OT:RR:BSTC:CCR H265370 KLQ
Mr. Alexander Koff
Whiteford, Taylor & Preston, LLP
Seven Saint Paul Street
Baltimore, Maryland 21202-1636
RE: Reconsideration of H253621 (Aug. 14, 2014); 46 U.S.C. § 55109; 43 U.S.C. 1333(a); Dredging; Outer Continental Shelf Lands Act; 43 U.S.C. § 1333(a)(1).
Dear Mr. Koff:
This is in response to your June 3, 2015, ruling request on behalf of your client, [ ] (“Company”), in which you request a reconsideration of H253621 (Aug. 14, 2014). Our decision follows.
FACTS
The following facts are from H253621 and your ruling request. The subject of this ruling is part one of a two-part project concerning an eventual pipelay route. In part one of the project, the Company has been asked by [ ] to design and build a trenching tool. The trenching tool will be a plow, a mechanical trencher, or a third model which is still in development. The tool will not be able to float, will not be designed for navigation and will be incapable of transporting cargo, equipment or passengers. The tool will be pulled by one of the Company’s vessels, which are all foreign-built and foreign-flagged, or in the alternative, the Company will use one or more U.S. built vessels or coastwise-qualified vessels to pull the tool. This proposed trenching tool will eventually be used in part two of this project to dig in the Outer Continental Shelf (“OCS”) off the coast of [ ] in order to lay a pipeline, which will be owned by [ ]. Wells and platforms will also be installed at a future date near the location of the anticipated pipelay route. The location of the anticipated pipelay route will be between [ ].
The Company will test the tool in various locations on the OCS within approximately a mile of the actual pipelaying site. Therefore, the distance between the testing sites and any platforms will vary. You further indicate that: (1) the testing will occur for no more than a few miles at a time during which the tool will be assessed for its ability to dig a trench [ ]; (2) the length of the test trench will be shorter than the length of the trench for the pipelay; (3) the testing will occur over a period of two months, which is shorter than the period of time it will take to complete the pipelay project; and (4) there will be approximately four to six years between the testing phase and the trenching operations for the pipelay.
ISSUES
Whether the subject dredging on the OCS qualifies as dredging for purposes of 46 U.S.C. § 55109.
Whether pursuant to 46 U.S.C. § 55109, a foreign-built and foreign-flagged support vessel, a U.S. built support vessel, or a coastwise-qualified support vessel, engaged in dredging on the OCS for the purposes of the exploration, development and production of resources from the OCS, may pull a foreign-built trenching plow or mechanical trencher.
LAW AND ANALYSIS
Pursuant to 46 U.S.C. § 55109, only coastwise-qualified vessels may engage in dredging in the navigable waters of the United States (“U.S.”), providing, in pertinent part:
[A] vessel may engage in dredging in the navigable waters of the United States only if—
the vessel is wholly owned by citizens of the United States for purposes of
engaging in the coastwise trade;
the charterer, if any, is a citizen of the United States for purposes of
engaging in the coastwise trade; and
(3) the vessel has been issued a certificate of documentation with a coastwise endorsement under chapter 121 of this title or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement
Dredging is defined as “excavation” by any means:
The word “excavate” is derived from the Latin word meaning to hollow out. Its common, plain and ordinary meaning is to make a cavity or hole in, to dig out, hollow out, to remove soil by digging, scooping out or other means. The common plain and ordinary meaning of the word “dredging” is the removal of soil from the bottom waters by suction or scooping or other means.
CBP has long-held that the term “dredging” within the meaning of 46 U.S.C. § 55109, is “the use of a vessel equipped with excavating machinery in digging up or otherwise removing submarine material.” In the instant case, you propose to use a foreign-built trenching tool, on the OCS. You assert that the purpose of the trenching is to “test” the ability of the subject tool to dig a trench [ ]. For the purpose of 46 U.S.C. § 55109, this activity is properly termed dredging in that a vessel will pull a foreign-built excavating machine which will remove submarine material.
You indicate that the proposed dredging will take place on the OCS. Section 1(a) of the Outer Continental Shelf Lands Act of 1953 (OCSLA), provides, in part that the laws of the United States are extended to:
[T]he 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.
Moreover, the OSCLA 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.
ISSUE ONE
You make a number of arguments in support of your position that 46 U.S.C. § 55109 does not apply to the OCS. Your primary argument is that the subsoil and seabed of the OCS are not navigable waters as contemplated under 46 U.S.C. § 55109. In support of your argument you cite H103995 (May 18, 2010) in which we found that a 20 foot deep man-made dredge pond did not qualify as navigable waters because the pond was not used in the “customary modes of trade and travel on water as a highway for interstate commerce.” We held that since the pond did not qualify as navigable waters, the dredging was not in violation of 46 U.S.C. § 55109. The question of whether a body of water qualifies as navigable waters is an appropriate consideration when there is actually a question as to the categorization of that body of water. The body of water involved in the present matter is readily identifiable as that above the OCS and we have long held that certain dredging on the OCS, is dredging in the U.S., for purposes of 46 U.S.C. § 55109.
The OCSLA extends U.S. jurisdiction to activities related to the exploration, development, or production of natural resources on the seabed of the OCS. In the ruling request, your client explains that the subject dredging is part one of a two-phase project. This two-phase project is part of a larger project involving the construction of platforms and wells on the OCS. In HQ 109016 (July 22, 1987), CBP held that “the prohibition on dredging on the OCS extends to those operations which are in furtherance of the extraction of or the exploration for, or the development or production of, resources from the OCS.” The laying of pipes, in addition to the construction of platforms and wells on the OCS, evidences exploration, development, and production of resources from the OCS. Insofar as the purpose of this specific dredging activity is to develop a tool, which will be used in connection with the exploration, development and production of resources from the OCS, and the OCSLA expands the application of the dredging statute to the OCS for activities related to the exploration, development and production of resources from the OCS, the subject dredging will be subject to 46 U.S.C. § 55109.
ISSUE TWO
You indicate that the foreign-built trenching tool will be a plow, mechanical trencher, or a third model which is still in development. The tool will not be able to float, will not be designed for navigation and will be incapable of transporting cargo, equipment or passengers. The tool will be pulled by one of the Company’s vessels, which are all foreign-built and foreign-flagged, or in the alternative, the Company will use one or more U.S. built vessels or coastwise-qualified vessels to the pull the trenching tool.
You cite two rulings in which Customs held that whether a system constitutes a foreign built dredge is governed by the build of the support vessel, not by the build of the excavating machinery. These rulings date to 1986 and 1989. Since the issuance of these rulings, the build of the support vessel is no longer the defining prong of that analysis. The support vessel is statutorily required to be coastwise-qualified and to have a coastwise endorsement. Therefore, neither a foreign-built vessel nor a foreign-flagged support vessel (even if U.S. built) will be permitted to pull the trenching tool. Only a coastwise-qualified vessel with a coastwise endorsement will be permitted to pull the tool.
However, in the specific instance of a coastwise-qualified vessel pulling a non-floating trenching tool, there is no statutory requirement that the tool be U.S. built. CBP has long-held that the term “dredging” within the meaning of 46 U.S.C. § 55109, is “the use of a vessel equipped with excavating machinery in digging up or otherwise removing submarine material.” As discussed above, 46 U.S.C. § 55109 requires that the vessel have a coastwise endorsement, and thus, the vessel must be U.S. built. However, 46 U.S.C. § 55109 does not mandate a build requirement for the excavating machinery. Insofar as 46 U.S.C. § 55109 does not require that the excavating machinery pulled by a coastwise-qualified vessel be built in the U.S., it would not be a violation of 46 U.S.C. § 55109 for a coastwise-qualified vessel, engaged in dredging on the OCS, in connection with the exploration, development or production of resources from the OCS to pull a non-floating, foreign-built plow or mechanical trencher.
HOLDING
The subject dredging on the OCS qualifies as dredging for purposes of 46 U.S.C. § 55109.
Pursuant to 46 U.S.C. § 55109, a coastwise-qualified support vessel, engaged in dredging on the OCS for the purposes of the exploration, development and production of resources from the OCS, may pull a foreign-built trenching plow or mechanical trencher.
Sincerely,
Glen E. Vereb, Director
Border Security & Trade Compliance Division
Office of International Trade, Regulations and Rulings
U.S. Customs and Border Protection