Coastwise Transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b)

HQ H211489 April 4, 2012 VES-3-02-RR:BSTC:CCI H211489 WRB CATEGORY: Carriers Mr. Christopher D. Pezold 300 Stubblefield Lane Liberty Hill, TX 78642 RE: Coastwise Transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b) Dear Mr. Pezold: This letter is in response to your correspondence of March 19, 2012, with respect to the proposed use of a sailing vessel to teach seamanship. Our ruling is set forth below. FACTS: You ask whether a coastwise endorsement is necessary in order to use your sailing vessel on Lake Buchanan in Burnet County, Texas, to teach sailing and seamanship. The vessel is a 42-foot, fiberglass-hulled, open cockpit Cascade ketch built in Portland, Oregon, in 1970. The vessel has not been issued a certificate of documentation with a coastwise endorsement. You plan to take paying groups of students to teach seamanship during daylight and night hours. You also indicate that you and your family intend to use the vessel for recreation as well. ISSUE: Whether the use of a non-coastwise-qualified vessel as described above constitutes an engagement in coastwise trade in violation of 46 U.S.C. § 55103? LAW AND ANALYSIS: 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 the present case, you desire to teach seamanship to paying groups of students during daylight and night hours aboard the subject vessel. You also indicate that you and your family intend to use the vessel for recreational purposes as well. CBP has long held that a person being trained or receiving instruction in the handling or navigation of a vessel, and whose presence on board the vessel is required in order to receive such training or instruction, is not a “passenger.” See Headquarters Ruling Letter H045778, dated March 3, 1998; Headquarters Ruling Letter 114263, dated March 3, 1998. Consequently, while the vessel is used for such training, it need not be documented to engage in the coastwise trade. See Headquarters Ruling Letter H045778, dated March 3, 1998; and Headquarters Ruling Letter 112479, dated January 6, 1993; see also Headquarters Ruling Letter 111021, dated August 28, 1990; Headquarters Ruling Letter HQ 111212, dated November 15, 1990. The individuals so trained or instructed are not “passengers” regardless of whether a fee is charged for the training program. See Headquarters Ruling Letter H045778, dated March 3, 1998; and Headquarters Ruling Letter 114283, dated March 27, 1998. Accordingly, the use of the subject non-coastwise-qualified vessel as a training platform is not in violation of 46 U.S.C. § 55103. All persons being transported on the vessel must receive the training or instruction as described above. While fee payment alone is not dispositive in determining whether an individual is a “passenger” for purposes of 46 U.S.C. § 55103, it should also be noted that a person who is carried on board such a vessel for recreational purposes and who pays a fee for such carriage would be considered a “passenger” and his carriage between places in the United States or entirely within U.S. waters would be in violation of 46 U.S.C. § 55103. See Headquarters Ruling Letter 113515, dated August 3, 1995.   You also indicate that you and your family intend to use the vessel for recreational purposes. As we discussed in Customs Rulings HQ H200704, dated February 8, 2012, and HQ 113088, dated November 16, 1994, a vessel may hold multiple endorsements. Since a vessel may be documented with more than one endorsement, there is no restriction on a vessel being employed part of the time in recreational uses and part of the time in permissible commercial uses. Accordingly, it is our opinion that there would be no restriction upon its use for recreational purposes for the period of time when the vessel is not employed as a training vessel. HOLDING The use of a non-coastwise-qualified vessel as described above does not constitute an engagement in coastwise trade in violation of 46 U.S.C. § 55103. 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