VES-3-02-RR:BSTC:CCI 116668 rb
Stuart S. Dye
Holland & Knight LLP
2099 Pennsylvania Ave., NW., Suite 100
Washington, D.C. 20006
RE: Coastwise transportation of cruise line personnel/independent contractors;
46 U.S.C. App. 289
Dear Mr. Dye:
Your letter of May 25, 2006, with enclosures, on behalf of your client, Royal Caribbean Cruises, Ltd. (RCCL), requests that we reconsider Headquarters ruling (HQ) 116659, dated May 19, 2006. That ruling found that RCCL=s employees would be passengers if transported coastwise aboard the vessel, FREEDOM OF THE SEAS, in violation of 46 U.S.C. App. 289. Our reconsideration of this matter follows.
FACTS:
As explained in HQ 116659, RCCL conducted a AGlobal Strategy Summit@ aboard its foreign-built, foreign-flagged vessel, while en route from Boston, MA, on May 22, 2006, to Miami, FL, on May 25, 2006. Among those aboard the vessel to attend this Summit were 358 persons, consisting of: company employees (202), and independent contractors (133), involved with the company=s sales, marketing and hotel operations; ten company executives; and 13 other miscellaneous company employees. The Summit was basically a sales, marketing and training conference for these parties, to strategize on how to sell, market and enhance the overall guest experience of that vessel, as well as the guest experiences offered on the company=s other vessels. To this end, the Summit included meetings to educate and motivate company personnel and contractors in the performance of their jobs, while they experienced the operation of the subject vessel from Boston to Miami, where they disembarked.
It is principally urged that the company personnel and independent contractors aboard, involved with sales, marketing, or hotel operations, were thereby directly linked with the business of the vessel: APlainly, cruises are the >business= of a cruise vessel, and sales, marketing and on-board hotel functions are at the very core of this business.@
ISSUE:
Whether the company=s employees, independent contractors and other personnel, when transported aboard its vessel in the circumstances outlined, were passengers under the coastwise passenger statute, 46 U.S.C. App. 289.
LAW AND ANALYSIS:
The coastwise passenger statute, 46 U.S.C. App. 289, provides that no foreign vessel may transport passengers between ports or places in the United States either directly or by way of a foreign port, upon a penalty of $300 for every passenger so transported and landed (see 19 CFR 4.80(b), adjusting the penalty to $300 pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990).
Pursuant to 19 CFR 4.50(b), a Apassenger@ under section 289 is any person carried aboard a vessel who is not connected with the operation of the vessel, her navigation, ownership, or business. Customs and Border Protection (CBP) has traditionally imposed a strict interpretation as to the meaning of the term Apassenger@ under
' 4.50(b) in keeping with the protectionist nature of section 289. As explained in HQ 116659, supra, and a June 5, 2002, Customs Bulletin notice (Vol. 36, No. 23), persons transported on a vessel would be considered passengers unless they were Adirectly and substantially@ connected with the operation, navigation, ownership or business of that vessel itself. CBP has a large body of rulings addressing the definition of Apassenger.@
Cruise Sales Promotion/Publicity
In Bureau Letter dated August 29, 1960 (MA 217.1), 20 members of the working press were to accompany a vessel coastwise for publicity purposes. The cruise ship operator requested that these newspapermen be viewed as connected with the business of the vessel because as a result of the publicity they generated, sales of cruise passages on that vessel might be stimulated, and Asuch sales are basic to the vessel=s business.@ However, in denying this request, Customs (now Customs and Border Protection (CBP)) ruled Athat newspapermen or cruise agents who merely accompany the vessel for publicity purposes or 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)...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.@
Additionally, in Bureau Letter dated April 3, 1958 (MA 216.131), concerning a meeting of the American Society of Travel Agents aboard a foreign-flagged vessel while moving from New York to Boston, the society suggested that their members making this trip might be considered other than passengers, Asince the purpose of their trip is to see the ship, experience its service, and better equip them to sell the services of the vessel for foreign cruises out of Boston.@ Again, in turning down this suggestion, Customs concluded that Athe fact that the involved transportation of the society members would better educate them for the promotion of foreign tourism would not connect them with the vessel=s operation, navigation, ownership, or business to such an extent as to justify an administrative ruling that the members were not passengers for the purposes of section 289@ (emphasis added). Accord, HQ 108184, of March 19, 1986 (Awhile travel agents may be tangentially connected with the business of a vessel, in that they may encourage future travel on that vessel, they are not directly enough connected with the business of the vessel to be classified as other than passengers@).
Company=s Independent Contractors; Employees
The independent contractors and company employees in the current case, engaged largely in sales, marketing, and hotel operations, were aboard the vessel to experience its operation and attend a conference (consisting of educational and motivational meetings, seminars, training, tours) devoted to developing marketing strategies intended to stimulate future sales of cruise passages on the subject vessel, as well as on the cruise line=s other vessels. Thus, just as the independent cruise agents in the foregoing rulings, the independent contractors and the company employees in the present case, were passengers when transported aboard the subject vessel for similar activities in furtherance of cruise sales promotion.
