VES 3-14 CO:R:P:C 109081 BEW
Dr. David H. Grover
Maritime Information Associates
677 Rio Vista Drive
Napa, California 94558
RE: Applicability of 46 U.S.C. App. 292 and 883 to the
exploration for, or the extraction of, resources from the outer
Continental Shelf outside the United States territorial waters.
Dear Dr. Grover:
This is in reference to your correspondence of July 28,
1987, in which you requested an interpretation of the legality
of the use of foreign-built dredges or mining vessels for
mining on the United States outer Continental Shelf.
FACTS:
You state that the mining would be conducted 10 miles off
the North Carolina coast, and that the operation would involve
hydraulic suction dredging of material which would be placed on
barges for transport ashore. You state that the mining vessel
would be foreign-built and documented as an American flag
vessel and that barges and tugs which would be used in the
operation would be built and documented in the United States.
You further state that while the vessel may use techniques
associated with dredging and may be identified as a dredge, you
would in fact be mining for phosphate ore on the outer
Continental Shelf. You also state that while you may be using
a foreign-built American-flag vessel, the vessel would only
enter the port for refuel and resupply.
It is requested that we rule on the following issues:
ISSUES:
1. Whether a foreign-built dredge documented in the
United States may engage in dredging in the United States.
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2. Whether the use of a foreign-built dredge documented
as an American-flag vessel for mining phosphate ore on the
outer Continental Shelf is an engagement in dredging in
the United States for the purposes of 46 U.S.C. App. 292.
3. Whether the transportation of dredged phosphate ore
from a dredging site on the outer Continental Shelf to a
United States port is coastwise transportation.
LAW AND ANALYSIS:
Section 1 of the Act of May 28, 1906 (34 Stat. 204; 46
U.S.C. App. 292), provides that "a foreign-built dredge shall
not, under penalty of forfeiture, engage in dredging in the
United States unless documented as a vessel of the United
States." In our interpretation of this statute, we have ruled
that dredging in the United States is prohibited to any
foreign-built dredging vessel except one of those named in
section 2 of the 1906 Act (see Customs Service Decision
(C.S.D.) 85-11).
For purposes of 46 U.S.C. App. 292, dredging in the United
States includes dredging in United States territorial waters,
generally defined as the belt, 3 nautical miles wide, adjacent
to the coast of the United States and seaward of the
territorial sea baseline, and certain dredging on the United
States outer Continental Shelf outside territorial waters (see
C.S.D. 85-11).
In our application of 46 U.S.C. App. 292, we have long
held that "dredging," for purposes of that statute, means the
use of a vessel equipped with excavating machinery in digging
up or otherwise removing submarine mineral. In the absence of
other information, it appears that the mining vessel or dredge
you describe would meet this definition and we so assume for
purposes of this ruling.
You inquire as to whether a foreign-built dredge
documented under the laws of the United States may engage in
dredging 10 miles off the coast of North Carolina. As stated
above, it is the position of the Customs Service that the
prohibition in 46 U.S.C. App. 292 relates to build, and not to
the documentation of a dredge. Accordingly, even though a
foreign-built dredge has been documented as a vessel of the
United States, it would be prohibited by 46 U.S.C. App. 292
from engaging in dredging in the United States.
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With regard to the applicability of section 292 to the
outer Continental Shelf, we have held that the statute only
applies with regard to dredging on the outer Continental Shelf
for the purposes described in section 4(a) of the Outer
Continental Shelf Lands Act of 1953, as amended (43 U.S.C.
1333(a)) (OCSLA). That statute provides, in pertinent part,
that the laws of the United States are extended to "... the
subsoil and seabed of the outer Continental Shelf and to all
artificial islands, and all installations and other devices
permanently or temporarily attached to the seabed, which may be
erected thereon for the purpose of exploring for, developing,
or producing resources therefrom ... to the same extent as if
the outer Continental Shelf were an area of exclusive Federal
jurisdiction located within a State."
Under the foregoing provision, we have ruled that the
coastwise laws and other Customs and navigation laws are
extended to mobile oil drilling rigs during the period they are
secured to or submerged onto the seabed of the outer
Continental Shelf. We have applied the same principles to
drilling platforms, artificial islands and similar structures,
as well as devices attached to the seabed of the outer
Continental Shelf for the purpose of resource exploration
operations. We have not, to this date, ruled on the
applicability of the coastwise laws and other Customs and
navigation laws to the exploration for, development or
production of, resources other than petroleum related
resources.
