[Federal Register Volume 72, Number 224 (Wednesday, November 21, 2007)]
[Proposed Rules]
[Pages 65487-65489]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-22788]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection

19 CFR Part 4

[USCBP-2007-0098]


Hawaiian Coastwise Cruises

AGENCY: Customs and Border Protection; Department of Homeland Security.

ACTION: Proposed interpretation; solicitation of comments.

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SUMMARY: This document proposes new criteria to be used by Customs and 
Border Protection (``CBP'') to determine whether non-coastwise-
qualified vessels are in violation of the Passenger Vessel Services Act 
(PVSA) when engaging in cruise itineraries in which passengers board at 
a U.S. port, the vessel calls at several Hawaiian ports, and then the 
vessel proceeds to a foreign port or ports for a brief period, before 
ultimately returning to the original U.S. port of embarkation where the 
passengers disembark to complete their cruise. CBP believes these 
itineraries are contrary to the PVSA because it appears that the 
primary objective of the foreign stop is evasion of the PVSA.

DATES: Comments must be received on or before December 21, 2007.

FOR FURTHER INFORMATION CONTACT: Glen E. Vereb, Cargo Security, 
Carriers & Immigration Branch, Office of International Trade, (202) 
572-8730.

ADDRESSES: You may submit comments, identified by docket number, by one 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Border Security Regulations Branch, Office of 
International Trade, Customs and Border Protection, 1300 Pennsylvania 
Avenue, NW., (Mint Annex), Washington, DC 20229

SUPPLEMENTARY INFORMATION: 



I. Public Participation

    Interested persons are invited to participate in this proposed 
interpretation by submitting written data, views, or arguments on all 
aspects of the proposed interpretation. Customs and Border Protection 
(CBP) also invites comments that relate to the economic, environmental, 
or federalism effects that might result from this proposed 
interpretation. Comments that will provide the most assistance to CBP 
in developing these procedures will reference a specific portion of the 
proposed interpretation, explain the reason for any recommended change, 
and include data, information, or authority that support such 
recommended change.
    Instructions: All submissions received must include the agency name 
and docket number for this proposed interpretation. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov. Submitted comments 
may also be inspected on regular business days between the hours of 9 
a.m. and 4:30 p.m. at the Office of International Trade, Customs and 
Border Protection, 799 9th Street, NW., 5th Floor, Washington, DC. 
Arrangements to inspect submitted documents should be made in advance 
by calling Mr. Joseph Clark at (202) 572-8768.

II. Background

    The maritime cabotage law governing the transportation of 
passengers was first established by section 8 of the Passenger Vessel 
Services Act of June 19, 1886 (the ``PVSA''), 24 Stat. 81; as amended 
by section 2 of the Act of February 17, 1898, 30 Stat. 248, formerly 
codified at 46 U.S.C. App. 289 (now codified at 46 U.S.C. 55103). That 
statute provided 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 a penalty of $200 (now $300, as promulgated in 
T.D. 03-11 pursuant to the Federal Civil Penalties Inflation Adjustment 
Act of 1990, 28 U.S.C. 2461 note) for each passenger so transported and 
landed.
    The intent of the maritime cabotage laws, including the PVSA, was 
to provide a ``legal structure that guarantees a coastwise monopoly to

[[Page 65488]]

American shipping and thereby promotes development of the American 
merchant marine.'' Autolog Corp. v. Regan, 731 F.2d 25, 28 (DC Cir. 
1984); see also The Granada, 35 F.Supp. 892, 893, 1940 AMC 1601 (DC Pa 
1940) (stating that the legislative aim of section 289 [now 55102] was 
the creation of a practical monopoly of coastwise and domestic shipping 
business for United States ships). In other words, the PVSA was enacted 
to advance the United States merchant marine and fleet by restricting 
the use of foreign-owned/flagged passenger vessels in United States 
territorial waters.
    Passenger vessel transportation between United States ports has 
historically been viewed to be part of the coastwise trade after the 
enactment of the PVSA. This view is premised on the concepts of 
continuity of the voyage and whether its intended purpose or objective 
was coastwise transportation. In other words, the PVSA was held to be 
violated if the coastwise movement was continuous or if the purpose of 
the trip was a coastwise voyage. (See 18 O.A.G. 445, September 4, 1886; 
28 O.A.G. 204, February 16, 1910; 29 O.A.G. 318, February 12, 1912; 30 
O.A.G. 44, February 1, 1913; 34 O.A.G. 340, December 24, 1924; and 36 
O.A.G. 352, August 13, 1930.)
    The CBP regulations promulgated pursuant to the PVSA are found at 
section 4.80a of title 19 of the Code of Federal Regulations (19 CFR 
4.80a) and are reflective of the above cited Office of the Attorney 
General decisions. These regulations provide, among other things, that 
a non-coastwise-qualified vessel which ``embarks'' a passenger at a 
port in the United States embraced within the coastwise laws (a 
``coastwise port'') will be deemed to have landed that passenger in 
violation of the PVSA if the passenger ``disembarks'' at a different 
coastwise port on a voyage to one or more coastwise ports and a 
``nearby foreign port or ports'' (as defined in 19 CFR 4.80a(a)(2); see 
also 19 CFR 4.80a(b)(2)). The terms ``embark'' and ``disembark'' are 
words of art which are defined as going on board a vessel for the 
duration of a specific voyage, and leaving a vessel at the conclusion 
of a specific voyage, respectively. (See 19 CFR 4.80a(a)(4).)
    The references in section 4.80a to ``nearby foreign ports'' 
(defined in 19 CFR 4.80a(a)(2)) are the results of attempts by CBP to 
apply an Office of the Attorney General's opinion dated February 26, 
1910 (28 O.A.G. 204). In that case, a foreign-flag vessel transported 
615 passengers on a voyage around the world, beginning in New York and 
concluding in San Francisco. The Attorney General opined that since the 
primary object of the voyage was to visit various parts of the world on 
a pleasure tour returning home via California, and not to be 
transported in domestic commerce, the transportation was not in 
violation of the PVSA.
    The 1910 Attorney General's opinion was extended to voyages that 
included foreign ports other than nearby foreign ports. (See Treasury 
Decision (T.D.) 68-285 (33 FR 16558), November 14, 1968.) However, 
voyages solely to one or more coastwise ports have always been 
considered predominantly coastwise. Therefore non-coastwise-qualified 
vessels engaging in such a voyage where passengers temporarily go 
ashore at a coastwise port have been deemed to have violated the PVSA.

III. Current Law and Policy

    Pursuant to Public Law 109-304, 120 Stat. 1632, enacted on October 
6, 2006, Title 46, United States Code, was substantially reorganized 
and recodified. Consequently, the PVSA is now codified at 46 U.S.C. 
55103 and provides that no vessel shall transport passengers between 
ports or places in the United States, either directly or by way of a 
foreign port, under a penalty of $300 for each person so transported 
and landed, except one that: (1) Is wholly owned by citizens of the 
United States for purposes of engaging in the coastwise trade; and (2) 
has been issued a certificate of documentation with a coastwise 
endorsement or is exempt from documentation but would otherwise be 
eligible for such a certificate and endorsement.
    In 2003, Congress enacted Public Law 108-7, Division B, Title II, 
Section 211, for the purpose of revitalizing the oceangoing U.S.-flag 
cruise industry in Hawaii (the ``2003 Act''). Three oceangoing U.S.-
flag cruise ships, PRIDE OF ALOHA, PRIDE OF AMERICA and PRIDE OF 
HAWAII, were documented with coastwise privileges pursuant to the 2003 
Act. These vessels entered regular service in Hawaii in 2004, 2005 and 
2006, respectively, and pursuant to the express language of the 2003 
Act, are limited in their operation to providing ``* * * regular 
service transporting passengers between or among the islands of Hawaii 
* * *''
    The CBP regulations promulgated pursuant to the PVSA are set forth 
in 19 CFR 4.80a and have remained unchanged throughout both the 
recodification of Title 46 of the United States Code and the enactment 
of the 2003 Act. They provide that a violation of the PVSA occurs when 
passengers ``embark'' (board a vessel for the duration of a voyage) a 
non-coastwise-qualified vessel at one U.S. port, and ``disembark'' 
(leave the vessel at the conclusion of a voyage) at a different U.S. 
port, unless they proceed with the vessel to a ``distant foreign port'' 
(i.e., any port not considered a ``nearby foreign port'' which is 
defined as any port located in North America, Central America, Bermuda, 
or the West Indies including the Bahamas). Currently, these regulations 
do not contain specific criteria for non-coastwise-qualified vessels on 
itineraries including U.S. ports and either ``nearby'' or ``distant'' 
foreign ports in order for such foreign port calls to be compliant with 
the PVSA.
    To reiterate, the applicable CBP regulations provide that the PVSA 
is violated when a non-coastwise-qualified vessel transports a 
passenger on a voyage solely to one or more coastwise ports and the 
passenger disembarks or goes ashore temporarily at a coastwise port. 
(19 CFR 4.80a(b)(1).) Furthermore, a violation of the PVSA also occurs 
when a non-coastwise-qualified vessel transports a passenger on a 
voyage to one or more coastwise ports and a nearby foreign port or 
ports (but no other foreign port) and the passenger disembarks at a 
coastwise port other than the port of embarkation. (19 CFR 
4.80a(b)(2).) However, there is no violation of the PVSA when a 
passenger is on a voyage to one or more coastwise ports and a distant 
foreign port or ports (whether or not the voyage includes a nearby 
foreign port or ports) and the passenger disembarks at a coastwise 
port, provided the passenger has proceeded with the vessel to a distant 
foreign port. (19 CFR 4.80a(b)(3).)

IV. Request From MARAD To Provide Guidance

    The U.S. Department of Transportation Maritime Administration 
(MARAD) has requested that CBP take action to ensure enforcement of the 
PVSA. MARAD has asked CBP to address the recent activities of foreign-
flag passenger vessels in the Hawaiian Islands that are imposing 
economic hardship on the operations of coastwise-qualified cruise ship 
operators.
    In April of 2007, the operator of the three U.S.-flag cruise 
vessels operating solely in Hawaii pursuant to the 2003 Act announced 
their intent to withdraw the PRIDE OF HAWAII from the Hawaii market and 
redeploy her to Europe. The operator intends to re-flag the vessel to 
foreign registry, directly resulting in the loss of over 1,100 
crewmember jobs. The primary reason cited for this decision is the 
rapid increase in foreign-flag competition entering the Hawaii market

[[Page 65489]]

from the West Coast. This competition is evidenced in published cruise 
itineraries of foreign-flag carriers offering a variety of round trip 
cruises that depart from a U.S. port, call at several Hawaiian ports, 
then proceed to Ensenada, Mexico for a brief period, usually in the 
early morning, and ultimately return to the original U.S. port of 
embarkation where the passengers disembark to complete their cruise. 
These cruises are often marketed as ``Hawaii cruises'' and except for 
the brief stop in the nearby foreign port of Ensenada, are purely 
coastwise in nature. It is these cruise itineraries that pose an 
imminent threat to the two remaining U.S.-flagged, coastwise endorsed 
passenger vessels that, pursuant to the 2003 Act, are currently 
engaging in cruise itineraries that include only ports of call within 
the Hawaiian Islands.

V. Preliminary Notice

    In response to MARAD's concerns, CBP sent letters to two carriers 
known to operate the itineraries in question, as well as to the Cruise 
Lines International Association, Inc., stating that CBP believes that 
these itineraries are contrary to the PVSA because it appears that the 
primary objective of the Ensenada stop is evasion of the PVSA. The 
letters further indicated that CBP is taking steps to publish this 
position.

VI. CBP's Proposed Interpretive Rule

    Accordingly, in this document, CBP is proposing to provide that 
cruise itineraries for non-qualified coastwise vessels which allow 
passengers to board at a U.S. port, call at several Hawaiian ports, 
proceed to a foreign port or ports for a brief period, and then 
ultimately return to the original U.S. port of embarkation for 
disembarkation are not consistent with the PVSA and the regulations 
promulgated pursuant thereto. Specifically, CBP interprets a voyage to 
be ``solely to one or more coastwise ports'' even where it stops at a 
foreign port, unless the stop at the foreign port is a legitimate 
object of the cruise. CBP will presume that a stop at a foreign port is 
not a legitimate object of the cruise unless:
    (1) The stop lasts at least 48 hours at the foreign port;
    (2) The amount of time at the foreign port is more than 50 percent 
of the total amount of time at the U.S. ports of call; and
    (3) The passengers are permitted to go ashore temporarily at the 
foreign port.
    Accordingly, CBP proposes to adopt an interpretive rule under which 
it will presume that any cruise itinerary that does not include a 
foreign port call that satisfies each of these three criteria 
constitutes coastwise transportation of passengers in violation of 19 
CFR 4.80a(b)(1).

    Dated: November 16, 2007.
W. Ralph Basham,
Commissioner, Customs and Border Protection.
 [FR Doc. E7-22788 Filed 11-20-07; 8:45 am]
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