Customs Ruling HQ H300962 - Coastwise Transportation; Wind Turbines; Scour Protection; 46 U.S.C. § 55102; 46 U.S.C. § 55103; 46 U.S.C. § 55109; 19 C.F.R. § 4.80a; 19 C.F.R. § 4.80b.

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HQ H300962
Apr 14, 2022

Type : Carriers • HTSUS :
Related: 103692; 109108; 109910; 115646; 113223; 109412; 115431; 115333; 114833; 113711; 115531; 113838; 113219; 116350; 114158; 110228; 115217; 116111; 115940; 111412; H311603; H317289; H010211

VES-3-02-OT:RR:BSTC:CCR H300962 AMW

Mr. Constantine G. Papavizas, Esq.
Winston & Strawn LLP
1700 K Street, NW
Washington, DC 20006

RE: Coastwise Transportation; Wind Turbines; Scour Protection; 46 U.S.C. § 55102; 46 U.S.C. § 55103; 46 U.S.C. § 55109; 19 C.F.R. § 4.80a; 19 C.F.R. § 4.80b.

Dear Mr. Papavizas:

This letter is in response to your ruling request, submitted on September 25, 2018, and revised on February 10, 2021, on behalf of [ ] regarding whether the installation of wind turbine generators and associated activities by non-coastwise qualified vessels over the U.S. outer continental shelf (“OCS”), as described below, would violate the coastwise laws. Our decision follows.

FACTS

The following facts are from your ruling requests and from subsequent follow-up communications with this office. Your client proposes to transport and install wind turbine generator (“WTG”) units for a project organized by [ ] off the coast of [ ]. You anticipate that the project will begin in early 2023 and will conclude in early 2024. You state that the project will occur in four discrete phases: (1) cable installation, (2) scour protection installation, (3) foundation installation, and (4) installation of the WTG unit itself. You propose that each phase will be conducted by a non-coastwise-qualified vessel.

The first phase of the project involves the installation of electrical cable. The offshore wind towers will eventually be integrated into the U.S. power grid via subsea cable connecting each tower to an offshore sub-station or sub-stations, which will in turn be connected to an onshore connection. The cable will be laid by a non-coastwise-qualified cable installation vessel between these points, which you have identified as the [ ] (the “Cable Vessel”).

To lay the subject cable, the Cable Vessel will deploy a trenching machine that will both create a narrow trench and simultaneously place the cable in that trench. You state that the Cable Vessel will utilize the [ ] (the “trenching machine”). The trenching machine will create a narrow trench using water jets and a “cutter” while laying the cable in the trench. Following this, the sediment created by this process will naturally cover the trench without further action from the trenching machine.

The cable will either arrive on board the Cable Vessel from a foreign destination or via another non-coastwise-qualified vessel from a foreign destination. In the latter case, the cable will be loaded onto the Cable Vessel either in a U.S. port or at sea within or outside U.S. territorial waters. After the cable is laden onto the Cable Vessel, the vessel will lay the cable on the seabed in both U.S. territorial waters and on the pristine seabed of the U.S. OCS for storage and subsequent pick up by either a near-shore Jones Act-qualified barge or a non-coastwise-qualified cable installation vessel. Some of the cable laid down on the seabed either within U.S. territorial waters or on the OCS may be picked up and laid down again. Specifically, the cable will be picked up so that it can either be connected to another section of cable or to make the final connection to an offshore structure. In circumstances in which the cable is connected to another section of cable, the cable will be raised to the Cable Vessel to make the connection before being returned to the seabed as close as possible to its original location. Once the cable is attached to the relevant offshore structure or onshore point, the cable will not be moved.

After the cable placement has been finalized, your request states that concrete mats or other protective material may be placed over the submarine cable by a yet-to-be-identified non-coastwise-qualified vessel at points at which cables cross or because of undersea sand dunes. You have provided four potential scenarios by which the cable-protection material will be transported and placed over the cable: (1) material of foreign origin will be loaded at a foreign port to be transported by a non-coastwise-qualified vessel to the cable site; (2) material of foreign origin will be laded onto a non-coastwise-qualified vessel at a U.S. port from another non-coastwise-qualified vessel tied up to a dock and transported to the cable site; (3) material of foreign or U.S. origin will be delivered to a U.S. on-shore facility and then later laded at a U.S. port onto non-coastwise-qualified vessel to be transported to the cable site; (4) material of foreign origin will be transported by a non-coastwise-qualified vessel from a foreign port and then transferred offshore to a second non-coastwise-qualified vessel floating beyond U.S. territorial waters before being transported to the cable site.

The second phase of the project involves the installation of “scour protection” materials at each wind turbine site on the seabed of the OCS. Specifically, each wind turbine foundation will be protected by scour protection, which will consist of rock material placed on the seabed to prevent scour (i.e., erosion of the sand) around the tower foundation. Either a single or double layer of scour protection will be applied. You have identified three non-coastwise-qualified vessels that may be used to install the subject scour protection (the “Scour Vessel”), [ ]. As with the placement of cable-protection material, you state that one of the four scenarios outlined above will be utilized for the placement of scour protection (e.g., the scour protection material may be either transported directly from either a foreign destination or indirectly from a foreign destination where it would be first delivered to a U.S. port or a non-coastwise-qualified vessel in a U.S. port tied alongside a berth or anchored in U.S. territorial waters).

In each scenario, the Scour Vessel will install the scour protection onto the seabed by dumping it onto the installation site to form a circular pattern. The Scour Vessel will install one or two layers of scour protection as needed at each site. In the event a second layer is needed, an additional layer of larger rocks will be dumped around the foundation pile after the foundation pile is driven into the seabed. No preparatory work will be performed prior to the initial placement of the scour protection material at each WTG site.

The third phase of the project involves the installation of a pile or piles that will serve as each turbine’s foundation. In this phase, a non-coastwise-qualified vessel (the “Foundation Installation Vessel”) will drive a pile (in the case of a monopile foundation) or piles (in the case of a jacket foundation) into the seabed. The pile or piles will either arrive on board the Foundation Installation Vessel from a foreign destination or will be brought to the installation vessel by a coastwise-qualified feeder vessel from a U.S. port. Throughout the installation process, the Foundation Installation Vessel will remain stationary once it receives a component, whether that be by jacking up if it is a jack-up vessel or by maintaining position through dynamic position or anchoring. You have identified two non-coastwise-qualified vessels that may be used as a Foundation Installation Vessel: [ ].

In the fourth and final phase, [ ] will utilize a non-coastwise-qualified vessel to install the WTG units onto the pile (the “Turbine Installation Vessel”). Similar to the installation of the foundation, the WTG components (e.g., transition pieces and anode cages, nacelle, and blades) will either arrive on board the Turbine Installation Vessel from a foreign destination or will be transported to the vessel by a coastwise-qualified feeder vessel from a U.S. port. In the event a feeder vessel is not used, the components will be laden at a U.S. port onto a coastwise-qualified barge that will be towed by a coastwise-qualified tug or tugs and subsequently offloaded onto the deck of the Turbine Installation Vessel. Regardless, the only movement of the components will be via the crane on the installation vessel. The Turbine Installation Vessel itself will not move at all, aside from potentially rotating on its axis. You have identified three non-coastwise-qualified vessels that might be used as a Turbine Installation Vessel: [ ].

In addition to the turbine components, the Turbine Installation Vessel will either arrive with additional materials and tools laded at a foreign point or those items will be transported to the installation vessel by a coastwise-qualified vessel. You have provided a comprehensive list of these items, which includes: bolt handling tools (e.g., spanners and sockets, hydraulic hoses and pumps/powerpacks, toolboxes and bolt grippers); hand tools (e.g., torque wrenches, sockets, screwdrivers, cordless drills, pliers, clippers); containers and bags (e.g., cleaning products, lifting bags, lashing straps, waste bags); personal protection equipment (e.g., masks, gloves, glasses, safety vests, hard hats, first aid equipment, harnesses and fall-protection devices, carabiners and other light connecting devices, ropes, and rope bags); hand washing material, rags and cleaning cloths; bags for dirty rags; biohazard bags, and other single-use items; and food and drinks for the installation crew. Other items used to install and affix the WTG components will include bolts, nuts, screws, and grouting; these materials will also be either loaded at a foreign destination or will be transported to the Turbine Installation Vessel at each WTG site via a coastwise-qualified feeder vessel.

Finally, the Turbine Installation Vessel will transport a complement of crew to conduct the WTG installation. Specifically, the vessel will subdivide the crew into the vessel crew and the project crew. The vessel crew will consist of approximately 30-40 officers and personnel who will operate the vessel and its machinery or provide services to the crew (e.g., chefs, stewards). The project crew will consist of approximately 40-60 personnel who will perform installation functions on board the installation vessel as well as the partially completed wind tower. You have provided a full list of titles and roles for the project crew. Each member of the project crew falls into one of the following categories:

Technicians (e.g., remote equipment specialists such as riggers, crane operators, remotely operated vehicle operators); Supervisors (e.g., managers, foremen, superintendents); Surveyors (e.g., verification agents, client representatives); Engineers (engineer superintendents, engineer surveyors).

The Turbine Installation Vessel will arrive in U.S. waters with an incomplete crew complement. The remaining crew members will embark the vessel at a U.S. port and sail with it to the first offshore WTG site or will join the installation vessel once it is offshore by helicopter or coastwise-qualified vessel that transports them from a U.S. port to the vessel.

During the installation process, some of the project crew will disembark from the stationary installation vessel onto the partially constructed foundation tower to conduct installation activities. These activities will include bolting, grouting, painting, cable pull in, and testing. The project crew will then return to the installation vessel following completion of the tasks. The project crew will go back and forth from the installation tower until their tasks are complete. When the installation vessel moves from one WTG installation site to another, it will transport some or all of the project crew who will perform the same function at the next site. Crew members will either disembark the installation vessel at a U.S. port or via helicopter or coastwise-qualified vessel.

ISSUES

Whether the use of the trenching machine deployed by a non-coastwise-qualified vessel to create a path along the seabed in which to place the cable constitutes a violation of the coastwise dredging statute, 46 U.S.C. § 55109? Whether the subject cable placement, storage, and movement by a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102? Whether the transportation of concrete mats and other material to be placed over the subject cable on board a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102? Whether the installation of the subject scour protection onto the seabed of the U.S. OCS by a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102? Whether the transportation of WTG piles and components to a non-coastwise-qualified installation vessel on the U.S. OCS violates the Jones Act, 46 U.S.C. § 55102? Whether the use of non-coastwise-qualified installation vessels to lift and construct the subject piles and WTGs violates the Jones Act, 46 U.S.C. § 55102? Whether the transportation of installation tools and material between WTG sites on board a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102?

Whether the transportation of the installation crew on board a non-coastwise-qualified vessel violates the Passenger Vessel Services Act, 46 U.S.C. § 55103? LAW AND ANALYSIS

Your request presents eight separate issues as outlined above. This ruling analyzes each below.

Issue One: Whether the use of the trenching machine to create a path along the seabed in which to place the cable constitutes a violation of the coastwise dredging statute, 46 U.S.C. § 55109?

Pursuant to 46 U.S.C. § 55109, only coastwise-qualified vessels may engage in dredging in the navigable waters of the United States, providing, in pertinent part:

[A] vessel may engage in dredging in the navigable waters of the United States only if—

(1) the vessel is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade;

(2) 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 (to include its predecessor, the U.S. Customs Service) has consistently 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.” See HQ 103692 (Dec. 28, 1978 published as Customs Service Decision (C.S.D.) 79-331); HQ 109108 (Nov.13, 1987); HQ 109910 (Jan. 26, 1989 published as C.S.D. 89-64).

CBP has nevertheless held that the use of certain devices to create underwater trenches for the purpose of cable laying does not constitute “dredging.” In particular, CBP has reasoned that the use by cable-laying vessels of cable-burial devices employing a jetting action resulting in the emulsification of the seabed surrounding the cable does not constitute an engagement in dredging. See, e.g., HQ 115646 (Apr. 12, 2002). Furthermore, CBP has also determined that the use of “a share or plow and cutting disc” that creates “a very narrow ‘slice” of the seabed under which the cable is buried is not an engagement in dredging.” See, e.g., HQ 113223 (Sept. 29, 1994) (relating to the use of an underwater trencher digging a 300 mm width trench). Specifically, CBP has reasoned that the use of a jetting tool to “temporarily lift” a “narrow ‘slice’” of the seabed amounts to a “temporary manipulation of the seabed” as opposed to the creation of a furrow or trench by operation of a share or plow and disc cutting wheel. See HQ 109412 (Mar. 29, 1988), published at C.S.D. 88-7.

In the present matter, you have provided a detailed description and technical depictions demonstrating that the trenching machine will use water “jets” and a “cutter” to create a path while simultaneously laying the subject cable. You state that the exact dimensions of the trench will be dependent on “local requirements,” but the trenching machine is capable of creating a trench up to 3.1 meters deep and .6 meters wide. We find that the use of the subject trenching machine is consistent with the activity described in HQ 115646 (Apr. 12, 2002) and HQ 113223 (Sept. 29, 1994) in that the machine will utilize jetting and cutting implements to create a narrow slice of seabed under which a cable will be laid and buried. This activity is not “dredging” within the meaning of 46 U.S.C. § 55109.

Issue Two: Whether the subject cable placement, storage, and movement by a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102?

The coastwise law applicable to the transportation of merchandise, known as the Jones Act, is found at 46 U.S.C. § 55102, and provides 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 a foreign port, unless the vessel—

is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and 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.

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. 33 CFR § 2.22(a)(2). In addition, Section 4(a)(1) of the Outer Continental Shelf Lands Act of 1953 (“OCSLA”), as amended by The William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, H.R. 6395, 116th Cong. § 9503 (2021), provides that the Constitution and laws and civil and political jurisdiction of the United States are extended to:

the subsoil and seabed of the outer Continental Shelf; all artificial islands on the outer Continental Shelf; 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, including non-mineral energy resources; or any such installation or other device (other than a ship or vessel) for the purpose of transporting or transmitting such resources.

(Emphasis added.)

Accordingly, the OCSLA, as amended in 2021, extends U.S. jurisdiction to devices attached to the seabed of the OCS for the purpose of producing non-mineral energy such as wind energy.

Pursuant to 19 U.S.C. § 1401(c), the word “merchandise” is defined as “goods, wares, and chattels of every description, and includes merchandise the importation of which is prohibited, and monetary instruments as defined in section 5312 of Title 31.” For purposes of the Jones Act, merchandise also includes “valueless material.” 46 U.S.C. § 55102(a)(2). The CBP Regulations promulgated under the authority of 46 U.S.C. § 55102 provide that a coastwise transportation of merchandise takes place when merchandise laden at a coastwise point is unladen at another coastwise point, regardless of origin or ultimate destination. 19 CFR § 4.80b(a).

As an initial matter, we determine that the original cable placement and storage operation does not constitute coastwise trade under the Jones Act. CBP has long held that the sole use of a vessel in laying pipe or cable between two coastwise points is not considered a use in the coastwise trade of the United States. See, e.g., HQ 115431 (Sept. 4, 2001), HQ 115333 (Apr. 27, 2001). The fact that the material is not landed as cargo but is only paid out in the course of the installation operation makes such operation permissible (i.e., “paid out/not unladen”). Further, since the use of a vessel in pipe or cable laying is not a use in the coastwise trade, a non-coastwise-qualified vessel may carry pipe or cable which is laid between such points. However, the transportation of pipe or cable by any vessel other than the vessel that is laying pipe to a pipe-laying 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, e.g., HQ 114833 (Apr. 20, 2000). In line with these rulings, your request describes a scenario in which the subject cable will initially be paid out from a dedicated Cable Vessel onto the seabed of U.S. territorial waters and the OCS. As such, the proposed used of the non-coastwise-qualified Cable Vessel to lay cable within U.S. territorial waters and on the OCS would not be in violation of the Jones Act, 46 U.S.C. § 55102. Similarly, we determine that the subsequent cable movement described in your request does not constitute coastwise trade. In relevant part, your request states that after being placed on the seabed, the cable may be picked up and connected to another section of cable and laid back onto the seabed or to make final connection to an offshore structure. In instances in which the cable is connected to another section, the cable will be laid back on the seabed as close as possible to its original location. CBP has previously confirmed that the movement of submarine cable to effect the repair, replacement, or installation of a section of cable does not constitute coastwise trade. See, e.g., HQ H311603 (Aug. 31, 2020). Furthermore, CBP contemplated a situation in which an umbilical would be “cut to the proper length, then abandoned on the seabed, including some additional length, to allow for pulling up to the platform….” See HQ 113711 (Nov. 26, 1996). CBP determined that such an operation, including the initial “abandonment” and eventual cable pull in, would not violate the Jones Act because it still constituted a cable-laying operation. As a result, the movement of the cable to effect its attachment to further cable sections or to connect that cable to an offshore structure would not be in violation of the Jones Act, 46 U.S.C. § 55102. Issue Three: Whether the transportation of concrete mats or other protective material to be placed over the subject cable by a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102? The coastwise law applicable to this portion is again the Jones Act, 46 U.S.C. § 55102, which prohibits the coastwise transportation of “merchandise” between coastwise points by non-coastwise-qualified vessels. As such, in order to determine whether the placement of concrete mats or other protective material over the electric transmission cable violates the Jones Act, this section analyzes (1) whether the material transported constitutes “merchandise” under the Jones Act, and (2) whether the transportation will occur between two coastwise points. Pursuant to 46 U.S.C. § 55102: “[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 value, is generally considered merchandise for the purpose of the Jones Act. CBP has also held, however, that “vessel equipment” or “equipment of the vessel” is not included within the general meaning of merchandise. “Vessel equipment” has been defined as portable articles, “necessary and appropriate for the navigation, operation or maintenance of the vessel and for the comfort and safety of the persons on the board.” Treasury Decision 49815(4) (Mar. 13, 1939). Items considered “necessary and appropriate for the operation of the vessel” are those items that are integral to the function of the vessel and are carried by the vessel. This may include those items that aid in the installation and construction of offshore infrastructure. The fact that an item is returned to and is not left behind on the seabed is a factor that weighs in favor of an item being classified as vessel equipment, but is not a sole determinative factor. Whether such articles constitute vessel equipment is a fact-specific, case-by-case determination. CBP has previously determined that concrete mats or other protective material placed over pipelines situated on the OCS are vessel equipment. See HQ 115531 (Dec. 3, 2001) and HQ 113838 (Feb. 25, 1997). These rulings were based on an interpretation that the concrete mats were “necessary for the accomplishment of the mission of the vessel.” See HQ 113838 (the placement of sand bags or concrete mats “between and over” OCS pipelines “does not constitute the use of the vessel in coastwise trade provided such articles are necessary for the accomplishment of the mission of the vessel…”) (emphasis added). In HQ 115531, CBP again found that the placement of concrete mats “laid at intervals along the pipeline in anticipation of additional pipeline being laid” did not constitute coastwise trade, relying directly upon HQ 113838, which, as noted, applied the “mission of the vessel” standard. CBP has since revoked the “mission of the vessel” analysis as a means of characterizing items as “vessel equipment,” pursuant to its authority under 19 U.S.C § 1625. See Customs Bulletin and Decisions, Vol. No. 53, No. 45 at 84 (Dec. 11, 2019). In doing so, CBP has clarified that the scope of vessel equipment includes items considered “necessary and appropriate for the navigation, operation or maintenance of the vessel,” as outlined above, and in CBP’s decision of December, 2019. The purpose and result of CBP’s December 2019 action was to narrow the scope of what had been interpreted to be “vessel equipment” by, in part, eliminating certain rationales such as “mission of the vessel.” As a result, we must determine whether the subject mats or other protective material constitute “vessel equipment” under the revised standard. In response to CBP’s follow-up communication, you clarified that the vessel to be used in transporting and installing the concrete mats or other protective material over the submarine cable has not yet been identified. CBP nevertheless notes that the concrete mats or other protective material do not aid the operation of the installation vessel itself as a vessel. Also, the items are not utilized to aid actual installation, and thus are dissimilar from things used as tools for installation operations. Furthermore, the mats or other protective materials are put in a specific place, where they remain, to protect existing cable or pipeline. The concrete mats or other protective material thus will not be returned to the transporting vessel but will instead be left on the seabed. The facts that the items are not used by the vessel itself to operate the vessel, nor used as tools, and are not returned to the vessel, are persuasive evidence these items are not “vessel equipment” as interpreted by CBP. As a result, CBP concludes that the concrete mats or other protective materials are merchandise. Because the subject mats or other protective material to be placed over the transmission cable constitute merchandise, we next determine if the proposed transportation of such materials occurs between coastwise points. To do so, we examine the points at which the subject material will be laden and unladen. Your request presents four potential scenarios by which the cable-protection material will be transported and placed over the cable: (1) material of foreign origin will be loaded at a foreign port to be transported by a non-coastwise-qualified vessel to the cable site; (2) material of foreign origin will be laded onto a non-coastwise-qualified vessel at a U.S. port from another non-coastwise-qualified vessel tied up to a dock to be transported to the cable site; (3) material of foreign or U.S. origin will be delivered to a U.S. on-shore facility and then later laded at a U.S. port onto non-coastwise-qualified vessel to be transported to the cable site; (4) material of foreign origin will be transported by a non-coastwise-qualified vessel from a foreign port and then transferred offshore to a second non-coastwise-qualified vessel floating beyond U.S. territorial waters before being transported to the cable site. With respect to the lading of the subject concrete mats or other protective material, we determine that scenarios (2) and (3) involve the lading of merchandise at a coastwise point while scenarios (1) and (4) do not. Specifically, Scenario (2) contemplates the transfer of foreign-origin mats or other protective material from one non-coastwise-qualified vessel to a second such vessel at a U.S. port. As such, this scenario contemplates the lading of merchandise at a coastwise point (i.e., a U.S. port). Similarly, in Scenario (3), foreign or U.S.-origin material will be delivered to a U.S. on-shore facility, a coastwise point, before being laded onto a non-coastwise-qualified vessel and transported to the cable site. In contrast, under Scenario (1), the mats or rocks will be laded onto a non-coastwise-qualified vessel at a foreign port and transported directly to the cable site. In Scenario (4), meanwhile, the material will be transferred to a non-coastwise-qualified vessel at a point on the high seas beyond U.S. territorial waters.

With respect to the unlading of the subject mats or rocks, it is clear that the electric transmission cable is a coastwise point. First, portions of cable resting in U.S. territorial waters are a coastwise point because the Jones Act clearly applies 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. 33 CFR § 2.22(a)(2). Second, those portions of cable on the OCS also constitute a coastwise point. Importantly, the plain language of the OCSLA makes clear that the Constitution and laws of the United States extend to installations or devices attached to the seabed serving a purpose as articulated in the OCSLA, including “any such installation or other device (other than a ship or vessel) for the purpose of transporting or transmitting such resources.” 43 U.S.C. § 1333(a)(1)(iv). The OCSLA’s legislative history further indicates that the coastwise laws extend to electric transmission cable placed on the seabed of the OCS. The initial language of the OCSLA, as passed in 1953, extended U.S. jurisdiction to “any such installation or other device…for the purpose of transporting such resources….” The relevant Senate Conference Report for this legislation further demonstrates that this language ensured U.S. jurisdiction over pipelines placed on the seabed of the OCS: “The new section 4 carries out the intent of the committee explained in [amendment 10] namely, that the jurisdiction of the Federal Government is extended to the seabed and subsoil of the outer continental shelf as such, as well as to artificial islands, and fixed structures, including pipelines, used in mineral resource development.” See Report from the Committee on Interior and Insular Affairs, U.S. Senate to Accompany S. 1901, the Outer Continental Shelf Lands Act at 23 (emphasis added). In amending the OCSLA, the 2021 NDAA adds the phrase “or transmitting,” which clearly extends the thrust of this language to include electric cable placed on the OCS for the purpose of transmitting electric power. Based on the foregoing, to the extent the concrete mats or other protective material are transported on board a non-coastwise-qualified vessel from one U.S. point (e.g., scenarios (2) and (3) outlined above) to the subject transmission cable, which itself constitutes a coastwise point, then such transportation would be in violation of the Jones Act, 46 U.S.C. § 55102. In contrast, the transportation of concrete mats or other protective material from a non-coastwise point, as in scenarios (1) and (4), does not constitute coastwise trade in violation of the Jones Act. Issue Four: Whether the installation of the subject scour protection onto the seabed of the U.S. OCS by a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102? As with the placement of cable-protection mats and materials discussed in the section above, your request outlines four potential scenarios related to the installation of scour protection at each WTG site: (1) rocks of foreign origin will be loaded at a foreign port to be transported by the scour vessel to the work site and dumped; (2) rocks of foreign origin will be laded onto the scour vessel at a U.S. port from a non-coastwise-qualified vessel tied up to a dock to be transported to the work site and placed on the seabed; (3) rocks of foreign or U.S. origin will be delivered to a U.S. on-shore facility and then later laded in a U.S. port onto the scour vessel to be transported to the work site and placed on the seabed; and (4) rocks of foreign origin transported by a non-coastwise-qualified vessel from a foreign port and then transshipped offshore to a non-coastwise-qualified vessel floating beyond U.S. territorial waters to be transported by the second vessel to be placed on the seabed. The Jones Act specifically prohibits the coastwise transportation of “merchandise” between coastwise points by non-coastwise qualified vessels. Once again, 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.” Prior CBP rulings have interpreted this definition of “merchandise” to include rocks and dredged material. E.g., HQ 113219 (Oct. 17, 1994). As such, it is clear that the scour protection materials are merchandise under 46 U.S.C. § 55102.

To determine if the proposed transportation of scour protection material occurs between coastwise points, we again examine the points at which the subject scour protection material will be laden and unladen. CBP treats the waters and seabed of the territorial sea differently from those of the OCS because of the narrower jurisdiction provided by the OCSLA. Within the territorial sea, U.S. sovereignty is unlimited. A country’s sovereignty beyond its territorial sea and over the OCS is more constrained, however, and in this situation is measured by the acts of Congress extending jurisdiction for specified purposes. In its application of the Jones Act, CBP interprets the OCSLA to provide CBP jurisdiction where there is an installation or device attached to the seabed serving a purpose as articulated in the OCSLA – the exploration for, or development, production, transmission, or transportation of resources. CBP previously has determined that jurisdiction does not reach activity occurring at the pristine seabed, where there is no installation or device attached to the seabed, and thus where for Jones Act purposes no coastwise point exists. CBP has held, however, that a coastwise point exists in the vicinity of an installation or device attached to the seabed of the OCS for a purpose articulated by the OCSLA. See, e.g., HQ 116350 (Jan. 18, 2005) (relating to a “suction anchor…[in] the seabed of the OCS in the immediate vicinity of, and in direct relation to, an exploratory wellhead already in existence at that location”). Furthermore, CBP recognizes that the OCSLA contemplates construction activity to be part of the development of resources, such that an installation or structure need not be completed to be embraced by the OCSLA’s jurisdictional reach. 43 U.S.C. § 1333(l).

With respect to the lading of the subject scour protection, we again determine that scenarios (2) and (3) involve the lading of merchandise at a coastwise point while scenarios (1) and (4) do not. Furthermore, all four scour-placement scenarios involve the transportation of scour protection material to a pristine location on the seabed. Your ruling request makes clear that there is no existing scour protection material, monopile, or other device or installation attached to the seabed at the time the scour protection material is delivered to the site where it will be placed on the seabed. Similarly, in those instances where the scour protection is to be laden in a U.S. port by a non-coastwise-qualified vessel, you state that no preparatory work will be performed on the seabed before the scour protection is installed. Accordingly, at that time of first delivery, there is no coastwise point, and hence, no transportation of merchandise from one coastwise point to another. As a result, the Scour Vessel may transport the scour protection material to the installation location when that location is the pristine seabed, without violating 46 U.S.C. § 55102.

CBP has previously found, however, that a coastwise point under 46 U.S.C. § 55102 will be created when the first layer of scour protection material is placed on the seabed. See HQ H317289 (Mar. 25, 2021). By this, CBP intends that the single scour-laying vessel can apply whatever volume of scour rock, in however many separate layers, it might apply at the site for that vessel’s immediate (present) visit to the site. CBP understands this to be referred to as the “filter layer” of scour protection. This application of scour protection by that vessel (whether completed at that time or not) establishes the coastwise point. As such, once that site is created, any transportation of merchandise to be unladen at each scour protection site, if the merchandise being transported was laden at a coastwise point, must be conducted by a coastwise-qualified vessel. This includes any transportation of additional materials to that coastwise point, including additional scour protection (whether “filter” or “armor” layer) and the monopile or other structure that will support the wind turbine generator. This also precludes any simultaneous transportation of the monopile or other components to the site from another coastwise point on a non-coastwise-qualified vessel.

We note, however, that your submission disputes CBP’s determination that the placement of a layer of scour protection creates a coastwise point. In relevant part, you assert that the scour protection itself does not constitute an “installation or device” attached to the seabed as required by Section 4(a)(1) of the OCSLA, which extends U.S. law to “installations or other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources, including non-mineral energy resources….”

CBP reiterates its determination that a layer of scour protection indeed constitutes an “installation or device” attached to the U.S. OCS for the purpose of wind energy production. Importantly, the text of the OCSLA contemplates that devices or installations used for development need not be complex or complete structures. In defining the term “development,” for instance, the OCSLA specifies that “the term…means those activities which take place following discovery of minerals…including…platform construction…and which are for the purpose of ultimately producing minerals discovered.” 43 U.S.C. § 1331(l). Under this interpretation, although it is obviously not the final wind turbine, the first layer of scour protection is nevertheless a component in the construction of a structure that will ultimately produce wind energy.

In addition, prior CBP rulings have included a broad interpretation of what constitutes an “installation or device.” CBP rulings have long considered components installed on the seabed as part of the construction of a complete structure to constitute an installation or device. For instance, in HQ 114158 (Feb. 13, 1998), CBP contemplated whether the proposed installation of an oil platform on an OCS site at which existed a “9-well template” by a non-coastwise-qualified vessel was in compliance with the Jones Act. Although CBP approved the transaction on other grounds, the ruling nevertheless states that, absent the unrelated exception relied on by CBP, it was otherwise clear that a coastwise-qualified vessel was required, indicating that a coastwise point was present at the location of the template. See also, HQ 110228 (July 14, 1989) (finding a coastwise point at a site containing foundation templates, piles, and a mooring system).

Finally, the plain meaning of the terms “device” and “installation” encompasses a scour protection layer installed during the construction of a WTG structure. Cambridge Dictionary, for instance, defines “device” as “an object or machine that has been invented for a particular purpose.” Other definitions similarly support CBP’s determination that an object, adapted to or put to use for a particular purpose, can be a “device.” The scour protection layer is most certainly an “object” that is made or adapted for a particular purpose—protecting the base of a WTG pile or platform jacket from submarine erosion. Although the scour protection is not a machine or mechanical in nature, neither are many other devices commonly accepted as creating a coastwise point (e.g., WTG piles, platform jackets). Merriam-Webster Dictionary, meanwhile, defines an “installation” as “something that is installed for use.” Other definitions similarly support CBP’s determination that the scour protection, either by itself or in conjunction with the monopile or platform jacket and WTG, is a collection of objects “installed for use” to prevent erosion and is part of a system making up the installation intended to produce wind energy. Once again, the subject scour protection clearly meets this definition as it is something that is placed on the seabed for the particular purpose of protecting a WTG pile.

Based on the foregoing, we determine that the proposed transportation of scour rock in each of the four scenarios above complies with the Jones Act, 46 U.S.C. § 55102. Specifically, scenarios (2) and (3) do not violate the Jones Act to the extent the scour rocks are laded on board the non-coastwise-qualified Scour Vessel at a U.S. point (i.e., a dock within U.S. waters or a U.S. on-shore facility) and transported to the pristine seabed of the U.S. OCS. Scenarios (1) and (4), meanwhile, do not violate the coastwise laws to the extent they involve transportation on board the non-coastwise-qualified Scour Vessel from one non-coastwise point (i.e., a foreign port or point on the high seas) to either the pristine seabed or a coastwise point (i.e., a scour site at which at least one layer has been placed).

Issue Five: Whether the transportation of WTG piles and components to a non-coastwise-qualified installation vessel on the U.S. OCS as described in phases three and four violates the Jones Act, 46 U.S.C. § 55102?

Specifically, your request notes that the WTG piles and components will either arrive from a foreign port with the relevant installation vessel or will be laden onto a coastwise-qualified feeder vessel at a U.S. port and transported to the relevant installation vessel, which will either be attached to the seabed via jack-up legs or anchor, or will be in a stationary position with the assistance of a dynamic positioning system. It is not disputed that the WTG piles and components contemplated in the instant request are merchandise under 46 U.S.C. § 55102.

To determine if the proposed transportation occurs between coastwise points, we again examine the points at which the WTG piles and components will be laden and unladen. Under your proposal, the WTG piles and components will be transported from a foreign point to the installation site on the U.S. OCS, which will be a coastwise point (either the site of the first scour protection layer or the foundation pile). However, because the merchandise will only be transported to one coastwise point, no violation of the Jones Act would occur where the WTG piles and components are laden on board the Foundation Installation Vessel or Turbine Installation Vessel at a foreign point and unladen at an installation site.

Section 4 of the OCSLA extends U.S. law to “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, including non-mineral energy resources.” Prior CBP rulings interpreted this language (which previously did not include a reference to “non-mineral energy resources”) to include “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 Customs Service Decisions 81-214 and 83-52. We have also found that a “Floating Offshore Service Facility” anchored to the seabed to the OCS to carry “necessary consumables and supplies to support deepwater [drilling] operations” would become a coastwise point when anchored. HQ 115217 (Dec. 7, 2000). Similarly, in the present matter, the subject installation vessels would become a coastwise point when attached to the seabed of the OCS via jack-up legs or anchors for the purpose of installing or constructing a structure to be used for the production of wind energy. We note that with respect to dynamically-positioned vessels, however, CBP has long held that the lack of any permanent or temporary attachment to the seabed excludes such vessels operating over the OCS from becoming coastwise points pursuant to the OCSLA. See, e.g., HQ H010211 (Dec. 30, 2007). As a result, any transportation of WTG piles or components from one coastwise point to an installation vessel physically affixed to the seabed of the U.S. OCS must be conducted by a coastwise-qualified vessel as outlined in your request.

Issue Six: Whether the use of non-coastwise-qualified installation vessels to lift and install the subject piles and WTG units described in phases three and four violates the Jones Act, 46 U.S.C. § 55102?

CBP has previously held that the use of a non-coastwise-qualified crane vessel to lade and unlade cargo or to construct or dismantle a marine structure is not coastwise trade and does not violate the coastwise laws, provided any movement of merchandise is performed exclusively by the crane and not by any movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. See, e.g., HQ 116111 (Jan. 30, 2004) (ruling no transportation occurs where a stationary crane barge moored in place by four anchors picks up boulders from a coastwise-qualified supply barge and places them on the seabed to create a breakwater); HQ 115940 (Apr. 17, 2003) (ruling that a Panamanian-flag crane barge would not violate the Jones Act in using its crane to lift erosion-protection boulders from one barge and place them onto the ocean floor). Similarly, CBP has previously held that the use of a non-coastwise-qualified, stationary vessel for pile driving operations does not violate the Jones Act. See HQ 111412 (Nov. 28, 1990).

In the present matter, we find that the proposed installation of the subject WTG piles and turbines does not violate the Jones Act. Your request states that the components for each WTG will be laden on board a coastwise-qualified feeder vessel and transported to the relevant installation vessel, which will be affixed to the seafloor via legs or anchor, or will be stationary through the use of a dynamic positioning system. The receiving vessel, either the Pile Installation Vessel or the Turbine Installation Vessel, will then raise the relevant components to its deck. The Pile Installation Vessel will then drive a pile or piles into the seabed that will serve as the wind tower foundation while the Turbine Installation Vessel will use its crane to install the remaining turbine components onto the foundation. Both vessels will remain stationary for the duration of this process. These operations are consistent with the types of installation activities that CBP has approved in the past. Because the subject installation vessels will remain stationary during the proposed operations, the subject installation of the piles and WTG components by the non-coastwise-qualified Pile Installation Vessel and Turbine Installation Vessel would not constitute transportation in violation of the Jones Act U.S.C. § 55102. Issue Seven: Whether the transportation of installation tools and material by the Turbine Installation Vessel between coastwise points violates the Jones Act, 46 U.S.C. § 55102?

Specifically, you state that the items and tools will either be laden onto the Turbine Installation Vessel at a foreign point or will be brought to the vessel by a coastwise-qualified feeder vessel. These tools will then be transported by the Turbine Installation Vessel and unladen at each WTG site (each a coastwise point) for use by installation crewmembers. As excerpted above, the Jones Act prohibits the coastwise transportation of “merchandise” by non-coastwise qualified vessels. Pursuant to 46 U.S.C. § 55102: “[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 value, is generally considered merchandise for the purpose of the Jones Act.

CBP has also held, however, that “vessel equipment” is not included within the general meaning of merchandise. “Vessel equipment” has been defined as portable articles, “necessary and appropriate for the navigation, operation or maintenance of the vessel and for the comfort and safety of the persons on the board.” Treasury Decision 49815(4) (Mar. 13, 1939). Items considered “necessary and appropriate for the operation of the vessel” are those items that are integral to the function of the vessel and are carried by the vessel. This may include those items that aid in the installation and construction of offshore infrastructure. Whether such articles constitute vessel equipment is a fact-specific, case-by-case determination.

In the present matter, the Turbine Installation Vessel’s explicit function is to install the WTG units onto the seabed. You have provided a comprehensive list of items and tools that will be unladen and used at the subject WTG sites, each of which is a coastwise point. The tools you described (e.g., bolt handling tools and hand tools) will be used by the installation crew in physically installing and commissioning the subject WTG units. As such, these items are integral to the function of the vessel, which is to install and commission the subject WTG units. The remainder of the items (e.g., containers and bags, personal protection equipment, food and drink, and sanitary materials) are necessary for the “comfort and safety” of the crewmembers performing the WTG installation. Accordingly, the tools and materials to be transported between WTG sites are vessel equipment and not “merchandise” under the Jones Act. As a result, no violation of 46 U.S.C. § 55102 exists if the subject materials outlined in the FACTS section are transported between, and used at, multiple installation sites.

Issue Eight: Whether the transportation of the project crew violates the Passenger Vessel Services Act, 46 U.S.C. § 55103?

Pursuant to the Passenger Vessel Services Act (“PVSA”), 46 U.S.C. § 55103, in relevant part:

(a) In General. Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel-

is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and

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.

Your request states that the non-coastwise-qualified Turbine Installation Vessel will arrive at a U.S. port with an incomplete crew complement. Members of the “project crew” will either join the vessel in a U.S. port or will be transported from a U.S. point to the Turbine Installation Vessel on the OCS aboard either a coastwise-qualified vessel or U.S.-registered helicopter. The project crew will then travel on board the vessel to each WTG site, disembarking to perform installation and commissioning work on each WTG. The installation crew will also perform pre-installation tasks on board the Turbine Installation Vessel, including regularly inspecting and maintaining the lifting equipment to be used in WTG installation. The ruling request states that the personnel fall into the following categories: supervisors, lifting operations crewmembers, and technical crew (e.g., installation technicians, high voltage technicians). To the extent that the individuals will be engaged in any shipboard activities while traveling on the Jack Up Vessel between coastwise points that would be “directly and substantially” related to the operation, navigation, or business of the vessel itself, as would be the case under the facts herein submitted, such individuals would not be considered to be passengers. Accordingly, we find that the proposed activities in this case are directly and substantially connected with the operation and business of the vessel, which is the installation of the subject WTGs. We therefore determine that the subject individuals are not “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR 4.50(b).

HOLDINGS

The use of the subject trenching machine by a non-coastwise-qualified vessel to create a path along the seabed while simultaneously placing cable does not constitute “dredging” as contemplated by the coastwise dredging statute, 46 U.S.C. § 55109, and therefore would not be a violation of that law. The laying of cable along the seabed for the purpose of storage and subsequent pick up does not constitute coastwise trade as contemplated by the Jones Act, 46 U.S.C. § 55102. As such, to the extent the cable is laden onto the non-coastwise-qualified Cable Vessel at a coastwise point and laid on the seabed in U.S. territorial waters or on the OCS for storage and subsequent pick up, a violation of the Jones Act would not occur. The transportation of concrete mats and other material from one U.S. point to the subject electric cable constitutes coastwise trade under the Jones Act, 46 U.S.C. § 55102. CBP determines that such material is “merchandise” as contemplated by the Jones Act. As such, the use of a non-coastwise-qualified vessel to transport this material from one U.S. point to the subject cable, another coastwise point, would be in violation of the Jones Act. The proposed installation of scour protection materials on the pristine seabed of the OCS by a non-coastwise-qualified vessel is not in violation of the Jones Act, 46 U.S.C. § 55102, because the pristine seabed does not constitute a coastwise point. However, the use of such a vessel to install scour protection on top of an existing layer of scour protection on the OCS would be in violation of the Jones Act because such a location constitutes a coastwise point. The transportation of WTG piles or components from a U.S. point to an installation vessel physically affixed to the seabed of the OCS for the purpose of installing an offshore wind energy structure constitutes coastwise trade under the Jones Act, 46 U.S.C. § 55102. As such, the proposed use of a coastwise-qualified vessel to conduct this portion of the transaction is in compliance with the Jones Act. The proposed use of non-coastwise-qualified installation vessels to lift and construct the subject WTGs would not violate the Jones Act, 46 U.S.C. § 55102, because the proposed operation does not constitute transportation under the Jones Act. The subject installation tools and materials outlined in the FACTS section constitute “vessel equipment.” As such, the transportation of such materials by a non-coastwise-qualified vessel would not violate the Jones Act, 46 U.S.C. § 55102. The transportation of the project crew on board the Installation Vessel between WTG installation sites attached to the seabed of the OCS would not be in violation of the PVSA, 46 U.S.C. § 55103, to the extent the crew are performing tasks on board the vessel that are directly and substantially related to the operation of the vessel.

Sincerely,

Lisa L. Burley
Chief/Supervisory Attorney-Advisor
Regulatory Reform and Priority Programs Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection