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

HQ H079375 October 9, 2009 VES-3-02-RR:BSTC:CCI H079375 GOB CATEGORY: Carriers Octavio Sanchez Manager, Port Operations Crystal Cruises 2049 Century Park East, Suite 1400 Los Angeles, CA 90067 RE: Coastwise Transportation; 46 U.S.C. § 55103; 19 CFR § 4.50(b) Dear Mr. Sanchez: This letter is in response to your correspondence of October 7, 2009, with respect to the coastwise transportation of certain individuals. Our ruling is set forth below. FACTS: You ask whether eight individuals may be transported on the non-coastwise-qualified CRYSTAL SYMPHONY (the “vessel”) from October 16, 2009 through October 22, 2009. The itinerary is as follows: Boston; Newport; New York; Newport; and Boston. While onboard, the individuals will conduct a conference with the vessel’s officers to review human resource issues and to discuss shipboard policies, purchasing issues, the supply process, food and beverage issues, management issues, logistics, the introduction of computer programs, and the introduction of shipboard products. The individuals have the following job titles: senior vice president of hotel operations; vice president of onboard guest services; vice president of purchasing; vice president of entertainment; director of casino operations; director of land programs; manager of shipboard training; and manager of quality assurance. ISSUE: Whether the subject individuals are “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b)? LAW AND ANALYSIS: Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.” 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. The coastwise law applicable to the carriage of passengers is found in 46 U.S.C. § 55103 (recodified by Pub. L. 109-304, enacted on October 6, 2006) and provides that: (a) In General. Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel- (1) is wholly owned by citizens of the United States for purposes of engaging in the coastwise traffic; and has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement. (b) Penalty. The penalty for violating subsection (a) is $300 for each passenger transported and landed. Section 4.50(b), Customs and Border Protection (“CBP”) Regulations (19 CFR § 4.50(b)) provides as follows: A passenger within the meaning of this part is any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business. You state that the subject individuals will be transported on the vessel for the purpose of conducting a conference with the vessel’s officers to review human resource issues and to discuss shipboard policies, purchasing issues, the supply process, food and beverage issues, management issues, logistics, the introduction of computer programs, and the introduction of shipboard products. In this context, and in accordance with previous Headquarters rulings, workmen, technicians, or observers transported by vessel between ports of the United States are not classified as “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b), if they are required to be on board to contribute to the accomplishment of the operation or business of the vessel during the voyage or are on board because of a necessary vessel ownership or business interest during the voyage. See HQ 101699, of November 5, 1975; see also HQ 116721, of September 25, 2006, quoting HQ 101699. The definition of “passenger” in 19 CFR § 4.50(b) has its origin in the former Bureau of Navigation General Letter No. 117 of May 20, 1916, which interpreted the meaning of the term under the steamboat inspection laws. General Letter No. 117 was affirmatively referenced and reviewed in the proposed notice concerning the definition of “passenger” published in the Customs Bulletin on February 20, 2002 (Vol. 36, No. 8), which led to the final notice published in the June 5, 2002, Customs Bulletin (Vol. 36, No. 23). Specifically, it established that 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 sufficiently connected with the ownership or business of that vessel if they were on board the vessel acting in their official capacity so as not to be considered passengers. (See also, for example, HQ H002925 dated November 8, 2006, H003146 dated November 15, 2006, and HQ H003597 dated November 29, 2006.) Therefore, any corporate officer of the company owning the subject vessel in this case would not be a passenger when carried aboard that vessel. See HQ 116668, dated July 25, 2006 (corporate officers and members of the board of directors are not "passengers" while traveling aboard to attend a sales, marketing and training conference to strategize on how to enhance the overall guest experience); see also HQ 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); HQ 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). Accordingly, in this regard we determine that the following individuals are not passengers as they are corporate officers acting in their official capacity: the senior vice president of hotel operations; the vice president of onboard guest services; the vice president of purchasing; and the vice president of entertainment. The other four individuals who are the subject of your request are not corporate officers and are not covered by this determination. In HQ 116668, dated July 25, 2006, we stated in pertinent part as follows: The independent contractors and company employees in the current case, engaged largely in sales, marketing, and hotel operations, were aboard the vessel to experience its operation and attend a conference (consisting of educational and motivational meetings, seminars, training, tours) devoted to developing marketing strategies intended to stimulate future sales of cruise passages on the subject vessel, as well as on the cruise lines other vessels. Thus, … the independent contractors and the company employees in the present case, were passengers when transported aboard the subject vessel for similar activities in furtherance of cruise sales promotion. Notably, in HQ 111628, dated April 26, 1991, it was concluded that the employees of a major cruise line would be passengers if transported aboard its vessel to further enhance employee product knowledge. It was implicit therein that if the employees of a cruise line were carried aboard its vessel to engage in activities related to promoting cruise passage sales, they would likewise be passengers in such circumstances, given that HQ 111628 favorably cited and discussed Bureau Letter dated August 29, 1960, supra, as to newsmen and independent cruise agents in this same regard. Moreover, mere employment with a cruise line would not exempt such an employee from passenger status (ibid.) (Mere employment by a corporation [a cruise line] that is involved in the transportation industry is not tantamount to being engaged in the business of a vessel)); and this would of course be true irrespective of the type of land-based employment with the cruise line (sales, marketing, hotel functions, etc.). With respect to the director of casino operations, the director of land programs, the manager of shipboard training, and the manager of quality assurance, we find that these individuals come within the analysis of HQ 116668, above. While the activities these individuals would be engaging in would serve to foster the business of the company, there is not a sufficient connection with the business and operation of the vessel itself such that these individuals would be considered to be other than passengers. Accordingly, we find that these four individuals are passengers within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b). Concerning 46 U.S.C. § 55103 and a non-coastwise-qualified vessel which embarks a passenger at a coastwise port, 19 CFR § 4.80a(b)(1) provides: “If the passenger is on a voyage solely to one or most coastwise ports and the passenger disembarks or goes ashore temporarily at a coastwise port, there is a violation of the coastwise law.” The presented facts are that the individuals will embark and disembark the vessel at the same port, Boston. Pursuant to our interpretation of 19 CFR § 4.80a(b)(1), if these four individuals do not go ashore temporarily at another coastwise port, there is no violation of 46 U.S.C. § 55103. HOLDING: The senior vice president of hotel operations, vice president of onboard guest services, vice president of purchasing, and vice president of entertainment are not “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b). Therefore, the coastwise transportation of such individuals is not in violation of 46 U.S.C. § 55103. The director of casino operations, director of land programs, manager of shipboard training, and manager of quality assurance are “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b). Therefore, the coastwise transportation of such individuals would be in violation of 46 U.S.C. § 55103. Pursuant to our interpretation of 19 CFR § 4.80a(b)(1), if these four individuals embark and disembark the vessel in Boston, and if they do not go ashore temporarily at another coastwise port, there will be no violation of 46 U.S.C. § 55103. Sincerely, Glen E. Vereb Chief Cargo Security, Carriers and Immigration Branch