Foreign-flag Yacht; Cruising License; 46 U.S.C. § 60504; 19 CFR 4.94.

HQ H197255 January 23, 2012 VES-12-02-OT: RR: BSTC:CCI H197255 WRB Category: Carriers Mr. Shannon Lo Ricco Greenpeace USA702 H Street, N.W.Suite 300 Washington, DC 20001 Re: Foreign-flag Yacht; Cruising License; 46 U.S.C. § 60504; 19 CFR 4.94. Dear Mr. Lo Ricco: This letter is in response to your December 15, 2011, correspondence, in which you request a ruling regarding the proposed use of a foreign-flag yacht. Our ruling on this matter is set forth below. FACTS The facts, as you have provided them in your e-mails and supporting documentation, are that the subject vessel, the M/Y RAINBOW WARRIOR, is a steel-hulled, auxiliary staysail schooner built in Germany and registered in the Netherlands. Your certificate of documentation indicates that the vessel is currently documented in the Netherlands as a non-commercial sailing yacht. The supporting documentation provided indicates that the vessel is owned by Stichting Greenpeace Council, a Netherlands organization, a non-U.S. resident and citizen. You assert in your e-mail that the vessel, for which application for a cruising license is being made, is not being offered for sale or charter while in the United States and will otherwise conform to all applicable CBP regulations. Your e-mail also indicates that the Rainbow Warrior will arrive in the United States on the January 27, 2012, for a United States tour, the purpose of which will be raising awareness of the effects of climate change, as well as inviting members of the public to come see the new ship. You state in your e-mail that your organization does not intend to charge admission to the vessel, nor will you actively approach people to support Greenpeace in a financial manner while they are aboard the vessel, including not setting up a donation box nor suggesting people make donations. Per your e-mail correspondence, the tour of the USA will be limited to education and empowering members of the public to campaign for a greener future in energy in America. You further state in your e-mail that, during parts of the tour, certain Greenpeace supporters will be invited to come aboard the vessel and receive a more detailed tour, which will also be free of charge. These more tours are intended to be a show of appreciation to long-time supporters. Schools groups from the various ports the vessel will call will also be invited to come aboard and tour the vessel free of charge. These tours are intended to give children the opportunity to see a large sailing vessel as well as educate them about ocean conservation and many of the other campaigns Greenpeace works on globally. You also assert that all tours of the vessel will occur while the vessel is alongside the pier at whichever port the vessel is calling. At no time will individuals touring the vessel be transported between coastwise points. Per your e-mail, the only personnel who will be aboard the vessel during transit between coastwise points will be the crew. ISSUE Whether the subject vessel is eligible for issuance of a cruising license pursuant to 46 U.S.C. § 60504 and 19 CFR 4.94. LAW and ANALYSIS Title 46 United States Code § 60504 provides for reciprocal privileges for recreational vessels, saying: “When the President is satisfied that yachts owned by residents of the United States and used only for pleasure are allowed to arrive at, depart from, and cruise in the waters of a foreign port without entering, clearing, or paying any duties or fees (including cruising license fees), the Secretary of Homeland Security may allow yachts from that foreign port used only for pleasure to arrive at and depart from the ports of the United States and to cruise in the waters of the United States without paying any duties or fees. However, the Secretary may require foreign yachts to obtain a license to cruise in the waters of the United States. The license shall be in the form prescribed by the Secretary and contain limitations about length of time, direction, place of cruising and action, and other matters the Secretary considers appropriate. The license shall be issued without cost to the yacht.” 46 USCS § 60504  Title 19 Code of Federal Regulation § 4.94 (19 CFR §4.94) addresses the issuance of cruising licenses which exempt foreign yachts from formal entry and clearance procedures (e.g., filing manifests, obtaining permits to proceed and exemptions from the payment of tonnage tax and entry and clearance fees) at United States ports. Title 19 Code of Federal Regulation § 4.94 was promulgated pursuant to Title 46 United States Code § 60504 (46 U.S.C. § 60504) which authorizes the issuance of cruising licenses to pleasure vessels of countries which extend reciprocal privileges to United States vessels. The Netherlands is on the list of countries appearing in § 4.94(b) whose yachts may be issued cruising licenses. It should be noted, however, that 46 U.S.C. § 60504 provides that on the basis of reciprocity, foreign yachts may be granted cruising licenses provided they are “...used only for pleasure...” (Emphasis supplied) Accordingly, we are required to examine whether the proposed use of the subject vessel constitutes solely pleasure cruising and whether any transportation between coastwise points takes place. Generally, 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 carriage of passengers is found in 46 U.S.C. § 55103 (recodified by Pub. L. 109-304, enacted on October 6, 2006) and provides that: (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- is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and 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. Section 4.50(b), Customs and Border Protection (“CBP”) Regulations (19 CFR § 4.50(b)) provides as follows: A passenger within the meaning of this part is any person carried on a vessel who is not connected with the operation, navigation, ownership, or business of the vessel. In HQ 109543, dated September 9, 1988, we remarked that the use of a yacht to transport business “guests” would be considered an engagement in trade (coastwise trade if the passengers were transported between coastwise points). Accordingly, a yacht so used could not be granted a cruising license. In that matter, we held that business guests, such as insurance brokers, business and financial customers, and other contacts of the corporate charterers of a foreign-flag vessel were “passengers” for purposes of the coastwise laws, and their transportation between coastwise points or on a “voyage to nowhere” solely in United States territorial waters would be prohibited. Similarly, in HQ 114120, dated October 8, 1997, we determined that the entertainment of the clients of the beneficial owner of a yacht would be for other than purposes of pleasure. In HQ 113304, dated January 11, 1995 we determined that the existing or potential clients of a yacht’s corporate owner were passengers within the meaning of the coastwise passenger law and 19 CFR 4.50(b). We noted that the clients were not connected with the operation, navigation, ownership or business of the vessel. Accordingly, we ruled that those individuals could not be transported from one coastwise point to another coastwise point as was proposed. Also, in HQ W115072, dated May 17, 2002, we determined that individuals transported aboard a foreign-flag pleasure vessel during fund-raising events of political and charitable organizations were not directly and substantially connected with the operation, navigation, ownership or business of the vessel. Thus, such individuals were considered passengers even though no direct monetary consideration was given to the vessel owner. Accordingly, we held that, for those individuals, cruises entirely within U.S. territorial waters, cruises between U.S. ports, and cruises between U.S. ports via nearby foreign ports would be prohibited. However, we noted that activities which did not involved transporting individuals between places in the United States, such as receptions while the vessel was moored or anchored either at a U.S. port or within the U.S. territorial waters would not be in violation of the coastwise laws. Inasmuch as you have indicated that, at no time will the individuals touring the vessel be transported between coastwise points, and that the only personnel who will be aboard the vessel during transit between coastwise points will be the crew, we are of the opinion that no coastwise transportation will take place. As the activities aboard the vessel while alongside the pier at whichever port the vessel is calling would be limited to tours conducted for educational purposes and no fund-raising events would take place, we are of the opinion that the individuals on the tours would not be considered passengers, and such use would not prohibit the issuance of a cruising license pursuant to 19 CFR § 4.94.  HOLDING The use of the foreign-flag yacht as described in the Facts section above does not contravene the issuance of a cruising license pursuant to 19 CFR § 4.94. Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Immigration Branch Office of International Trade, Regulations & Rulings U.S. Customs and Border Protection