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HQ H005171

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January 10, 2007

VES-3-02-RR:BSTC:CCI H005171 IDL

CATEGORY: CARRIER

Chris York
Metro Shore Services, LLC
720 East E Street
Wilmington, California 90744

RE: Coastwise Transportation; 46 U.S.C. § 55103; Employees

Dear Mr. York:

This is in response to your correspondence of January 8, 2007, with respect to the coastwise transportation of certain employees aboard a foreign-flagged vessel. Our response on this matter is set forth below.

FACTS:

Three individuals plan to embark foreign-flagged vessels at one U.S. point before disembarking at another U.S. point. Each of the individuals is a “non-revenue status” corporate employee of his or her respective cruise line.

Specifically, one individual, a Security Manager employed by Cunard Line, plans to embark the QUEEN ELIZABETH 2 at Lost Angeles, California on January 22, 2007, and disembark two days later at San Francisco, California. The purpose of such travel is to conduct “training and evaluation of individual Security Ratings on board the ship.”

Another individual, a Corporate Fleet Trainer employed by Princess Cruises, plans to embark the ISLAND PRINCESS at Los Angeles on January 11, 2007, and disembark nine days later at Kona, Hawaii. The purpose of such travel is to conduct “new-hire training for the Purser’s Department onboard.”

A third individual, also employed by Princess Cruises, plans to embark the ISLAND PRINCESS at Honolulu, Hawaii on January 18, 2007, and disembark eight days later at San Pedro, California. The purpose of such travel is to conduct “supervisor tasks or work onboard [the] vessel in conjunction with inspections, repairs, and/or warranties for specialized shipboard technical equipment or company business.”

ISSUE:

Whether the use of a foreign-flagged vessel to transport corporate employees from one U.S. port to another U.S. port for the purposes discussed above would constitute a violation of 46 U.S.C. § 55103?

LAW AND ANALYSIS:

The coastwise passenger statute, 46 U.S.C. § 55103 (recodified from former 46 U.S.C. App. § 289; Pub. L. 109-304, October 6, 2006), provides that no vessel may transport passengers between ports or places in the United States either directly or by way of a foreign port, upon a penalty of $300 for every passenger so transported and landed, unless it:
is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and has been issued a certificate of documentation with a coastwise endorsement under chapter 121 of Title 46, United States Code, or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.

Under section 55103 (see 19 CFR 4.80(a)(5)), a “passenger” is any person carried aboard a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business (19 CFR 4.50(b)). In this regard, as resolved in a June 5, 2002, Customs Bulletin notice (Vol. 36, No. 23, p. 50), persons transported on a vessel would be passengers unless they were “directly and substantially” connected with the operation, navigation, ownership, or business of that vessel itself.

In the current context, Headquarters ruling 116752 (November 3, 2006), is instructive in explaining the operative administrative law applicable herein, as follows:

[T]he Customs Service [now Customs and Border Protection (CBP)] has repeatedly ruled that if any persons are transported coastwise who are bona fide agents of the line or officers of companies acting as such agents and if such persons while on the voyage are concerned with observing and appraising the facilities offered, such personsare not ‘passengers’ under section 289 [55103] and § 4.50(b) (emphasis added) (HQ 103410, of May 5, 1978 (operations manager of freight line transported coastwise aboard freight line’s vessel to observe vessel’s operational pattern thereby deemed connected with operation and business of vessel so as not to be a passenger when being transported for this purpose)). HQ 116752.

Further, we note that 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 19 CFR § 4.50(b) and 46 U.S.C. § 55103 if they are required to be on board to contribute to the accomplishment of the operation or navigation of the vessel during the voyage, or are on board because of a necessary vessel ownership or business interest during the voyage. HQ 101699 (November 5, 1975); see also HQ 116721 (September 25, 2006), quoting HQ 101699.

To the extent that the aforementioned corporate employees would be engaged in any shipboard activities while traveling on the foreign-flagged vessel between coastwise ports that would be “directly and substantially” related to the operation or business of the vessel itself, such individuals would not be considered to be passengers (see HQ 116659 (May 19, 2006), referencing the “direct and substantial” test). The aforementioned activities satisfy the requisite criteria in this regard.

Accordingly, the coastwise transportation of the three individuals aboard their employer’s foreign-flagged vessel for the purposes stated above would not violate 46 U.S.C. § 55103.

HOLDING:

The use of a foreign-flagged vessel to transport corporate employees from one U.S. port to another U.S. port for the purposes discussed above would not constitute a violation of 46 U.S.C. § 55103.

Sincerely,

Glen E. Vereb
Chief

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