OT:RR:BSTC:CCR
H342562 SMS
Captain Stephen Demarest
12 Bass Ave,
Key Largo, FL 22037
RE: Affirmation of Headquarters Ruling H340907; Round Trip Boat Tours within Coastwise Waters; 46 U.S.C. § 55103; 19 C.F.R. § 4.80a(b)(1).
Dear Captain Demarest:
This letter is in response to your October 16, 2024, request for reconsideration of Regulations and Rulings’ (RR) October 4, 2024, decision, Headquarters Ruling (HQ) H340907, issued in response to your July 25, 2024, request. In your original request for a ruling, you inquired whether the operation of the non-coastwise-qualified vessel, motor yacht (M/Y) FLORIDAZE (vessel), in United States territorial waters would constitute a violation of 46 U.S.C. § 55103, 19 C.F.R. § 4.80a(b)(1).
On October 4, 2024, this office ruled that the transportation of passengers on a round-trip boat tour, also known as a “voyage-to-nowhere,” where the passengers embarked and disembarked at the same coastwise point, would not constitute a violation of 46 U.S.C. § 55103, but only if the vessel traveled beyond the U.S. territorial sea. However, RR determined if the voyage remained wholly within U.S. territorial waters, a violation of 46 U.S.C. § 55103 and 19 CFR § 4.80a(b) would occur. In your current request, you contend that the distinction RR made in H340907, dated October 4, 2024, i.e., between round-trip voyages that reach the high seas versus round-trip voyages that remain within in the territorial sea, is not supported by U.S. coastwise laws.
FACTS:
The following facts are taken from your original ruling request, dated July 25, 2024, your request dated October 16, 2024, and any supporting e-mails RR received regarding this matter. You indicated that you currently operate small boat tours as a hobby-vocation using the non-coastwise-qualified vessel. The vessel is a Swedish-built, U.S. Coast Guard-documented vessel (DO 1346966). You further indicated that the vessel is used to transport up to six passengers on two-hour sunset sightseeing excursions, from the point of embarkation along Adams Waterway in Key Largo, Florida. The voyage proceeds through Largo Sound, then through South Creek, and into the Atlantic Ocean, before crossing from U.S. territorial waters into the high seas. The vessel then reverses course, and passengers disembark at the beginning location along Adams Waterway in Key Largo, Florida.
You further state that in the event of rough seas during the sunset excursion, you would like the option of staying closer to shore or rerouting the trip into the Blackwater Sound at the leeward side of Key Largo, both of which are wholly within U.S. territorial waters. As we ruled in H340907, a voyage to nowhere that extends past the high seas, does not violate the Passenger Vessel Services Act (PVSA). Thus, the only issue remaining in this request for reconsideration is regarding a voyage that remains in the U.S coastal, i.e., territorial, waters.
ISSUE:
Whether the transportation of passengers on a closed loop voyage, by a non-coastwise-qualified vessel, that remains within the U.S territorial waters for the entirety of its voyage, constitutes a violation of 46 U.S.C. § 55103 as implemented by 19 C.F.R. § 4.80a(b)(1).
LAW AND ANALYSIS:
Pursuant to 46 U.S.C. § 55103, the Passenger Vessel Services Act, only coastwise-qualified vessels may transport passengers between ports or places in the United States to which the coastwise laws apply. The coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.” The coastwise laws generally apply to points in the territorial sea, which is defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline.
The coastwise law applicable to the transportation of passengers is found in 46 U.S.C. § 55103 which provides:
(a) In General. Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel-
(1) is wholly owned by citizens of the United States for purposes of engaging in coastwise trade; and
(2) has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
(b) Penalty. The penalty for violating subsection (a) is $300 for each passenger transported and landed.
The U.S. Customs and Border Protection (CBP) Regulations, promulgated under the authority of 46 U.S.C. § 55103, provides, in pertinent part:
(a) No vessel shall transport, either directly or by way of a foreign port, any passenger or merchandise between points in the United States embraced within the coastwise laws, including points within a harbor, or merchandise for any part of the transportation between such points, unless it is:
(1) Owned by a citizen and is so documented under the laws of the United States as to permit it to engage in the coastwise trade….
Similarly, 19 C.F.R. § 4.80a(b) provides, in pertinent part:
The applicability of the coastwise law (46 U.S.C. § 55103) to a vessel not qualified to engage in the coastwise trade (i.e., either a foreign-flag vessel or a U.S.-flag vessel that is foreign-built or at one time has been under foreign flag) which embarks a passenger at a coastwise port is as follows:
If the passenger is on a voyage solely to one or more coastwise ports and the passenger disembarks or goes ashore temporarily at a coastwise port, there is a violation of the coastwise law.
If the passenger is on a voyage to one or more coastwise ports and a nearby foreign port or ports (but at no other foreign port) and the passenger disembarks at a coastwise port other than the port of embarkation, there is a violation of the coastwise law.
If the passenger is on a voyage to one or more coastwise ports and a distant foreign port or ports (whether or not the voyage includes a nearby foreign port or ports) and the passenger disembarks at a coastwise port, there is no violation of the coastwise law provided the passenger has proceeded with the vessel to a distant foreign port.
In its administration of 46 U.S.C. § 55103, CBP has consistently ruled that the transportation of passengers to the high seas (i.e. beyond U.S. territorial waters) and back to the point of embarkation, assuming the passengers do not go ashore, even temporarily, at another U.S. point, often called a “voyage-to-nowhere,” is not considered coastwise trade. However, in this specific request, we are faced with a voyage that remains wholly within the U.S. territorial waters.
You posit that legislative history and the plain language of 46 U.S.C. § 55103, makes no distinction between such voyages that stay within the U.S. territorial waters and those that extend beyond to the high seas. Specifically, you contend that the PVSA and CBP regulations, do not encompass round trip excursions, because the language which states “passengers between ports or places” is a fundamental requirement that two distinct points are required to implicate the PVSA. We disagree. While the term “between ports or places” is found in the PVSA, as explained in detail below, it has been this agency’s and our predecessor agency’s firm position that staying wholly within the U.S. territorial is coastwise and triggers the coastwise laws and such triggers the PVSA.
CBP has consistently ruled that the carriage of passengers entirely within U.S. territorial waters, even if embarking and disembarking at the same U.S. port and not landing at other coastwise points, is considered coastwise trade subject to the coastwise laws. As an example, in HQ H243820, dated July 22, 2013, we found that a foreign-built yacht operating whale watching charters, embarking and disembarking at Half Moon Bay, California if it remained entirely within territorial waters, it was subject to coastwise law. Specifically, we explained:
It is noteworthy that our predecessor agency, the U.S. Customs Service, specifically examined the question of the use of a non-coastwise-qualified vessel for whale watching in HQ 112189, dated April 21, 1992. In that matter, we reiterated our longstanding position that the carriage of passengers entirely within territorial waters, even though the passengers disembarked at their point of embarkation and the vessel touched no other point, was considered coastwise trade subject to the coastwise laws. This position was based on a 1900 decision (Treasury Decision 22275) and consistently followed since.
On June 11, 1900, the Treasury Department ruled that the use of a Canadian vessel for the purpose of taking passengers on “short excursions” from the port of Duluth and back, contravened the provisions of the Act. In Customs Service Decision (C.S.D.) 81-171, dated January 15, 1981, we explained:
Thus, the transportation of passengers from a United States port solely into territorial waters and back to the port of embarkation has been considered coastwise trade at least since 1900. We have been unable to find any ruling after the 1900 decision which holds such transportation to be other than coastwise trade. In fact, our rulings consistently follow the position enunciated in that decision. Accordingly, it is our conclusion that although the transportation of passengers from a United States port to the high seas or foreign waters and back to the port of embarkation is not considered coastwise trade, the transportation of passengers from a United States port on a voyage solely within United States territorial waters and back to the port of embarkation is considered coastwise trade.
You recognize the above longstanding CBP position yet contend that it is in opposition of the statute and a 1912 United States Department of Justice Office of the Attorney General (AG) opinion, which you state demonstrates that two distinct points are required. Again, we disagree. In the 1912 opinion, the AG was presented with facts concerning a Canadian vessel taking passengers from a U.S. port and returning them through the same U.S. port, after passing through foreign waters. There was an argument made that because the vessel returned to the same U.S. port the voyage was solely domestic in nature and thus subject to the coastwise laws. The AG explained:
excursions from United States ports through domestic and foreign waters, sometimes touching at a foreign port, but returning to the port of departure – does not come within the terms of the statute, which deals only with transportation between ports or places in the United States, either directly or by way of a foreign port. “These words imply a transportation beginning at one port or place in the United States and ending at another port or place therein. So, too, the clause imposing a penalty of $200 for “each passenger so transported and landed” implies landing at the port or place of destination. . . .
In the present case the transportation referred to -- from a domestic port to a foreign port or into foreign waters and return -- is, in my judgment, neither within the letter nor the spirit of the law.
It is our longstanding position, that while the AG and other rulings discuss returning to the same port, the distinction is that the vessel in these cases travelled to foreign waters. If a vessel remains completely within U.S. waters, there is no need to make such a distinction as there is no doubt the vessel remained within the actual limits of U.S. coastwise waters and thus remain subject to the coastwise laws. Thus, while you include the language concerning distinct U.S. ports of embarkment and dismemberment, what is not reflected in your argument, is the distinction made in this opinion regarding voyages traveling through foreign waters and those of solely domestic waters, which is a longstanding distinction to which CBP and its predecessor has adhered.
The AG took pains to explain that the voyage at issue was not in violation of the Act, because if returned to the same port, but also because it passed through foreign waters. The AG explained “[a]nd it is not decisive in a case of this nature, that the mischiefs to be guarded against and remedied by the act of 1803, are equally as applicable to whaling voyages, as to voyages to foreign ports for the general purposes of trade.” The opinion refers to the legislative history and Congress’ intent to make a distinction between domestic traffic, and traffic that reaches foreign ports and further elaborates:
In the case before me I am unable to perceive any ambiguity in the statute; certainly, none which warrants the construction suggested by the statement that “the traffic in question is essentially domestic, since it originates and terminates in the United States, and is supported by the American public.” . . . In other words, it was legislating with respect to what is generally termed coastwise traffic, whereas the transportation referred to by you is not coastwise, but outward, into foreign waters or to a foreign port. I am unable to perceive how the fact that passengers so transported are returned to the port of departure in the United States brings the case within the statute.
CBP has consistently ruled that the carriage of passengers entirely within territorial waters, even though the passengers disembark at their point of embarkation and the vessel touches no other coastwise point, is considered coastwise trade subject to the coastwise laws. Looking at the legislative history of and spirit of the PSVA, it is to preserve a monopoly of coastwise, domestic, trade and voyages to the United States shipping industry. It would be in complete opposition of this purpose to find that a ship that remained 100% in U.S. waters was not within U.S coastwise laws. “The general intent and purpose of this legislation was to provide a ‘legal structure that guarantees a coastwise monopoly to American shipping and thereby promotes development of the American merchant marine… ‘(stating that the legislative aim of section 289 was the creation of a practical monopoly of coastwise and domestic shipping business for United States ships). Simply stated, this statute was designed to advance the United States Merchant Marine and Merchant Fleet by placing restrictions on the use of foreign owned/flagged passenger vessels in United States coastwise waters.’”
In summary, most of the support you provided is solely in relation to creating a two-port distinction and creating an exception for closed loop voyages, if in both instances they reach foreign seas and/or foreign ports. As explained by the District Court in Sea Princess it “is undisputed that M/V Sea Princess proceeded beyond the territorial waters as required to qualify as a ‘Voyage to Nowhere.’”
Of note is also T.D. 85-109, dated July 1, 1985, which provides an amendment to 19 C.F.R. § 4.80a, which you provide as support to your position that two distinct ports are required, and to your position that an exception is in place for cruises, as cited in the Maritime Law Exemption Report provided with your supplemental submissions. This argument again neglects the fundamental exception to these rulings, opinions, decisions, which is already, longstanding in place to protect wholly domestic travel.
