VES-10-01-RR:BSTC:CCI 116558 rb
Anne Mickey
Sher & Blackwell
1850 M Street, NW., Suite 900
Washington, D.C. 20036
RE: Coastwise Trade; Salvage; Outer Continental Shelf; 46 U.S.C. App. 883;
46 U.S.C. App. 316(d); 43 U.S.C. 1333(a)
Dear Ms. Mickey:
In your letter of October 18, 2005, you requested an expedited ruling, on behalf of your client, Rowan Companies, Inc., concerning the applicability of the coastwise merchandise law, 46 U.S.C. App. 883, and the law covering salvaging operations, 46 U.S.C. App. 316(d), in connection with the use of a foreign-flagged diving vessel, and the possible use of non-coastwise-qualified barges, in facilitating the removal of remnants of five mobile offshore drilling rigs located on the Outer Continental Shelf (OCS) in the Gulf of Mexico. Our ruling in this matter follows.
FACTS:
The remains of five mobile offshore drilling rigs are involved in this case. Prior to recent hurricanes which destroyed the rigs, they were initially situated outside the three-mile United States (U.S.) territorial sea on the Outer Continental Shelf in the Gulf of Mexico. During the hurricanes, the platform and legs of each rig became separated. Four of these platforms have not yet been located. However, portions of the leg sections remain embedded in the OCS seabed, while other portions have broken away and are lying on the sea bottom; and various rig debris is strewn as well along the OCS ocean floor surrounding the leg portions. In addition to the leg portions still affixed to the seabed, the platform components and other drilling rig debris, that, for purposes of this ruling, are presumed to still be outside U.S. territorial waters on the OCS, will need to be recovered/removed therefrom for possible transportation to and unlading at a U.S. (coastwise) port.
Specifically, to accomplish the collection and removal of the OCS-embedded leg wreckage and other drilling rig debris (legs, platforms, or remnants of either), it is proposed to use a foreign-flagged diving support vessel as well as a derrick barge and a materials barge, which barges may possibly be non-coastwise-qualified. In brief, the diving support vessel would inspect the wreckage and attach cables to the legs and other debris so that the derrick barge may uproot/lift these materials and deposit them onto the materials barge for hauling.
ISSUES:
Whether the recovery of the leg and platform remnants, and other drilling rig debris at and around the former drilling rig sites located beyond the three-mile limit of U.S. territorial waters on the OCS in the Gulf of Mexico constitutes salvaging operations under 46 U.S.C. App. 316(d); and whether the lading and transportation of such recovered materials for unlading at a possible U.S. port would constitute a coastwise transportation subject to 46 U.S.C. App. 883.
LAW AND ANALYSIS:
Under 46 U.S.C. App. 316(d), a foreign-flag vessel, with certain exceptions not here relevant, is prohibited from engaging in salvaging operations in the territorial waters of the United States on the Gulf of Mexico; and, under 46 U.S.C. App. 883, merchandise may not be transported between ports or places in the United States embraced within the coastwise laws in any vessel other than one which is coastwise-qualified (i.e., built in and documented under the laws of the United States and owned by persons who are citizens of the United States). (“Merchandise” under section 883 comprises “goods, wares, and chattels of every description” (19 U.S.C. 1401(c)), and includes “valueless material” (46 U.S.C. App. 883, Proviso 11).)
In pertinent part, the coastwise laws apply to any point in the territorial waters of the United States, defined as the belt, three (3) nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline (T.D. 78-440).
Moreover, under the Outer Continental Shelf Lands Act (OCSLA), as amended, 43 U.S.C. 1333(a), the laws of the United States are extended to the subsoil and seabed of the Outer Continental Shelf (OCS) 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. Thus, the laws applicable to the OCS include the customs and navigation laws, as well as the coastwise laws, which of course encompass sections 316(d) and 883 (see also, e.g., T.D. 54281(1); and Headquarters ruling (HQ) 113838, of February 25, 1997).
Notably, when the OCSLA was amended in 1978 regarding temporary attachment, the legislative history made clear that:
Federal law is to be applicable to all activities or all devices in contact with the seabed for exploration, development, and production. The committee intends that Federal law is, therefore, to be applicable to activities on drilling rigs, and other watercraft, when they are connected to the seabed by drillstring, pipes, or other appurtenances, on the OCS for exploration, development, or production purposes.
H. Rept. 95-590, reprinted at, 1978 U.S. Code Cong. & Admin. News 1450, at 1534 (emphasis added). However, given the facts herein, the leg remnants of the former drilling structures can in no way legally be perceived as henceforward being so affixed for exploration, development or production; and, hence, against this backdrop, these particular locations may no longer be treated under the OCSLA as coastwise points, a finding already definitively reached in HQ 115850, dated November 15, 2002, a case involving circumstances very closely comparable to those at present. In short, as a result, since the former sites of the drilling rigs would no longer constitute coastwise points, the provisions of 46 U.S.C. App. 316(d) and 883 would simply not apply to the operations contemplated within the context of this ruling.
HOLDING:
The recovery/removal, lading and transportation of materials from the former drilling rigs in this case, at and from locations beyond U.S. territorial waters on the OCS, and the subsequent unlading of such materials at a possible U.S. port, are not subject to either 46 U.S.C. App. 316(d) or 883.
Sincerely,
Glen E. Vereb
Chief
Cargo Security, Carriers, & Immigration Branch