HQ H021971 - Coastwise Transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b) - United States International Trade Commision Rulings

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HQ H021971

January 28, 2008

VES-3-02-OT:RR:BSTC:CCI H021971 JLB

CATEGORY: CARRIER

Mr. Stuart S. Dye
Holland & Knight LLP
2099 Pennsylvania Avenue, N.W.
Suite 100
Washington, DC 20006-6801

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

Dear Mr. Dye:

This letter is in response to your correspondence dated January 16, 2008, on behalf of your client, Clipper Ventures Plc, (“Clipper”) in which you request a ruling on whether the transportation of certain individuals traveling on non-coastwise-qualified vessels, which temporarily stop at certain U.S. ports on three legs of a round-the-world yacht race, constitutes coastwise transportation in violation of 46 U.S.C. § 55103. Our ruling on your request follows.

FACTS

The Clipper 07-08 Round the World Yacht Race starts from and returns to Liverpool, England. It involves ten foreign-flag, foreign-built, 68 foot racing yachts which sail seven legs with three of those legs having temporary stops in three U.S. ports. The fifth leg of the race is from Qingdao, China to Oahu, Hawaii to Santa Cruz, California. The sixth leg of the race is from Santa Cruz, California to Port Antonio, Jamaica via Panama City and Colon, Panama. Finally, the seventh leg of the race is from Port Antonio, Jamaica to New York, New York to Halifax, Canada to Cork, Ireland to Liverpool, England.

The crew of each vessel will include one permanent professional captain, and possibly one mate, paid by Clipper, the vessel’s owner. The remaining crew, up to seventeen people at a time, would consist of people who pay a fee to participate as a crew member in a leg of the race. This temporary crew is responsible for all the duties of operating and navigating the vessel. These numerous duties include, but are not limited to, standing all watches, steering the vessel, keeping lookout, setting, trimming and stowing all sails, all maintenance of the vessel, navigation and maintenance of the vessel’s logs and reporting to the vessel’s owners regarding activities onboard and all other relevant information.

Each temporary crew member is required to do at least one leg of the yacht race in its entirety. While they are permitted to do two or more legs, no one is allowed to do just part of a leg. None of them will embark and disembark at two different U.S. ports. The crew members may temporarily go ashore when they are off-duty in the U.S. ports, where the vessels may stay for six to ten days pending commencement of the next leg of the yacht race. The only occasion when any individual crew member may permanently disembark the vessel at a U.S. port would be if they had embarked in a previous foreign port.

ISSUES

Whether the individuals described above would be “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b)? Whether the legs of the yacht race described above constitute “coastwise trade” within the meaning of 46 U.S.C. § 55103?

LAW AND ANALYSIS

The coastwise passenger statute, former 46 U.S.C. App. § 289 recodified as 46 U.S.C. § 55103, pursuant to P.L. 109-304 (October 6, 2006), states that no foreign vessel shall transport passengers “between ports or places in the United States to which the coastwise laws apply, either directly or by way of a foreign port,” under a penalty of $300 for each passenger so transported and landed. See also 19 C.F.R. § 4.80(b)(2). 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.

Under 46 U.S.C. § 55103, a “passenger” is any person carried aboard a vessel “who is not connected with the operation of the vessel, her navigation, ownership, or business.” See also 19 C.F.R. § 4.50(b). In this regard, U.S. Customs and Border Protection (“CBP”) provides a strict interpretation of “passenger” defining the term as persons transported on a vessel unless they are "directly and substantially" connected with the operation, navigation, ownership or business of that vessel itself. See Customs Bulletin of June 5, 2002, Vol. 36, No. 23, at pp. 50.

In regard to the status of individuals paying to be aboard a vessel, CBP has held that a person paying a fee to be trained or to receive instruction is not a “passenger” so long as they are engaged in the navigation of the vessel. See Headquarters Decision 109850, dated December 27, 1988; Headquarters Decision 109287, dated February 24, 1988. However, people carried onboard a vessel for recreational purposes, whether or not they pay a fee, would be considered "passengers," and their carriage between places in the United States or entirely within United States waters would be in violation of the coastwise laws. See Headquarters Decision 112098, dated May 6, 1992. In this case, the temporary crew would pay a fee to participate as crew members in the race. While they are not being trained or receiving instruction, they are actively engaging in all the duties related to the operation and navigation of the vessel. Therefore, the temporary crew would be “directly and substantially” related to the operation and navigation of the vessel during a particular leg of the voyage and would not be considered “passengers” under 46 U.S.C. § 55103 and 19 C.F.R.

CBP has promulgated regulations to the coastwise passenger statute at 19 C.F.R. § 4.80a. These regulations provide guidelines for determining whether the movement of passengers between two coastwise points is considered coastwise trade. “Embark” is defined as a “passenger boarding a vessel for the duration of a specific voyage.” See 19 C.F.R. § 4.80a(a)(4). A passenger only "disembarks" from the vessel if the passenger “finally and permanently" leaves the vessel at the conclusion of the specific voyage. See Headquarters Decision 112208, dated June 29, 1992.

In the present case, the coastwise passenger statute would be inapplicable as the temporary crew will not embark and disembark at different coastwise points. For example, if the crew member sails leg 5 of the Round the World Yacht Race, they would embark at Qingdao, China, a foreign port, and disembark at Santa Cruz, California, a coastwise point. Even though the passenger is disembarking at one of the coastwise ports, this would not constitute a violation of 46 U.S.C. § 55103 because the passenger did not embark at a coastwise port. Furthermore, if the temporary crew goes ashore during their off-duty time in U.S. ports, for a period of six to ten days pending commencement of the next leg of the yacht race, this does not constitute disembarkation. Since the crew members are required to sail at least one leg of the yacht race in its entirety and no leg involves both embarking and disembarking at a coastwise point, there is no violation of 46 U.S.C. § 55103.

HOLDINGS

The subject individuals are not “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). The subject legs of the yacht race do not constitute coastwise trade within the meaning of 46 U.S.C. § 55103.

Sincerely,

Glen E. Vereb, Chief

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