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HQ 113009

December 16, 1994

VES-3-CO:R:IT:C 113009 GEV


Manuel Gamboa
Fantasy Cruise Lines
9806 Sunset Avenue
La Mesa, California 91941

RE: Coastwise Trade; Passengers; 46 U.S.C. App. 289

Dear Mr.Gamboa:

This is in response to your letter dated December 2, 1994, requesting a ruling regarding your proposal to operate a cruise/gambling ship service. Our ruling on this matter is set forth below.


Fantasy Cruise Lines proposes to initiate a cruise/gambling service between San Diego, California and Rosarito Port, Mexico. A chartered, U.S.-flag vessel will be used for this service. Three round trip voyages per week will be scheduled. It is anticipated that the passengers will make the round trip and not disembark at Rosarito Port, however, that possibility may exist.

In conjunction with your effort to comply with the applicable Customs laws and regulations, you express a particular concern about the following:

1. Is there a distinction made between scheduling liner service (regular advertised service) or chartered service on an irregular basis in terms of piers/facilities to be utilized?

2. Whether or not there are different rules applicable to chartered or owned vessels.

3. Rules that may be applicable should passengers temporarily leave the vessel in Mexico for a return voyage at a future date.

4. Any rules that may be linked to U.S. Coast Guard certification.


Whether the proposed cruise service described above constitutes a violation of 46 U.S.C. App. 289.


Title 46, United States Code Appendix, 289 (46 U.S.C. App. 289, the passenger coastwise law), prohibits the transportation of passengers between points embraced within the coastwise laws of the United States, either directly or by way of a foreign port, in a non-coastwise-qualified vessel (i.e., any vessel not built in and documented under the laws of the United States and owned by persons who are citizens of the United States). For purposes of section 289, "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." (19 CFR

The Customs Regulations promulgated pursuant to 46 U.S.C. App. 289 are set forth in Section 4.80a, Customs Regulations (19 CFR 4.80a). Section 4.80a(b)(1), Customs Regulations (19 CFR passenger is on a voyage solely to one or more coastwise ports and the passenger disembarks or goes ashore temporarily at a coastwise port. Section 4.80a(b)(2), Customs Regulations (19 CFR 4.80a(b)(2)),provides that a coastwise violation occurs if a 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. (see 19 CFR 4.80a(a)(1)(2) and (4) for the definitions of the terms "coastwise port," "nearby foreign port," "embark," and "disembark," as those terms are used in the regulation)

In its administration of 46 U.S.C. App. 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. However, 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 United States point, often called a "voyage to nowhere", is not considered coastwise trade (29 O.A.G. 318 (1912)).

In interpreting the coastwise laws, Customs has ruled that a point in United States territorial waters is a point in the United States embraced within the coastwise laws. The territorial waters of the United States consist of the territorial sea, defined as the belt, 3 nautical miles wide,
seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ.

In regard your proposal, you should know that gambling activities are not within in the purview of the Customs Service but rather the Department of Justice. We suggest that you direct any inquiries you may have in that regard to the following address:

Organized Crime and Racketeering Section
Criminal Division
Department of Justice
Washington, D.C. 20530

As for those aspects of your proposal that are within Customs jurisdiction, our comments are as follows.

Although you state that the vessel to be used is U.S.- flagged, you do not indicate whether it will be U.S.-built thereby rendering it coastwise-qualified. However, upon reviewing the proposed cruise itinerary the fact that the vessel may not be coastwise-qualified is irrelevant since the itinerary meets the criteria of a "voyage-to-nowhere" discussed above. Accordingly, the proposed cruises would not constitute coastwise trade and therefore would not be in violation of 46 U.S.C. App. 289.

In regard to the four particular areas of concern expressed in your letter and enumerated above, we note the following. For purposes of 46 U.S.C. App. 289, if the vessel is coastwise- qualified there is no distinction to be made between its schedule of service and the piers/facilities to be used. If the vessel is not coastwise-qualified, the vessel must embark and disembark passengers at the same coastwise point (i.e., pier/facility) in order to meet one of the criteria for a "voyage-to-nowhere." Aside from the ramifications of 46 U.S.C. App. 289, we note that in regard to scheduling, passenger vessels making three trips or more a week between a United States port and a foreign port are exempt from Customs entry requirements pursuant to 19 U.S.C. 1441(2), although they are still required to immediately report their arrival in the United States from a foreign port pursuant to 19 U.S.C. 1433(a)(1)(A).

As for whether there are different rules applicable to chartered or owned vessels (your second point of concern), while such divergence does exist with respect to the coastwise laws, it does not appear to be applicable to your proposal in view of the fact that the transportation in question is not considered coastwise trade. However, for your reference we offer the following. The Customs Service has consistently held that when a vessel is chartered under a bona fide bareboat charter, the
bareboat charterer is treated as the owner of the vessel for the period of the charter, and, because the owners are not considered "passengers" for purposes of the coastwise laws, the charterer is not proscribed by the coastwise laws from using the vessel during the charter for pleasure purposes only. A vessel chartered under a charter arrangement other than a bareboat charter (e.g., a time or voyage charter) and used in coastwise transportation (see discussion above on the carriage of passengers entirely in territorial waters or to the high seas or foreign waters) would be subject to penalties under the coastwise laws. A vessel chartered under a bareboat charter would also be subject to penalties if the bareboat charterer used it in the coastwise trade (e.g., to transport passengers (other than bona fide guests) between coastwise points or entirely within territorial waters).

In our review of charter arrangements to determine whether or not they are bareboat charters we have generally held that:

The nature of a particular charter arrangement is a question of fact to be determined from the circum- stances of each case. Under a bareboat charter or demise charter the owner relinquishes complete man- agement and control of the vessel to the charterer. On the other hand, if the owner retains a degree of management and control, however slight, the charter is a time or voyage charter, and the vessel is deemed to be engaged in trade. The crux of the matter is whether complete management and control have been wholly surrendered by the owner to the charterer so that for the period of the charter the charterer is in effect the owner. Although a charter agreement on its face may appear to be a bareboat or demise charter, the manner in which its covenants are carried out and the intention of the respective parties to relinquish or to assume complete management and control are also factors to be considered.

In regard to your third area of concern, no violation of 46 U.S.C. App. 289 would occur if passengers temporarily leave the vessel in Mexico and return on it to San Diego at a later date.

Finally, we defer to the U.S. Coast Guard regarding any questions you may have concerning that agency's certification requirements. We do note, however, that the certificate of documentation for the vessel in question need not have a coastwise endorsement to engage in the proposed cruise itinerary.


The proposed cruise service described above does not constitute a violation of 46 U.S.C. App. 289.


Arthur P. Schifflin

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