VES-3-15 CO:R:P:C 110959 BEW
Martha J. Schoonover, Esq.
Fulbright & Jaworski
1150 Connecticut Avenue, N.W.
Washington, D.C. 20036
RE: Applicability of the coastwise laws to transportation and
installation of marker buoys to be used as a lateral
mooring system for a tension leg platform on the United
States outer Continental Shelf; 46 U.S.C. App. 883; 43
U.S.C. 1331
Dear Ms. Schoonover:
This is in reference to your letters of March 30, April 5,
April 24 and July 17, 1990, concerning your request for a ruling
on the impact of the coastwise trading provisions of the Jones
Act on the transportation and installation of a lateral mooring
system (LMS) to be connected to a tension leg platform (TLP) to
be used for deep water oil and gas production and development on
the United States outer Continental Shelf (OCS) in the Gulf of
Mexico.
FACTS:
You state that in approximately three years, Shell Offshore,
Inc. (Shell) plans to install a TLP for deep water petroleum
exploration and production on the OCS in the Gulf of Mexico.
The site is approximately 150 miles from shore off the coast of
Louisiana. You state that when the TLP is first brought to the
site, it will be moored using a LMS consisting of eight lines,
each anchored to the OCS.
You state that the LMS will consist of eight or more
individual mooring lines made up of wire rope, chain, buoys, and
anchors. You state that the LMS will eventually help secure the
TLP in place and move it laterally when needed, and will be
installed in two separate phases, as much as one year apart. Its
purpose is to move and hold the hull and deck in various surface
positions during drilling and production activities and to help
to hold the TLP on location during storm conditions.
For the transportation and installation of the eight preset
LMS, you state that Coflexip will use the FLEXSERVICE III, a
foreign-owned vessel built in Norway and registered in the
Bahamas.
The components of each preset LMS would be transported from
a port in Houston, Texas, to the installation site aboard the
FLEXSERVICE III. The anchor would be deployed first by attaching
it to the ground wire and lowering it to the sea bed. The
various other components, the dip chain, riser wire, lower
connection pendant, riser buoy, upper connection pendant, pendant
with flotation collars and finally the marker buoy, would be
sequentially connected and deployed by the FLEXSERVICE III. At
the conclusion of the first phase of installation of the LMS,
each of the eight present LMS "legs" would have been deployed.
The eight preset LMS would remain exactly as installed by
the LMS contractor for up to a year, until the TLP is brought to
the site and installed; they would not be connected to each other
or to anything else, except to the seabed by the anchor, unless a
drilling vessel employed by Shell would require their use at the
site prior to the arrival of the TLP. They would be marked only
by marker buoys, one marker buoy to each leg.
You state that as a part of the second phase, i.e., the
attachment of the LMS to the TLP, the marker buoys of each leg
would be retrieved and the intermediate and platform sections of
the LMS would be installed and attached to the TLP. The marker
buoy and pendant with flotation collars would be part of the LMS
only to facilitate the eventual retrieval of the preset LMS, and
would not be incorporated in the eventual lateral mooring system.
In your letter dated April 5, 1990, you state that at the
present time there is nothing on the seabed at the LMS site, but
that at the time that Coflexip would install its preset LMS,
there might be one or more temporarily abandoned wells in the
vicinity of the LMS installation site. The wells will not be
marked on the surface by a buoy marker or other device or
installation.
Additional facts stated in your April 24, 1990, letter
indicate that the mission of the FLEXSERVICE III is to pay out a
series of chains and wires which will eventually be used by the
TLP as the LMS, that the FLEXSERVICE III is designed to pay out
cable and flexible pipe from a basket on its deck. It is used
exclusively for such cable or pipe laying operations, and it is
not used to transport cargo. The LMS system will be paid out
from the FLEXSERVICE III in the following series of steps:
1. The cables and associated items on the layout and
configuration of the FLEXSERVICE III (submitted with
your request) are all items on the vessel which are to
be integral parts of the mooring system or are the
ship's equipment necessary to install the LMS.
2. Each of the eight LMS to be installed consists of an
anchor, a wire rope ground wire, a dip chain, a wire
rope riser wire, upper and lower wire rope connection
pendants, a riser buoy, a pendant with flotation
collars and a marker buoy.
You request that we rule on the following issues.
ISSUES:
1. Is the installation site on the OCS, at which the only
contact with the seabed is a temporary wire rope and
chain, attached to the seabed by an anchor and marked
only by marker buoys, one marker buoy to each leg, an
anchor mooring system (LMS), which is intended to hold
the hull and superstructure (TPL) on location during
exploration, development, and production of oil
resources on the OCS, a coastwise point.
2. Is the installation site on the OCS for purposes stated
in issue 1, where there are one or more temporarily
abandoned wells in the vicinity, a coastwise point
during the initial installation.
3. If the installation site of the LMS is a coastwise
point would a foreign flag vessel be in violation of
the coastwise laws when the foreign-vessel is a cable
laying vessel and is laying cable or pipe-laying?
4. Whether the installation of a lateral mooring system as
described in the FACTS is cable-laying within the
meaning of the coastwise laws.
LAW AND ANALYSIS:
Section 27 of the Act of June 5, 1920, as amended (41 Stat.
999; 46 U.S.C. App. 883, often called the Jones Act), provides,
in pertinent part, that:
No merchandise shall be transported by water, or by
land and water, on penalty of forfeiture of the
merchandise (or a monetary amount up to the value
thereof as determined by the Secretary of the Treasury,
or the actual cost of the transportation, whichever is
greater, to be recovered from any consignor, seller,
owner, importer, consignee, agent, or other person or
persons so transporting or causing said merchandise to
be transported), 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 other vessel 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 ....
For purposes of the coastwise laws, a point in United
States territorial waters is considered a point embraced within
the coastwise laws. The territorial waters of the United States
consist of the territorial sea, defined as the belt, 3 nautical
miles wide, adjacent to the coast of the United States and
seaward of the territorial sea baseline.
Section 4(a) of the Outer Continental Shelf Lands Act of
1953, as amended (67 Stat. 462; 43 U.S.C. 1333(a)) (OCSLA),
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 there- from ... to
the same extent as if the outer Continental Shelf were
an area of exclusive Federal jurisdiction located
within a State.
Under this provision, Customs has 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 United States OCS. The same
principles have been applied to drilling platforms, artificial
islands, and similar structures attached to the seabed of the OCS
for the purpose of resource exploration operations, including
warehouse vessels anchored over the OCS when used to supply
drilling rigs on the OCS.
Section 203 of the OCSLA Amendments of 1978 (92 Stat. 629,
635) (1978 Amendments), amended section 4(a) of the OCSLA by
substituting "... and all installations and other devices
permanently or temporarily attached to the seabed ..." for "...
and fixed structures ...." The purpose of this change was
stated in the legislative history to be to make it clear "...
that Federal law is to be applicable to all activities on all
devices in contact with the seabed for exploration, develop-
ment, and production." Thus, Federal law was intended "... to
be applicable to activities on drilling ships, semisubmersible
drilling rigs, and other watercraft, when they are connected to
the seabed by drillstring, pipes, or other appurtenances, on
the OCS for exploration, development, or production purposes."
(reproduced at 1978 U.S.C.C.A.N. 1450, 1534.)
On the basis of the 1978 Amendments, we ruled that the
coastwise laws extend to devices such as a well casing with
attendant accessory systems when submerged into the seabed of the
OCS (see C.S.D. 81-95). We modified that ruling (see C.S.D. 84-
96) by holding that a point at which no well has been sunk into
the seabed is not a coastwise point even if there are unrelated
buoys or wells in the general vicinity. We also ruled that
marker buoys attached to the OCS to mark drilling sites will not
be considered coastwise points within the meaning of the OCSLA.
