VES-3-02-OT:RR:BSTC:CCR H326258 DMK
Joshua Stein, Esq.
Cozen O’Connor, P.C.
1200 19th Street, NW
Washington, DC 20036
RE: Coastwise Transportation; Towing; Outer Continental Shelf; Wind Turbines; 46 U.S.C. §§ 55102, 55103, 55111; Merchandise; Passengers; Towing; Vessel Equipment; Scour Protection; 19 C.F.R § 4.50(b); 19 C.F.R. § 4.80; 19 C.F.R. § 4.80a; 19 C.F.R. § 4.80b; 19 C.F.R. § 4.92.
Dear Mr. Stein;
This letter is in response to your July 12, 2022, ruling request submitted on behalf of your client, [ ] (the “Company”), regarding whether the installation of wind turbine generators (“WTG”) and associated activities by non-coastwise qualified vessels over the Outer Continental Shelf (“OCS”), as described below, would violate the coastwise laws. Our decision follows.
FACTS
The following facts are from your client’s ruling request and supporting information dated July 12, 2022, as well as supplemental information submitted on September 2, 2022. Your client has requested U.S. Customs and Border Protection (“CBP”) to determine whether the transport and installation of offshore substations (“OSS”), foundations (“FOU”), scour protection, and associated activities on the OCS would violate the Jones Act, 46 U.S.C. § 55102, the Towing Statute, 46 U.S.C. § 55111, and the Passenger Vessel Services Act, 46 U.S.C. § 55103 (“PVSA”).
The Company has been contracted to perform the transport and installation of OSS and FOU for the [ ] and [ ]. The Company has also been contracted to supply and install scour protection for WTG and OSS locations on [ ] and [ ]. You have provided a list of vessels, project crew, and materials, tools, bolts, nuts, screws, and equipment to be utilized in the operations. Each project will occur in two phases: (1) scour protection installation and (2) FOU and OSS transport and installation.
The Company intends to transport scour protection material from a foreign destination to the installation site by a non-coastwise-qualified Dynamically Positioning Fallpipe Vessel (“Scour Vessel”). The scour protection material will either be installed to the pristine seabed prior to the installation of a monopile (“MP”) or will be installed after the installation of an MP. In both scenarios, 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 may also return to the partially installed scour protection area to add additional scour protection following restocking in a foreign location.
As regards the FOU and OSS transport, the Company intends to transport MPs from a foreign location to the installation site by a non-coastwise qualified heavy lift vessel (“HLV”). In the alternative, the MPs will be brought from a foreign location to the HLV at a transfer location on the OCS by a non-coastwise-qualified heavy transport vessel (“HTV”), where the MPs will be transferred from the HTV to the HLV. You have provided transfer locations, as well as the proposed methods for transferring the MPs. The HTV will remain stationary by: (1) two non-coastwise qualified anchor handling tugs (“AHT”) which will be connected to the bow and stern on the ATV; (2) one coastwise qualified AHT will anchor to the seabed and will connect to the bow or stern of the HTV, and a non-coastwise qualified AHT will be connected on the other side; (3) two non-coastwise qualified AHTs will connect to the bow and stern of the HTV and one will anchor to the seabed; or (4) the HTV will anchor to the seabed during any of the foregoing methods.
In all cases, a non-coastwise qualified HLV will come alongside the stationary HTV and will remain stationary by dynamic positioning. The HLV may also connect to the HTV via mooring lines and/or fenders but will not anchor. The MPs will then be transferred to the HLV using the HLV’s crane.
The HLV will install the MPs on pristine seabed at [ ] and in locations where scour protection has already been installed during Phase 1 at [ ]. The HLV will use dynamic positioning at the MP installation locations and drive the MPs into the seabed. The HLV may install temporary MP lighting and flange protector frames, which will arrive on board the HLV from a foreign destination. Prior to installing the other components of the OSSs and FOUs, i.e., Module Support Frames (“MSF”), OSS Topsides, and Secondary Steel, the installation of which is described below, the frames will be removed. The HLV may take the frames from one MP, to transport and install it on another MP. Following their last use at a project site, the frames are retrieved to the HLV and return to a location outside the U.S.
The other components of the OSSs and FOUs will be transported and installed in one of three methods: (a) transport from a foreign country to a transfer location near an installed MP on the OCS; (b) transport from a foreign country directly to the installation location with installation by a non-coastwise-qualified HLV; or (c) transport from a U.S. coastwise point by a coastwise-qualified vessel or coastwise-qualified tug and barge with installation by a non-coastwise qualified HLV.
For [ ] locations, MSFs and OSS Topsides will be transported and transferred according to method (a), reflecting the same manner in which the MPs are transferred from the HTV to HLV. The MSFs and OSS Topsides will either be lifted to the deck of the HLV by the HLV’s crane or may stay in the HLV’s crane hook. The HLV will then transit to the installation location and install the component onto an already installed MP.
Secondary Steel to be installed on top of the OSS MP will be transported according to method (b). All OSS Secondary Steel items excluding the [ ] MSF described above will arrive at the installation site on board the non-coastwise-qualified HLV from a foreign destination. The HLV will position itself using dynamic positioning and lift the component to the OSS MP.
The Company contemplates some installations may involve the use of a temporary platform and specialized installation equipment to complete the installation of the component following placement on the OSS MP by the HLV. Such equipment will either be pre-installed on the component prior to loading on the HLV and returned to the HLV following installation, lifted to the OSS MP prior to installation and returned to the HLV following installation, or transported to the installation site aboard a coastwise-qualified Platform Supply Vessel (“PSV”) and lifted to the OSS MP by the HLV while the HLV is stationary and returned to the PSV.
The third method of transport involves using a coastwise-qualified PSV to carry SS installation tools with the WTG MP SS from the [ ] to a WTG MP location. The PSV will position itself next to the HLV, where it may be moored alongside the HLV using mooring lines. The HLV will lift the integrated SS installation tool from the deck of the PSV using the HLV’s crane. The HLV will then maneuver laterally approximately 30-50 meters, before using the crane to set the installation tool on the MP. The empty installation tool will then be placed back aboard the PSV in the reverse manner as it was removed from the PSV. The PSV will then either transport the installation tool to the next MP location or return to the supply port to restock SS on the PSV.
For the [ ] projects, the OSS Topsides will be fabricated in the U.S. and transported by a coastwise-qualified tug and barge to the installation site. Once at the installation site, a second non-coastwise-qualified tug may be attached to the barge to ensure the barge remains stationary. The HLV will then position alongside the barge at a position approximately 300 meters from the OSS foundation where the barge is moored to the HLV. The HLV then connects rigging and lifts the OSS Topside from the barge. The non-coastwise-qualified tug (if used) then disconnects from the barge and the coastwise qualified tug tows the barge clear. The HLV will then maneuver to the OSS foundation location and install the OSS Topside on the MSF. Rigging, welding, and completion equipment and tools will be either lifted from the HLV to the OSS Topside or pre-installed on the OSS Topside or MSF. After completing the operation, the HLV will lift the equipment and tools back to its deck. You assert that the HLV’s movement is necessary and is the safest and most practical solution to minimize the risk of collision between the moving and stationary assets during the operation, as well as minimizing the risk during lifting and risk of damage to the surface and subsea infrastructure.
To monitor noise, you propose to have either coastwise-qualified or non-coastwise-qualified Anchor Handling Tugs (“AHT”) load noise measurement buoys at a U.S. port. Two AHTs will deploy the buoys to points on the pristine seabed of the OCS around an MP installation site. The same vessels will retrieve the buoys before moving to the next location and repeating the sequence. At the end of use, if coastwise-qualified vessels were used, the vessels will return the buoys to either the same U.S. port as they were loaded or a different U.S. port. If a non-coastwise qualified vessel is used, the vessel will return the buoys to the same U.S. port as they were loaded.
To mitigate noise, you propose to use a system you call the Big Bubble Curtain (“BBC”). To do so, a non-coastwise-qualified AHT equipped with BBC equipment will arrive from a foreign destination. The AHT will then pay out the BBC hose from a spool and lay the hose on the seabed. In some situations, scour protection may have already been laid but the BBC hose will regardless be deployed to a pristine location. Before pile driving, the AHT will pump air into the BBC hose which will escape through holes and create an air bubble curtain. Once pile driving is complete, the AHT will retrieve the BBC and move to the next location. The BBC will depart U.S. waters with the AHT and be demobilized in Europe.
To achieve the above, each vessel will transport a complement of crew subdivided into the vessel crew and project crew. The vessel crew are responsible for operation of the vessel itself. You have provided a list of project crew members for each non-coastwise qualified vessel. The project crew will perform installation functions on board the installation vessel as well as the partially completed foundations and/or OSS. The project crew will be transported to and between MP installation sites aboard the vessel to which they are assigned or aboard a coastwise qualified vessel or U.S.-registered, operated, and crewed helicopter.
You contemplate the possibility that project crew of one vessel may board another vessel to access components or assist with equipment on board. This will occur only while the vessel is stationary through a gangway, walk-to-work system, or man-riding basket in the stationary HLV’s crane, and the non-coastwise-qualified vessel with non-assigned installation crew aboard will remain stationary until the personnel return to their assigned vessel.
Similarly, some project crew will disembark from the stationary HLV and/or Completions Vessel onto the partially constructed foundation or OSS to conduct installation activities. The crew will transfer between their assigned vessel and the foundation or OSS via the same methods as above. The project crew will be transferred between sites aboard their assigned vessel. Any crew changes will occur directly to the vessel to which the crew member is assigned at a U.S. port or via a coastwise qualified vessel or a U.S.-registered, operated, and crewed helicopter.
In addition, four individuals will embark a non-coastwise qualified Protected Species Observation (“PSO”) vessel for the purpose of engaging in protected species observation. The PSO observers would board and depart the PSO vessel either in a U.S. port or via a U.S.-flagged coastwise-qualified crew transfer vessel or helicopter. The PSO observers are tasked with observing the project from the PSO vessel to ensure the project complies with all relevant environmental and protected species requirements.
During the operations, the vessels may also receive and transport parts, provisions, specialized items, tools, and installation aids. You have provided a list of these items with your request. These items will be transferred to the vessels one of three ways:
Items loaded at a foreign destination will be lifted from the HLV to the OSS Topside or pre-installed on the OSS Topside or MSF. Some items will be carried aboard the HLV to and between MP installations which are utilized in the installation of the various FOU and OSS components.
Items may be transported on a non-coastwise qualified supply vessel and lifted from that vessel to a receiving vessel utilizing the stationary HLV’s crane. Such items will be carried aboard and utilized by the receiving vessel.
Vessels may dock at a U.S. port to load the items.
ISSUES
Whether the offloading of merchandise at an installation or transfer site by a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C § 55102 where such merchandise was laden at a foreign port?
Whether installation of components by a non-coastwise-qualified installation vessel when such components are lifted from a coastwise-qualified transport vessel violates the Jones Act, 46 U.S.C. § 55102 where any movement of merchandise during the lifting operation is effected exclusively by the installation vessel’s crane and not by any movement of the installation vessel, except for necessary movement which is incidental to the lifting operation while it is taking place?
Whether the transfer of components from a non-coastwise-qualified transport vessel to a non-coastwise qualified installation vessel over the OCS and subsequent movement and installation by the installation vessel violates the Jones Act, 46 U.S.C. § 55102 where such components were laden at a foreign port and neither vessel is anchored or attached to the seabed?
Whether unlading of items from a non-coastwise-qualified vessel to the pristine seabed of the OCS violates the Jones Act, 46 U.S.C. § 55102?
Whether the use of non-coastwise-qualified tugs to ensure a vessel remains stationary violates the Towing Statute, 46 U.S.C. § 55111?
Whether the deployment and recovery of the Big Bubble Curtain equipment by a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102?
Whether the transportation of tools, materials, installation aids, and other items utilized in the installation operations described herein on board non-coastwise-qualified vessels to, from, and between installation sites on the OCS violates the Jones Act, 46 U.S.C. § 55102?
Whether the transportation of installation crew aboard non-coastwise-qualified vessels to which they are assigned violates the Passenger Vessel Services Act, 46 U.S.C. § 55103?
