CBP Modifies Mitigation

Phillip Brickman weighs in: Guidelines for Violations of Coastwise Passenger Laws



U.S. Customs and Boarder Protection (“CBP”) recently issued a memorandum modifying its mitigation guidelines for violations of the Passenger Vessel Services Act (“PVSA”), 46 U.S.C. §55103. The CBP enforces the coastwise trade laws, including the PVSA, and imposes penalties for violations of those laws. PVSA provides that a foreign flag vessel may not transport passengers between two U.S. ports. Vessels must leave from and return to the same port of origin. Failure to do so results in a fine of US $300.00 per passenger, an amount that can be substantial when a violation involves commercial passenger cruise vessels carrying thousands of passengers. There is also a similar provision under the U.S. Code which applies to the carriage of goods and cargo between two U.S. ports. The CBP has the authority to mitigate penalties assessed under the PVSA when the offense was not willfully committed or committed without intent pursuant to 19 U.S.C. §1618. Passenger cruise vessels, and also cargo vessels, that operate in ports along the U.S. Gulf Coast and Atlantic Coast face challenges due to unforeseen heavy weather events, such as hurricanes or tropical storms, and/or marine casualties that may close a port to traffic for a period of time. Port closures mandated by the U.S. Coast Guard can sometimes cause a vessel to deviate from its intended voyage, making it impossible to comply with the PVSA.



One such instance involved two passenger vessels operating cruises out of the Port of New Orleans. In 2004, two cruise ships departed from New Orleans for their regularly scheduled cruises in the Caribbean. While at sea, a tragic collision occurred near the mouth of the Mississippi River, causing the U.S. Coast Guard to close the river to all traffic. The river remained closed when the ships were scheduled to return. As a result, the ships were forced to divert to Gulfport, Mississippi and Mobile, Alabama to disembark the passengers while passengers waiting to board in New Orleans were bused to Gulfport and Mobile to embark on the next cruises. When the river was reopened, the ships returned to New Orleans.



The CBP levied several million dollars in fines against the two ships for alleged PVSA violations. The ships were initially fined for diverting to Mobile and Gulfport and again fined for returning passengers to New Orleans that had embarked in Mobile and Gulfport. Under the CBP Mitigation Guidelines, a penalty imposed for violations of the PVSA must be mitigated in full where the violation was not willfully committed or the violation occurred as a result of a force of nature, the vessel being in distress, or for safety or humanitarian concerns. In this instance, the vessels were forced to divert the cruises and disembark passengers at alternative ports due to the river closure imposed by the U.S. Coast Guard.



Petitions for mitigation of these penalties were filed on behalf of the cruise line and the CBP appropriately mitigated all the fines associated with the first deviations to Mobile and Gulfport. However, the CBP refused to mitigate the fines for the return voyages to New Orleans under the assumption that the second deviations occurred for solely commercial reasons. Supplemental petitions seeking reconsideration of the erroneous decision were filed to demonstrate that the cruise line had no intention of transporting passengers between two U.S. ports. Rather, the deviations occurred because of the unforeseen collision at the mouth of the Mississippi River. Through vigorous negotiations with the CBP Office of Regulations and Rulings, the CBP agreed that the return voyages of the passenger vessels were not intentionally committed and fully mitigated all fines. More importantly, the CBP recently modified its mitigation guidelines to account for similar scenarios. The Border Security Trade Compliance Division directed its local Port Directors and Fines, Penalties and Forfeiture Officers to fully mitigate PVSA violations where passengers embarked at unscheduled ports of call due to Coast Guard mandated port closures. This can occur frequently, particularly in busy ports such as Houston, New Orleans, Tampa or Miami, which are subject to heavy marine traffic, as well as severe tropical weather.



In a similar situation, the vessel owner or operator should immediately contact the local Port Director to inform them of the circumstances. This will also serve to put the CBP on notice of potential PVSA violation, even if it is unintentional. Before returning passengers to the original or an alternate port, the vessel owner or operator can request an advance ruling from the CBP requesting that a violation be waived under the given circumstances. Typically, the CBP will impose a penalty and then consider a petition for mitigation.



When faced with a port closure and possible PVSA violation, vessel owners or operators should maintain all shipboard documents that evidence an unforeseen deviation including deck logs, U.S.C.G. notices, communications with CBP local port director, communications regarding efforts to secure alternate locations to disembark passengers and statistics regarding passengers onboard the vessel. This and other information, such as media reports, passenger ticket contracts or literature evidencing the intended scheduled voyage, may be utilized to support a petition to mitigate the PVSA penalty, if one is imposed by the CBP.



Immediately opening a direct line of communications with CBP officials such as the local port director and the Office of Regulation and Rulings, is important in projecting a vessel owner’s desire to comply with the PVSA and other applicable laws. If a PVSA penalty has been levied, be aware of the time within which to file a petition for mitigation. Failure to timely file a petition may result in the CBP moving against a carrier’s international carrier bond to satisfy the fine. Local CBP Fines, Penalties and Forfeitures Officers are generally agreeable to extensions of time to file petitions for mitigation. These actions and a clear understanding of the CBP Mitigation Guidelines may enable a vessel owner to mitigate substantial fines for violating coastwise trade laws.



Phillip Brickman is a partner with Fowler Rodriguez Valdes-Fauli law firm in New Orleans, Louisiana. Mr. Brickman specializes in maritime and environmental law, as well as customs and international trade matters. He can be reached at (504) 595-5149 or [email protected].