HQ H020448 - 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 H020448

December 13, 2007

VES-3-02-OT:RR:BSTC:CCI H020448 LLB

CATEGORY: CARRIER

Mr. LeVar O. Kennings
Norwegian Cruise Line
7565 Corporate Center Drive
Miami, Florida 33126

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

Dear Mr. Kennings:

This letter is in response to your correspondences of December 3, and 6, 2007, and your two December 11, 2007, electronic mail messages in which you inquire about the coastwise transportation of the 49 individuals mentioned therein aboard the M/S NORWEGIAN GEM. Our decision follows.

FACTS

The voyage in question involves the transportation of the subject individuals, as described below, aboard the non-coastwise-qualified M/S NORWEGIAN GEM (the “vessel”) from Boston, Massachusetts to New York, New York. You have provided the following itinerary:

N. GEM
Arr
Dep
Day
Date
Boston, MA debark only
0800
Wed
12/12/07 cruise nowhere
Boston, MA
1700
Thu
12/13/07
At Sea
Fri
12/14/07 cruise nowhere
Boston, MA
0700
1600
Sat
12/15/07
At Sea
Sun
12/16/07 debark only
Boston, MA
0700
1100
Mon
12/17/07 cruise nowhere
New York
0900
1900
Tue
12/18/07
At Sea
Wed
12/19/07 cruise nowhere
New York
0600
1900 thu
12/20/07

The individuals are expected to embark in Boston, Massachusetts on December 12, 2007 and December 17, 2007 and disembark in New York on December 20, 2007. The general purpose stated for the transportation of the individuals is to prepare the vessel for the M/S NORWEGIAN GEMs inaugural period, December 18th – 20th, 2007, in which Norwegian Cruise Line (NCL) will have a “cruise to nowhere”. Among the invited guests will be travel agents and trade organizations.

The individuals listed in your December 6, 2007, correspondence that will be transported during the subject voyage are as follows. Nine of the individuals listed, individuals numbered 3-11, are the management of the food and beverage, culinary, hotel, and restaurant operations and will be conducting a quality assurance audit on those operations. One individual, the Vice President of Nautical Operations (individual number 14) will be conducting an audit in preparation for a classification inspection that will occur once the vessel reaches New York. Another individual, the Revenue Operations Assistant (individual number 29) will coordinate room assignments during the voyage.

Seven of the individuals, 1-2; 24; 26-28, represent NCL in the capacities of Vice President of e-Commerce;

We note that you have withdrawn your ruling request for the Vice President of e-Commerce (individual number 1). Executive Assistant to the President and CEO; Director of Public Relations; Vice President of Corporate and Media Promotions; Executive Vice President of Marketing and Sales; Vice President for Customer Experience and Brand Delivery; and the President and CEO.

Two of the individuals, individuals numbered 32 and 33, are consultants to NCL and will be bringing aboard the vessel scanners that will be used by the crew to read passenger satisfaction evaluations. The remaining 29 passengers listed, individuals numbered 12-13; 15-23; 25; 31; and 34-49, will be involved in different capacities as part of an “industrial show” You describe the industrial show as a “short informational show”. and production shows about NCL products.

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)(2007). 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).

With regard to individuals numbered 3-11, you state that they will be conducting a quality assurance audit on the food and beverage, culinary, hotel, and restaurant operations. The Vice President of Nautical Operations (individual number 14) will be conducting an audit in preparation for a classification inspection that will occur once the vessel reaches New York and the Revenue Operations Assistant (individual number 29) will coordinate room assignments during the voyage. In this context, and 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 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b), 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 (Nov. 5, 1975); see also HQ 116721 (Sept. 25, 2006) quoting HQ 101699.

In the present case, to the extent that these 11 individuals would be engaged in any shipboard activities while traveling on the foreign vessel between coastwise ports, that would be “directly and substantially” related to the operation or business itself, as would be the case under the facts herein submitted, such individuals would not be considered passengers. See HQ 116721, supra; and see HQ 116659 (May 19, 2006) (referencing the “direct and substantial” test); see also, e.g., HQ 116752(Nov. 3, 2006) (finding that chef overseeing culinary operations of the vessel was not a passenger); Customs telex 104712 (July 21, 1980) (finding that repairman were not passengers when carried aboard a foreign vessel between U.S. ports “for [the] purpose of repairing vessel en route between such ports.”). Accordingly, the coastwise transportation of these eleven individuals would not be in violation of 46 U.S.C. § 55103.

With regard to individuals 2, 24, and 26-28, CBP has 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). See HQ 103410 (May 5, 1978) (holding that 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 (Nov. 3, 2006) (executive chef); HQ H004493 (Dec. 20, 2006) (executive vice president of operations). With regard to the President and CEO of NCL, his presence on an inaugural cruise of a vessel in the company’s fleet would be directly and substantially related to the operation and business of the vessel itself; however, the President’s Executive Assistant, who will be on board to handle his clerical and administrative tasks would not.

No description was provided for purpose of transporting the Director of Public Relations, the Executive Vice President of Marketing and Sales, and the Vice President of Corporate Communications and Media Promotions and the Vice President of Experience and Brand Delivery will “audit [] overall vessel preparedness for revenue passengers in the North America market [and] will go through all spaces to ensure quality assurance.” In addition, 29 of the passengers will be involved in different capacities as part of an “industrial show” and production shows about Norwegian Cruise Line products.

In HQ 116659 (May 19, 2006), a cruise line proposed transporting employees and contractors that worked in the areas of North America Sales and Marketing and International Sales and Marketing for the purpose of strategizing on how to sell, market, and enhance the overall guest experience of the vessel. CBP held that the foregoing individuals were “passengers” within the meaning of 19 C.F.R. § 4.50(b) and the coastwise transportation of those passengers would be in violation of 19 U.S.C. § 55103. The holding in HQ 116659 was affirmed after reconsideration of the issue in HQ 116668 (July 25, 2006) and has since been upheld in several rulings. See HQ H013701 (July 10, 2007) (holding that sales representatives are passengers); HQ H002925 (Nov. 8, 2006) (holding that key account representative is a passenger). In addition, we have historically held that individuals, cruise line employees or contractors, transported solely for the promotional purpose of the cruise line, are passengers within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). See Bureau Letter dated July 3, 1957, MA 212 (movie making); HQ 109695 (Nov. 3, 1988) (camera crew carried aboard to film a promotional video); HQ 116668 (July 25, 2006) (camera crew and company employees engaged in promotional filming for cruise line); HQ H008038 (Mar. 9, 2007) (holding that two marketing employees of the cruise line and independent contractors, that were shooting, producing, and performing in a promotional video cruise line were passengers). CBP’s reasoning in the holdings in the foregoing cases is that none of those activities are “directly and substantially” related to the operation or business of the vessel itself.

Here, the purpose of the industrial show and events is to expose the passengers, including travel agents and trade organizations, to NCL products. The foregoing, coupled with the fact, the cruise line individuals responsible for putting on the industrial show are sales and marketing employees of the cruise line and the contractor We note that although NCL lists individuals 34-49, as “performers”, i.e. singer, dancers, aerialists, jugglers, and directors, our research has revealed that at least 11 of these individuals are advertising, sales, event, and media professionals. hired for organizing the event specializes in product launching, leads us to the conclusion that the industrial show is no more than a marketing strategy to promote and sell NCL products and services. Although the preparation for this industrial show may foster the business of NCL, it does not connect these individuals directly and substantially with the business of the vessel itself. To the extent that the subject individuals 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 or business of the vessel itself, such individuals would be considered passengers within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b).

With regard to the remaining 2 passengers, consultants that will be bringing on board scanners that will read passenger satisfaction reviews of revenue customers, we do not find that their transportation aboard the vessel is directly and substantially connected to the operation, navigation, or business of the vessel itself. No facts have been provided as to why the consultants’ presence would be necessary aboard the vessel insofar as they are not installing the scanners on the vessel. Based on the foregoing, the two consultants described herein would be considered passengers within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b).

In conclusion, we find that the 11 individuals (numbers 3-11; 14; 29) that will be auditing the food, beverage, culinary, and restaurant operations; conducting a vessel audit; and coordinating room assignments are not “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). In addition, the President and CEO of NCL, individual number 28, will not be considered a passenger for the subject voyage. However, the remaining 36 individuals (numbers 2; 12-13; 15-23; 25; and 31-49), as discussed above, will be considered “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b).

HOLDING

The eleven individuals (numbers 3-11; 14; 29), as described above are not “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). Therefore, the coastwise transportation of those eleven individuals is not in violation of 46 U.S.C. § 55103.

However, the remaining 36 individuals, (numbers 2; 12-13; 15-23; 25; and 31-49) 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 36 individuals would be in violation of 46 U.S.C. § 55103.

Sincerely,

Glen E. Vereb
Chief

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