HQ 113454 - Coastwise Trade; Passengers; Transportation of Employees, from One Coastwise Port to Another Coastwise Port on a Foreign-Flag Vessel; 46 U.S.C. App. 289; - United States International Trade Commision Rulings

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HQ 113454

June 7, 1995

VES-3-02/07-R:IT:C 113454 BEW

CATEGORY: CARRIER

Ms. Maureen Johnson
Marine Operations/Port Agent
Royal Caribbean Cruises Ltd.
310 East "B" Street
Wilmington, California CA 90744

RE: Coastwise Trade; Passengers; Transportation of Employees, from One Coastwise Port to Another Coastwise Port on a Foreign-Flag Vessel; 46 U.S.C. App. 289;

Dear Ms. Johnson:

This is to confirm our telephone conversation with you on May 30, 1995, and to respond to your letter dated May 30, 1995, requesting a ruling concerning the application of the Jones Act to a proposed trip from Los Angeles to San Francisco, California, on a foreign flag vessel as set forth below.

FACTS:

Your letter states that in preparation for inaugural activities relating to the LEGEND OF THE SEAS, Royal Caribbean Cruises, Ltd. (RCCL) newest cruise ship, it would be necessary to transport certain employees of RCCL aboard the vessel, departing from Los Angeles on May 31, 1995, to San Francisco, to conduct company business. In addition, certain other persons, such as shipyard workers, contractors, sub-contractors or vendors would be on board, for the purpose of completing work items on the vessel and/or making repairs necessary to meet the operational requirements during the both the inaugural period and future revenue voyages. The subject persons would disembark from the vessel in San Francisco.

ISSUE:

Whether the transportation of passengers on a foreign-flag vessel as described above constitutes a violation of 46 U.S.C. App. 289.

LAW AND ANALYSIS:

Generally, the coastwise laws (e.g., 46 U.S.C. App. 289 and 883, and 46 U.S.C. 12106 and 12110) prohibit the transportation of merchandise or passengers between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in and documented under the laws of the United States, and owned by persons who are citizens of the United States.

The passenger coastwise law, 46 U.S.C. App. 289, 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 penalty of $200 for each passenger so transported and landed.

In interpreting the coastwise laws, Customs has ruled that a point in United States territorial waters is considered a point embraced within the coastwise laws. The coastwise laws generally apply to points in the territorial sea, defined as the belt, three (3) nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ.

For purposes of the coastwise laws, a vessel "passenger" is defined as "... any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business" (Section 4.50(b), Customs Regulations).

In the subject case the CRYSTAL SYMPHONY is a commercial vessel used in the cruise industry, and the subject persons are employees of the company. Section 4.80a(b)(1) of the Customs Regulations (19 CFR 4.80a(b)(1) provides that:

If a passenger is on a voyage solely to one or more coastwise ports and the passenger disembarks or goes ashore temporarily at a coastwise port, there is a violation of the coastwise law. Section 4.50(b) exempts persons connected with the business of a vessel from passenger status.

With regard to the employees of the vessel company, the facts presented show that the subject employees are connected with the operation, navigation, ownership, or business of the vessel within the meaning of section 4.50 (b) of the Customs Regulations. While employees who are directly or immediately connected with the vessel's operation, navigation, ownership, or business may be exempt from passenger status under section 4.50(b), employees who are indirectly or remotely connected with the business of the vessel, such as those whose connection with the vessel does not go beyond being employed by the corporation that owns the ship, would not be exempt from passenger statute.

HOLDING:

The subject persons listed your letter of May 30, 1995, are not deemed passengers as defined in section 4.50 (b) of the Customs Regulations, because they are sufficiently connected with the business of the vessel within the meaning of section 4.50(b). Customs has held that no violation of the coastwise laws, 46, U.S.C. App. 289 would occur when persons connected with the business of the vessel disembark from the vessel at a port other than the port of embarkation.

Sincerely,

Arthur P. Schifflin
Chief

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