VES-3-02-OT:RR:BSTC:CCR H328718 JLE
Constantine Papavizas, Esq.
Winston & Strawn, LLP
1901 L Street, N.W.
Washington, DC 20036
RE: Coastwise Transportation; Monopile Foundation; 46 U.S.C. § 55102; 46 U.S.C. § 55111.
Dear Mr. Papavizas:
This is in response to your November 25, 2022, inquiry regarding whether certain operations contemplated to be performed by a foreign-flagged vessel relating to the installation of monopile foundations for wind turbine generators in federal waters on the U.S. Outer Continental Shelf (“OCS”) would violate the coastwise laws. Our decision follows.
FACTS
The following facts are from your November 25, 2022, ruling request. Your client,
[ ] is a party to a [ ] agreement with
[ ]. Your client proposes installing offshore wind turbine generators (“WTGs”) in federal waters using the [ ] or another similar non-coastwise-qualified vessel. The offshore WTGs would be spaced on average no less than [ ] nautical miles apart and no more than [ ] nautical miles apart. Based on current planning, subsea cable will have been laid in the lease area prior to the installation of the monopiles, but in general no monopile will be installed closer than [ ] nautical miles to any installed cable.
To accomplish this, multiple monopiles will be loaded aboard a non-coastwise-qualified foreign-flagged installation vessel in a U.S. port. The installation vessel will sail to the federal lease area where it will install each monopile at a pristine seabed site while maintaining its position utilizing a dynamic positioning (“DP”) system, with the intention of remaining unanchored from the seabed. However, you note, the installation vessel may have to anchor at an installation site depending on weather conditions before it commences monopile installation operations at each site. The installation vessel is not a jack-up vessel. There will be no scour protection installed at any of these pristine sites prior to the installation of the monopiles. The installation vessel will not move other than for corrections for changing wind, current, and wave conditions during the monopile installation when in DP mode. Should a foreign-flagged jack-up vessel be utilized if the [ ] is unavailable, said jack-up vessel will jack up at the pristine work site prior to installing a monopile, and then jack down and sail to the next site to repeat the operation. Thus, the monopile will be the first installed item on the pristine seabed at each future WTG location. Scour protection will be installed by a separate, coastwise-qualified vessel following installation of each monopile. Once several monopiles have been installed, the foreign-flagged installation vessel will return to a U.S. port to pick up the next set of monopiles, and operations will be repeated until all monopiles have been installed.
ISSUE
Whether the process of installing monopiles described above using a foreign-flagged installation vessel would result in a violation of the Jones Act, 46 U.S.C. § 55102?
LAW AND ANALYSIS
The coastwise law applicable to the transportation of merchandise, known as the Jones Act, is found at 46 U.S.C. § 55102, and provides in pertinent part:
Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel—
is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and
has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
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. 33 C.F.R. § 2.22(a)(2). In addition, Section 4(a)(1) of the Outer Continental Shelf Lands Act of 1953 (“OCSLA”) (as amended) provides that the Constitution and laws and civil and political jurisdiction of the United States are extended to:
the subsoil and seabed of the outer Continental Shelf;
all artificial islands on the outer Continental Shelf;
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, including non-mineral energy resources; or
any such installation or other device (other than a ship or vessel) for the purpose of transporting or transmitting such resources.
Accordingly, the OCSLA extends U.S. jurisdiction to devices attached to the seabed of the OCS for the purpose of producing non-mineral energy resources such as wind energy.
The Jones Act specifically prohibits the coastwise transportation of “merchandise” between coastwise points by non-coastwise-qualified vessels. The Jones Act sets forth that the term “merchandise” “includes … merchandise owned by the United States Government, a State, or a subdivision of a State” and “valueless material.” See 46 U.S.C. § 55102(a). CBP additionally utilizes the definition of “merchandise” in 19 U.S.C. § 1401(c): “goods, wares, and chattels of every description, and includes merchandise the importation of which is prohibited, and monetary instruments as defined in section 5312 of Title 31.” Furthermore, by interpretations in its Jones Act administrative letter rulings, CBP has distinguished the transportation of “vessel equipment” from the transportation of “merchandise.” Here, the offshore transportation of monopiles would constitute transportation of merchandise.
The term “coastwise point” is not defined in the Jones Act itself. 19 CFR § 4.80b references the term as follows: “A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (‘coastwise point’) is unladen at another coastwise point….” This includes all points within U.S. territorial waters (i.e., landward points within three nautical miles of the territorial baseline) as well as limited extension to those points on the OCS that are captured by the jurisdictional provisions of the OCSLA. Unlike U.S. territorial waters, however, the extent of U.S. jurisdiction on the OCS is limited. In its application of the Jones Act, CBP interprets the OCSLA to provide CBP jurisdiction where there is an installation or device attached to the seabed serving a purpose as articulated in the OCSLA—the exploration for, development, production, transmission, or transportation of resources. 43 U.S.C. § 1333(a)(1).
CBP previously has determined that jurisdiction does not reach activity occurring on the pristine seabed of the OCS where there is no installation or device attached to the seabed, and thus for Jones Act purposes no coastwise point exists. See, e.g., HQ 115069 (June 14, 2000) (noting a pristine site “is not considered to be a coastwise point”). Furthermore, in relation to the transportation of merchandise within and between such areas to which U.S. coastwise laws apply, the term “coastwise point” is interpreted narrowly. In this context, CBP has consistently determined that transportation of merchandise between different points in the same harbor, or even along the same pier, by a non-coastwise-qualified vessel results in a violation of the Jones Act, while a lading and unlading at the same point does not. See, e.g., H169017 (July 25, 2017) (finding no violation where a non-coastwise-qualified vessel proposed to return cargo “to the same berth at the same terminal in the same U.S. port at which it was previously loaded); see also, HQ H036936 (Jan. 26, 2009) (recognizing that an “integrated facility” with “a cluster of wells that are 300 feet from each other” is both an area within the jurisdiction of the coastwise laws via OCSLA and “a location that has several coastwise points, much like a harbor with several piers and docks”).
To determine whether the proposed transportation occurs between coastwise points, we examine the points at which the subject monopiles will be laden and unladen. Regarding the point at which the monopiles are to be installed, you stated that these will be no less than [ ] nautical miles from cable that previously has been laid on the seafloor. Furthermore, the monopiles will be the first item to be installed at the location. In CBP’s evaluation of the facts presented, CBP considers the location for monopile installation to be a pristine site prior to the installation of the monopile. As outlined in your request, the non-coastwise-qualified installation vessel will lade each monopile at a U.S. port (a coastwise point) and unlade each monopile at a point on the pristine seabed of the OCS (a non-coastwise point). Because the installation vessel is not transporting the monopiles between coastwise points, the proposed operations do not violate the Jones Act. CBP notes, however, that upon the installation of the monopiles at each location, each monopile would then be considered a coastwise point, at which no other merchandise, if laden at another coastwise point, could be unladen other than by a coastwise-qualified vessel.
HOLDING
For the reasons stated above, the transportation of monopile foundations from a U.S. coastwise point to a pristine seabed site on the OCS by a non-coastwise-qualified vessel would not violate the Jones Act.
Sincerely yours,
W. Richmond Beevers. Chief
Cargo Security, Carriers, and Restricted
Merchandise Branch
Office of International Trade, Regulations
and Rulings
U.S. Customs and Border Protection