This is based upon the legislative history to the 1978 Amendment
to the OCSLA which states that for the purposes of the coastwise
laws, the term "installations and other devices" in the OCSLA may
be limited to something to which merchandise or passengers can be
transported and on which they can be unladen (see House
Conference Report No. 95-1474, dated August 10, 1978, page 124).
We assume for purposes of this ruling that the marker buoy
cannot be so employed.
Accordingly, marker buoys attached to the OCS for possible
future use with a TLP will not be considered coastwise points
within the meaning of the OCSLA until the time of attachment to
a drill ship or TLP. In addition, a non-coastwise-qualified
vessel may be used to transport merchandise between a point in
the territorial waters and a point at which no buoy marker is
submerged onto or attached to the shelf and no well has been sunk
into the seabed, even if there are buoys or wells in the general
vicinity, provided that such points are unrelated to the subject
activity.
You state that there may be temporarily abandoned wells at
or in the vicinity of the site where the LMS will be installed.
We have ruled that the plugging and permanent abandonment of a
well on the OCS results in the well no longer being considered a
coastwise point by virtue of the OCSLA (see Customs Service
Decision (C.S.D.) 83-13 and ruling dated July 9, 1984, File
Number 106910). However, the platform from which such a well is
drilled, while it is attached to the OCS, remains an
"installation" or "other device" attached to the seabed for the
purpose of exploring for, developing, or producing resources
therefrom. We have ruled that a drilling rig at anchor on the
OCS, whether preparatory to, at the conclusion of, or during
activities related to the exploration or exploitation of the
OCS, is a "fixed structure" for purposes of the OCSLA (before the
1978 Amendment, see ruling letters 105123 and 101466, and
subsequent rulings 109516 PH and 110385 PH).
In order to be permanently abandoned, the well must be
plugged and abandoned in accordance with the requirements of the
Department of the Interior (DOI) (See 30 CFR part 250).
In the case under consideration, you indicate that the
abandoned wells will be temporarily abandoned, that they will
not be plugged and abandoned in accordance with DOI requirements,
that the wells may be exploratory wells and not production wells.
Because the said regulations are DOI regulations, and subject to
approval by the Agency, the plugging and capping procedures may
vary somewhat from well to well depending on the circumstances.
Accordingly, we find that installation of the LMS at a site where
there are temporarily abandoned wells, is a coastwise point and
transportation of the LMS to such site would be in violation of
the coastwise laws.
With regard to the issues relating to cable-laying and pipe
laying, the operation differs from the precedents which address
the paying out of communication cables between two coastwise
points within the territorial or international waters of the U.S.
The operation as described would be prohibited by 46 U.S.C. App.
883.
HOLDINGS:
1. The installation site on the OCS, at which the only
contact with the seabed is a temporary wire rope,
chain, an anchor mooring system (LMS) which is intended
to hold the hull and superstructure (TPL) on location
during exploration, development, and production of oil
resources on the OCS, is not a coastwise point during
the installation of the marker buoys, until the time of
attachment to a drill ship, TLP or other point at
which merchandise or passengers can be unladed.
2. The installation site on the OCS for purposes stated
above, where there are one or more temporarily
abandoned wells at the installation site, is a
coastwise point during the installation of the LMS,
which will be used for the production of oil and gas
because there would be "[an] installation [or] other
device ... attached to the seabed ... for the purpose
of exploring for, developing, or producing resources
therefrom [i.e., from the OCS]". However, where
abandoned wells or buoys are in the general vicinity of
the site rather than the installation site, and are
unrelated to any ongoing activity, a coastwise point
would not exist at the installation site.
3. Once a coastwise point is established (see above) the
transportation of the components of the LMS as
described would be a coastwise transportation violative
of 46 U.S.C. App. 883.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch