HQ H019729 - Coastwise Transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b); employee; investor; HQ H008510 (Mar. 22, 2007); HQ H008513 (Mar. 23, 2007); HQ H010696 (May 9, 2007); HQ H010662 (May 9, 2007); HQ H013452 (June 29, 2007); HQ H013701 (July 10, 2007) - United States International Trade Commision Rulings

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HQ H019729

November 16, 2007

VES-3-02-OT:RR:BSTC:CCI H019729 LLB

CATEGORY: CARRIER

Mr. Ernie Esparza
Western Overseas Corporation
P.O. Box 90099
Long Beach, California 90809

RE: Coastwise Transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b); employee; investor; HQ H008510 (Mar. 22, 2007); HQ H008513 (Mar. 23, 2007); HQ H010696 (May 9, 2007); HQ H010662 (May 9, 2007); HQ H013452 (June 29, 2007); HQ H013701 (July 10, 2007)

Dear Mr. Esparza:

This letter is in response to your correspondence dated November 12 and 15, 2007, on behalf of your client Hyundai Merchant Marine (America), Inc. (HMM). In your correspondence, you inquire about the coastwise transportation of a shipping company employee and a credit appraiser aboard the HYUNDAI HIGHNESS. Our decision follows.

FACTS

The voyage in question involves the transportation of the subject individuals, an employee of HMM and a credit appraiser aboard the non-coastwise-qualified HYUNDAI HIGHNESS (the “vessel”) from Long Beach, California to Oakland, California. The individuals are expected to embark in Long Beach on November 18, 2007 and disembark in Oakland on November 19, 2007. The HMM employee will be transported aboard the vessel to escort the credit appraiser, who will be transported for the purpose of being “briefed on [HMM] terminal operations to include expectations for the upcoming ILWU negotiations, strike contingency plans, and terminal development [ . . . and] will review [HMM] vessel operations with the intent of evaluating the general condition of the vessel and crew.”

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. See 33 C.F.R. § 2.22(a)(2). 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. 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.

The Customs and Border Protection (“CBP”) Regulations, promulgated under the authority of 46 U.S.C. § 55103, 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.

19 C.F.R. § 4.50(b).

In HQ H008510 (Mar. 22, 2007) and HQ H008513 (Mar. 23, 2007), CBP held that shipping agency trainees transported aboard a vessel “to observ[e] daily life on a vessel and gain[] better insight about what their colleagues [that] work[] on a vessel actually do” or “observe what goes on during a vessel’s voyage” were passengers within the meaning of 46 U.S.C. § 55103 insofar as the trainees were not “directly and substantially” See HQ 116721, supra; and see HQ 116659 (May 19, 2006) (referencing the “direct and substantial” test). connected with the operation, navigation, ownership or business of the vessel itself. See also, e.g., HQ H010696 (May 9, 2007) and HQ H010662 (May 9, 2007) (shipping agencies’ human resources manager and ship broker’s trainee); HQ H013452 (June 29, 2007) (stevedore); HQ H013701 (July 10, 2007) (customer service auditors and sales representatives); H0118186 (Oct. 11, 2007) (shoreside operations assistant).

Similarly, in the present case, you propose to transport a credit appraiser to be briefed on [HMM] terminal operations to include expectations for the upcoming ILWU negotiations, strike contingency plans, and terminal development [ . . . and] will review [HMM] vessel operations with the intent of evaluating the general condition of the vessel and crew.” First, the briefing relating to terminal operations and development does not connect the subject individual “directly and substantially” with the operation, navigation, ownership or business of the vessel itself.

Second, although familiarizing a credit appraiser with vessel operations may foster the business of the shipping company, it does not connect this individual directly and substantially with the business of the vessel itself. To the extent that the subject individual would not have been engaged in any shipboard activities while traveling on the foreign vessel between coastwise ports, that would be “directly and substantially” related to the operation, navigation, or business of the vessel itself, such individual would be considered a passenger within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b).

Last we note, the HMM employee who will be merely escorting the credit appraiser, does not connect such individual directly and substantially with the operation, navigation, ownership or business of the vessel itself, as such this individual would also be considered a passenger within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b).

HOLDING

The HMM employee and the credit appraiser, as described above, are “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). Therefore, the coastwise transportation of those individuals would be in violation of 46 U.S.C. § 55103.

Sincerely,

Glen E. Vereb
Chief

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