VES-3-18-OT-RR:BSTC:CCR H325118 TNA
Ms. Laurie Pazzo
Senior Import Specialist
CEE-Electronics, Partnership Division
U.S. Customs and Border Protection
Charlotte, NC
RE: Application for Further Review; 43 U.S.C. 1333(a); 19 U.S.C. 1434(a); 19 C.F.R. 4.80b(a); Entry No. 101-6513644-1; Protest No. 1401-21-106406; Siemens Gamesa Renewable Energy, Inc.
Dear Ms. Pazzo:
This is in response to Protest and Application for Further Review ("AFR") No. 1401-21-106406, timely filed on November 29, 2021, by Siemens Gamesa Renewable Energy, Inc. ("SGRE" or the "Protestant") with respect to Entry No. 101-6513644-1. On or about May 3, 2022, your office forwarded the subject Protest and AFR for our review. Our determination is set forth below.
FACTS
SGRE protests U.S. Customs and Border Protection's ("CBP's") liquidation of entries of certain wind-powered electric generators and other structures installed on the U.S. outer continental shelf ("OCS") near the state of Virginia. The goods were entered under subheading 8502.31.0000 of the Harmonized Tariff Schedule of the United States ("HTSUS"), which provides for, "Electric generating sets and rotary converters: Other generating sets: Wind powered," and under subheading 7308.20.0020, which provides for, "Structures (excluding prefabricated buildings of subheading 9406) and parts of structures . . . of iron or steel; plates, rods, angles, shapes, sections, tubes and the like, prepared for use in structures, of iron or steel: Towers and lattice masts: Tubular, whether or not tapered, and sectional components thereof." The subject merchandise was imported under Entry No. 101-6513644-1, which is dated June 15, 2020.
The underlying protest relates to the installation of two wind turbine generators ("WTGs") at an offshore location on the U.S. OCS, approximately 27 nautical miles from Virginia Beach, Virginia. The WTGs were constructed in two phases. First, a foreign-flag vessel transported the monopile foundation, transition piece and related construction material from Halifax, Nova Scotia, Canada, to the OCS installation site. The vessel then installed the monopile and transition piece to the seabed of the OCS. The foreign-flag construction vessel was held stationary while undertaking the emplacement of the monopile foundation and other components. According to documentation submitted by Protestant, as part of the project, scour protection was installed on the seabed before the monopile and transition piece were installed.[1] In the second phase of the installation, which occurred approximately three weeks after the first phase, the same foreign-flag vessel attached a wind tower, nacelle and blades to the transition piece installed on top of the previously installed monopile base.
On November 29, 2021, counsel for SGRE submitted written arguments in support of its protest. In addition, CBP held an in-person meeting with counsel for SGRE on January 11, 2023, and heard further arguments on behalf of SGRE.
ISSUE:
Whether the installation of the WTGs and other structures caused them to be attached to the seabed of the OCS such that entry and payment of duties were required for the subject merchandise.
LAW AND ANALYSIS:
Initially, we note that based upon the record provided, the subject Protest and Application for Further Review, was timely filed under the statutory and regulatory provisions for protests. See 19 U.S.C. l514(a)(3); 19 CFR 174.12(e). Additionally, further review of Protest 1401-21-106406 is properly accorded to the Protestant pursuant to 19 CFR 174.24(c) and 174.25, as this protest involves matters previously ruled upon by the Commissioner of CBP or his designee or by the relevant courts, but facts are alleged or legal arguments presented which were not considered at the time of the original decision. In this regard, Protestant submits that CBP improperly determined the installation site to be a coastwise point.
United States law generally 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). In addition, Section 4(a)(1) of the Outer Continental Shelf Lands Act of 1953 ("OCSLA") (as amended), provides that the Constitution and laws and civil and political jurisdiction of the United States are extended to:
i) the subsoil and seabed of the outer Continental Shelf;
ii) all artificial islands on the outer Continental Shelf;
iii) 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
iv) any such installation or other device (other than a ship or vessel) for the purpose of transporting or transmitting such resources.[2]
Protestant argues that there is "no need for entry and clearance" of the subject wind turbine generators because they were not installed at a coastwise point.[3] Protestant further states that "CBP had no authority to require the entry of the goods included with Entry No. 101-6513644-1, and as such, no authority to liquidate the entry and assess duties and fees."[4] As such, this protest centers around the dutiability of this merchandise.
