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

HQ H189916 October 25, 2011 VES-3-02-RR:BSTC:CCI H189916 WRB CATEGORY: Carriers Mr. John S. Stoll Vice President, Land & Port Operations Crystal Cruises, Inc. 2049 Century Park East Suite 1400 Los Angeles, CA. 90067 RE: Coastwise Transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b) Dear Mr. Stoll: This letter is in response to your correspondence of October 21, 2011, with respect to the coastwise transportation of two individuals. Our ruling is set forth below. FACTS: You ask whether two individuals may be transported aboard the non-coastwise-qualified M/V CRYSTAL SYMPHONY from Los Angeles, California to San Francisco, California. The individuals would embark the vessel in Los Angeles on December 4, 2011, and disembark in San Francisco on December 7, 2011. One individual is employed by Crystal Cruises as the Senior Vice President, Hotel Operations, and the other is employed by Crystal Cruises as Senior Vice President, Finance Administration. The individuals would be transported for the purpose of conducting annual budget meetings onboard, while the vessel is underway. 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- 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, navigation, ownership, or business of the vessel. In the present case, you state that the subject individuals would be transported for the purpose of conducting annual budget meetings onboard, while the vessel is underway. 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 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 an 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. (See HQ 116721, supra; and see HQ 116659 [May 19, 2006], referencing the “direct and substantial” test.) 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 CFR § 4.50(b). Accordingly, the coastwise transportation of the individuals in question would not be in violation of 46 U.S.C. § 55103. HOLDING: The subject individuals 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. Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Immigration Branch Office of International Trade, Regulations & Rulings U.S. Customs and Border Protection