Whether the transportation of PSO observers onboard a non-coastwise-qualified vessel violates the Passenger Vessel Services Act, 46 U.S.C. § 55103?
LAW AND ANALYSIS
Generally, the coastwise laws prohibit the transportation of merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a certificate of documentation with a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.”
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. In addition, Section 4(a) of the Outer Continental Shelf Lands Act of 1953 (“OCSLA”), 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.
The coastwise law applicable to the transportation of merchandise, often referred to 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 Jones Act only partially defines the term “merchandise,” setting forth that merchandise “includes … merchandise owned by the United States Government, a State, or a subdivision of a State” and “valueless material.” See 46 U.S.C. § 55102(a). CBP utilizes as well the definition of “merchandise” in 19 U.S.C. § 1401(c): “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.” Furthermore, by interpretations in its administrative letter rulings for purposes of the Jones Act, CBP has distinguished the transportation of “vessel equipment” from “merchandise.”
Issue One: Whether the offloading of merchandise at an installation or transfer site by a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C § 55102 where such merchandise was laden at a foreign port
First, we consider whether the proposed offloading of MP, MSF, OSS, OSS topsides, MP Secondary Steel, or scour protection at an installation or transfer site by a non-coastwise qualified vessel violates the Jones Act, 46 U.S.C. § 55102.
To determine whether transportation between coastwise points occurs, CBP examines the points at which merchandise is laden and unladen. HQ H316313 (Feb. 4, 2021). Regardless of whether merchandise is unladen at a coastwise point, if the merchandise is laden at a foreign port, there is no transportation between coastwise points. HQ H309176 (Jan. 27, 2021); HQ H143075 (Feb. 24, 2011). This presumes, of course, that the subject merchandise did not originally come from a U.S. coastwise point.
In the present case, you state that the cargo will be transported from a foreign port to either the installation site itself or a transfer site as close to the installation site as operationally feasible. You have provided information on the location of the transfer sites and the operational requirements which make the transfer necessary (see also Issues 2 and 3 below). We find that the proposed activities described in your request would not constitute transportation between coastwise points because the merchandise is laden at a foreign. We therefore determine that there is no coastwise transportation of merchandise within the meaning of 46 U.S.C. § 55102 and 19 CFR § 4.80.
In the alternative, you state that some cargo may be transported from a U.S. port to the transfer site or installation site by coastwise-qualified vessels. This would constitute transportation between coastwise points, but would not violate 46 U.S.C. § 55102 and 19 CFR § 4.80 because the vessels are coastwise qualified and to the extent the subsequent installation follows the procedures laid out for Issue Two.
Issue Two: Whether installation of components by a non-coastwise-qualified installation vessel when such components are lifted from a coastwise-qualified transport vessel violates the Jones Act, 46 U.S.C. § 55102, where any movement of merchandise during the lifting operation is effected exclusively by the installation vessel’s crane and not by any movement of the vessel, except for necessary movement which is incidental to the lifting operation while it is taking place
Next, we consider whether the proposed installation of components by a non-coastwise-qualified vessel when such components are transported from a coastwise point by a coastwise-qualified transport vessel, then are lifted from the coastwise-qualified transport vessel to the installation site by the non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102. As noted above, transportation of merchandise between coastwise points by a non-coastwise-qualified vessel violates the Jones Act.
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 is effected 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 HQ H320052 (May 11, 2022); HQ 115940 (Apr. 17, 2003). Additionally, “lateral movement of the vessel or item in the vicinity of” the lifting operation is not “transportation” but merely a movement subordinate to and a direct consequence of the lifting operation. 53 Cust. Bull. & Dec. 45, p. 95 (Dec. 18, 2019). CBP has indicated that some movement is permissible to the extent necessary to satisfy the demands of the lifting operation or to avoid risk to human life or damage to the marine environment. 53 Cust. Bull. & Dec. 38, p. 21 (Oct. 23, 2019). Accordingly, some lateral movement may be allowable if the lateral movement of the vessel or the item in the vicinity of the structure (where the item is being positioned or removed) is subordinate to and a direct consequence of the lifting operations and is necessary for safety and practical concerns. Id.