Notably, in HQ 111628, dated April 26, 1991, it was concluded that the employees of a major cruise line would be passengers if transported aboard its vessel Ato further enhance employee product knowledge.@ It was implicit therein that if the employees of a cruise line were carried aboard its vessel to engage in activities related to promoting cruise passage sales, they would likewise be passengers in such circumstances, given that HQ 111628 favorably cited and discussed Bureau Letter dated August 29, 1960, supra, as to newsmen and independent cruise agents in this same regard. Moreover, mere employment with a cruise line would not exempt such an employee from passenger status (ibid. (AMere employment by a corporation [a cruise line] that is involved in the transportation industry is not tantamount to being engaged in the >business= of a vessel@)); and this would of course be true irrespective of the type of land-based employment with the cruise line (sales, marketing, hotel functions, etc.).
June 5, 2002, Customs Bulletin Notice on Meaning of APassengers@
On June 5, 2002, Customs published a notice in the Customs Bulletin to revoke/modify any prior rulings that were inconsistent with a strict interpretation of the term Apassenger@ under the coastwise laws. In that notice, Customs identified the following rulings that would tend to support your client=s contention that its employees/contractors were not passengers when carried aboard its vessel to attend the sales conference: T.D. 69-120(4) (where an accredited newspaper reporter traveling coastwise on a foreign vessel to write a story based on observations during the voyage was held to be closely enough connected with the operation of the vessel so as not to be considered a passenger under section 289); and, in particular, HQ 113017, dated February 2, 1994 (where a cruise line executive and three photographers employed by the cruise line were found to have a sufficient connection with the ownership or business of its vessel so as not to be passengers when being carried coastwise aboard the vessel to produce photos for company business purposes (i.e., for cruise line sales staff training)).
However, most significantly, these rulings, T.D. 69-120(4) and HQ 113017, were among those that were explicitly revoked by the June 5, 2002, Customs Bulletin notice, thereby definitively resolving that these parties (the newsman; and the cruise line=s executive and three photographers, respectively) were not Adirectly and substantially@ connected with the operation, ownership or business of the vessel concerned when transported aboard that vessel for the described purposes.
Ownership/Business of Vessel; Company Officers, Directors
The definition of Apassenger@ in 19 CFR 4.50(b) has its origin in General Letter No. 117 of May 20, 1916, which interpreted the meaning of the term under the steamboat inspection laws. General Letter No. 117 was affirmatively referenced and reviewed in the proposed notice published in the Customs Bulletin on February 20, 2002 (Vol. 36, No. 8), which led to the final notice published in the June 5, 2002, Customs Bulletin (Vol. 36, No. 23). Specifically, General Letter No. 117 established that the officers of the company owning a vessel, and, if a corporate owner, the members of its board of directors, would, by virtue of their positions as such, be connected with the ownership or business of that vessel. Therefore, any corporate officer, or member of the board of directors, of the company owning the subject vessel in this case would not be a passenger when carried aboard that vessel.
Film Crew and Cast
You enclosed with the May 25, 2006, letter requesting a reconsideration of the initial ruling in this case (HQ 116659, of May 19, 2006) two lists of 55 additional persons comprising a film crew and cast who were engaged in filming and/or a photo shoot for company business purposes while traveling on the subject vessel from Boston to Miami. This film crew and cast (cameramen, photographers, producers, stylists, models, etc.) were not included in the company=s May 18 ruling request, and thus were not covered in the May 19 ruling.
A film crew and cast that are engaged in making a movie, or doing a promotional film/photo shoot while being transported coastwise aboard a vessel have long been held to be passengers under section 289 (see Bureau Letter dated July 3, 1957, MA 212 (movie making); HQ 109695 of November 3, 1988 (camera crew carried aboard Hyundai vessel to film a promotional video, featuring a Hyundai automobile, for the Olympic games in Seoul, Korea)). AThe Customs Service [now CBP] has previously held that a foreign-flag vessel making a movie may not carry its cast or technicians from one United States point to another@ (HQ 105979, of February 9, 1983) (where the British Columbia (B.C.) Ministry of Tourism wanted to film motion pictures aboard a B.C. Government-owned vessel for both Province and B.C. Steamship Co. promotional programs, that featured Aguests@ (passengers) aboard the vessel portrayed by civil officials, press, and transportation professionals)).
In addition, a film crew and cast would be passengers when traveling aboard a vessel to make a movie, or do a promotional film/photo shoot, whether or not the vessel is owned by the company that so employs them (see Bureau Letter dated July 3, 1957, supra (AIt is immaterial to the above whether the vessel is operated under bareboat or time charter to [the] company@ making the film) (a bareboat charterer is legally considered the owner of the vessel)). (Parenthetically, HQ 113017, supra, expressly made such a distinction based on ownership in finding that photographers were not passengers when employed by a cruise line and conveyed aboard its vessel to produce a photo shoot for the cruise line=s business; however, the noted revocation of HQ 113017 by the June 5, 2002, Customs Bulletin notice effectively reaffirmed that such a distinction was without merit.)
HOLDING:
The company=s employees, independent contractors and its other personnel, as well as the film crew/cast engaged in promotional filming/photography for the company, were passengers under the coastwise passenger statute, 46 U.S.C. App. 289, when transported aboard its vessel from Boston, MA, to Miami, FL. Their transportation aboard the vessel from Boston, MA, and their disembarking at Miami, FL, on May 22 and May 25, 2006, respectively, was therefore in violation of section 289. However, any corporate officer, or member of the board of directors, of the company owning the subject vessel was not a passenger when so conveyed aboard its vessel.
EFFECT ON OTHER RULINGS:
HQ 116659 of May 19, 2006, is reaffirmed.
Sincerely,
/S/ (Virginia L. Brown)
Virginia L. Brown
Director
Border Security and Trade Compliance Division