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

HQ H030168 June 6, 2008 VES-3-02-OT:RR:BSTC:CCI H030168 JLB CATEGORY: Carriers Mr. LeVar O. Kennings Manager, Port Operations Norwegian Cruise Line 7665 Corporate Center Dr. Miami, Florida 33126 RE: Coastwise Transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b) Dear Mr. Kennings: This letter is in response to your facsimile correspondence dated June 5, 2008, in which you request a ruling on whether the coastwise transportation of the individuals mentioned therein aboard the non-coastwise-qualified M/S NORWEGIAN STAR constitutes a violation of 46 U.S.C. § 55103. Our ruling on your request follows. FACTS The voyage in question involves the transportation of the subject individuals, investors in Norwegian Cruise Line (“NCL”), aboard the non-coastwise-qualified M/S NORWEGIAN STAR (“the vessel”). The two individuals would embark on June 7, 2008 at Seattle, Washington and would disembark at the port of Ketchikan, Alaska on June 9, 2008. The investors are representatives of Apollo Management, a company with a 51% share of NCL, and would be traveling aboard the vessel to ensure that their investment is in alignment with the strategies and objectives that were set out for NCL at the beginning of the year. Additionally, the investors would meet with the vessel’s senior management, such as the hotel director, to discuss strategic plans about NCL’s advancement in the industry and to inspect the hotel areas, the entertainment and the overall cruise experience. ISSUE Whether the individuals described above would be “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b)? LAW AND ANALYSIS The coastwise passenger statute, former 46 U.S.C. App. § 289 recodified as 46 U.S.C. § 55103, pursuant to P.L. 109-304 (October 6, 2006), states that no foreign vessel shall transport passengers “between ports or places in the United States to which the coastwise laws apply, either directly or by way of a foreign port,” under a penalty of $300 for each passenger so transported and landed. See also 19 C.F.R. § 4.80(b)(2). 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. Under 46 U.S.C. § 55103, a “passenger” is any person carried aboard a vessel “who is not connected with the operation of the vessel, her navigation, ownership, or business.” See also 19 C.F.R. § 4.50(b). In this regard, U.S. Customs and Border Protection (“CBP”) provides a protectionist interpretation of “passenger” defining the term as persons transported on a vessel unless they are "directly and substantially" connected with the operation, navigation, ownership or business of that vessel itself. See Customs Bulletin of June 5, 2002, Vol. 36, No. 23, at pp. 50. Pursuant to Headquarters Decision 101699, dated November 5, 1975, it is well settled that "workmen, technicians, or observers transported by vessel between ports of the United States are not classified as ‘passengers’ within the meaning of section 4.50(b) and section 289 [now section 55103] if they are required to be on board to contribute to the accomplishment of the operation or navigation of the vessel during the voyage or are on board because of a necessary vessel ownership or business interest during the voyage." See also Headquarters Decision 116721, dated September 25, 2006. In Headquarters Ruling Letter H019729, dated November 16, 2007, a credit appraiser was transported aboard a non-coastwise-qualified vessel in order to be briefed on the terminal operations including labor negotiations and terminal development, as well as to inspect the vessel’s operation and to evaluate the general condition of the vessel and crew. In that case, CBP held that the credit appraiser was a “passenger” pursuant to 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b) since the briefing and inspection did not connect the individual “directly and substantially” with the operation, navigation, ownership or business of the vessel itself. See also, e.g., Headquarters Ruling Letter H008510, dated March 22, 2007 (shipping agency trainees transported aboard a non-coastwise-qualified vessel “to observe daily life on a vessel and gain better insight about what their colleagues that work on a vessel actually do” or “observe what goes on during a vessel’s voyage” are passengers within the meaning of 46 U.S.C. § 55103 since the trainees were not “directly and substantially” connected with the operation, navigation, ownership or business of the vessel itself); Headquarters Ruling Letter H013701, dated July 10, 2007 (customer service auditors and sales representatives are “passengers”); Headquarters Ruling Letter H018186, dated October 11, 2007 (shoreside operations assistant is a “passenger”). Similarly, in the present case, you propose to transport the subject investors coastwise to discuss strategic plans about NCL’s advancement in the industry with the vessel’s senior management, to ensure that their investment is in alignment with NCL’s strategies and objectives and to inspect the hotel areas, the entertainment and the overall cruise experience. These activities do not connect the subject individuals “directly and substantially” with the business, operation, and navigation of the vessel itself. To the extent that the subject individuals would not be engaging in any shipboard activities while traveling on the non-coastwise-qualified vessel between coastwise ports, they would not be "directly and substantially" related to the operation, business, or navigation of the vessel during the voyage and would be considered passengers under 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). Consequently, the coastwise transportation of these individuals would be in violation of 46 U.S.C. § 55103. HOLDING The subject individuals are “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). Therefore, the coastwise transportation of such individuals is in violation of 46 U.S.C. § 55103. Sincerely, Glen E. Vereb, Chief Cargo Security, Carriers and Immigration Branch