• HQ H008396
• Jun 04, 2007

• Type : Carriers • HTSUS :
•  Related:   107579; 109576; 113838; 115431; 115134; 108213; 106351   

VES-3-15-OT:RR:BSTC:CCI H008396 LLB

Category: Carriers

Jonathan K. Waldron, Esquire
Larry Hampel, Esquire
Blank Rome, LLP
Watergate
600 New Hampshire Avenue, N.W.
Washington, D.C. 20037

Re: Coastwise Trade; SAFE CONCORDIA; floating hotel; gangway; 19 U.S.C. §§ 1433 and 1434; 46 U.S.C. §§ 55102, 55103, and 60105; Outer Continental Shelf Lands Act;

Dear Messrs. Waldron and Hampel:

This is in response to your March 14, 2007, request, on behalf of your client, Prosafe Offshore, Ltd., (Prosafe), to issue a ruling concerning the application of certain Customs and Border Protection (CBP) statutes and regulations to the operations of a foreign-flag hotel accommodation vessel. Our decision follows.

Facts

The subject foreign-flag vessel, the SAFE CONCORDIA, (the floatel) has been contracted to provide accommodation, offices, workshops, workspace on deck, and storage facilities related to the construction, integration of preconstructed components, installation of piping, cables and other materials, and commissioning of a floating production facility (FPF).

The floatel is expected to depart Mexican waters and proceed directly to the FPF. The FPF will be located more than 175 miles off the shore of Louisiana in the Gulf of Mexico and will be attached to the seabed by a mooring system connected to the spar hull and have the bare elements of its topsides in place. The floatel may anchor seaward of the U.S. territorial waters to take on fuel and stores from coastwise-qualified offshore supply vessels (OSVs) from a U.S. port approximately 4-5 times a week in addition to receiving at least one helicopter flight a week for personnel. The floatel will not be carrying any equipment, supplies, spares, or merchandise for the FPF from Mexico or any other foreign country and none will be unladen upon its arrival to the FPF. Further, the floatel will not be transporting any passengers to the FPF.

Once the floatel arrives at the FPF, it will be connected to the FPF by means of a telescopic gangway. The floatel will maintain its position by operating in dynamic positioning (DP) mode and will not be anchored or moored to the seabed. The gangway may be retracted during emergency conditions involving weather, logistics, or safety, in which event, the floatel will maneuver away 500 meters until conditions allow the floatel to return to the FPF. During any necessary period of disengagement, the floatel will not proceed to any other port or coastwise point, but will immediately re-engage when conditions permit.

While the floatel is on station and attached to the FPF, the following operations will occur. The primary function of the floatel is to quarter the FPF work crews. As such, the gangway is the means by which the work crews will access the FPF. In addition, the floatel will provide workspace for the crews to perform operations that can be done more safely aboard the floatel than the FPF, e.g., pipe welding. As noted above, the delivery of supplies, equipment, materials, and personnel from U.S. ports to the floatel, that will be used by and employed on the floatel or the FPF, will be made by OSVs. The floatel’s crane will be used to transfer the subject items to the FPF. Once the subject items are on the FPF, they may be transferred back to the floatel by its own crane for temporary storage. Spares, supplies, and catering stores for sole use on the floatel will be transported to the floatel by OSVs and off-loaded by the floatel’s crane. Issues

1. Whether the FPF is a coastwise point. a. If so, whether the floatel is deemed an extension of the FPF, by virtue of connection to the FPF by gangway, whereby it would be considered a coastwise point.

2. Whether the work crews, which will be transported to the floatel by coastwise-qualified OSVs, subsequent to being disembarked onboard the floatel, will be allowed to move freely between the floatel and the FPF without entering and clearing Customs each time they leave the floatel.

3. Whether the floatel will be subject to arrival reporting, vessel entry, and clearance requirements when the floatel: a. first anchors to receive goods from OSVs; b. first arrives at the FPF; c. disengages upon completion of the project to call foreign. 4. Whether the OSVs, as described above, that will be transporting equipment, supplies, goods, and personnel from U.S. ports to the floatel would be: a. in violation of 46 U.S.C. §§ 55102 and 55103. b. subject to arrival reporting, vessel entry, and clearance requirements.

5. Whether the use of the floatel’s crane to unload cargo from the OSVs to the floatel or the FPF, or to unload cargo from the floatel to the FPF, would constitute the transportation of merchandise in violation of 46 U.S.C. § 55102.

6. Whether the use of the floatel to transport the work crews, supplies, goods, and equipment from the FPF to a distance 500 meters away and returning to the FPF, would constitute transportation of passengers and merchandise in violation of the 46 U.S.C. §§ 55102 and 55103.

Law and Analysis

Pursuant to 46 U.S.C. § 55102(b), the merchandise coastwise law often called the “Jones Act”, 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 one that is coastwise-qualified, i.e. U.S.-built, owned and documented. Likewise, 46 U.S.C. § 55103(a) prohibits the transportation of passengers between points in the United States embraced within the coastwise laws, either directly or by way of a foreign port, in a non-coastwise-qualified vessel. 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 internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ. See 33 C.F.R. § 2.22(a)(2).

The navigation law administered by CBP requires that any vessel arriving “from a foreign port or place” must immediately report its arrival and make formal entry. 19 U.S.C. §§ 1433(a)(1)(A) and 1434(a)(1). These laws also require any vessel which has received merchandise while outside the territorial sea to report its arrival, see 19 U.S.C. § 1433(a)(1)(D), and make formal vessel entry, see 19 U.S.C. § 1434(a)(4), with the latter also the authority imposing the requirement to make formal entry if any vessel receives merchandise while outside the territorial sea. In addition, any vessel proceeding from a port or place in the United States “for a foreign port or place” and any vessel that would “receive merchandise while outside the territorial sea” must obtain clearance from CBP before proceeding. 46 U.S.C. §§ 60105(a)(1) and (3).

Section 4(a) of the Outer Continental Shelf Lands Act of 1953 (OCSLA), provides, in part, that 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 within a State.

(emphasis added).

Issue 1

You inquire as to whether the FPF and the floatel are coastwise points under the facts presented. As stated above, the OCSLA, extends the laws of the U.S. 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.” The statute was substantively amended by the Act of September 18, 1978, adding, inter alia, language concerning temporary attachment to the seabed. The legislative history provides, in pertinent part: ...It is thus 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.

(emphasis added). H. Rep. No. 95-590; 1978 U.S.C.C.A.N. 1450, 1534.

Pursuant to the foregoing provision, we have ruled that the coastwise laws, the laws on entrance and clearance of vessels, and the provisions for dutiability of merchandise, are extended to mobile oil drilling rigs during the period they are secured to or submerged onto the seabed of the OCS. See Treasury Decisions (T.D.s) 54281(1), 71-179(1), 78-225; see also, Cust. Serv. Dec. 85-54. We have applied the same principles to drilling platforms, artificial islands, and similar structures, as well as devices attached to the seabed of the OCS for the purpose of resource exploration operations, including warehouse vessels anchored over the OCS when used to supply drilling rigs on the OCS. See Cust. Serv. Dec. 81-214 and 83-52; see also, HQ 107579 (May 9, 1985).

With regard to the FPF, you indicate in your ruling that it will be attached to the seabed by a mooring system connected to the spar hull. Insofar as the FPF will be attached to the seabed for the purpose of “exploring for, developing, or producing resources therefrom,” the FPF would be a coastwise point pursuant to the OCSLA.

With regard to the floatel, you indicate in your ruling that it will be dynamically positioned next to the FPF and connected thereto by gangway. We note that with respect to dynamically positioned vessels, this agency has long- held that the lack of any permanent or temporary attachment to the seabed operates to exclude such vessels operating over the OCS from becoming coastwise points pursuant to the OCSLA. HQ 109576 (July 12, 1988) and HQ 113838 (Feb. 25, 1997). Consequently, unless the floatel itself is connected to the seabed, as required by the OCSLA, it will not be considered a coastwise point merely by virtue of its connection to the FPF by gangway. See HQ 115431 (Sept. 4, 2001)(stating that hotel vessel would not be considered a coastwise point pursuant to the OCSLA unless anchored or moored to the seabed); see also HQ 115134 (Sept. 27, 2000)(stating that floating offshore service facility vessel would not be subject to Customs and navigation laws pursuant to the OCSLA insofar as “onboard vessel propulsion system,” rather than anchoring was used to maintain the vessel’s position next to drilling unit). Issue 2 You inquire as to whether the work crews, subsequent to being disembarked from the OSVs to the floatel, may move freely between the floatel and the FPF without entering and clearing Customs. Although the FPF is considered a location to which U.S. law would apply pursuant to the OCSLA, whereas the foreign-flag floatel would not, no law or regulation administered by this agency requires individuals to enter or clear Customs under these circumstances. See HQ 115431, citing 19 U.S.C. § 1459.

Issue 3

In your request, you indicate that the floatel will depart from Mexico and may anchor seaward of U.S. territorial waters to take on fuel and stores prior to proceeding to the FPF. As noted above, any vessel arriving “from a foreign port or place” must immediately report its arrival and make formal entry. 19 U.S.C. §§ 1433(a)(1)(A) and 1434(a)(1). These laws also require any vessel which has received merchandise while outside the territorial sea to report its arrival, see 19 U.S.C. § 1433(a)(1)(D), and make formal vessel entry, see 19 U.S.C. § 1434(a)(4), with the latter also the authority imposing the requirement to make formal entry if any vessel receives merchandise while outside the territorial sea. In addition, any vessel proceeding from a port or place in the United States “for a foreign port or place” and any vessel that would “receive merchandise while outside the territorial sea” must obtain clearance from CBP before proceeding. 46 U.S.C. §§ 60105(a)(1) and (3).

Since the FPF is a place within the U.S. pursuant to the OCSLA, and since the floatel will be both arriving from Mexico and will have “received merchandise outside the territorial sea” it will be required to report its arrival and make entry once it arrives at the FPF. See 19 C.F.R. §§ 4.2(a) and 4.3(a)(1) and (4). Furthermore, the floatel’s departure from the FPF to Mexico necessitates clearance. See 19 C.F.R. § 4.60(a)(1).

With respect to the compliance with the foregoing requirements, in view of the uniqueness of OCS operations, we recognize the discretion accorded the port director under whose jurisdiction such requirements fall. See 19 C.F.R. § 101.4(a). We therefore defer to the relevant port director(s) in regard to their administration of these requirements made applicable pursuant to the OCSLA.

Issue 4 You inquire as to whether the OSVs that will be delivering supplies, equipment, and personnel to the floatel from U.S. ports would be in violation of 46 U.S.C. §§ 55102 and 55103 and whether such OSVs would be subject to arrival, entry, and clearance requirements. As stated above, 46 U.S.C. §§ 55102 and 55103 prohibit the transportation of merchandise and passengers by non-coastwise qualified vessels. Pursuant to 19 C.F.R. § 4.80b(a), promulgated under the authority of 46 U.S.C. § 55102, a coastwise transportation of merchandise takes place when merchandise laden at one coastwise point is unladen at another coastwise point. For purposes of § 55103, “passenger” is defined as “…any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, business.” 19 C.F.R. § 4.50(b).

Notwithstanding the fact that the OSVs are coastwise-qualified, and therefore fully compliant with 46 U.S.C. §§ 55102 and 55103, the maintaining of the floatel’s position by dynamic positioning renders inapplicable the coastwise and navigation laws at issue with one exception. That exception pertains to the OSVs in question which have delivered or received merchandise or passengers to or from the floatel while the floatel is outside the 3-mile territorial sea. OSVs engaged in such activities are required to report arrival, enter, and clear. See 19 U.S.C. §§ 1433(a)(1)(D), 1434(a)(4), and 46 U.S.C. § 60105(a)(3); HQ 115134 (Sept. 27, 2000).

Issue 5

You inquire as to whether the use of the floatel’s crane to unload cargo from the OSVs to the floatel or the FPF or to unload cargo from the floatel to the FPF would constitute the transportation of merchandise in violation of 46 U.S.C. § 55102. CBP has held that the use of a non-coastwise-qualified crane barge to load and unload cargo is not coastwise trade and does not violate the coastwise laws, provided, that any movement of merchandise is effected exclusively by the operation of the crane and not by movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. Thus, a crane vessel could lift merchandise with its crane at one coastwise point, be pivoted while remaining in that stationary location, and put down the merchandise at a coastwise point other than that from which it was lifted. Such a vessel would be prohibited from lifting merchandise with its crane at one coastwise point, being towed or pushed or otherwise moving to another coastwise point while the merchandise is suspended from the crane, and placing the merchandise at that second coastwise point. See HQ 115431; HQ 108213 (Mar. 6, 1986); HQ 106351 (Nov.1, 1983). Accordingly, the floatel’s crane may be used in the project in question as long as it is used within the parameters of the above-cited CBP decisions.

Issue 6 In your ruling request, you indicate that under exigent circumstances, it may be necessary for the floatel to move the work crews, supplies, goods, and equipment, to a distance 500 meters away from the FPF, then return to the FPF once it is determined to be safe to do so. You inquire as to whether such movement would violate 46 U.S.C. §§ 55102 and 55103 and whether reconnecting the gangway at an alternate location on the FPF would be considered transportation between two coastwise points.

As stated above, the coastwise transportation of merchandise occurs when merchandise is laden at one U.S. point and unladen at another U.S. point. See 19 C.F.R. § 4.80b(a). Likewise, the coastwise transportation of passengers occurs when passengers embark at one U.S. point and disembark or go ashore temporarily at another U.S. point. See 19 C.F.R. § 4.80a(b)(1). Thus, based on the foregoing, the remaining issue under the foregoing scenario is whether the connection of the gangway to another location on the FPF that is different from the location on the FPF that the work crews embarked and the merchandise was laden, would be considered another U.S. point within the meaning of 19 C.F.R. § 4.80(a). Insofar as the embarkation and disembarkation of passengers, as well as the lading and unlading of merchandise involves one coastwise point, i.e. the FPF in this case, there would be no transportation of merchandise or passengers between two coastwise points and therefore, no violation of the 46 U.S.C. §§ 55102 or 55103.

HOLDINGS

1. The FPF, as described herein, is a coastwise point pursuant to the OCSLA insofar as it will be attached to the seabed for the purpose oil exploration, development, and production; however, the foreign-flag floatel will not be a coastwise point by virtue of its connection to the FPF by gangplank unless it also attaches to the seabed.

2. The work crews, which will be transported to the floatel by coastwise-qualified OSVs, subsequent to being disembarked onboard the floatel, will be allowed to move freely between the floatel and the FPF without entering and clearing Customs each time they leave the floatel.

3. The floatel will be subject to arrival reporting, vessel entry, and clearance requirements when the floatel first arrives at the FPF and departs upon completion of the project to call foreign. We defer to the relevant CBP port director(s) with respect to the administration of these requirements.

4. The OSVs that will be transporting equipment, supplies, goods, and personnel from U.S. ports to the floatel would not violate 46 U.S.C. §§ 55102 and 55103 because not only are the OSVs coastwise qualified, the floatel would not be considered a coastwise point under the OCSLA thereby rendering the coastwise and navigation laws inapplicable; however, the OSVs will be subject to arrival reporting, entry, and clearance requirements when delivering or receiving merchandise or passengers pursuant to 19 U.S.C. §§ 1433(a)(1)(D) and 1434(a)(4) and 46 U.S.C. 60105(a)(3) and the regulations promulgated thereunder.

5. The use of the floatel’s crane to unload cargo from the OSVs to the floatel or the FPF, or to unload cargo from the floatel to the FPF would not constitute the transportation of merchandise in violation of 46 U.S.C. § 55102.

6. The use of the floatel to transport the work crews, supplies, goods, and equipment from the FPF to a distance 500 meters away and returning to the FPF, as described in the FACTS section herein, would not constitute transportation of merchandise or passengers in violation of the 46 U.S.C. §§ 55102 and 55103, respectively.


Sincerely,

Glen E. Vereb
Chief
Cargo Security, Carriers and Immigration Branch