VES-3-15 OT:RR:BSTC:CCI H019524 LLB
Category: Carriers
Mr. Brian Peacher
Maersk Line
2500 Navy Way
Terminal Island, California 90731
RE: Coastwise transportation; 46 U.S.C. § 55103; 19 C.F.R. § 4.50(b); revocation of HQ H004175 (Dec. 8, 2006).
Dear Mr. Peacher:
On December 8, 2006, U.S. Customs and Border Protection (“CBP”) issued Headquarters Ruling (“HQ”) H004175 to you. In HQ H004175, CBP held, the vessel line’s shoreside employees, specifically, two terminal operations managers, were not passengers within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b), and therefore, their coastwise transportation was not in violation of 19 U.S.C. § 55103. We have recently recognized that the foregoing holding in HQ H004175 is contrary to CBP decisions which interpret 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). Consequently, this ruling, HQ H019524, revokes HQ H004175, and provides a decision consistent with current CBP decisions.
FACTS
The pertinent facts you provided in H004175 are as follows.
We are writing to request written permission for Maersk Line to have company employees ride our Maersk Line vessels coastwise … to develop better safety practices and business processes between APL Terminals (Maersk owned companies) and Maersk Line. To achieve this, the company requests that the APMT assistant terminal operations managers spend time aboard the vessels to
understand what the vessel crew’s responsibilities are once the cargo has loaded and is in route to the next port. Amongst the responsibilities that are to be learned … are:
Lashing gear checks and proper stowage of lashing gear.
Cargo stowage and vessel stability.
Hazardous and reefer management.
Reefer QRR (Quality Reefer Reporting).
Importance of schedule integrity for bunker efficiency.
Discharge and load operations from vessel vantage point.
The employees will discuss with crew the challenges the terminals face when loading and discharging cargo and hear the vessels concerns and recommendations. The goal is for the APL Terminal group to build a better relationship with our vessels which will in turn improve terminal efficiency and communications.
Under the foregoing scenario, CBP held in HQ H004175, that the foregoing shoreside employees were not passengers within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). As explained in the “Law and Analysis” section of this ruling, this holding is inapposite to CBP decisions interpreting 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b).
ISSUE
Whether the shoreside employees, e.g. terminal operations managers, described 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 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).
The subject of this revocation is whether the terminal operations manager, a shoreside employee, is considered a passenger, e.g. connected with the operation of the vessel, her navigation, ownership, or business, when transported between two coastwise points. CBP, in precise concert with the protectionist nature of 19 U.S.C. § 55103, imposed a circumscribed construction as to the meaning of the term "passenger" under the U.S. coastwise trade laws. Under this strict interpretation of the term "passenger," persons transported on a vessel are considered passengers unless they are "directly and substantially" connected with the operation, navigation, ownership or business of that vessel itself. See Cust. Bull., Vol. 36, No. 23, p. 50 (June 5, 2002) (emphasis added).
Consistent with CBP's interpretation of the term passenger in the foregoing June 5, 2002, notice, we have held that certain shoreside employees transported for the purpose of observing or familiarizing themselves with onboard operations are passengers. 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” 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 terminal operations manager to “understand what the vessel crew’s responsibilities are once the cargo has loaded and is in route to the next port” and for "APL Terminal group to build a better relationship with [y]our vessels." Although familiarizing a terminal operations manager 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, ownership 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).
HOLDING
The terminal operations manager is a “passenger” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b). Therefore, the coastwise transportation of that individual would be in violation of 46 U.S.C. § 55103.
EFFECT ON OTHER RULINGS
HQ H004175, dated December 8, 2006, is hereby revoked.
Sincerely,
Jeremy Baskin, Acting Director
Border Security and Trade Compliance Division