HQ 0109685 - Application of the coastwise passenger law to transportation between points in the United States in non-coastwise-qualified cargo vessels or freighters of certain persons who are transported without charge. - United States International Trade Commision Rulings

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HQ 109685

November 23, 1988

VES-3-02 CO:R:P:C 109685 PH

CATEGORY: CARRIER

Francis H. McNamara, Esq.
Cardillo & Corbett
29 Broadway
New York, New York 10006

RE: Application of the coastwise passenger law to transportation between points in the United States in non-coastwise-qualified cargo vessels or freighters of certain persons who are transported without charge.

Dear Mr. McNamara:

This is in response to your letter of August 4, 1988, in which you request a ruling on the applicability of the coastwise passenger law to certain transportation in cargo vessels or freighters. You state that your client in this matter is Sea The Difference Inc. (STD), a New York corporation.

FACTS:

You state that your client has contracted with Mediterranean Shipping Company S.A. (MSC) to market travel by paying passengers on board freighters which sail in the MSC containership service between the United States East Coast and Western European ports. STD is not owned in any part by MSC. The vessels, all of which are documented under a foreign flag, have accommodations for up to 12 passengers. You state that STD, as part of its marketing responsibilities, is concerned with the suitability of the vessels' passenger spaces and services. Specifically, STD has become closely involved in approval and general supervision of such on-board matters as cleanliness, refurbishment, allocation and quality of service personnel, food quality, appearance of public areas, etc.

You state that STD anticipates that in the course of its marketing functions, STD employees will need to travel on the vessels between United States ports in connection with the passenger business of the vessels. The reason such STD employees will need to be on the vessels is, you state, that

"[c]onferences must be held with ship's personnel, renovation/refurbishment must be inspected, paying passengers, VIP's and other travel agents or travel writers must sometimes be accompanied for the first day or two of a foreign cruise, etc." Generally, as you put it, "STD employees will often have to sail with the vessels to attend to business but their presence on board will not be required for the Atlantic crossing." These STD employees will be transported without charge.

STD also proposes to transport, without charge, travel agents and travel writers between United States ports. The purposes of such transportation will be to encourage the travel agents to promote the MSC passenger service and to encourage the travel writers to report favorably on the MSC service. You state that because the MSC vessels do not have many of the facilities and attractions of full scale passenger vessels, it is anticipated that these complimentary cruises will often be limited to a coastwise trip which, you believe, will be sufficient to allow the involved professionals to judge the product.

ISSUES:

(1) Are employees of a corporation, which has been contracted by a vessel operator to market trans-Atlantic travel by paying passengers on board the foreign-flag freighters of the vessel operator, "passengers" for purposes of 46 U.S.C. App. 289 when they are transported between United States points in such vessels free of charge in connection with the passenger business of the vessel?

(2) Are travel agents and travel writers transported in foreign-flag vessels free of charge between United States points for promotional purposes "passengers" for purposes of 46 U.S.C. App. 289?

LAW AND ANALYSIS:

The Act of June 19, 1886, as amended (24 Stat. 81; 46 U.S.C. App. 289, sometimes called the coastwise passenger law), provides that:

No foreign vessel shall transport passengers between ports or places in the United States either directly or by way of a foreign port, under a penalty of $200 for each passenger so transported and landed.

For your general information, we have consistently interpreted this proscription to apply to any vessel except a United States-built, owned, and properly documented vessel (see

46 U.S.C. 12106 and 12110, 46 U.S.C. App. 883, and 19 CFR 4.80(a)). Pursuant to section 4.50(b) of the Customs Regulations (19 CFR 4.50(b), the word "passenger," for purposes of this provision, is defined as "... any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business."

On the basis of the foregoing, STD employees transported free of charge on an MSC vessel would not be considered to be passen- gers, for purposes of section 289, if they are genuinely connect- ed with the passenger business of the vessel. If the STD employ- ees are on the vessel for the purposes you describe, they would be considered to be connected with the passenger business of the vessel.

Customs has consistently held that travel agents and newspaper reporters and other writers who accompany a vessel for publicity purposes and cruise passenger sale promotion are not persons connected with the operation, navigation, ownership, or business of the vessel within the meaning of 19 CFR 4.50(b), whether or not they are charged a fare. Accordingly, the travel agents and travel writers you describe would be considered passengers, for purposes of section 289, and their transportation between United States points in the foreign-flag vessels under consideration would be prohibited.

HOLDINGS:

(1) Employees of a corporation, which has been contracted by a vessel operator to market trans-Atlantic travel by paying passengers on board the foreign-flag freighters of the vessel op- erator, are not "passengers" for purposes of 46 U.S.C. App. 289 when they are transported between United States points in such vessels free of charge, if they are genuinely connected with the passenger business of the vessel.

(2) Travel agents and travel writers transported in foreign- flag vessels free of charge between United States points for pro- motional purposes are "passengers" for purposes of 46 U.S.C. App. 289 and such transportation is prohibited.

Sincerely,

B. James Fritz

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