In the matter at hand, you propose to have a coastwise-qualified transport vessel bring components from a coastwise point to a location near the installation site. At this location, a non-coastwise-qualified vessel will lift the components before moving laterally up to 300 meters. This is done to prevent collision between the fixed foundation, the OSS Module Support Frame, the tug/HTV, and/or the OSS Topsides, which could damage the vessels, the foundations, and threaten human life and the local environment. You have provided a hazard identification risk assessment showing that the proposed movements keep the risk of damage to vessels, marine infrastructure, and crew as low as reasonably practicable. This movement is subordinate to and a direct consequence of the lifting operation, and you have proposed no other movement beyond this movement necessary for safety and practical concerns, or incidental to the lifting operation. Accordingly, the proposed lifting operation does not constitute transportation between coastwise points within the meaning of 46 U.S.C § 55102 and 19 CFR § 4.80.
Issue Three: Whether the transfer of components from a non-coastwise-qualified transport vessel to a non-coastwise-qualified installation vessel over the OCS and subsequent movement and installation by the installation vessel violates the Jones Act, 46 U.S.C. § 55102 where such components were laden at a foreign port and neither vessel is anchored or attached to the seabed.
Next, we consider whether the proposed transfer of components, such as MPs, MSFs, and OSS Topsides, from a non-coastwise qualified transport vessel to a non-coastwise qualified installation vessel over the OCS and subsequent movement and installation by the installation vessel violates the Jones Act, 46 U.S.C. § 55102. As noted above, to determine whether there is a coastwise transportation of merchandise, CBP looks to the points at which cargo is laden and unladen. In this case, the merchandise is laden on one vessel at a foreign port and unladen at sea over the OCS. The merchandise is laden on the second vessel at sea over the OCS and unladen at the installation site. Neither vessel will be anchored or attached to the seabed during transfer.
CBP has previously ruled that the transfer of merchandise between vessels beyond the three-mile territorial sea line does not involve the lading of merchandise at a coastwise point. HQ 114803 (Aug. 31, 1999) (finding that a transfer of merchandise between two foreign-flag vessels which occurs beyond the three-mile territorial sea line would not constitute lading of merchandise at a coastwise point). Because foreign points are not coastwise points and the OCSLA does not extend to ships which are not anchored or attached to the seabed, these are not coastwise points for purposes of the Jones Act; the only coastwise point is the installation site. Accordingly, there is no transportation between coastwise points within the meaning of 46 U.S.C § 55102 and 19 CFR § 4.80.
Issue Four: Whether unlading of items from a non-coastwise-qualified vessel to the pristine seabed of the OCS violates the Jones Act, 46 U.S.C. § 55102
Next, we consider whether the proposed unlading of MPs and scour protection from a non-coastwise qualified vessel to the pristine seabed of the OCS violates the Jones Act, 46 U.S.C. § 55102. Both the MPs and scour protection will be transported from a foreign location and will be unladen to the pristine seabed of the OCS. One contemplated operation involves the transfer of the MPs to the HLV from the HTV while the HTV is anchored on the OCS. Other contemplated operations would involve the use of one or more AHTs to hold the HTV in place, and in one scenario an AHT would be anchored to the seabed during the operation. CBP has previously ruled that a vessel anchored to the OCS can be considered a coastwise point. See, e.g., HQ H008396 (June 4, 2007) (finding that a vessel engaged in exploring for, developing, or producing resources and attached to the seabed by a mooring system constitutes a coastwise point).
As noted above, to determine whether there is a coastwise transportation of merchandise, CBP looks to the points at which cargo is laden and unladen. In this case, the cargo is laden on one vessel at a foreign port and unladen to the pristine seabed of the OCS. Even if the point of unlading is considered a coastwise point because the HTV is anchored on the OCS while transferring the MPs to the HLV, the point of lading is still not a coastwise point. This analysis is not changed if an AHT is anchored on the OCS and holds the HTV stationary because, even if the AHT is considered a coastwise point, the point of lading is still a foreign port. Accordingly, there is no transportation between coastwise points within the meaning of 46 U.S.C § 55102 and 19 CFR § 4.80.
Issue Five: Whether the use of non-coastwise-qualified tugs to ensure a vessel remains stationary violates the Towing Statute, 46 U.S.C. § 55111
Next, we consider whether the use of non-coastwise qualified tugs to hold a vessel in place violates the Towing Statute, 46 U.S.C. § 55111. Regarding the applicability of the coastwise towing statute to the activities described in the FACTS section above, 46 U.S.C. § 55111 provides, in pertinent part:
(a) IN GENERAL.—Except when towing a vessel in distress, a vessel may not do any part of any towing described in subsection (b) unless the towing 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 of this title or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
(b) APPLICABLE TOWING.—Subsection (a) applies to the towing of—
(1) a vessel between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port or place;
(2) a vessel from point to point within the harbors of ports or places to which the coastwise laws apply; or ….
The CBP Regulations at 19 CFR § 4.92 provide, in pertinent part:
No vessel other than a vessel documented for the coastwise trade, or which would be entitled to be so documented except for its tonnage (see
§ 4.80), may tow a vessel other than a vessel in distress between points in the U.S. embraced within the coastwise laws, or for any part of such towing ….
“Towage service is the employment of one vessel to expedite the voyage of another.” Sacramento Navigation Co. v. Salz, 273 U.S. 326 (1927). “A towage service is one which is rendered for the mere purpose of expediting her voyage, without reference to any circumstances of danger.” The Mercer, 297 F. 981 (2d Cir. N.Y. 1924). “When a tug is called or taken by a sound vessel as a mere means of saving time, or from considerations of convenience, the service is classed as towage;….” The Flottbek, 118 F. 954 (9th Cir. Wash. 1902).
CBP has previously ruled that when no movement occurs and any movement is merely incidental, no “towage” occurs and the Towing Statute is not violated. HQ H251654 (June 4, 2014). However, CBP has determined that “towage” occurs if a tug slows a vessel to assist it in becoming stationary, or if a tug turns an otherwise stationary vessel. Id.
In the present case, all four potential uses of AHTs are to keep the HTV stationary. You have not indicated that the AHTs will be used to slow or stop the HTV, only that the AHTs will connect to the HTV to keep it stationary. None of these proposed scenarios involve using an AHT to move the HTV between points or to expedite its voyage. Any movement will be merely incidental. Since neither the AHTs nor HTV will move while attached to each other, save for unavoidable incidental movement, no voyage would be undertaken. Therefore, no “towage” would occur and the contemplated use of AHTs to hold the HTV stationary would not violate the Towing Statute, 46 U.S.C. § 55111.
Issue Six: Whether the deployment and recovery of the BBC by a non-coastwise-qualified vessel violates the Jones Act, 46 U.S.C. § 55102
Next, we consider whether the deployment and recovery of the BBC by a non-coastwise qualified vessel violates the Jones Act, 46 U.S.C. § 55102.
CBP has interpreted merchandise not to include “vessel equipment,” that is, items which are “necessary and appropriate for the navigation, operation or maintenance of a vessel and for the comfort and safety of the persons on board.” Necessary and appropriate items are those that are integral to the function of the vessel and are carried by the vessel, including items that aid in the “installation, inspection, repair, maintenance, surveying, positioning, modification, construction, decommissioning, drilling, completion, workover, abandonment or other similar activities or operations of wells, seafloor or subsea infrastructure, flow lines, and surface production facilities.” The fact that an item is returned to the vessel and not left behind on the seabed is a factor that weighs in favor of an item being classified as vessel equipment, but is not the sole determinative factor. Whether such articles constitute vessel equipment is a fact-specific, case-by-case determination. HQ H058647 (May 18, 2011).
CBP has consistently held that vessel equipment consists of articles necessary to carry out a vessel’s function. HQ H029417 (June 5, 2008). See also HQ H321240 (Mar. 21, 2022); HQ H058647 (May 18, 2009). However, if the articles are intended to perform a function separate from that of the vessel, they may be considered merchandise. HQ H322233 (Sep. 2, 2022).
In the matter at hand, the BBC will arrive in U.S. waters aboard an AHT. The BBC will be used by the AHT to create a sound attenuation barrier during pile driving. In between MP installation sites, the BBC will be laded aboard the same AHT. After completion of operations, the BBC will leave U.S. waters aboard the same AHT.
We determine that the BBC is necessary and appropriate to the function of the AHT it is kept aboard, that is, for the creation of a sound attenuation barrier during pile driving. The function of the AHT is to create this barrier and the BBC is integral to that function; the BBC is like a tool in this respect. Accordingly, the BBC is vessel equipment and not “merchandise” under the Jones Act. As a result, no violation of 46 U.S.C. § 55102 exists.
Issue Seven: Whether the transportation of tools, materials, installation aids, and other items utilized in the installation operations described herein on board non-coastwise-qualified vessels to, from, and between installation sites on the OCS violates the Jones Act, 46 U.S.C. § 55102
Next, we consider whether the transportation of items utilized in the installation operations on board non-coastwise-qualified vessels to, from, and between installation sites on the OCS violates the Jones Act, 46 U.S.C. § 55102.
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). When construction on the OCS involves permanently or temporarily attaching FOUs, OSS, or scour protection to the seabed, that location becomes a coastwise point. Thus, the tools, materials, installation aids, and other items utilized in the installation operations will be moved between coastwise points. See HQ H317289 (Jan. 27, 2021). Accordingly, the issue as it relates to the Jones Act is whether the articles are merchandise or vessel equipment.
In the present matter, the explicit function of the vessels is to install OSS, FOU, and scour protection. You have provided a comprehensive list of items and tools that will be unladen and used at the subject sites. 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. The installation tools (e.g., MP lighting, flange protector frames, MSFs) are used by the installation vessels and installation crew to physically install and commission the subject WTG units. As such, these items are used as tools and 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.
However, components like nuts, bolts, and screws, once used in the installation and construction process, become an integral part of the infrastructure itself. Because of their embedded nature post-installation, they cease to facilitate further construction or installation. While containers, waste skip, consumables, and associated devices, such as bolt handling tools, may be considered "vessel equipment", nuts, bolts, and screws are not because they become permanent parts of the built infrastructure, precluding their further transportation or utilization in other installations. See HQ H328865, footnote 17. Accordingly, the nuts, bolts, and screws mentioned in your request are considered merchandise for the purposes of the Jones Act.
Your request has clarified three methods by which the items and tools will be transferred to the vessels: (1) loaded at a foreign destination; (2) transported on a non-coastwise qualified supply vessel and lifted from that vessel to a receiving vessel utilizing the HLV’s crane; and (3) vessels may dock at a U.S. port to load the items. Method 1 does not involve the transportation of the nuts, bolts, and screws between coastwise points so there is no violation of the Jones Act. Method 2 may constitute transportation between coastwise points should the non-coastwise qualified supply vessel load the nuts, bolts, and screws at a coastwise point. Accordingly, Method 2 could violate the Jones Act unless the supply vessel loads the nuts, bolts, and screws at a foreign point. Method 3 would likewise violate the Jones Act insofar as the non-coastwise qualified vessels involved in the installation would load the nuts, bolts, and screws at a coastwise point and transport those items to the installation site.
Accordingly, the tools and materials to be transported between WTG sites are vessel equipment and not “merchandise” under the Jones Act, provided the tools and materials are used by the installation vessels and crew to physically install and commission the subject WTG units, or are necessary for the comfort and safety of the crew. 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. However, the nuts, bolts, and screws listed in your request are considered merchandise and, if transported between coastwise points, would result in a violation of 46 U.S.C. § 55102.
Issue Eight: Whether the transportation of installation crew aboard non-coastwise qualified vessels to which they are assigned violates the Passenger Vessel Services Act, 46 U.S.C. § 55103
Next, we determine whether transporting the installation crew aboard non-coastwise qualified vessels to which they are assigned would be in violation of the Passenger Vessel Services Act, 46 U.S.C. § 55103. Pursuant to 46 U.S.C. § 55103 only coastwise-qualified vessels may transport passengers in the navigable waters in the United States, provided, in pertinent part:
[…] 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.
The applicable regulation at 19 CFR § 4.50(b) defines a passenger as “any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business.”