After consideration of all the comments, we believe that the amendment [which allowed non-coastwise approved vessels to travel between U.S. Ports, if visited a foreign port for up to 24 hours, without violating the Act] will simplify the administration of the statute for Customs, will be of benefit to the economy of certain of the American coastwise ports affected, and will in no way erode the statutory protection given to American vessels engaged solely in domestic trade (e.g., all of the many U.S.-flag, U.S.-built passenger vessels operating on the inland waters of the U.S. solely between U.S. points would continue to be protected from competition by foreign vessels).
T.D. 85-109 also elaborates on the 1910 AG opinion stating,
The 1910 Attorney General’s opinion was extended to voyages touching at foreign ports other than nearby foreign ports . . . On the other hand, voyages solely to one or more coastwise ports have always been considered predominantly coastwise in their nature and object and therefore passengers on such a voyage temporarily going ashore at a coastwise port have been deemed to have been disembarked in violation of the statute.
We note the 24-hour exception has long been changed, but it, as you submit, provides insight into the PVSA’s legislative history, which again does not negate the purpose of protecting wholly domestic travel by qualified U.S. vessels, from foreign competition. While there are many cases discussing travel between two distinct points, they in no way negate the imposition of coastwise laws on voyages wholly within U.S. waters.
Additionally, while there is no dispute that the persons included on your sightseeing voyage are passengers under the PVSA and implementing CBP regulations, sightseeing voyages have also been considered under the coastwise laws and thus under the purview of the PVSA. While you argue that the sightseeing purpose of your proposed voyages exempts it from being considered coastwise trade, we disagree. Again, the materials you use as support of this position deal with voyages that travel beyond U.S. territorial waters and into foreign waters or ports. However, as found in the many sightseeing or excursion type decisions, this activity is squarely under the purview of coastwise laws. Specifically, in HQ H311571, dated June 25, 2020, CBP ruled that the use of non-coastwise-qualified vessels to conduct sightseeing excursions represents coastwise trade in violation of the PVSA. With similar facts we found:
In the present matter, you request to use non-coastwise-qualified Zodiac vessels to transport passengers from an anchored cruise vessel to ‘engage in operations that consist of sightseeing, nature watches, and ecotourism, etc. . . . the salient consideration is that the proposed transportation does not contemplate point-to-point tendering but rather a sightseeing journey in which passengers return to the cruise vessel without going ashore. Furthermore. . . the instant request involve[s] the transportation of passengers entirely within U.S. territorial waters for excursions in which passengers begin and end at a single coastwise point (either a cruise vessel anchored in U.S. waters or docked at a U.S. pier).
Based on this information, we find that the use of foreign-owned Zodiacs carried on board the above-described cruise vessel to transport passengers on excursions in U.S. territorial waters constitutes a violation of 46 U.S.C. § 55103.
As explained above, we confirm our original decision issued to you on October 4, 2024, in which this office ruled that the transportation of passengers on a round-trip boat tour, also known as a “voyage-to-nowhere,” where the passengers embarked and disembarked at the same coastwise point, would not constitute a violation of 46 U.S.C. § 55103, only if the vessel traveled beyond the U.S. territorial sea. If the voyage remained wholly within U.S. territorial waters, a violation of 46 U.S.C. § 55103 and 19 C.F.R. § 4.80a(b) will occur.
HOLDING:
The transportation of passengers on a “voyage-to-nowhere” beyond the territorial sea in which the passengers embark and disembark at the same coastwise point, as described above, would not constitute a violation of 46 U.S.C. § 55103. However, a rerouting of the voyage to remain close to shore or enter Blackwater Sound, a voyage which would remain wholly within U.S. territorial waters would be in violation of 46 U.S.C. § 55103 and 19 C.F.R. § 4.80a(b).
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” If the terms of the import or export contracts and results of the sampling records vary from the facts stipulated to herein, or CBP ascertains discrepancies based upon a review of any other pertinent information, this decision shall not be binding on CBP as provided for in 19 C.F.R. § 177.9(b)(1), (2) and (4).
Sincerely,
Jennifer L. Petelle, Director
Border Security & Trade Compliance Division
Office of International Trade, Regulations and Rulings
U.S. Customs and Border Protection