VES-3/VES-3-02/VES-3-15/VES-10-03-RR:IT:EC 113657 GOB
Andrew Podolnick, Esq.
Senior Counsel
Law Department
Chevron U.S.A. Production Co.
935 Gravier Street
New Orleans, LA 70112
RE: 46 U.S.C. App. 289, 316(a), 883; Coastwise transportation;
Outer Continental Shelf; Towing; Crane vessel
Dear Mr. Podolnick:
This is in response to your letter dated September 6, 1996.
FACTS:
In your letter of September 5, 1996, you state as follows:
Last year Chevron U.S.A. Inc. solicited an opinion from the
Customs Department regarding the proposed operation of a
semisubmerssible [sic] vessel (ssv) designed for the
drilling and production of hydrocarbons. The ssv was to be
anchored on the Outer Continental Shelf 150 miles off the
coast of Louisiana...
Since last corresponding with Customs Department the project
has changed and several issues have surfaced which need
further clarification. Rather than modify an existing ssv,
Chevron has elected to build a spar, which is a deep draft,
single hull floating column caisson. The spar will be
anchored to the OCS and, like an ssv, is capable of
supporting both drilling and production operations. For all
practical purposes the spar will function identically to an
ssv...
The issue of primary concern is with respect to the
installation of the topsides facilities and the drilling
package that will be set on the spar once it has been
anchored...
...
We would appreciate a response to the following questions.
For the purposes of your response, please assume that the
spar will be documented under the laws of a foreign nation.
1. Will the use of the foreign flagged derrick barge to
install the topsides and the drilling package on the
anchored spar violate the coastwise trade laws and in
particular 46 U.S.C. App. 883? Until the topsides and
drilling unit are installed, the spar will be incomplete and
cannot perform its intended functions.
2. Must we use barges and tugs authorized to engage in
coastwise trade to transport the topsides and the drilling
unit to the location?
3. Drilling operations will be completed in approximately 3
years. Must we use vessels authorized to engage in
coastwise trade to transport the drilling unit from the
spar? In this regard, can we engage a foreign flagged
derrick barge to perform the actual removal?
4. If during the life of the spar, we elect to rework the
wells and need to install a second drilling unit can the
installation work be performed by a foreign flagged derrick
barge? Again, the barge that is performing the initial
installation may be one of the only vessels world-wide that
can perform this work. Can the unit be transported to the
spar aboard the derrick barge or must it be loaded onto
barges and tugs authorized to engage in coastwise trade?
ISSUE:
Whether the proposed activities may be accomplished in
compliance with the coastwise laws.
LAW AND ANALYSIS:
Generally, the coastwise laws prohibit the transportation of
passengers or merchandise between points in the United States
embraced within the coastwise laws in any vessel other than a
vessel built in, documented under the laws of, and owned by
citizens of the United States.
The coastwise laws generally apply to points in the
territorial sea, which is 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.
46 U.S.C. App. 883, the coastwise merchandise statute often
called the "Jones Act," provides in part that no merchandise
shall 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 vessel other than a
vessel built in, documented under the laws of, and owned by
citizens of the United States.
The coastwise law applicable to the carriage of passengers
is found in 46 U.S.C. App. 289 and provides that:
No foreign vessel shall transport passengers between ports
or places in the United States, either directly or by way of a
foreign port, under a penalty of $200 for each passenger so
transported and landed.
Section 4.50(b), Customs Regulations (19 CFR 4.50(b)) states
as follows:
A passenger within the meaning of this part is any person
carried on a vessel who is not connected with the operation
of such vessel, her navigation, ownership, or business.
46 U.S.C. App. 316(a) prohibits the use of a non-coastwise-qualified vessel to tow any vessel, other than a vessel in
distress, between ports or places in the United States embraced
within the coastwise laws, either directly or by way of a foreign
port, or to do any part of such towing, or to tow any such vessel
between points in a harbor of the United States.
Section 4(a) of the Outer Continental Shelf Lands Act of
1953, as amended (43 U.S.C. 1333(a); "OCSLA"), provides in 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
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
("OCS"). We have applied that principle to drilling platforms,
artificial islands, and similar structures, as well as to devices
attached to the seabed of the outer Continental Shelf for the
purpose of resource exploration operations.
After a consideration of this matter, we make the following
determinations based on the facts presented.
Your ruling request is a follow-up to Ruling 113439 dated
May 18, 1995. Nothing contained herein changes the
determinations of Ruling 113439, which we do not repeat here.
With respect to your first question, please be advised of
the following. Once the spar is anchored on the outer
continental shelf, it becomes a coastwise point. Pursuant to 46
U.S.C. App. 883 and 289, a non-coastwise-qualified vessel (e.g.,
the foreign-flag derrick barge) cannot transport merchandise
(e.g., the topsides and/or drilling package) or passengers (i.e.,
any individual not connected with the operation, navigation,
ownership, or business of the transporting vessel) from one
coastwise point (e.g., a U.S. port) to a second coastwise point
(e.g., the anchored spar). The foreign-flag derrick barge may
participate in the installation and removal of the topsides and
drilling unit provided that such activity does not involve the
transportation of merchandise or passengers between coastwise
points. If the foreign-flag derrick barge is stationary at the
site of the spar, it may use a crane aboard the foreign-flag
derrick barge to move the topsides and drilling unit from the
transporting vessel to the spar. In this regard, in Ruling
109831 dated November 14, 1988, we stated:
The Customs Service has long held that the use of a non-coastwise qualified crane vessel to load and unload cargo is
not coastwise trade and does not violate 46 U.S.C. App. 883,
provided, that any movement of the merchandise is effected
exclusively by the operation of the crane and not by
movement of the vessel, except for necessary movement which
is incidental to a lifting operation while it is taking
place. (Emphasis in original.)
With respect to your second question, pursuant to 46 U.S.C.
App. 883, a vessel which transports the topsides and the drilling
unit from a coastwise point (e.g., a U.S. port) to a second
coastwise point (e.g., the anchored spar) must be coastwise-qualified.
Further, pursuant to 46 U.S.C. App. 316(a), a vessel which
tows another vessel from one coastwise point (e.g., a U.S. port)
to a second coastwise point (e.g., the anchored spar) must be
coastwise-qualified. Inasmuch as there are no structures of any
kind at the surface location, such location is not a coastwise
point until the spar is anchored at that location. Accordingly,
46 U.S.C. App. 316(a) does not apply to the towing of the vessel
from a coastwise point to the surface location on the outer
continental shelf prior to the anchoring of the spar.
With respect to your third question, pursuant to 46 U.S.C.
App. 883, a vessel which transports the drilling unit from a
coastwise point (e.g., the anchored spar) to a second coastwise
point (e.g., a U.S. port) must be coastwise-qualified. You also
ask with respect to the "actual removal" of the drilling unit.
As stated supra, the foreign-flag derrick barge may participate
in the installation and removal of the topsides and drilling unit
provided that such activity does not involve the transportation
of those items between coastwise points. If the foreign-flag
derrick barge is stationary at the site of the spar, it may use a
crane aboard the foreign-flag derrick barge to move the drilling
unit from the spar to the transporting vessel.
Our response to your fourth question is the same as our
response to your first question. The foreign-flag derrick barge
may install a drilling unit on the spar provided that it does not
transport the drilling unit between coastwise points. The
foreign-flag derrick barge cannot transport the drilling unit
from one coastwise point (e.g., a U.S. port) to a second
coastwise point (e.g., the spar anchored on the outer continental
shelf). Further, a vessel which tows another vessel from one
coastwise point (e.g., a U.S. port) to a second coastwise point
(e.g., the anchored spar) must be coastwise qualified.
HOLDING:
As detailed supra, certain of the proposed activities
constitute coastwise trade such that those activities must be
accomplished by coastwise-qualified vessels.
Sincerely,
Chief,
Entry and Carrier Rulings Branch