VES-3-02-OT:RR:BSTC:CCI H196496 LLB
Category: Carriers
Gary M. Haugen, Esquire
Bauer Moynihan and Johnson, LLP
2101 Fourth Avenue, Suite 2400
Seattle, Washington 98121
Re: 46 U.S.C. §§ 2101, 50503, 55102; oceanographic research; tidal turbines.
Dear Mr. Haugen:
This letter is in response to your December 8, 2011, ruling request on behalf of your client, Public Utility District No. 1 of Snohomish County (hereinafter “the utility company”), related to the coastwise activities of the special purpose vessel the OH INSTALLER. Our decision follows.
FACTS
The subject utility company is implementing a pilot research program (hereinafter “the Project”) to confirm the feasibility of generating electricity from the tidal currents within Puget Sound. The project, the details of which will be discussed further in the Law and Analysis section of this ruling, will involve the deployment, operation, monitoring, and evaluation of two open-center tidal turbines developed by OpenHydro Group Ltd. (OpenHydro). The utility company intends to use the foreign-built, foreign-flagged, special purpose vessel the OPENHYDRO INSTALLER (the “vessel”) to deploy the tidal turbines. The manufacturer of the tidal turbines, OpenHydro, is also the builder of the vessel.
The utility company proposes to lade the tidal turbines aboard the vessel at a point either in Anacortes, Seattle, or Everett in the state of Washington. Once the turbines are laden aboard the vessel, the vessel will be coupled to a coastwise-qualified cable-laying vessel and towed by coastwise-qualified tugboats to the Admiralty Inlet off of Whidbey Island where the turbines will be deployed to the seafloor. Once the turbines are unladen, the vessel is uncoupled from the cable-laying vessel and is towed from the deployment site.
The “Statement of Project Objectives” that was submitted in support of this ruling request states:
Snohomish PUD (the District) believes there is potential to generate renewable, emission free, environmentally benign and cost-effective energy from tidal flows at selected sites in the Puget Sound, and that successful tidal energy demonstration in the Sound may enable significant commercial development resulting in important benefits for both the northwest region and the country. This project promotes the Wind and Hydropower Technologies Program’s goals of advancing commercial viability, cost-competitiveness, and market acceptance of marine hydropower systems. The District is pursuing a four-phase Tidal Energy Demonstration Project in order to conduct in water testing and evaluation of commercial/near-commercial tidal in-stream conversion (TISEC) technology representative of what would be expected to be used in a commercial-scale power plant. This will enable the District team to make an informed evaluation of whether, and to what extent, tidal energy should be included in the District’s energy portfolio, while simultaneously facilitating the commercial development of this new industry.
(emphasis added). According to OpenHydro’s statement dated December 6, 2011, submitted in support of the subject ruling request:
The [vessel] barge is a purpose-built, 3 point heavy-lift barge designed solely for the installation and recovery of subsea base-mounted Open-Centre Turbines. The [vessel] has been designed and optimized to preliminarily test the operation of the turbine prior to installation, carry the subsea base and turbine to site, and lower it onto the seabed. The [vessel] is not intended to be used for any purpose not associated with the testing, installation, or recovery of Open-Centre turbines. The vessel is classified by the Bureau Vertitas as a special service, non-propulsion, and unmanned vessel.
. . .
The design of the [vessel] includes a “moon pool,” lifting mechanisms, video and GPS equipment, a platform to access the turbine, a purpose-built lifting frame for the turbines, an attachment system to allow in-water testing of the turbine, and other features tailored specifically to the limited tasks for which the barge is intended. The [vessel] relies on local tug boats to travel between a local dock and the installation site and to hold the [vessel] in place while the installation takes place as well as support vessels to carry personnel and equipment to the installation site and assist in other facets of the installation process.
These same features make the [vessel] unsuitable for other tasks, such as the transportation of general cargo or people. The [vessel] has no cargo or deck to store containers or other cargo and no accommodation. The [vessel] is also is unsuitable for lifting objects off the seafloor apart from the Open-Centre Turbine as it relies on the specialized lifting frame to retrieve an Open-Centre Turbine from the sea floor and it has no ability to completely remove an object out of the water.
(emphasis added).
ISSUE
Whether the transportation and installation of tidal turbines, as described in the FACTS section above, by the OPENHYDRO INSTALLER constitutes “oceanographic research” and therefore, not a violation of 46 U.S.C. § 55102.
LAW and ANALYSIS
Pursuant to 46 U.S.C. § 55102, 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 foreign port, unless the vessel—
(1) is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and
(2) 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.
Pursuant to 46 U.S.C. § 55102(a), "[m]"erchandise, includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material." As such, any cargo, regardless of its value or ownership, would be considered merchandise for the purpose of 46 U.S.C. § 55102. The U.S. Customs and Border Protection (CBP) regulations promulgated under the authority of 46 U.S.C. § 55102(a), provide in pertinent part:
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, regardless of the origin or ultimate destination of the merchandise.
