Commercial Activity ≠ Coastwise Trade

Written by Mr. Robert Bruce

The Hearing Office occasionally receives a case alleging that a vessel has 

engaged in coastwise trade without a Certificate of Documentation evidencing 

a coastwise endorsement. This type of case would involve an alleged violation 

of 46 U.S.C. § 12102(a), 46 C.F.R. § 67.323, § 67.325, or § 67.327. In order to 

prove that such a violation occurred, there must be evidence that the vessel was 

engaged in coastwise trade, among other things. 

Coastwise trade is defined in various sections of 46 U.S.C. Chapter 551. The 

Coast Guard is authorized to enforce the coastwise laws (14 U.S.C. § 100), but 

Customs and Border Protection is the agency responsible for determining what 

activities are included within the definition of coastwise trade. It may be that 

coastwise trade always involves some commercial activity, but it is not true that 

all commercial activity is coastwise trade. For example, a vessel that lays cable 

or pipe in a U.S. harbor may not be engaged in the coastwise trade if it does not 

transport any passengers or merchandise. 

In cases where the vessel’s activity clearly falls within the statutory definition 

of coastwise trade, it may be sufficient to provide evidence showing the activity 

in which the vessel was engaged. For example, a ferry carrying passengers 

from Orient Point, New York to New London, Connecticut, would fall squarely 

within 46 U.S.C. § 55103 and there could not be much of an argument that it 

was not engaged in coastwise trade. 

In cases that are more ambiguous, the Hearing Officer will need to be provided 

with evidence that clearly shows the activity the vessel was engaged in, plus 

some authority for the Coast Guard’s position that the vessel is engaged in 

coastwise trade. A valid authority would be a ruling by Customs and Border 

Patrol or a decision by a court of competent jurisdiction. In an ambiguous 

situation, a determination by the Coast Guard that a vessel activity constituted 
coastwise trade would not necessarily be persuasive, because the Coast Guard 

is not the agency responsible for making those determinations. 

In the past few months, the Hearing Office has been presented with two 

problematic cases. One involved a vessel laying pipe in a harbor. The case file 

only vaguely described the activity the vessel was engaged in and contained no 

authority that laying pipe was coastwise trade. In another case, a vessel carried 

passengers on a harbor cruise that started and ended at the same point. Again, 

the case file did not include any authority to support the allegation that such an 

activity is coastwise trade. 

In some cases, the issue of proving that the vessel was engaged in coastwise 

trade can be avoided by using a different approach. For instance, in the 

passenger vessel case above, it is likely that a Coast Guard Certificate of 

Inspection (COI) would be required for carrying passengers for hire. If the 

vessel did not have a valid COI, then a civil penalty case could be based on the 

invalid or missing COI, rather than on a coastwise trade violation. 

A civil penalty case involving proof that a vessel engaged in coastwise trade 

can require more research and preparation than the typical civil penalty case. If 

in doubt, contact your servicing legal office for assistance.