In accordance with previous CBP rulings, individuals transported between coastwise points are not classified as “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b) if they are required to be onboard to contribute to the accomplishment of the operation or navigation of the vessel during the voyage or are onboard because of a necessary vessel ownership or business interest during the voyage. See, e.g., HQ H316313 (Feb. 4, 2021); HQ H311603 (Aug. 31, 2020); HQ H183157 (Sept. 2, 2011); HQ H168214 (May 26, 2011); HQ H036016 (Aug. 29, 2008).
In the present case, you state that the installation crew will be on board for the purposes of installing the FOU and OSS and supporting activities related thereto. You have provided a list of installation crew and their responsibilities. We find that the proposed activities described in your request would be directly and substantially connected with the operation of the vessel and the installation crew will be onboard because of a necessary business interest. We therefore determine that the subject installation crew are not “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b).
Issue Nine: Whether the transportation of PSO observers onboard a non-coastwise-qualified vessel violates the Passenger Vessel Services Act, 46 U.S.C. § 55103
Finally, we determine whether transporting the PSO observers onboard a non-coastwise-qualified vessel, from a U.S. port or via a coastwise qualified crew transfer vessel or helicopter, to a U.S. port would be in violation of the Passenger Vessel Services Act, 46 U.S.C. § 55103.
As noted above, individuals transported between coastwise points are not classified as “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b) if they are required to be onboard to contribute to the accomplishment of the operation or navigation of the vessel during the voyage or are onboard because of a necessary vessel ownership or business interest during the voyage. CBP has previously held that PSO observers did not constitute “passengers” within the meaning of the PVSA because such activities were “directly and substantially connected with the operation of the vessel” and that the observers were “onboard because of a necessary business interest.” HQ H311603 (Aug. 31, 2020).
In the present case, you state that the PSO observers will be on board for the purposes of engaging in protected species observation, to ensure that the project complies with relevant environmental and protected species requirements. We find that the proposed activities described in your request would be directly and substantially connected with the operation of the vessel and the PSO observers will be onboard because of a necessary business interest. We therefore determine that the subject PSO observers are not “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b).
HOLDING
The proposed offloading of merchandise at an installation or transfer site by a non-coastwise qualified vessel does not violate the Jones Act, 46 U.S.C § 55102, where such merchandise was laden at a foreign port.
The proposed installation of components by a non-coastwise-qualified installation vessel when such components are lifted from a coastwise-qualified transport vessel does not violate the Jones Act, 46 U.S.C. § 55102 where any movement of merchandise during the lifting operation is effected exclusively by the installation vessel’s crane and not by any movement of the installation vessel, except for necessary movement which is incidental to the lifting operation while it is taking place.
The proposed transfer of components from a non-coastwise qualified transport vessel to a non-coastwise qualified installation vessel over the OCS and subsequent movement and installation by the installation vessel does not violate the Jones Act, 46 U.S.C. § 55102 where such components were laden at a foreign port and neither vessel is anchored or attached to the OCS seabed.
The proposed unlading of items from a non-coastwise qualified vessel to the pristine seabed of the OCS does not violate the Jones Act, 46 U.S.C. § 55102.
The proposed use of non-coastwise qualified tugs to ensure a vessel remains stationary does not violate the Towing Statute, 46 U.S.C. § 55111.
The proposed deployment and recovery of the BBC equipment by a non-coastwise qualified vessel does not violate the Jones Act, 46 U.S.C. § 55102.
The proposed transportation of tools, materials, installation aids, and other items physically utilized in the installation operations or for the comfort and safety of the crew described herein on board non-coastwise qualified vessels to, from, and between installation sites on the OCS does not violate the Jones Act, 46 U.S.C. § 55102. However, the proposed transportation of nuts, bolts, and screws on board non-coastwise qualified vessels from a coastwise point to an installation site does violate the Jones Act, 46 U.S.C. § 55102.
The proposed transportation of installation crew aboard non-coastwise qualified vessels to which they are assigned does not violate the Passenger Vessel Services Act, 46 U.S.C. § 55103.
The proposed transportation of PSO observers onboard a non-coastwise qualified vessel does not violate the Passenger Vessel Services Act, 46 U.S.C. § 55103.
Sincerely,
W. Richmond Beevers
Chief, Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade; Regulations and Rulings
U.S. Customs and Border Protection