19 C.F.R. § 4.80b(a).
You concede the turbines are merchandise and that the transportation of the turbines would be between coastwise points; however, you assert that because the vessel is engaging in oceanographic research, its use, as contemplated in the FACTS section above, would not constitute coastwise trade. In its interpretation of the coastwise laws with regard to the issue under consideration, CBP has long held that the use of a vessel solely to engage in oceanographic research is not considered a use in the coastwise trade. See HQ H008902 (May 17, 2007) (holding that scientists transported aboard scientific research vessel to gather data from rocks in seafloor); HQ 113461 (June 8, 1995)(scientific personnel transported by oceanographic research vessel to conduct seismic surveys); HQ 112122 (July 22, 1992)(scientists transported by survey ship to map the ocean floor); HQ 110399 (Aug. 23, 1989)(biologists and chemists transported aboard an oceanographic research vessel to collect algae and water samples). Accordingly, if such a vessel transported between coastwise points, or provided part of the transportation between coastwise points, of any persons other than the vessel crew and scientists and students engaged in the oceanographic research or any merchandise other than the usual supplies and equipment necessary for that research and/or research specimens or samples, the coastwise laws would be violated. HQ 112316 (July 22, 1992).
CBP’s interpretation of the coastwise laws as it relates to oceanographic research, in part, has been in concert with the Oceanographic Research Vessel Act, as amended, and codified at 46 U.S.C. § 2101(18); which defines an “oceanographic research vessel” as:
. . . a vessel that the Secretary finds is being employed only in instruction in oceanography or limnology, or both, or only in oceanographic or limnological research, including studies about the sea such as seismic, gravity meter, and magnetic exploration and other marine geophysical or geological surveys, atmospheric research, and biological research.
See also 46 U.S.C. § 50503 (“An oceanographic research vessel (as defined in section 2101 of this title) is deemed not to be engaged in trade or commerce.”). We note that although the above-cited CBP rulings do not determine whether the vessels themselves are oceanographic research vessels under 46 U.S.C. § 2101(18), the use of the vessel or the type of vessel has been a considering factor as to whether the activities aboard those vessels constituted oceanographic research. In addition, these rulings consider the activities of the individuals transported aboard a vessel alleged to be engaged in oceanographic research.
In support of your argument that the contemplated activities are oceanographic research, you conclusionally state that “[d]uring the course of the Project [,] marine geophysical, environmental and biological research will be conducted, all of which are within the definition of “oceanographic research.”” Our review of the evidence you provided, specifically, the Statement of Project Objectives and Openhydro’s statement, suggest that the activities contemplated by Openhydro and its use of the vessel is not oceanographic research.
The vessel itself has no purpose related to the study of the sea; rather, it is an installation vessel. Likewise, the company installing the turbines, which as noted above, are the manufacturers of the turbines and the builders of the vessel, do not engage in the study of the sea; rather, according to OpenHydro’s webpage, it “is a technology business that designs and manufactures marine turbines to generate renewable energy from tidal streams.” Pursuant to Openhydro’s statement, the vessel serves and cannot be used for any other purpose, but installing and testing tidal turbines manufactured by Openhydro. The vessel is not equipped to transport people; thus, no scientific personnel or individuals engaged in the study of the sea will be aboard the vessel. The purpose of the tidal turbines themselves is to generate electricity and their deployment is not for the purpose of studying or exploring the ocean. Insofar as the vessel has no purpose related to the study of the sea, the company installing the turbines and their employees are not engaged in a study of the sea, and the purpose of the turbines themselves is to generate electricity, we conclude that the installation and transportation of the turbines do not constitute oceanographic research.
We note, however, that the manner in which you frame your issue seems to suggest that the vessel’s activities in the scope of the entire project can be considered “oceanographic research”. The activities of the vessel and the persons aboard the vessel are determinative of whether the vessel is engaged in oceanographic research. Notwithstanding your assertion, the proposed project would not be considered oceanographic research. Pursuant to the “Statement of Project Objectives” submitted with your ruling request the project: “promotes the Wind and Hydropower Technologies Program’s goals of advancing commercial viability, cost-competitiveness, and market acceptance of marine hydropower systems” and “enable[s] the District team to make an informed evaluation of whether, and to what extent, tidal energy should be included in the District’s energy portfolio, while simultaneously facilitating the commercial development of this new industry.” Indeed, the project encompasses monitoring of tidal systems, not for the purpose of studying the sea, but for the primary purpose of generating electricity for commercial purpose. In addition, the “Statement of Project Objectives” outlines plans to conduct an environmental impact of the tidal turbines on marine mammals, whales, and fish. But for the presence of the turbines, the presence of which are not for the study of the sea, the studies related to marine life and the environment would not be conducted. Any investigation related to marine mammals, whales, and fish, within the scope of this project is not to study these species and organisms, but to determine whether such would be an impediment to the primary purpose of the project which is to generate electricity.
Accordingly, based on the foregoing analysis, the activities engaged in by the vessel do not constitute oceanographic research; therefore, the transportation of the turbines between coastwise points would be in violation of 46 U.S.C. § 55102.
HOLDING
Insofar as the transportation of the tidal turbines do not constitute oceanographic research, the coastwise transportation of the tidal turbines would be in
violation of 46 U.S.C. § 55102.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Immigration Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection