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

HQ H124675 September 19, 2010 VES-3-OT:RR:BSTC:CCI H124675 LLB CATEGORY: Carriers Stuart S. Dye, Esquire Holland and Knight LLP 2099 Pennsylvania Avenue, N.W. Suite 100 Washington, D.C. 20006 RE: Coastwise Transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b). Dear Mr. Dye: This is in response to your correspondence of September 21, and 29, 2010, on behalf of your client, The World of ResidenSea II, Ltd. In your correspondence, you request a ruling regarding the coastwise transportation of the individuals mentioned therein aboard the M/V THE WORLD. Our decision follows. FACTS: The voyage in question involves the transportation of the subject individuals aboard the non-coastwise-qualified M/V THE WORLD (“the vessel”). The Chief Financial Officer (CFO), controller, and Vice President of Hotel Operations (VP) for the vessel’s manager, ROW Management, will embark in Boston, Massachusetts on October 3, 2010 and disembark in New York, New York on or about October 10, 2010. The vessel manager’s Chief Executive Officer (CEO) and senior accountant, and ResidenSea’s Secretary and General Counsel (General Counsel), along with his wife, will be embarking on October 29, 2010 in Port Canaveral, Florida and will be disembarking in Fort Lauderdale, Florida on or about November 6, 2010. In addition to the voyage above, the CFO will also embark in Charleston, South Carolina on October 25, 2010 and disembark in Fort Lauderdale on November 4, 2010. The CFO, CEO, VP, controller and General Counsel will be attending meetings of ResidenSea’s Board of Directors, in part, to discuss the preparation of the 2011 operating budget. The CEO, CFO, and the General Counsel will also be attending a budget workshop and resident’s meeting. The accountant will conduct an internal audit with the vessel’s chief accountant, which will include determining whether significant financial, managerial, and operating information is accurate and ensuring that financial controls used by the vessel’s hotel crew are in place to ensure that all funds are being spent according to the vessel’s budget. ISSUE: Whether the individuals described in the FACTS section above are “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 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 which provides: (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 coastwise traffic; (2) 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) of the Customs and Border Protection (“CBP”) Regulations provide: A passenger within the meaning of this part is any person carried on a vessel who is not connected with the operation of the vessel, her navigation, ownership, or business. In the present case, you state that the subject individuals will be attending board of director’s meetings to discuss the vessel operating budget, as well as budget workshops and meetings with the vessel’s residents to discuss the budget as described in the FACTS section above. In addition, another individual will be conducting an internal financial audit. 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 C.F.R. § 4.50(b), if they are required to be onboard to contribute to the accomplishment of the operation or navigation of the vessel during the voyage or are onboard because of a necessary vessel ownership or business interest during the voyage. See HQ 101699 (Nov. 5, 1975) and see also HQ 116721 (Sept. 25, 2006) quoting HQ 101699; see also HQ H043314 (Nov. 7, 2008) and HQ H021922 (Jan. 17, 2008)(holding that individuals transported for the purpose of discussing the vessel operating budget with the vessel’s management were not passengers); HQ H018972 (Oct. 26, 2007)(holding that individual transported for the purpose of auditing the vessel’s financial records was not a passenger). Furthermore, the shipboard activities engaged in by such aforementioned individuals while traveling on a non-coastwise-qualified vessel between coastwise ports must be “directly and substantially” related to the operation, navigation, ownership, or business of the vessel itself in order for such individuals to not be considered as passengers under these provisions of law.  In the present case, we find that the proposed activities described in your request would be directly and substantially connected with the business of the vessel and we therefore determine that the subject individuals are not “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). Accordingly, the coastwise transportation of the individuals in question would not be in violation of 46 U.S.C. § 55103. With regard to the wife of the General Counsel, CBP has determined, in accordance with General Letter No. 117 of May 20, 1916, from the former Bureau of Navigation, wives and children of the officers of a vessel and the officers of the company that own the vessel are not passengers within the meaning of the navigation laws. See Cust. Bull., Vol. 36, No. 23, p. 50 (June 5, 2002). However, it should be noted that such officers will not be considered passengers only if they are acting in their official capacities while onboard the vessel. See HQ H003146 (Nov. 15, 2006) and HQ H003597 (Nov. 29, 2006). You submitted a letter dated November 7, 2008, from the Director and Chairman of the Board of Directors for the World of ResidenSea II, Ltd., which states in pertinent part: I am the Chairman of the Board of Directors of the World of ResidenSea II, Ltd. (the “Ship Owner”), which is the owner of the non-coastwise qualified m/v The World (the “Vessel”). Mr. [ ] is an officer of the Ship Owner, holding the positions of Corporate Secretary and General Counsel. Accordingly, the wife of the General Counsel, who is an officer of the company that owns the vessel, which is riding the vessel in his official capacity, as described in the FACTS section above, would not be considered a "passenger" within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). Therefore, the coastwise transportation of this individual would not be in violation of 46 U.S.C. § 55103. HOLDING: The individuals described in the FACTS section above 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 would not be in violation of 46 U.S.C. § 55103. Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Immigration Branch Office of International Trade, Regulations & Rulings