• HQ H332160
• Jun 13, 2024

• Type : Carriers • HTSUS :
•  Related:   110837; 115940; H316313; H309176; H143075; H320052; 110239   

VES-3-02-OT:RR:BSTC:CCR H332160 DMK

Nedjeljko Mihaljevic Harren & Partner Services Mexico S.A.P.I De C.V. Av. Aviacin No. 245, Petrolera 24179 Ciudad del Carmen, Campeche Mexico

RE: Coastwise Transportation; Lifting; Outer Continental Shelf; Wind Turbines; 46 U.S.C. 55102; 19 C.F.R 4.80, 4.80b.

Dear Mr. Mihaljevic;

This letter is in response to your May 2, 2023, ruling request submitted to us on May 23, 2023, regarding whether certain lifting operations by a non-coastwise-qualified vessel over the United States Outer Continental Shelf ("OCS"), as described below, would violate the coastwise laws.[1] Our decision follows.

FACTS

The following facts are from your May 2, 2023, and June 1, 2023, ruling requests and supporting information and September 26, 2023, and April 3, 2024, responses to our requests for additional information. You have requested U.S. Customs and Border Protection ("CBP") to determine whether the transport and installation of monopiles, transition pieces, jackets, and topsides on the OCS would violate the Jones Act, 46 U.S.C. 55102.

The [ ] ("the Vessel") is a dynamically-positioned floating crane barge used for heavy lift operations. The Vessel is currently documented in the United States and maintains a coastwise endorsement. However, the Vessel is contracted to undergo a change of ownership and flag. After the change in ownership and flag, the Vessel is anticipated to be used on the OCS at the [ ] off the coast of [ ] and [ ] off the coast of [ ] for construction and decommissioning projects. For both projects, the port of mobilization will be [ ], a U.S. coastwise point. You have provided the specific contemplated locations on the OCS where the Vessel is intended to be used.

To that end, you have proposed that the Vessel may install and decommission (1) monopiles, (2) transition pieces, (3) jackets, and (4) topsides.

For Category 1, monopiles, a coastwise-qualified transport vessel will deliver the monopiles to the offshore location. The Vessel will lift the monopiles from the transport vessel and install them onto the seabed utilizing an impact or vibro hammer. No lateral or horizontal movement of the Vessel is contemplated. During decommissioning, the Vessel will lift the monopiles from the seabed and place them onto an adjacent transport vessel,[2] again with no lateral or horizontal movement.

For Category 2, transition pieces, a coastwise-qualified transport vessel will deliver the transition pieces to the offshore location. The Vessel will lift the transition pieces from the transport vessel and install them onto the monopiles. You contemplate a lateral movement of approximately 100 to 200 meters during the lifting operation due to logistical and safety reasons, to avoid the previously installed monopiles. During decommissioning, the Vessel will lift the transition pieces from the monopiles, move laterally approximately 100 to 200 meters, and place the transition pieces onto a coastwise qualified transport vessel.

For Category 3, jackets, a coastwise-qualified transport vessel will deliver the jackets to the offshore location. The Vessel will lift the jackets from the transport vessel and install them onto either the seabed or on top of previously installed pin piles. No lateral or horizontal movement of the Vessel is contemplated. During decommissioning, the Vessel will lift the jackets from the seabed and place them onto an adjacent transport vessel,[3] again with no lateral or horizontal movement.

For Category 4, topsides, a coastwise-qualified transport vessel will deliver the topsides to the offshore location. The Vessel will lift the topsides from the transport vessel and install them onto the jackets. You contemplate a lateral movement of approximately 100 to 200 meters during the lifting operation due to logistical and safety reasons, to avoid the previously installed jackets. During decommissioning, the Vessel will lift the topsides from the jackets, move laterally approximately 100 to 200 meters, and place the transition pieces onto a coastwise-qualified transport vessel.

For Categories 2 and 4, you have provided documentation detailing how the contemplated lateral movement is necessary to satisfy the demands of the lifting operation and avoid risk of damage.

ISSUES

1. Whether installing and decommissioning the monopiles would constitute a violation of the Jones Act, 46 U.S.C. 55102?

2. Whether installing and decommissioning the transition pieces would constitute a violation of the Jones Act, 46 U.S.C. 55102?

