VES-3-CO:R:IT:C 111889 LLB
Mr. Patrick H. Patrick
Jones, Walker, Waechter, Poitevent,
Carrere and Denegre
201 St. Charles Avenue
New Orleans, Louisiana 70170-5100
RE: Coastwise trade; Merchandise; Passengers; Crew members;
Equipment of vessels; Outer Continental Shelf; Oil
production platform
Dear Mr. Patrick:
Reference is made to your letter of August 27, 1991, in
which you request a ruling on issues associated with the use of a
foreign-built, foreign-flag modified semi-submersible drilling
vessel to be used as a stationary floating oil production station
at a site on the outer Continental Shelf.
FACTS:
It is proposed that a foreign-built and foreign-registered
semi-submersible drilling vessel be modified in a United States
shipyard and towed by properly qualified vessel to a point on the
high seas which overlies well heads already drilled on the outer
Continental Shelf. The modified production vessel would have
aboard at the time of its tow from a shoreside point to the well
head site, equipment essential to its intended operation. It is
our understanding that no vessel or other structure will be at
the high seas site at which the production vessel will arrive and
be anchored and subsequently attached to the seabed well heads.
It is anticipated that the production vessels would remain
stationary, except for incidental movement resulting from the
action of winds, tides, and wave action, and would remain at the
same site for a period of eight to ten years.
The vessel would operate as a production platform by means
of a device known as a multi-well template which will be placed
on the sea floor over several well heads. A flexible pipe known
as a marine riser will be attached to the template for the
purpose of funneling oil or natural gas from the wells to the
vessel. Oil and natural gas would leave the production vessel
via pipelines which would be installed. These lines would either
lead ashore, or to an off shore gathering platform. It is stated
that the only materials aboard would be necessary equipment, the
only persons aboard would be production crew members, and any
other vessels involved in moving between the production vessel
and points within the jurisdiction of the United States would be
coastwise qualified.
ISSUE:
Whether the movement and use of a foreign built and
documented drilling vessel/production platform, as described in
the Facts portion of this ruling, is permissible under the
coastwise laws as administered by the Customs Service.
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...
The Act of June 19, 1886, as amended (24 Stat. 81; 46
U.S.C. App. 289, sometimes called the coastwise passenger
law), 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.
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.
Not included within the general meaning of merchandise is
the equipment of a vessel which will be used by that vessel.
Such materials have been defined as articles, "...necessary and
appropriate for the navigation, operation or maintenance of the
vessel and for the comfort and safety of the persons on board."
(Treasury Decision 49815(4), March 13, 1939). Customs has
specifically ruled that, "Vessel equipment placed aboard a vessel
at one United States port may be removed from the vessel at
another United States port at a later date without violation of
the coastwise laws." (Customs Ruling Letter 102945, November 8,
1978). Decisions as to whether a given article comes within the
definition of "vessel equipment" are made on a case by case
basis.
For the purposes of the coastwise laws, the term
"passenger" is defined in section 4.50 (b), Customs Regulations
(19 CFR 4.50 (b)), as "...any person carried on a vessel who is
not connected with the operation of such vessel, her navigation,
ownership, or business."
In view of the fact that the vessel in question will have
aboard only necessary equipment and crew members during its
movement and, further, that it will be towed by a qualified
vessel from a coastwise point to a point on the high seas
overlying a point on the outer Continental Shelf at which there
will be no surface installation, we have determined that no
coastwise laws will be violated in the course of the proposed
vessel movement. It should be noted, however, that the
production vessel will itself become a coastwise point once
attached to the seabed, and any further movements of equipment
and personnel from a coastwise point to the production site must
be accomplished by use of a coastwise qualified vessel.
HOLDING:
Following a thorough review of the facts and analysis of
the relevant law and precedents, we have determined, in accord
with the information set forth in the Law and Analysis section of
this ruling letter, the proposed operation does not violate any
of the coastwise laws administered by the Customs Service.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch