VES-3-02/07-CO:R:IT:C 111628 BEW
Mr. Gary K. Santos
The EMBA Group, Inc.
Post Office Box 1428
Charleston, South Carolina 29402
RE: Coastwise Trade; Passengers; Transportation of Employees,
Spouses or Business Guest from One Coastwise Port to Another
Coastwise Port on a Foreign-Flag Vessel; 46 U.S.C. App. 289;
Dear Mr. Santos:
This is in response to your letter dated April 8, 1991,
requesting a ruling on behalf of Royal Viking Line concerning
the application of the Jones Act to a proposed trip from
Charleston, South Carolina, to Williamsburg, Virginia, on a
foreign flag vessel as set forth below.
FACTS:
In a letter dated April 4, 1991, from Royal Viking Line to
you, they state that on April 27, 1991, the ROYAL VIKING SUN will
be calling at the port of Charleston, South Carolina. They state
they are planning to invite approximately sixty (60) Royal Viking
Line employees, their spouses, and various company affiliates to
board the vessel on April 27, 1991, at the port of Charleston and
sail to Williamsburg, Virginia, where the passengers will
disembark from the vessel. They state that the purpose of this
trip is to further enhance employee product knowledge. They
state the all of the passengers will be sailing as "NON-FARE
PAYING PASSENGERS ON COMPANY BUSINESS".
ISSUE:
Whether the transportation of passengers on a foreign-flag
vessel as described above constitutes a violation of 46 U.S.C.
App. 289.
LAW AND ANALYSIS:
Generally, the coastwise laws (e.g., 46 U.S.C. App. 289 and
883, and 46 U.S.C. 12106 and 12110) prohibit the transportation
of merchandise or passengers between points in the United States
embraced within the coastwise laws in any vessel other than a
vessel built in and documented under the laws of the United
States, and owned by persons who are citizens of the United
States.
The passenger coastwise law, 46 U.S.C. App. 289, provides
that:
No foreign vessel shall transport passengers
between ports or places in the United States
either directly or by way of a foreign port,
under penalty of $200 for each passenger so
transported and landed.
In its administration of 46 U.S.C. App. 289, the Customs
Service has ruled that the carriage of passengers entirely within
territorial waters, even though the passengers disembark at their
point of embarkation and the vessel touches no other coastwise
point, is considered coastwise trade subject to coastwise laws.
However, the transportation of passengers to the high seas
(i.e., beyond U.S. territorial waters) and back to the point of
embarkation, assuming the passengers do not go ashore, even
temporarily, at another United States point, often called a
"voyage to nowhere", is not considered coastwise trade. It
should be noted that the carriage of fishing parties for hire,
even if the vessel proceeds beyond territorial waters and returns
to the point of the passenger's embarkation, is considered
coastwise trade.
For purposes of the coastwise laws, a vessel "passenger" is
defined as "... any person carried on a vessel who is not
connected with the operation of such vessel, her navigation,
ownership, or business" (Section 4.50(b), Customs Regulations).
With regard to commercial vessels, in a letter dated
August 29, 1960 (MA 217.1) Customs has ruled that:
...newspapermen or cruise agents who merely
accompany the vessel for publicity purposes
and cruise passage sales promotion are not
persons connected with the operation,
navigation, ownership, or business of the
vessel within the meaning of section 4.50(b)
of the Customs Regulations. The activity of
the persons involved is only remotely or
indirectly connected with the operation, or
business of the vessel rather than direct and
immediate as is contemplated by the
regulations.
In the subject case the ROYAL VIKING SUN is a commercial
vessel used in the cruise industry, and the subject persons, are
employees, their spouses, and company affiliates. Section
4.80a(b)(1) of the Customs Regulations (19 CFR 4.80a(b)(1)
provides that:
If a passenger is on a voyage solely to one
or more coastwise ports and the passenger
disembarks or goes ashore temporarily at a
coastwise port, there is a violation of the
coastwise law.
Section 4.50(b) exempts persons connected with the business of a
vessel from passenger status.
With regard to the employees of the vessel company, the
facts presented are not sufficient to show that they are
connected with the actual operation, navigation, ownership, or
business of the vessel within the meaning of section 4.50 (b) of
the Customs Regulations. While employees who are directly or
immediately connected with the vessel's operation, navigation,
ownership, or business may be exempt from passenger status under
section 4.50(b), employees who are indirectly or remotely
connected with the business of the vessel, such as those whose
connection with the vessel does not go beyond being employed by
the corporation that owns the ship, would not be exempt from
passenger status.
The phrase "to further enhance employee product knowledge"
explains neither what knowledge it is intended that the employees
gain, nor how that knowledge has a nexus with the actual business
or operation of the vessel. The same is true of the employees'
families and the "company affiliates."
HOLDING:
The facts are not sufficient to show that the subject
employees of the Royal Viking Line, nor their families, nor
company affiliates are directly connected with the operation,
navigation, ownership, or business of the vessel. Mere
employment by a corporation that is involved in the
transportation industry is not tantamount to being engaged in the
"business" of a vessel. The request to transport the subject
persons is denied; they are considered passengers for the
purposes of 46 U.S.C. App. 289.
Sincerely,
Stuart P. Seidel
Director
International Trade
Compliance Division Branch