VES-3-15:RR:IT:EC 116350 rb
Mr. Ken Wells
President
Offshore Marine Service Association
990 N. Corporate Drive, Suite 210
Harahan, LA 70123
RE: Coastwise point; Outer Continental Shelf; exploratory wellhead; suction
anchor; 46 U.S.C. App. 883
Dear Mr. Wells:
In your letter of November 1, 2004, you request a ruling confirming that the coastwise merchandise statute (46 U.S.C. App. 883) would apply to the transportation of a suction anchor assembly from a port in the United States to the U.S. Outer Continental Shelf (OCS) where the suction anchor is sunk into the seabed of the OCS in the immediate vicinity of, and in direct relation to, an exploratory wellhead already in existence at that location. Our ruling in this matter follows.
FACTS:
Suction pile anchors represent a fairly recent advance in technology that is increasingly used in mooring and unmooring floating deepwater drilling/production facilities on the United States Outer Continental Shelf (OCS) in the Gulf of Mexico. Each anchor is cylindrical in shape, typically measures 70-by-91/2 feet, and weighs as much as 85 tons.
The suction anchors are carried from a U.S. port aboard an anchor handling towing supply vessel (AHTS) or on a barge (and then loaded onto an AHTS as part of a single movement) to a site over the OCS where a drill ship has previously sunk and temporarily capped a well. Once at the site, the AHTS lowers the suction anchor to the seabed and, when it is positioned, water is pumped out of the anchor, thereby resulting in its being driven into the seabed. A series of these suction pile anchors installed at a site constitutes a complete anchoring (mooring) system.
After imbedding the suction pile anchoring system, an AHTS later connects the system to a floating drilling/production facility, thereby holding the facility in place in relation to the wellhead.
ISSUE:
Whether an anchor handling towing supply vessel (AHTS) is subject to the coastwise merchandise statute (46 U.S.C. App. 883) when used in transporting suction pile anchor assemblies between a U.S. port or other coastwise point and a site on the OCS where an exploratory wellhead exists for resource exploration, development or production.
LAW AND ANALYSIS:
The coastwise merchandise statute, 46 U.S.C. App. 883, provides, in pertinent part, that no merchandise may be transported between ports or places embraced within the coastwise laws either directly or for any part of such transportation in any other than a coastwise-qualified vessel, i.e., 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 this agency’s administration of this statute, the term “merchandise” is defined as “goods, wares, and chattels of every description,...” (19 U.S.C. 1401(c)). Consequently, the suction pile anchor assemblies carried aboard an AHTS represent merchandise under section 883 (compare, e.g., Headquarters ruling (HQ) 110959, dated August 8, 1990 (a lateral mooring system (LMS) consisting of wire rope, chain, buoys and anchors to be used to secure a tension leg platform in place on the Outer Continental Shelf (OCS) for drilling and production activities was clearly merchandise under section 883 when carried as deck cargo aboard another vessel)).
Under the Outer Continental Shelf Lands Act (OCSLA), as amended (43 U.S.C. 1333(a)(1)), the coastwise laws are extended to 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 this end, in C.S.D. (Customs Service Decision) 81-95, Vol. 15 Cust. Bull. 927 (1981), a wellhead casing which had been sunk into the seabed of the OCS for the purpose of resource production was effectively concluded to be a coastwise point or place (see also C.S.D. 84-96, Vol. 18 Cust. Bull. 1068 (1984)). Similarly, in HQ 113113, supra, a site on the OCS at which there was situated a temporarily abandoned oil well remained a location to which the coastwise laws were extended.
Moreover, in C.S.D. 89-115, Vol. 23 Cust. Bull. 838, at 846 (1989), an installation site on the OCS at which there were located foundation templates, piles, a mooring system, and temporarily abandoned wells to be used for future production of oil and gas was
likewise considered a coastwise point; otherwise stated, such wells, along with the other assemblies directly and specifically associated therewith, together comprised the coastwise site or point.
Against this backdrop, therefore, an exploratory wellhead sunk into the seabed of the OCS for future resource exploration, development or production, would clearly constitute a coastwise site; as a result, a suction pile anchor and mooring assembly that is thereafter transported to, and installed into the seabed at, that site, in order to secure a floating production facility in relation to that wellhead for the described purpose(s) would likewise have been transported to and installed at that same coastwise site (see also HQ 110959, supra (a coastwise site existed on the OCS where a lateral mooring system (LMS) was installed to secure/move a platform in relation to one or more wells previously imbedded at that site for the production of oil and gas)).
Parenthetically, in sharp contrast with the foregoing, Customs (now Customs and Border Protection (CBP)) has ruled that the use of an anchor handling tug or vessel in moving (setting and changing the location of) anchors for drilling rigs or other vessels located either in territorial waters or on the OCS does not constitute coastwise trade; and thus such an operation may be effected by a non-coastwise-qualified vessel (see, e.g., HQ 106912, of August 8, 1984). Yet, for such “anchor handling” to remain outside the realm of coastwise trade under section 883, it must per force be understood that:
[T]he anchors which are to be moved by the anchor handling tugs would be attached to anchor
lines from the drilling rigs while being moved by the anchor handling tugs. Under such
circumstances, it is our opinion that the anchors would be considered to be fittings of the drilling
rigs and not “merchandise” within the meaning of...section 883.
HQ 102984, of November 14, 1977 (emphasis added); accord, HQ 112387, of July 23, 1992 (anchor handling boat used to lift drilling rig’s anchors and chains off ocean floor for reeling in by rig; no anchors or chains transported to or from rig). Hence, quite plainly, such anchor handling, as just described, is not involved in the instant case.
HOLDING:
An anchor handling towing supply vessel (AHTS) is subject to the coastwise merchandise statute (46 U.S.C. App. 883) when transporting a suction pile anchor and mooring assembly either directly or for any part of such transportation between a U.S. port or other coastwise point and the site of an exploratory wellhead on the OCS for
resource exploration, development or production, where the anchor is to be used as part of a system for mooring a floating production facility in relation to that wellhead. As such, the use of a foreign-flagged vessel for this purpose would violate section 883.
Sincerely,
Glen E. Vereb
Chief
Entry Procedures and Carriers Branch