VES-3-16-CO:R:IT:C 113247 GOB
L.J. Dickson
International Marketing Manager
Stena Offshore Inc.
Suite 210
9432 Old Katy Road
Houston, Texas 77055
RE: Coastwise transportation; Pipe laying; 46 U.S.C. App. 883
Dear Mr. Dickson:
This is in response to your letter dated October 19, 1994.
FACTS:
You state, in pertinent part:
...The vessel now known as "Stena Apache" is registered
under the Bahamian Flag...
...
The fact that we install pipe in a less than conventional
manner would need to be addressed, especially when the need
to comply with certain aspects of the "Jones Act", whereby
the transport of pipe from a shore fabrication site to the
offshore installation location would be undertaken by the
vessel itself.
...
We believe we may be allowed an exemption to the Jones Act in
this regard due to the nature of the vessel's operation and the
fact that although we are operating in coastwise trade, we are
being employed to install offshore pipelines in a manner by
which the pipe is being continuously offloaded.
To summarize the above, Stena Offshore would wish to request
your approval in principle to allow this vessel to operate
within the coastal waters of the United States for the
specific intention of installing offshore pipelines.
In an attachment to your letter of October 19, 1994, it is
stated:
- 2 -
The pre-welded pipe is spooled onto the reel which is
located on the vessel while the vessel is in port. The
vessel can then transit to the offshore installation
location and lay the pipeline along the designated pipeline
route in a continuous length without the disruption of
welding as would be the case if a conventional pipelay
vessel was used.
ISSUE:
Whether a foreign-flag vessel may engage in pipe laying
activity within the territorial waters of the United States.
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 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.
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 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.
In C.S.D. 79-321, we stated:
The Customs Service has held that the sole use of a vessel in
laying pipe is not considered a use in the coastwise trade of the
United States, even when the pipe is laid between two points in
the United States embraced within the coastwise laws. The fact
that the pipe is not landed as cargo but is only paid out in
the course of the laying operation makes such operation
permissible. Further, since - 3 -
the use of a vessel in pipelaying is not a use in the
coastwise trade, a foreign-flag vessel may carry pipe which it
is to lay between such points. However, the
transportation of pipe by any vessel other than a pipelaying
vessel to a pipelaying location at a point within U.S.
territorial waters would be considered coastwise trade and
would therefore have to be accomplished by a vessel meeting
the statutory requirements entitling it to engage in such trade.
See also T.D. 78-387 and Ruling 112032 dated January 21, 1992.
Accordingly, the subject foreign-flag vessel may engage in
pipe laying within the territorial waters of the United States as
described supra.
HOLDING:
The subject foreign-flag vessel may engage in pipe laying
within the territorial waters of the United States as described
supra.
Sincerely,
Arthur P. Schifflin
Chief
Carrier Rulings Branch