HQ 113176
VES-3-15-CO:R:IT:C 113176 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;
Pristine site; 43 U.S.C. 1333; 46 U.S.C. App. 883
Dear Mr. Mesirow:
Reference is made to your letter of August 2, 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 in the Gulf of Mexico at which no structure or development
of any type currently exists. 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 self-propelled, semi-submersible 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 then proceed to a
location on the Outer continental shelf in the Gulf of Mexico at
which it is proposed to engage the rig in exploratory drilling
operations. The rig, which to this point would have been
transported as merchandise, would then be unladed from the
foreign vessel and would undertake to begin drilling operations
which would extend to between 30 days and six months in duration.
The rig would be moved under wet tow, as a vessel, from the first
well site to all subsequent sites by use of a coastwise-qualified
towing vessel.
2
ISSUE:
Whether a non-coastwise-qualified vessel may be used to
transport a drill rig as deck cargo from a site in Alaska to a
site located on the Outer continental shelf (OCS) at which no
surface or seabed structure exists, for the purpose of initiating
exploratory drilling operations at that location, and further,
whether that drill rig may then be wet-towed by qualified vessels
to subsequent OCS sites at which structures do currently exist.
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.
As we understand the circumstances under consideration, the
site contemplated for the unlading and employment of the drilling
rig is a location at which no surface, sub-surface, or seabed
structure of any sort currently exists, nor will be in existence
at the time the rig arrives. As such the site, although located
over the OCS, is not considered to be a point within the
jurisdiction of the coastwise laws at the time of unlading.
There is in effect a Customs Service Decision of November
21, 1985 (C.S.D. 85-9), which prohibits the transportation of
merchandise by vessel between coastwise points by use of what are
known as dual-mode movements. Typically, these would involve the
transportation of a vessel as cargo from a coastwise point to a
point on the high seas (not a coastwise point) at which the
transported vessel is placed in the water. Another vessel then
is utilized to move the newly unladed vessel to a point within
the jurisdiction of the coastwise laws (including sites on the
OCS).
In the case under consideration, the rig will be utilized in
exploratory drilling operations at its initial point of unlading
(which has been determined not to be a coastwise point) for a
period of from one to six months. We are of the opinion that
this use in drilling operations acts to break the continuity of
the voyage between Alaska and the first of the subsequent sites
at which there is some existing structure.
Accordingly, the contemplated movement from Alaska to the
pristine site over the OCS is not a movement within the
contemplation of the coastwise merchandise transportation
statute, and neither is the subsequent movement of the drilling
rig considered a violative dual-mode transportation.
HOLDING:
Following a thorough review of the evidence and applicable
law and precedents we find that, for the reasons stated in the
Law and Analysis portion of this ruling, neither the initial nor
subsequent movements of the drilling rig under consideration as
described would be prohibited under the Jones Act, 46 U.S.C. App.
883.
Sincerely,
Arthur P. Schifflin
Chief
Carrier Rulings Branch