HQ 113113
VES-3-15-CO:R:IT:C 113113 LLB
Mr. Harold E. Mesirow
Robins, Kaplan, Miller, and Ciresi
1801 K Street, N.W.
Washington, D.C. 20006-1301
RE: Coastwise trade; Dry towing; Outer continental shelf;
Temporarily abandoned oil well site; 43 U.S.C. 1333; 46
U.S.C. App. 883
Dear Mr. Mesirow:
Reference is made to your letter of May 23, 1994, in which
you request that Customs rule upon the applicability of the
coastwise merchandise transportation statute (46 U.S.C. App.
883), commonly known as the Jones Act, to the proposed
transportation of a jack-up type drilling rig from a site in the
territorial waters off Alaska, to a site on the Outer continental
shelf off the coast of California at which is located a
temporarily abandoned well. It is requested that confidential
treatment be accorded the identifying information submitted with
the ruling request.
FACTS:
It is proposed that a jack-up type drilling rig be
transported as deck cargo aboard a foreign-flag vessel. The rig
would be loaded aboard the foreign vessel while located in the
territorial waters of Alaska. The vessel with the rig aboard
would be towed by a qualified U.S.-flag towing vessel to a
location on the Outer continental shelf off the coast of
California at which there is a well site which has been
temporarily abandoned and capped. The rig, which to this point
would have been transported as merchandise, would then be unladed
from the foreign vessel and would undertake to permanently cap
the well site. Other well sites would be subsequently plugged,
all of which lie within the three-mile territorial waters off the
California coast. The rig would be moved under wet tow, as a
vessel, from the first well site to all of the other sites by use
of a coastwise-qualified towing vessel.
2
ISSUE:
Whether a temporarily abandoned oil well site located on the
Outer continental shelf is considered a coastwise point, so as to
preclude the use of a foreign-flag vessel to undertake the
transportation of deck cargo in the form of a jack-up drilling
rig from a coastwise point to that site.
LAW AND ANALYSIS:
The coastwise law pertaining to the transportation of
merchandise, 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 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 trans-
portation, 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...
When a vessel is carried aboard another vessel, it assumes the
character of merchandise whose carriage is governed by the same
requirements applicable to any other category of goods.
For your general information, we have consistently
interpreted this prohibition to apply to all vessels except
United States-built, owned, and properly documented vessels (see
46 U.S.C. 12106, 12110, 46 U.S.C. App. 883, and 19 C.F.R.
4.80).
The coastwise laws generally 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
the internal waters, landward of the territorial sea baseline, in
cases where the baseline and the coastline differ. These laws
have also been interpreted to apply to transportation between
points within a single harbor. Merchandise, as used in section
883, includes any article, including even materials of no value
(see the amendment to section 883 by the Act of June 7, 1988,
Pub. L. 100-329; 102 Stat. 588).
Under Section 4(a) of the Outer Continental Shelf Lands Act
of 1953, as amended (43 U.S.C. 1333(a) (OCSLA)), 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. The provisions for dutiability of merchandise, as well as
the coastwise and other navigation laws, apply to production
platforms. C.S.D. 83-52.
The sole remaining issue is whether a site located on the
Outer continental shelf at which there is located a temporarily
abandoned oil well would be considered a location to which the
coastwise laws are extended as contemplated under 43 U.S.C. 1333.
On July 14, 1989 (Ruling Letter 110228), Customs had
occasion to rule upon the question of whether a, "...site on the
OCS at which there are foundation templates, piles, a mooring
system, and temporarily abandoned wells which are to be used for
future production of oil and gas [is] a coastwise point." We
found at that time that such a site is a coastwise point.
While there is a distinction between the contemplated future
of the site previously ruled upon and the one presently under
consideration, in that the former was to be utilized in future
production and the latter is to have its abandonment perfected,
we do not find the distinction to be meaningful for purposes of
the Jones Act as extended through the OCSLA. In both cases there
is present something more than a pristine sea bottom, and some
structure integral to the exploitation of the mineral resources
of the Outer continental shelf. Both locations require
purposeful transportation to a fixed site which should be
reserved for qualified vessels.
HOLDING:
Following a thorough review of the evidence and applicable
law and precedents, we find that a well site on the Outer
continental shelf which has not been permanently abandoned and
capped, remains a location to which the coastwise laws of the
United States are extended. It is necessary to employ a
coastwise-qualified vessel to undertake transportation of
merchandise from a point within the territorial waters of the
United States to such a location.
Sincerely,
Arthur P. Schifflin
Chief
Carrier Rulings Branch