CBP has long held that foreign merchandise delivered directly to OCS facilities to which federal law applies pursuant to the OCSLA is considered imported into the Customs territory of the United States, and is therefore subject to applicable entry and duty requirements. See, e.g., HQ 115431 (September 4, 2001). See also HQ 115134 (September 27, 2000) ("OSVs, regardless of flag, transporting passengers or merchandise between the FOSF vessel at its OCS location and foreign ports or offshore OCS platforms located beyond the territorial sea of the United States, are subject to Customs report of arrival, entry and clearance requirements if such OCS locations are coastwise points pursuant to the OCSLA."); HQ 115535 (November 20, 2001) (finding subsea cables and umbilicals to be dutiable when attached to the platform structures of the subsea wells at issue.)
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. See 43 U.S.C. 1333(l). CBP has consistently determined that the OCSLA extends U.S. jurisdiction and laws - including the laws for assessment of customs duties - to those objects attached to the seabed for the purpose of exploring for, developing, producing, transporting or transmitting resources from the OCS, which includes non-mineral resources such as wind energy. See, e.g., HQ 115134 (September 27, 2000) (citing Treasury Decision (T.D.) 554281(1)); HQ 115535 (November 20, 2001). These laws similarly extend to installations or other devices permanently or temporarily attached to the seabed of the OCS for the purpose of exploring for, developing, or producing non-mineral energies such as wind energy. See, e.g., HQ H329630 (March 9, 2023); HQ H328865 (February 14, 2023); HQ H316313 (February 4, 2021); HQ H327590 (December 16, 2022).
CBP further notes the legislative history of the 1978 statutory amendments to the OCSLA, which makes clear that objects "built overseas, and brought into OCS waters for placement" for development and production of resources are subject to customs duties. See H.R. Conf. Rep. 95-1474 (Aug. 10, 1978), 1978 U.S.C.C.A.N. 1674, 1679-1680.
In the present matter, the subject merchandise was transported from Halifax, Nova Scotia, a foreign location, to a location on the OCS where scour protection had already been attached to the seabed. As a result of the placement of scour protection, this location was already a coastwise point. See, e.g., HQ H317289 (Jan. 27, 2021); HQ H300962 (April 14, 2022).[5] Furthermore, this merchandise was transported to this coastwise point for the purposes of building wind turbine generators. As such, it was transported there with the intent to unlade. Thus, this was foreign merchandise being delivered to OCS facilities, which merchandise was "built overseas, and brought into OCS waters for placement" for the development and production of resources. As a result, we find that this is a dutiable event, and the subject merchandise is subject to entry requirements. Even if there was not already a coastwise point there, however, the placement of the monopile and transition piece and any other merchandise on the OCS when brought from a foreign location is a dutiable event.
In both its November 29, 2021 protest submission and in the January 11, 2023 conference, SGRE disputed CBP's determination that the placement of a layer of scour protection creates a coastwise point and argues that this determination is inconsistent with prior CBP rulings. Specifically, SGRE argues that HQ H317289 (March 25, 2021) and HQ H318758 (June 6, 2022) are inconsistent with HQ H105415 (May 27, 2010), in which CBP determined that the use of a stationary, non-Jones-Act-qualified vessel to drive a monopile into the seabed of the OCS did not violate the Jones Act.[6] SGRE avers that, in HQ H105415, CBP "considered whether the driving of a monopile foundation into the seabed creates a coastwise point."[7]
First, SGRE's arguments are not pertinent to the question of merchandise entry and assessment of customs duties. We nonetheless address SGRE's arguments and find that SGRE misreads HQ H105415. In HQ H105415, CBP merely reiterated the long-standing principle that the act of driving a monopile into the seabed of the OCS itself does not constitute "coastwise trade or coastwise transportation," which is a separate question from whether the location of the activity itself constitutes a coastwise point.[8] In so doing, CBP did not reach the question of whether or when a coastwise point existed at the pile-driving site because such a question would have been moot. As such, HQ H105415 is not in conflict with HQ H317289, and has no bearing on the present analysis.
