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HQ 110226


May 12, 1989

VES-3-CO:R:P:C 110226 LLB

CATEGORY: CARRIER

Mr. Chuck Morris
Special Projects
Underwater Construction Inc.
8740 Hartzell Road,
Anchorage, Alaska 99507

RE: Use of a non-coastwise-qualified vessel for a diving platform for company-employed divers

Dear Mr. Morris:

This is in response to your letter of May 8, 1989, in which you request that we rule upon the proposed use of a Canadian-flag tug boat for non-tug-related activities rn U.S. territorial waters.

FACTS:

The vessel GORDON GILL is described as a small tug boat of Canadian registry, currently located in Dutch Harbor, Alaska, and due to be sold via sealed bid on May 15, 1989. Your American company proposes to purchase the vessel and put it into service as a dive platform for its own company-employed divers. The tow winch would be removed and the vessel would not be engaged in any towing operations.

ISSUE:

Is the transportation of divers employed by the owner of a non-coastwise-qualified vessel, the transportation of passengers within the meaning of title 46, United States Code App., section 289,and thus a prohibited activity.

LAW AND ANALYSIS:

Generally, the coastwise laws prohibit the transportation of merchandise or passengers 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. The passenger coastwise law, 46 U.S.C. App. 289, provides that:

No foreign vessel shall transport passengers between ports or places in the United States 2
either directly or by way of a foreign port, under a penalty of $200 for each passenger so transported and landed.

Pursuant to 46 U.S.C. 12106 and 12110 and their predecessors (46 U.S.C. 65i and 65m and, before them, 46 U.S.C. 11) and consistent with 46 U.S.C. App. 883, the coastwise merchandise law, the Customs Service has consistently held that the prohibition in 46 U.S.C. App. 289 applies to all non-coastwise qualified vessels. Non-coastwise-qualified vessels include any vessel other than a vessel built in, properly documented under the laws of, and owned by citizens of the United States, with certain exceptions (see 46 U.S.C. 12106(a)(2)(B) and 19 CFR

In its interpretation of section 289, the Customs Service has 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. Transportation of passengers from a point in the United States to the high seas or foreign waters and back to the point of original embarkation, often called a "voyage to nowhere," is not considered coastwise trade. For purposes of the coastwise laws, a vessel "passenger" is defined as "...any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business." (Section 4.50(b), Customs Regulations)

Since those persons transported aboard the vessel will be employees of the owner and will be engaged in diving operations on behalf of the owner, we are of the opinion that they are directly connected with operation, ownership, or business of the vessel and not, therefore, passengers within the contemplation of the statute or implementing regulations.

HOLDING:

Company-employed divers transported aboard the company vessel in furtherance of the business of the vessel (a diving platform) are not passengers within the meaning of section 4.50(b), Customs Regulations. Accordingly, their transportation to and from dive sites, even though wholly within territorial waters, is not violative of 46 U.S.C. App. 289.

Sincerely,

B. James Fritz
Chief

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