3. Whether installing and decommissioning the jackets would constitute a violation of the Jones Act, 46 U.S.C. 55102?

4. Whether installing and decommissioning the topsides would constitute a violation of the Jones Act, 46 U.S.C. 55102?

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 law applicable to the transportation of merchandise, often referred to as "the Jones Act," is found at 46 U.S.C. 55102,[4] 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-

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 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." See 46 U.S.C. 55102(a)(2). 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).

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.[5] In addition, Section 4(a) of the Outer Continental Shelf Lands Act of 1953, 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.[6]

CBP has determined that a "lifting operation" includes "the lifting by cranes, winches, lifting beams, or other similar activities or operations, from the time that the lifting activity begins when unlading from a vessel or removing offshore facilities or subsea infrastructure until the time that the lifting activities can be safely terminated in relation to the unlading, installation, or removal of offshore facilities or subsea infrastructure. Lifting operations encompass the initial vertical movement of an item from a lower position to a higher position, and any additional vertical or lateral movement necessary ... to safely place into position or remove an item from the vicinity of an existing structure, facility or installation." 53 Cust. Bull & Dec. 45, p. 95 (Dec. 11, 2019).

In addition, lateral movement of a vessel or item in the immediate 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. 11, 2019). However, allowing only incidental movement "is overly restrictive and does not accurately reflect the concept of coastwise transportation under the Jones Act" and 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. Id. This leeway applies to the entirety of a lifting operation, "from the time that the lifting activity begins when unlading from a vessel or removing offshore facilities or subsea infrastructure until the time that the lifting activities can be safely terminated in relation to the unlading, installation, or removal of offshore facilities or subsea infrastructure" and includes "incidental movement while lifted items are temporarily placed on the deck of the lifting vessel as necessary for the safety of certain lifted items, as well as surface and subsea infrastructure, and the vessels and mariners involved[.]" Id. Accordingly, provided that lateral movement of a vessel or an item in the vicinity of a structure which is subordinate to and a direct consequence of a lifting operation is necessary for safety and practical concerns, during a lifting operation some movement of a vessel may be allowable and some materials can be temporarily placed on the deck of a lifting vessel. Id.[7]

As a preliminary matter, we note that 46 U.S.C. 55102(b)(1) establishes that a vessel must be wholly owned by citizens of the United States to be coastwise qualified. Accordingly, it is our interpretation that the proposed sale of the Vessel to an entity outside the United States would prohibit the Vessel from holding a coastwise endorsement. Accordingly, the below analysis is predicated upon an assumption that the Vessel will no longer be coastwise-qualified. See, e.g., HQ 110239 ( May 24, 1989), HQ 110837 (Aug. 16, 1990) (clarifying that a U.S.-built vessel which is sold foreign is precluded from engaging in coastwise trade).

Issue 1: Whether installing and decommissioning the monopiles would constitute a violation of the Jones Act, 46 U.S.C. 55102?

First, we determine whether installing the monopiles 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 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).

In the facts as described, the Vessel is only using its crane to install the monopile. The monopile is never laded on board the Vessel, nor does the Vessel move while lifting the monopile. Similarly, the Vessel is only using its crane to decommission the monopile. During decommissioning, the monopile is likewise never laded on board the vessel, nor does the Vessel move while lifting the monopile. Accordingly, we determine that, as the Vessel is only using its crane to construct and deconstruct a marine structure, the Vessel is not engaged in coastwise trade and the activity as described does not constitute a violation of the Jones Act, 46 U.S.C. 55102.

Issue 2: Whether installing and decommissioning the transition pieces would constitute a violation of the Jones Act, 46 U.S.C. 55102?

Next, we determine whether installing the transition pieces violates the Jones Act, 46 U.S.C. 55102. In the facts as described, the Vessel is only using its crane to install the transition pieces. The transition pieces are never laded on board the Vessel. The Vessel does move while the transition pieces are being lifted, but this movement is necessary to satisfy the demands of the lifting operation and avoid risk of damage. Similarly, during decommissioning operations, the Vessel is only using its crane to decommission the transition pieces. The transition pieces are never laded on board the Vessel. The Vessel does move while the transition pieces are being lifted, but this movement is merely a movement subordinate to and a direct consequence of the lifting operation, and such movement is necessary to satisfy the demands of the lifting operation or to avoid risk to human life or damage to the marine environment.

Accordingly, we determine that, as the Vessel is only using its crane to construct and deconstruct a marine structure, and the movement during the lifting operation is necessary to satisfy the demands of the lifting operation and avoid risk of damage, the Vessel is not engaged in coastwise trade and the activity as described does not constitute a violation of the Jones Act, 46 U.S.C. 55102.

Issue 3: Whether installing and decommissioning the jackets would constitute a violation of the Jones Act, 46 U.S.C. 55102?

Next, we determine whether installing the jackets violates the Jones Act, 46 U.S.C. 55102. In the facts as described, the Vessel is only using its crane to install the jackets. The jackets are never laded on board the Vessel, nor does the Vessel move while lifting the jackets. Similarly, during decommissioning operations, the Vessel is only using its crane to decommission the jackets. During decommissioning, the jackets are likewise never laded on board the vessel, nor does the Vessel move while lifting the jackets. Accordingly, we determine that, as the Vessel is only using its crane to construct and deconstruct a marine structure, the Vessel is not engaged in coastwise trade and the activity as described does not constitute a violation of the Jones Act, 46 U.S.C. 55102.

Issue 4: Whether installing and decommissioning the topsides would constitute a violation of the Jones Act, 46 U.S.C. 55102?

Next, we determine whether installing the topsides violates the Jones Act, 46 U.S.C. 55102. In the facts as described, the Vessel is only using its crane to install the topsides. The topsides are never laded on board the Vessel. The Vessel does move while the topsides are being lifted, but this movement is necessary to satisfy the demands of the lifting operation and avoid risk of damage. Similarly, the Vessel is only using its crane to decommission the topsides. The topsides are never laded on board the Vessel. The Vessel does move while the topsides are being lifted, but this movement is a movement subordinate to and a direct consequence of the lifting operation, and such movement is necessary to satisfy the demands of the lifting operation or to avoid risk to human life or damage to the marine environment.

Accordingly, we determine that, as the Vessel is only using its crane to construct and deconstruct a marine structure, and the movement during the lifting operation is necessary to satisfy the demands of the lifting operation and avoid risk of damage, the Vessel is not engaged in coastwise trade and the activity as described does not constitute a violation of the Jones Act, 46 U.S.C. 55102.

HOLDINGS

1. The proposed installation and decommissioning of monopiles as described herein by a non-coastwise qualified vessel would not constitute a violation of the Jones Act, 46 U.S.C. 55102.

2. The proposed installation and decommissioning of transition pieces as described herein by a non-coastwise qualified vessel would not constitute a violation of the Jones Act, 46 U.S.C. 55102.

3. The proposed installation and decommissioning of jackets as described herein by a non-coastwise qualified vessel would not constitute a violation of the Jones Act, 46 U.S.C. 55102.

4. The proposed installation and decommissioning of topsides as described herein by a non-coastwise qualified vessel would not constitute a violation of the Jones Act, 46 U.S.C. 55102.

Sincerely yours,

W. Richmond Beevers Chief, Cargo Security, Carriers and Restricted Merchandise Branch Office of Trade; Regulations and Rulings U.S. Customs and Border Protection ----------------------- [1] You have asked this office for confidential treatment of bracketed information. CBP Regulations at 19 C.F.R. 177.2(b)(7) provide that the requester of a ruling from our office may ask that privileged or confidential commercial or financial information supplied for purposes of preparing the requested ruling not be disclosed. Such requests will be considered if the information is clearly identified and the reasons for requesting that information not be disclosed are provided. If this office receives a Freedom of Information Act request for your submission, Regulations at 6 C.F.R. 5.12, et seq. regarding the disclosure of business information provide that the submitter of business information will be advised of receipt of a request for such information whenever the business submitter has in good faith designated the information as commercially or financially sensitive information. We accept your request for confidential treatment as a good faith request. [2] Although not specifically stated in the ruling request, the adjacent transport vessel must be coastwise qualified if transporting the monopiles to another coastwise point. [3] Although not specifically stated in the ruling request, the adjacent transport vessel must be coastwise qualified if transporting the monopiles to another coastwise point. [4] Formerly 46 U.S.C. App. 883. See Pub. L. 109-304 (Oct. 6, 2006). [5] 33 U.S.C. 1362(8). [6] 43 U.S.C. 1333(a)(1)(A), as amended by H.R. 6395, 116th Cong. 9503 (2021). [7] See e.g., HQ H326258 (holding that it was not a Jones Act violation for a non-coastwise qualified lifting vessel to move laterally 300 meters to prevent the collision of a fixed foundation, the OSS Module Support Frame, the tug/HTV, and/or the OSS Topsides because it could damage the vessels, the foundations, and threaten human life and the local environment).

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