VES-3-16 CO:R:IT:C 111718 JBW
Thomas A. Lorensen, Esquire
Paul, Hastings, Janofsky & Walker
Twelfth Floor
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
RE: Coastwise; Pipelaying; Foreign Registry; Equipment;
Passengers; LORELAY; 46 U.S.C. App. 883.
Dear Mr. Lorensen:
This letter is in response to your letter of July 8, 1991,
in which you seek a ruling on the application of the United
States coastwise laws to the use of a foreign-flagged vessel in a
pipelaying project in southern California.
FACTS:
Allseas Marine Contractors, S.A. ("Allseas"), is under
contract with the Exxon Corporation to install offshore pipelines
as part of Exxon's Santa Ynez Unit Expansion Project. Allseas
wishes to use the LORELAY, a vessel registered in Panama, built
in Germany, and modified in the Netherlands. The LORELAY is
described as a state of the art pipelaying vessel, with a large
capacity hold and a positioning system that allows it to operate
with anchors or the assistance of anchor-holding tugs. Other
support vessels of "U.S. registry" will be used in the pipelaying
project.
The project will entail the installation of five steel
pipelines and a flexible pipe riser in the Santa Barbara Channel.
The LORELAY will arrive at Port Hueneme, Ventura County,
California from its base in the North Sea with a crew of 120
personnel; the remainder of the crew will arrive in Los Angeles
by air. The LORELAY will be prepared for service by removing
from its hold its gondola barge and by offloading the stinger
extension and connecting it to the LORELAY's stinger. Two
thousand feet of flexible pipeline will be offloaded and stored
at the dock. Material and equipment will be loaded onto the
vessel at this time. You state that certain large pieces of
equipment that were manufactured in Europe and loaded in
Rotterdam will be used in the operation. Two of these pieces are
large support decks that will be offloaded the LORELAY and then
reloaded and transported to existing jackets. Also, seventeen
buoyancy tanks will be stored on the gondola barge and
transported to the work site for subsea installation.
The pipelines will be laid on the seabed between the
Heritage, Harmony, and Hondo jackets and the existing near shore
pipeline. From the map supplied, these points each are over
three miles from the shore. The pipelaying operation involves
the loading of the pipe into the LORELAY's hold at Port Hueneme.
This pipe will include the pipe described in the previous
paragraph and pipe that will be supplied by Exxon. The pipe will
then be transported to the work site and installed. You state
that "U.S.-flagged ships" will transport personnel and materials
to and from the project site.
ISSUES:
Whether a foreign-flag vessel may load and transport pipe
that is to be laid by the vessel between points embraced within
the coastwise laws.
LAW AND ANALYSIS:
The coastwise laws generally prohibit the transportation of
passengers or merchandise between points in the United States
embraced within the coastwise laws in any vessel other than a
United States built, owned, and documented vessel. 46 U.S.C.
App. 289 (Supp. III 1985) & 46 U.S.C.A. App. 883 (West Supp.
1991). The coastwise laws apply to points in the territorial
sea, defined as the belt, three nautical miles wide, seaward of
the territorial sea baseline, and to points located in internal
waters, landward of the territorial sea baseline, in cases where
the baseline and the coastline differ.
The Customs Service has held that the sole use of a non-
coastwise-qualified vessel to lay pipe between points in the
United States or in international waters does not violate the
coastwise laws. C.S.D. 79-321, 13 Cust. B. & Dec. 1481, 1481-
82 (1979). Further, we have held that, since the use of a vessel
in pipelaying is not a use in coastwise trade, a foreign-flag
vessel may carry pipe which it is to lay between coastwise
points. Id. However, the transportation of pipe by any vessel
other than a pipelaying vessel to a pipelaying location at a
point within United States territorial waters would be considered
coastwise trade. Id. Legitimate equipment and stores of the
pipelaying ship, including pipe laden to be paid out in the
course of operations, are not considered merchandise within the
purview of section 883; articles, however, that are not
legitimate equipment and stores of the pipelaying vessel must be
transported in coastwise-qualified vessels. Id.
For purposes of section 289, the Customs Regulations define
passenger to include " any person carried on board a vessel who
is not connected with the operation of such vessel, her
navigation, ownership, or business." 19 C.F.R. 4.50(b) (1991);
19 C.F.R. 4.80a(a)(5) (1991). The Customs Service has held that
crew members, including technicians necessary to assist the
vessel's pipelaying operation, are not considered passengers, nor
are construction company personnel and employees of the various
subcontractors who may be on the ship in connection with the
pipelaying operation. C.S.D. 79-321.
Pursuant to Section 4(a) of the Outer Continental Shelf
Lands Act of 1953 (OCSLA), as amended, 43 U.S.C. 1333(a) (1982),
the Customs Service has ruled that the coastwise laws are
extended to mobile oil drilling rigs during the period they are
secured to or submerged onto the seabed of the Untied States
outer continental shelf. T.D. 54281(1), 92 Treas. Dec. 8 (1957);
see also, C.S.D. 89-115, 23 Cust. B. & Dec., No. 45, 7, 13-14
(1989). The Customs Service has applied this principle 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, including warehouse vessels anchored over the outer
continental shelf when used to supply drilling rigs on the outer
continental shelf. Id. Further, the platform itself will
become a coastwise point. Therefore, any vessel moving
merchandise or passengers between the stationary platform and
another coastwise point must be documented for the coastwise
trade. 46 U.S.C. App. 289 & 883.
Applying these principles, we determine that the foreign-
flagged LORELAY may be used to transport and to lay pipe in the
above described project. However, any pipe loaded on the LORELAY
at one United States point that, instead of being laid as part of
the project, is unloaded at another United States point, would
result in a coastwise violation. Further, the LORELAY may
transport its crew, technicians, workers, and their equipment
and materials associated with the pipelaying operation.
In your letter, you relate a number of specifically
described operations that implicate coastwise issues. We agree
that the off-loading and attachment of the stinger extension,
which is considered vessel equipment, is a permitted
transportation. C.S.D. 79-331, 13 Cust. B. & Dec. 1496, 1498
(1979). Further, the unloading and reloading of the pipe and
buoyancy tanks is permitted provided that those objects are
installed as part of the pipelaying operation. The
transportation of the two support decks is not problematic in
view of the fact that they will be loaded in Rotterdam and will
not be offloaded from the LORELAY until the vessel arrives at the
SYU Expansion Project site where they will be placed on the
Heritage and Harmony jackets. Although the existing jackets are
considered coastwise points, the transportation of these decks
from Rotterdam to either jacket is a direct arrival from foreign
rather than a coastwise movement and therefore would not
constitute a violation of 46 U.S.C. App. 883.
Finally, as a point of clarification, you state that "U.S.-
registered" vessels will be used to transport supplies and
workers. The terms "U.S.-registered" and "coastwise-qualified"
are not synonymous, for a vessel may be have a United States
registry, but not be eligible to engage in the coastwise trade.
Also, the flexible piping that is off-loaded at Port Huenume is
subject to duty. Headquarters Ruling Letter 109355, dated March
1, 1988.
HOLDING:
With the exceptions noted in the body of the ruling, the
foreign-flagged LORELAY may be used to transport and to lay pipe
in the above described project. However, any pipe loaded on the
LORELAY at one United States point that, instead of being laid as
part of the project, is unloaded at another United States point,
would result in a coastwise violation. Further, the LORELAY may
transport its crew, technicians, workers, and their equipment
and materials associated with the pipelaying operation.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch