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

HQ H069521 September 14, 2009 VES-3-02-OT:RR:BSTC:CCI H069521 JLB CATEGORY: Carriers Mr. Bill Sharp Vice President Port Operations & Fleet Security Holland America Line 300 Elliott Avenue West Seattle, Washington 98119 RE: Coastwise Transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b) Dear Mr. Sharp: This letter is in response to your correspondence dated July 21, 2009 and July 30, 2009, in which you request a ruling on whether the coastwise transportation of the individuals mentioned therein aboard the MS WESTERDAM 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 aboard the non-coastwise-qualified MS WESTERDAM (“the vessel”). The individuals will embark on September 27, 2009 at Seattle, Washington and will disembark at the port of San Diego, California on September 30, 2009. The individuals include the President & CEO of Holland America Line, twenty-three Vice Presidents of Holland America Line, and two consultants who will lead the team building conference, with each of these individuals bringing a spouse or guest. The purpose of the conference is to discuss with the onboard senior management, i.e. the captain, chief officer, chief engineer, hotel manager and others, how to collectively work together to provide a better product for the guests and to work more effectively during the course of day-to-day business. 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 strict 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. The officers of the company owning a vessel, and, if a corporate owner, the members of its board of directors, would, by virtue of their positions as such, be “directly and substantially” connected with the ownership or business of that vessel. See U.S. Customs Service General Letter No. 117 (May 20, 1916). Therefore, any corporate officer, or member of the board of directors, of the company owning the subject vessel in this case would not be a passenger if acting in their official capacities while onboard the vessel. See, e.g., Headquarters Ruling Letter 116668, dated July 25, 2006; Headquarters Ruling Letter H002925, dated November 8, 2006; Headquarters Ruling Letter H003146, dated November 15, 2006; Headquarters Ruling Letter H003597, dated November 29, 2006. In the present case, the President & CEO and the twenty-three Vice Presidents of Holland America Line as well as the two consultants are traveling aboard the vessel to attend a team building conference with the vessel’s senior staff. The purpose of the conference is to discuss with the onboard senior management how to collectively work together to provide a better product for the guests and to work more effectively during the course of day-to-day business. CBP has previously held that an individual acting in his capacity as the President and CEO and traveling aboard the vessel to conduct a 2009 budget meeting with the vessel’s board of directors would not be considered a “passenger” under 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). See Headquarters Ruling Letter H043321, dated November 4, 2008; see also Headquarters Ruling Letter 116668, dated July 25, 2006 (while the employees and independent contractors are considered “passengers” when they travel aboard the vessel to attend a sales, marketing and training conference to strategize on how to enhance the overall guest experience, the corporate officers or member of the board of directors of the company owning the subject vessel are not “passengers”); Headquarters Ruling Letter H062237, dated June 5, 2009 (the Corporate Secretary and General Counsel to the owner of the vessel who is riding aboard the vessel for the purpose of attending a shareholder meeting of the owner and meeting of the board of directors is not considered a “passenger” since he is acting in his official capacity while aboard); Headquarters Ruling Letter H024346, dated May 1, 2008 (the CEO, the President, the Executive VP and CFO are not “passengers” when they are onboard to attend a board of directors meeting). Consequently, the President & CEO as well as the Vice Presidents, by virtue of their positions and the fact that they will be attending a team building conference aboard the vessel as described above, e.g. are acting in their official capacities, are not considered “passengers.” Accordingly, the coastwise transportation of the subject individuals is not in violation of 46 U.S.C. § 55103. With regard to the spouses and guests of the corporate officers, it is CBP’s longstanding position that the spouse and children of officers and owners of a vessel and if a corporate owner, members of its board of directors, are not “passengers” for purposes of the passenger coastwise statute. See General Letter No. 117 (May 20, 1916) from the former Bureau of Navigation. Accordingly, the spouses of the CEO & President and Vice Presidents are not “passengers” and may travel aboard the vessel. However, since CBP’s position only extends to the spouse and children of the officers of the vessel and of the company that owns the vessel, as well as immediate family members of the owner, the spouses of the consultants and the guests of any of the individuals would be considered “passengers.” Consequently, the coastwise transportation of those individuals would be in violation of 46 U.S.C. § 55103. Additionally, the consultants, who will lead and direct the conference, are considered “passengers” under 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). See Headquarters Ruling Letter 116668, dated July 25, 2006 (determining that the employees and independent contractors are considered “passengers” when they travel aboard the vessel to attend a sales, marketing and training conference to strategize on how to enhance the overall guest experience). Consequently, the coastwise transportation of the two individuals would be in violation of 46 U.S.C. § 55103. HOLDING The consultants, the consultants’ spouses, and any guests who are not spouses of the corporate officers are passengers under 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. The corporate officers, or members of the board of directors of the company owning the subject vessel and their spouses are not “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 not in violation of 46 U.S.C. § 55103. Sincerely, Glen E. Vereb, Chief Cargo Security, Carriers and Immigration Branch