Coastwise Transportation; Foreign-flag vessel; 46 U.S.C. § 55103; 19 C.F.R. § 4.80

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H274318 April 14, 2016 VES-3-02-OT:RR:BSTC:CCR H274318 PF CATEGORY: Carriers John J. Reilly, Esq. Squire Patton Boggs (US) LLP 30 Rockefeller Plaza New York, New York 10112 RE: Coastwise Transportation; Foreign-flag vessel; 46 U.S.C. § 55103; 19 C.F.R. § 4.80 Dear Mr. Reilly: This letter is in response to your March 24, 2016, ruling request regarding the operation of the Maltan-flagged, MS CELEBRITY INFINITY, in United States (“U.S.”) waters. Our decision follows. FACTS The following facts are from a letter sent to this office on March 24, 2016. The subject vessel, the MS CELEBRITY INFINITY (“vessel”), is a Maltan-flagged vessel. The foreign-flagged vessel will be moored at the Port of San Francisco, California on or about October 2016 for a period of five days. During those five days, the vessel will remain moored at the dock of the Port of San Francisco and will serve as an event and hotel venue for a large tech conference in the city of San Francisco. The vessel will provide hospitality and catering services for approximately 1,100 attendees. The foregoing passengers will board the vessel for purposes of this hospitality event and leave the vessel at the conclusion of the event. After the event, the vessel will immediately depart to a foreign destination. ISSUE Whether the use of the subject vessel violates 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. See 33 C.F.R. § 2.22(a)(2)(2013). The CBP Regulations at 19 C.F.R § 4.80 provide, 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; (2) Owned by a citizen, is exempt from documentation, and is entitled to or, except for its tonnage, would be entitled to be documented with a coastwise endorsement. (3) Owned by a partnership or association in which at least a 75 percent interest is owned by such a citizen, is exempt from documentation and is entitled to or, except for its tonnage, or citizenship of its owner, or both, would be entitled to be documented for the coastwise trade. The term “citizen” for vessel documentation purposes, whether for an individual, partnership, or corporation owner, is defined in 46 C.F.R 67.3. (b) Penalties for violating coastwise laws. (1) The penalty imposed for the illegal transportation of merchandise between coastwise points is forfeiture of the merchandise or, in the discretion of the port director, forfeiture of a monetary amount up to the value of the merchandise to be recovered from the consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing the merchandise to be transported [46 U.S.C. § 55102]. 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. In HQ H249818 (April 4, 2014), CBP held that passengers who boarded an anchored foreign-flagged vessel for a hospitality event at the Miami Beach Marina and left the vessel at the conclusion of the event did not engage in coastwise transportation. At the conclusion of the hospitality event, the vessel departed to a foreign location with no passengers. Similarly here, your client indicates that the vessel will be moored at the Port of San Francisco for approximately five days on or about October 2016. Passengers will board the vessel for the hospitality event and leave the vessel at the conclusion of the event. Insofar as the vessel will not leave the dock while at the Port of San Francisco, no coastwise transportation will occur. The vessel will depart from the Port of San Francisco and immediately travel to a foreign destination. HOLDING The proposed embarkation and disembarkation of passengers by the subject vessel does not violate 46 U.S.C. § 55103. Sincerely, Lisa L. Burley Chief/ Supervisory Attorney-Advisor Cargo Security, Carriers and Restricted Merchandise Branch Office of International Trade, Regulations and Rulings U.S. Customs and Border Protection