In the alternative, SGRE asserts that scour protection is not "attached" to the seabed and, therefore, no coastwise point is created. Specifically, SGRE disputes HQ H317289's citation to HQ H287418 (June 19, 2017) for the proposition that scour protection is "attached" to the seabed of the OCS. SGRE argues that HQ H287418 states that the vessel wreckage is not attached to the seafloor at all. SGRE's reading, however, is again in contradiction to the plain text of the ruling. HQ H287418 states that the vessel wreckage is simply not affixed to the seabed in connection with the purposes required by the OCSLA: "wreckages or debris, while attached to the seafloor, are not affixed...for exploration, development, or production...." See HQ H287418 (emphasis added). In HQ H317289, CBP determined that scour protection material placed on the seabed of the OCS is similarly "attached" to the OCS. However, unlike vessel wreckage, scour protection placed in the process of constructing a WTG is attached to the seabed of the OCS for the purpose of wind energy exploration, development, or production, thereby leading to the creation of a coastwise point under the OCSLA. Regardless, for the purposes of dutiability of merchandise (which is not a Jones Act issue), it is clear from the legislative history noted above that the attachment of the WTGs and other structures on the OCS subjects the items to customs duties, even if there was no scour protection - or anything else - there when the items were so placed.
Based on the foregoing, it is our determination that the first phase of the construction of the subject WTGs, which attached a monopile and transition piece, subjected those items to customs entry and duties.[9] In addition, any further items attached to the monopile and transition piece themselves, such as the tower, and nacelle and blades of the wind turbine generator and other components, become subject to customs duties when so attached. Accordingly, CBP properly determined that the placement of the subject WTG tower, nacelle, and blades upon the monopile and transition piece necessitated the entry and payment of duties on the merchandise.
As a final matter, we note that Protestant requested an advance ruling on this same matter in 2019, which our office opened under case number H309642. Please be aware that this protest review decision will answer that ruling request, which has been administratively closed.
HOLDING:
The installation of the scour protection, monopile and transition piece, and any other merchandise subsequently attached thereto, is an attachment to the seabed of the OCS, to which U.S. laws for merchandise entry and assessment of customs duties are extended by virtue of the OCSLA. Therefore, SGRE was properly required to make entry and payment of duties upon installation of the subject WTGs. Accordingly, we find that SGRE's Protest was properly denied. We are returning to your office for appropriate action.
In accordance with the Protest/ Petition Processing Handbook (CIS HB, December 2007), you are to mail this decision, together with the Customs Form 19, to the Protestant no later than 60 days from the date of this letter. Any final duty determination of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings, will make the decision available to CBP personnel and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
W. Richmond Beevers
Chief, Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection
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[1] See "Project Timing for Transportation, Installation, and Entry of Offshore Wind Turbines," dated June 16, 2020, which was part of Protestant's submission for this Protest.
[2] 43 U.S.C. 1333(a)(1).
[3] SGRE's Memorandum in Support of Protest and Application for Further Review, dated November 29, 2021, at page 2.
[4] Id. at 2.
[5] CBP has previously determined that a coastwise point is created when the first layer of scour protection material is placed on the seabed in preparation for the construction of an offshore WTG. See HQ H317289 (modifying H309186 (Jan. 29, 2021)). In HQ H300962, CBP further clarified the "first layer" interpretation, specifying that a 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 visit to the site. This application of scour protection by that vessel (whether completed at that time or not) establishes the coastwise point. See also HQ H318958 (June 6, 2022).
[6] The Jones Act, 46 U.S.C. 55102, prohibits the transportation of merchandise between points in the United States or points to which the coastwise laws apply on board non-coastwise-qualified vessels (i.e., vessels that are not built, owned, and documented in the United States). The Jones Act itself is not directly at issue in the present matter, though most CBP rulings regarding the extent to which the OCSLA extends jurisdiction to the seabed of the U.S. OCS have been issued in relation to the operation of the Jones Act.
[7] SGRE's Memorandum in Support of Protest and Application for Further Review, dated November 29, 2021, at page 5.
[8] To illustrate this point further, in interpreting the Jones Act, CBP has determined in multiple contexts, that certain activities, such as lifting operations, which result in items being placed at a coastwise point, do not violate the Jones Act because the lifting operation itself is not "transportation" as intended in the Jones Act. 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). These rulings do not state, and are not meant to state, that the underlying locations themselves are not coastwise points, but rather, that the activity performed by the vessels is not sufficient to constitute "transportation" under the Jones Act.
[9] What created a coastwise point at this location is not within the scope of this letter. However, the placement of scour protection there, or the attachment of the monopile and transition piece to the OCS, would have created a coastwise point. This is pertinent for Jones Act and vessel entry and clearance requirements, which are not the subject of this protest.
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