"Exploration," "development," and "production" are
generally defined under the OCSLA to include the process of
searching for minerals, the activities which take place
following discovery of minerals, and those activities which
take place after the successful completion of any means for the
removal of minerals from the outer Continental Shelf. The term
"minerals" includes oil, gas, sulphur, geopressured-geothermal
and associated resources, and all other minerals which are
authorized by an Act of Congress to be produced from "public
lands" as defined in 43 U.S.C. 1702 (43 U.S.C. 1331)(k), (l),
(m) and (q)).
It is clear that the OCSLA was intended to apply to the
exploration for, development or production of resources other
than petroleum related resources. This position is consistent
with judicial interpretations of the OCSLA.
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In Guess v. Read, C.A. La. 290 F.2d 622, 625 (1961), cert.
denied 386 U.S. 957, 82 S.Ct. 394, 7 L.Ed.2d 388 (1962), the
Court held that "[t]he Continental Shelf Act was enacted for
the purpose, primarily, of asserting ownership of and
jurisdiction over the minerals in and under the Continental
Shelf." In Treasure Salvors Inc. v. Unidentified Wrecked and
Abandoned Sailing Vessel, C.A. Fla. 1978, 569 F.2d 330, 339,
the Court held that, "(t)he structure of the Act itself, which
is basically a guide to the administration and leasing of
offshore mineral-production properties, reinforces this
conclusion." The Court said that "[t]he Act consists almost
exclusively of specific measures to facilitate exploitation of
natural resources on the continental shelf." The Court noted
that the interpretations of the Convention of the Continental
Shelf and the Act by legal scholars have, with remarkable
accord, reached the same conclusion regarding the nature of
control of the United States over the Continental Shelf.
In CSD 85-11 (referred to above) we ruled that 46 U.S.C.
App. 292 applied to certain dredging on the outer Continental
Shelf in support of oil and gas resource exploration
operations. In our Case No. 109016, March 22, 1987, we ruled
that the prohibition against dredging on the outer Continental
Shelf extends only to those operations which are in furtherance
of the extraction of or the exploration for, or the development
or production of, resources from the outer Continental Shelf.
The OCSLA does apply to the exploration for, development or
production of minerals, in addition to petroleum related
resources, from the outer Continental Shelf. Accordingly, we
find that the described mining of the phosphate ore from the
seabed of the outer Continental Shelf outside the territorial
waters of the United States would constitute dredging in the
United States for purposes of 46 U.S.C. App. 292. Therefore,
the engagement of a foreign-built, United States-flag mining
vessel or dredge for such exploration of phosphate ore would be
prohibited.
Among navigation laws other than section 292 which Customs
interprets and enforces is the so-called Jones Act (41 Stat.
999; 46 U.S.C. App. 883). This statute prohibits the
transportation of merchandise between points in the United
States embraced within the coastwise laws, either directly or
via a foreign port, or for any part of the transportation, in
any vessel other than a vessel built in and documented under
the laws of the United States and owned by citizens of the
United States (see also 46 U.S.C. App. 316a, the coastwise
towing statute).
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While we have held that the act of dredging is not,
itself, deemed to be coastwise trade, we have consistently held
that "merchandise" for the purpose of 46 U.S.C. App. 883,
includes anything of commercial value. In applying this
statute to the transportation of the mining resource exploited
from the outer Continental Shelf to a coastwise port, we have
consistently ruled that the use of a foreign vessel for such
transportation would be prohibited under the statute. However,
transportation of the mining resources by coastwise qualified
barges and tugs would be permitted under the provisions of
section 883 and 316(a).
In addition to the above cited statutes, you attention is
directed to Presidential Proclamation 5030 of March 10, 1983,
whereby the President of the United States proclaimed an
Exclusive Economic Zone of the United States of America, and to
the Deep Seabed Hard Mineral Resources Act (Public Law 96-283,
94 Stat. 553, 30 U.S.C. 1401 et seq.).
HOLDINGS:
1. A foreign-built dredge documented in the United States
may not engage in dredging in the United States.
2. The use of a foreign-built dredge documented as an
American-flag vessel for mining for minerals, including
phosphate ore, on the outer Continental Shelf is an
engagement in dredging in the United States for the
purposes of 46 U.S.C. App. 292.
3. The transportation of the dredged phosphate ore from a
dredging site on the outer Continental Shelf to a United
States port is coastwise transportation which may only be
effected by coastwise qualified vessels.
EFFECT ON OTHER RULINGS:
None.
Edward T. Rosse
Acting Director, Regulatory
Procedures and Penalties Division
CO:R:P:C:BEWhiting:4/20/88:retyped:5/6/88