Coastwise Transportation; 46 U.S.C. §§ 55102, 55103; Baggage

HQ H072316 September 16, 2009 VES-3-02-OT:RR:BSTC:CCI H072316 JLB CATEGORY: Carriers Ms. Jeanne M. Grasso Blank & Rome, LLP Watergate 600 New Hampshire Avenue NW Washington, DC 20037 RE: Coastwise Transportation; 46 U.S.C. §§ 55102, 55103; Baggage Dear Ms. Grasso: This letter is in response to your correspondence dated August 17, 2009, on behalf of your client, Schiffahrtsgesellschaft MS DEUTSCHLAND GmbH & Co. KG, in which you inquire about whether your client’s proposed scenarios for transporting passengers and their baggage on various itineraries constitutes a violation of 46 U.S.C. §§ 55102 and/or 55103. Our ruling on your request follows. FACTS Schiffahrtsgesellschaft MS DEUTSCHLAND GmbH & Co. KG (the “Company”) intends to operate their foreign-flagged cruise ship, the DEUTSCHLAND (“the vessel”), in U.S. waters beginning in January 2011. Prior to embarking the vessel, the passengers will travel to Los Angeles, California. The vessel’s final port of call for such passengers will be Honolulu, Hawaii. You have presented four proposed itineraries. The first [hereinafter referred to as Scenario One] is that the passengers will embark the vessel in Ensenada, Mexico, then the vessel will call on one or more U.S. coastwise ports before the passengers disembark in Honolulu, Hawaii. The second itinerary you present [hereinafter referred to as Scenario Two] constitutes the passengers traveling aboard a different vessel from Los Angeles, California to Ensenada, Mexico before embarking the DEUTSCHLAND in Ensenada. The vessel will then call on one or more U.S. coastwise ports before the passengers disembark in Honolulu. The third itinerary [hereinafter referred to as Scenario Three] involves the passengers traveling by air or ground from Los Angeles to Ensenada. However, the baggage belonging to the passengers will be loaded onto the vessel in Los Angeles and transported from Los Angeles to Ensenada. In Ensenada, the passengers will embark the vessel, meet up with their baggage and carry out Scenario One as described above. The final scenario presented [hereinafter referred to as Scenario Four] will provide the passengers the option of boarding the vessel in Los Angeles and traveling to Ensenada under one ticketed itinerary, which will be separately paid for, and then continuing on the vessel under the itinerary described in Scenario One pursuant to a separately ticketed itinerary. ISSUES Whether the use of a non-coastwise-qualified vessel in the cruise itineraries described above constitutes an engagement in coastwise trade in violation of 46 U.S.C. § 55103? Whether the transportation of merchandise by a non-coastwise-qualified vessel as described in Scenario Three constitutes a violation of 46 U.S.C. § 55102? 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. U.S. Customs and Border Protection (“CBP”) has promulgated regulations to the coastwise passenger statute at 19 C.F.R. § 4.80a. These regulations provide guidelines for determining whether the movement of passengers between two coastwise points is considered coastwise trade. Pursuant to 19 C.F.R. § 4.80a(b)(2), if a passenger, on a non-coastwise qualified vessel, takes 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, there is a violation of the coastwise law.” The regulations define a nearby foreign port as “any foreign port in North America, Central America, the Bermuda Islands, or the West Indies (including the Bahama Islands, but not including the Leeward Islands of the Netherlands Antilles, i.e. Aruba, Bonaire, and Curacao).” See 19 C.F.R. § 4.80a(a)(2). The term “distant foreign port,” for purposes of § 4.80a, is defined in paragraph (a)(3) of that section as “any foreign port that is not a nearby [foreign] port.” Embark is defined as “a passenger boarding a vessel for the duration of a specific voyage.” See 19 C.F.R. § 4.80a(a)(4). A passenger does not "disembark" if they merely go ashore temporarily at a coastwise port then re-board the vessel and sail from the port. See 19 C.F.R. § 4.80a(a)(4). A passenger only "disembarks" from the vessel if the passenger “finally and permanently" leaves the vessel at the conclusion of the specific voyage. See Headquarters Ruling Letter 112208, dated June 29, 1992; Headquarters Ruling Letter H056574, dated April 17, 2009; Headquarters Ruling Letter 112353, dated July 22, 1992. Scenario One: This itinerary involves the passengers embarking the vessel at Ensenada, Mexico, calling upon one or more coastwise ports, and disembarking in Honolulu, Hawaii. In regard to this proposed cruise itinerary, the coastwise passenger statute would be inapplicable. Temporarily going ashore at one or more intermediate coastwise ports does not constitute disembarkation. See Headquarters Ruling Letter 116164, dated April 8, 2004; Headquarters Ruling Letter 115106, dated September 27, 2000. Consequently, such an itinerary would not be in violation of 46 U.S.C. § 55103 insofar as the transportation does not involve embarkation at a coastwise port. Scenario Two: CBP has stated and the court has reiterated, in Autolog Corp. v. Regan, 731 F.2d 25, 32 (D.C. Cir. 1984), that 46 U.S.C. § 55103 “aims at tracking the route of the vessel, not the route of the passengers.” In that case, when passengers and their automobiles were taken from New York to the Bahamas on one non-coastwise-qualified vessel and then were transferred to another non-coastwise-qualified vessel for transportation to ports in Florida, it was found not to violate 46 U.S.C. § 55103 since there was more than one vessel involved. See also Headquarters Ruling Letter 110976, dated June 26, 1990 (finding that a passenger may return to the U.S. at a port other than the original coastwise port of embarkation if they return on a different vessel than the one originally transporting them from the U.S.). Under this scenario, the passengers will travel aboard a different vessel from Los Angeles, California to Ensenada, Mexico before embarking the DEUTSCHLAND in Ensenada. The vessel will then call on one or more U.S. ports before the passengers disembark in Honolulu. Thus, the subject itinerary would not violate 46 U.S.C. § 55103 since the DEUTSCHLAND would not be transporting passengers between two coastwise ports. Scenario Three: The Jones Act, former 46 U.S.C. App. § 883 recodified as 46 U.S.C. § 55102, pursuant to P.L. 109-304 (October 6, 2006), states that “a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via a foreign port” unless the vessel was built in and documented under the laws of the United States and owned by persons who are citizens of the United States. (See also 19 C.F.R. §§ 4.80, 4.80b). Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise-qualified.” Pursuant to 19 U.S.C. § 1401(c), the word "merchandise" is defined as "goods, wares, and chattels of every description, and includes merchandise the importation of which is prohibited, and monetary instruments as defined in section 5312 of Title 31.” For purposes of the Jones Act, merchandise also includes “valueless material.” See 46 U.S.C. § 55102(a)(2). The CBP Regulations promulgated under the authority of 46 U.S.C. § 55102 provide that a coastwise transportation of merchandise takes place when merchandise laden at a coastwise point is unladen at another coastwise point, regardless of origin or ultimate destination. See 19 C.F.R. § 4.80b(a). Under this scenario, the baggage belonging to the passengers will be pre-loaded onto the vessel in Los Angeles and transported from Los Angeles to Ensenada. In Ensenada, the passengers will embark the vessel and travel to one or more coastwise ports before disembarking in Honolulu with their baggage. In reliance on the court’s decision in Autolog Corp., CBP has previously held that the transportation of baggage is not merchandise for purposes of 46 U.S.C. § 55102 provided it accompanies the passengers to which it belongs. See Headquarters Ruling Letter 114598, dated February 5, 1999 (loading passengers’ baggage in San Diego when the passengers would be embarking in Ensenada, Mexico and disembarking in Hawaii is not in violation of 46 U.S.C. § 55102 since the subject baggage is accompanying the passengers to which it belongs); Headquarters Ruling Letter 109649, dated August 17, 1988 (baggage which is accompanied by its owner as a passenger aboard a vessel is not "merchandise" for purposes of 46 U.S.C. § 55102 and its coastwise transportation is governed by the coastwise statute applicable to passengers). Thus, in the present case, the transportation of the baggage in question by a non-coastwise-qualified vessel from Los Angeles, California to Honolulu, Hawaii via Ensenada, Mexico, where the passengers owning the baggage will embark, is not in violation of 46 U.S.C. § 55102. Scenario Four: The Company will provide the passengers the option of embarking the vessel in Los Angeles and traveling to Ensenada under one ticketed itinerary, which will be separately paid for, and then continuing on the vessel under the itinerary described in Scenario One pursuant to a separately ticketed itinerary. You assert that these would be two separate and independently ticketed and paid for voyages aboard the vessel. As stated above, 46 U.S.C. § 55103 states that a non-coastwise-qualified vessel shall not 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.” See 19 C.F.R. § 4.80(b)(2). The option offered to the passengers to embark in Los Angeles and disembark in Honolulu via Ensenada, even though they are two separately ticketed voyages, would involve the vessel transporting passengers between ports in the United States. Consequently, the transportation of passengers who embark at a coastwise point to travel only to a nearby foreign port and disembark at a coastwise point other than the point of embarkation would be a violation of 46 U.S.C. § 55103. CBP has specifically held that the Ensenada, Mexico is a nearby foreign port. See Headquarters Ruling Letter 112039, dated January 6, 1992; Headquarters Ruling Letter 116336, dated October 18, 2004. Accordingly, this proposed itinerary constitutes a violation of 46 U.S.C. § 55103. HOLDINGS The use of a non-coastwise-qualified vessel in the cruise itineraries described above constitutes an engagement in coastwise trade in violation of 46 U.S.C. § 55103 with respect to Scenario Four but not Scenarios One or Two. The transportation of merchandise by a non-coastwise-qualified vessel as described in Scenario Three does not constitute a violation of 46 U.S.C. § 55102. Sincerely, Glen E. Vereb, Chief Cargo Security, Carriers and Immigration Branch