VES-3-02-OT:RR:BSTC:CCR H329630 TNA
Constantine G. Papavizas, Esq.
Winston & Strawn LLP
1901 L Street, NW
Washington, DC 20036
RE: Coastwise Transportation; Undersea Cable Laying; 46 U.S.C. § 55102; 46 U.S.C. § 55109; 19 C.F.R. § 4.80b; Outer Continental Shelf Lands Act; 43 U.S.C. § 1333.
Dear Mr. Papavizas:
This letter is in response to your January 25, 2023, ruling request on behalf of your client, [], (“the Company”) regarding whether certain activities related to the installation of electric power transmission cable by a non-coastwise-qualified vessel would violate the coastwise laws. Our decision follows.
FACTS
The following facts are taken from your ruling request. The Company proposes using a non-coastwise-qualified cable-lay vessel (“CLV”) and a non-coastwise-qualified trencher support vessel (“TSV”) to lay and bury electrical transmission cables on the seabed of U.S. territorial waters. These vessels will also lay and bury electrical transmission cables on the seabed of the U.S. Outer Continental Shelf. Both the CLV and the TSV will be supported by coastwise-qualified offshore support vessels (“OSVs”). These works are carried out for a project permitted under a Bureau of Ocean Energy Management lease off the coast of the state of []. The CLV will be the []. The TSV will be the [].
The CLV will pay out and lower cable onto the seabed along existing cable routes between wind turbine foundations and/or offshore substation foundations. At each foundation, a cable protection system comprised of tubular formed stiffening/protection elements will be attached onto the cable-ends onboard the CLV. The cables will be cut to length and prepared aboard the CLV before being paid out along with a cable protection system. Both ends of each cable with attached cable protection systems will then be pulled into and attached within the wind turbine foundations. The trenching machine appurtenant to the TSV will then be placed on the seabed above the paid-out cables, where it will use a submersible tracked jetting trencher (“cable burial jetting tool”) to fluidize the seabed. This will allow the cables to be buried along the pre-agreed cable routes, where they will be used to transmit electric current from the wind turbine generators to offshore substations.
The cable burial jetting tool is an electrically powered, tracked trencher that contains jetting “swords” with jetting nozzles distributed over the length of the swords. The nozzles fluidize the seabed soil in front of the trencher to reduce friction and allow the cable to be submerged into the fluidized soil/water mix. This allows the cable to be buried to its required depth.
The TSV will carry, deploy, and transport the cable burial jetting tool to the seabed. Both the cables and the cable protection system will be manufactured outside of the U.S. The cables will be manufactured in []. The cable protection system will be manufactured in the []. These items will be transported separately to a U.S.-port by the CLV or by other non-coastwise-qualified vessels to be named later. Various items such as tools, ropes, cable grips, provisions, ships spares and consumables will be transported from a U.S. port or from vessels that are active on the project onto the CLV, TSV and OSVs. These items are necessary for the personal protection, equipment, and provision of the CLV, TSV and OSV crews, operation of the CLV, TSV and OSVs, and will remain on board while these vessels are operational. Used consumables and waste will then be backloaded into containers aboard the CLV or onto the coastwise qualified feeder vessels for final discharge in a U.S. port. The offloaded containers will contain trash and waste related to the operation, including dirty rags, biohazard bags, and wrappings. Finally, once all installation operations conclude, the containers which had been placed on board the CLV containing tools, rigging, and spare parts also will remain on board the CLV when departing the construction site to a non-U.S.-port.
The CLV, TSV and OSV vessel crews will consist of approximately [] personnel who will operate the vessel and its machinery or provide services to the crew. This includes positions such as the vessel master, dynamic position operators, officers, deck crew, lifting supervisors, surveyors, cable system operators, helicopter landing officers, cable operators, supervisors, riggers, electricians, chefs and stewards. However, the CLV and TSV will arrive in U.S. waters with an incomplete crew complement and will visit a U.S.-port so that their remaining crewmembers can embark. In addition, new shifts of crew members will embark the coastwise-qualified OSVs at a U.S. port and sail to the project site and will either embark the CLV and TSV from shore-side via coastwise-qualified crew transfer vessels, or airside by FAA-registered helicopters. Any crewmembers disembarking at the end of their rotations will disembark the CLV and TSV in a similar manner.
The project installation crew will comprise of approximately [] project installation crew members who will perform installation functions both on board the coastwise-qualified feeder vessels, TSV, and CLV and directly on the cables at the foundations. These crew members’ work will include cable operations, equipment testing, planning, and training. The crew will hold positions such as pulling-in teams, riggers, supervisors, technicians, surveyors, marine warranty surveyors, and client representatives.
Coastwise-qualified vessels are used for personnel transport in the field and travelling to/from the shore to the CLV, TSV and stationary foundations. During the cable installation process, members of the project installation crew will disembark from coastwise-qualified vessels and onto the stationary foundations and from the CLV onto the coastwise-qualified vessels to conduct installation activities. The crew will also perform other work such as pre-installation cable tasks on board the CLV, as well as on the feeder and support vessels; this includes inspecting and maintaining the cable handling equipment. The crew will then return to the coastwise-qualified vessels following completion of these tasks.
ISSUES
Whether the proposed cable laying and burial operations constitute a violation of 46 U.S.C. § 55109?
Whether the proposed cable lay and burial operations by a non-coastwise-qualified vessel violate the Jones Act, 46 U.S.C. § 55102?
Whether the proposed transportation of the project installation crew by 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 or passengers 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 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)(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 wind energy, such as the wind energy turbine generators contemplated in the present matter.
Issue One: Whether the Creation of the Cable Pathway Violates 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 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).
By contrast, CBP has consistently 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 consistently stated that the use of cable-burial devices by cable-laying vessels, which employ a water jetting action that emulsifies the seabed surrounding the cable, does not constitute an engagement in dredging. This emulsification process creates a long, narrow trench as the jetting action displaces the particles of the seabed until the cables are buried. The particles then return to the seabed by way of the ocean currents to bury the cables; none of the seabed material is removed in the process. See HQ 109412 (March 29, 1988); HQ 109882 (December 2, 1988); HQ 115646 (Apr. 12, 2002); HQ 115972 (April 22, 2003); HQ 116117 (February 26, 2004); HQ H311602 (March 25, 2022); HQ H300962 (April 14, 2022). Furthermore, in HQ 113223 (Sept. 29, 1994), CBP reasoned that this process “temporarily lift[s]” a “narrow ‘slice’” of the seabed, which 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; see also HQ H311602; HQ H300962. As such, this process is not “dredging” within the meaning of 46 U.S.C. § 55109.
Similarly, in the present case, the cable burial jetting tool will fluidize the seabed without the use of a mechanical plow or cutter. Instead, the cable burial jetting tool uses water jets to move the seabed in such a way that the seabed’s particles are replaced once the cables are buried. As such, we find that this is a “temporarily lift” of a “narrow ‘slice’” of the seabed that amounts to a “temporary manipulation of the seabed” rather than the creation of a furrow or trench by operation of a share or plow and disc cutting wheel. As a result, we find that this does not constitute dredging for the purposes of 46 U.S.C. § 55109.
Issue Two: Whether the Cable Lay and Burial Violate the Jones Act, 46 U.S.C. § 55102
The Jones Act, 46 U.S.C. § 55102, 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.
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 C.F.R. § 4.80b(a).
However, 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); HQ H311602, dated March 25, 2022. In doing so, CBP has reasoned that in these situations, material is not landed as cargo but is only paid out in the course of the installation operation (i.e., paid out instead of 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 by that vessel. However, the transportation of pipe or cable by any vessel other than the vessel that is laying that pipe or cable at a point within U.S. territorial waters would be considered coastwise trade; therefore, that transportation would have to be accomplished by a coastwise-qualified vessel. See, e.g., HQ 114833 (Apr. 20, 2000); HQ H311602.
In the present request, you state that both the subject cable and cable protection system will be laded onto the CLV at foreign locations, namely [] and []. The direct transportation of the cable between a foreign location and a U.S. point does not constitute coastwise transportation within the meaning of the Jones Act. Furthermore, even if the cable is laded at a U.S. point (i.e., via transfer to a vessel at a U.S. port or within U.S. territorial waters), the subject cable will initially be “paid out” from a dedicated CLV onto the seabed of the U.S. territorial waters and OCS. As a result, we find that the initial cable placement and storage operation does not constitute transportation under the Jones Act. Thus, the proposed use of the non-coastwise-qualified CLV would not be in violation of the Jones Act, 46 U.S.C. § 55102.
Issue 3: Whether the proposed transportation of the project installation crew by a non-coastwise qualified vessel violates the Passenger Vessel Services Act, 46 U.S.C. § 55103?
As with the Jones Act, the PVSA 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. The PVSA provides, 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.
Furthermore, 19 C.F.R. § 4.80(b)(2) provides:
The penalty imposed for the unlawful transportation of passengers between coastwise points is $300 for each passenger so transported and landed on or before November 2, 2015, and $812 for each passenger so transported and landed after November 2, 2015 (46 U.S.C. § 55103, as adjusted by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015).
In accordance with previous CBP rulings, workmen, or technicians transported between coastwise points are not classified as “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 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 H183157 (Sept. 2, 2011), HQ H168214 (May 26, 2011). In addition, CBP has previously examined whether the project crew for wind turbine installations were considered “passengers” within the meaning of the PVSA. In HQ H300962, for example, the crew consisted of supervisors, lifting operations crewmembers, and technical crew (e.g., installation technicians, high voltage technicians). These individuals performed work such as installation and commissioning work on each WTG and pre-installation tasks on board the Turbine Installation Vessel, including regularly inspecting and maintaining the lifting equipment used for WTG installation. There, CBP held that these individuals were “directly and substantially” related to the operation, navigation, or business of the vessel itself, and thus were not “passengers.” See HQ H300962.
In the present case, you state that the vessel crews include positions such as the vessel master, officers, deck crew, and cable system officers who will operate the vessel and its machinery, or provide services to the crew, such as chefs and stewards. You state that the project installation crew will hold positions such as pulling-in teams, riggers, supervisors, technicians, surveyors, marine warranty surveyors, and client representatives, and that they will perform work such as cable operations, testing equipment, planning, and training. In addition, the crew will also perform other work aboard the CLV, as well as on the feeder and support vessels; this includes pre-installation cable tasks, inspecting and maintaining the cable handling equipment. These tasks are directly and substantially connected with the operation of the vessel. As a result, we find that the members of the subject project installation crew are not “passengers” within the meaning of 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b).
HOLDINGS
The proposed cable laying and burial operations do not constitute dredging within the meaning of the Dredging Statute, 46 U.S.C. § 55109.
The proposed cable laying and burial operations do not constitute coastwise trade within the meaning of the Jones Act, 46 U.S.C. § 55102 and 19 C.F.R. § 4.80b(a).
The members of the subject project installation crew are not “passengers” within the meaning of the Passenger Vessel Services Act, 46 U.S.C. § 55103. Therefore, the coastwise transportation of such individuals is not in violation of the PVSA.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” If the terms of the import or export contracts and results of the sampling records vary from the facts stipulated to herein, or CBP ascertains discrepancies based upon a review of any other pertinent information, this decision shall not be binding on CBP as provided for in 19 C.F.R. § 177(b)(1), (2) and (4), and § 177.9(b)(1) and (2).
Sincerely,
W. Richmond Beevers
Chief/Supervisory Attorney-Advisor
Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection