OT:RR:BSTC:CCR H341844 HKC
Emily S. Huggins Jones
Locke Lord LLP
701 8th Street, N.W.
Suite 500
Washington, DC 20001
RE: Coastwise Transportation; Outer Continental Shelf; Jack-Up Barge; Hotel; Gangway; 46 U.S.C. §§ 55102 and 55103; 19 CFR §§ 4.80a and 4.80b; 43 U.S.C. § 1333.
Dear Ms. Huggins Jones:
This letter is in response to your August 20, 2024 ruling request on behalf of your client [
] regarding whether the use of jack-up barges equipped with hotel accommodations and catering services for workers involved in offshore wind construction on the U.S. outer continental shelf (“OCS”), as described below, would violate the coastwise laws. Our decision follows.
FACTS
The following facts are from your August 20, 2024 ruling request and subsequent correspondence. Your client has been engaged by [
] to provide a jack-up barge [ ] (“the Jack-Up Vessel”) outfitted with hotel and office accommodations to support construction of the [ ] offshore wind project. The project will consist of a wind turbine generator (“WTG”) array as well as two offshore substations (“OSS”). The Jack-Up Vessel will be utilized specifically to house OSS Commissioning Personnel responsible for supporting commissioning activities at the two OSS sites. These OSS Commissioning Personnel will consist of commissioning managers, commissioning supervisors, logistics coordinators, Supervisory Control and Data Acquisition (“SCADA”) representatives, fabrication inspectors, protection engineers, onshore and offshore management specialists, offshore specialist system engineers, transformer and shunt reactor engineers and advisors, scaffolders, and general supervisors.
Your client’s Jack-Up Vessel was constructed in [ ] and is currently flagged in [ ]. The Jack-Up Vessel will be transported by a foreign-flagged Heavy Lift Vessel from Rotterdam, the Netherlands to a safe and suitable position offshore of Rhode Island outside of the U.S. territorial sea where it will be offloaded with 22 core marine operational crew members on board. The core marine crew will consist of individuals responsible for navigation of the Jack-Up Vessel, positioning operations, jack-up/down operations, deck operations, vessel/equipment maintenance, and emergency functions such as lifesaving and firefighting. The Jack-Up Vessel will subsequently conduct vessel entry and take on fuel bunkers at one of several ports in the area, either [ ].
The Jack-Up Vessel will then travel under its own power to the first OSS site, located outside the U.S. territorial sea on the OCS, where it will jack down at a pristine seabed site located near the first OSS. The OSS will be already attached to the seabed, sitting atop a “jacket” consisting of a series of legs, when the Jack-Up arrives. Once the Jack-Up Vessel is secured to the seabed, the OSS Commissioning Personnel, as well as an additional 14 subcontractor personnel responsible for performing hotel and catering services aboard the vessel, will be transported from shore to the Jack-Up Vessel using either a coastwise-qualified crew transfer vessel or a U.S. registered helicopter.
Once aboard, the OSS Commissioning Personnel will walk between the Jack-Up Vessel and the first OSS utilizing a gangway to be deployed from the Jack-Up Vessel to the OSS. Once commissioning activities at the first OSS are complete, the OSS Commissioning Personnel and the 14 subcontractor personnel will depart the Jack-Up Vessel utilizing coastwise-qualified crew transfer vessels. During the operations described above, the Jack-Up Vessel will receive supplies consisting of fuel, food, and drink from coastwise qualified supply vessels. These supplies will be laden aboard the Jack-Up Vessel using the Jack-Up Vessel’s crane. Separately, coastwise-qualified supply vessels will transport OSS tools and parts directly to the OSS without taking them aboard the Jack-Up Vessel. Any fuel and provisions remaining on board the Jack-Up Vessel will be transported to shore utilizing a coastwise-qualified supply vessel before the Jack-Up Vessel departs the first OSS site.
The Jack-Up Vessel will then detach itself from the seabed, with only the 22 core marine operational crew members on board, and depart for the second OSS site. Once at the second OSS site, the process described above will be repeated. Upon the completion of OSS commissioning activities at the second site, the OSS Commissioning Personnel, subcontractor personnel, and all merchandise will be offloaded utilizing coastwise-qualified vessels. The Jack-Up Vessel will subsequently depart for a safe and suitable location off the coast of Rhode Island outside the U.S. territorial sea, where it will be loaded back aboard the Heavy Lift Vessel for transportation to Europe. Most of the 22 core marine crew will board the Heavy Lift Vessel, while a handful will remain aboard the Jack-Up Vessel to assist with loading operations. Once the Jack-Up Vessel is loaded aboard the Heavy Lift Vessel, all 22 core marine crew members will be transported to Europe aboard the Heavy Lift Vessel.
As a preliminary matter, CBP previously has determined that use of a dynamically positioned floating hotel (“floatel”) on the OCS to support oil and gas infrastructure development would not violate the coastwise laws. CBP further noted that there would be no coastwise violation even if the floatel were anchored to the seabed, reasoning that such a use would not constitute the transportation of passengers or merchandise between coastwise points. Consistent with this analysis, CBP does not consider the use of a jack-up vessel as a hotel to violate the coastwise laws.
ISSUES
Whether the transportation of merchandise by coastwise-qualified supply vessels, between a U.S. port located on the eastern seaboard and a jack-up vessel secured to the seabed of the U.S. OCS as described above, violates the Jones Act, 46 U.S.C. § 55102?
Whether the transportation of core marine operational crew, subcontracted hotel personnel, and OSS Commissioning Personnel between coastwise points, as described above, violates the Passenger Vessel Services Act, 46 U.S.C. § 55103?
LAW AND ANALYSIS
The coastwise law applicable to the transportation of merchandise, known as the Jones Act, is found at 46 U.S.C. § 55102, and provides in pertinent part:
Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel—
is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and
has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
The coastwise laws generally apply to points in the territorial sea, which is defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline. 33 CFR § 2.22(a)(2). In addition, Section 4(a)(1) of the Outer Continental Shelf Lands Act of 1953 (“OCSLA”), as amended, provides that the Constitution and laws and civil and political jurisdiction of the United States are extended to:
the subsoil and seabed of the outer Continental Shelf;
all artificial islands on the outer Continental Shelf;
installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources, including non-mineral energy resources; or
any such installation or other device (other than a ship or vessel) for the purpose of transporting or transmitting such resources.
(Emphasis added).
Accordingly, the OCSLA, as amended in 2021, extends U.S. jurisdiction to devices attached to the seabed of the OCS for the purpose of producing non-mineral energy such as wind energy.
Issue One: Whether the transportation of merchandise by coastwise qualified supply vessels, between a U.S. port located on the eastern seaboard and a jack-up vessel secured to the seabed of the U.S. OCS as described above, violates the Jones Act, 46 U.S.C. § 55102.
The Jones Act specifically prohibits the coastwise transportation of “merchandise” between coastwise points by non-coastwise qualified vessels. 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.” Further, 46 U.S.C. § 55102(a) also provides: “[m]erchandise includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material.” For purposes of the Jones Act, merchandise also includes “valueless material.”
To determine if the proposed transportation occurs between coastwise points, we must examine the points at which the subject merchandise will be laden and unladen. The Jones Act extends to points on 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. OCSLA Section 4, as amended in 2021 extends U.S. law to “installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources, including non-mineral energy resources.”
Prior CBP rulings interpreted OCSLA Section 4 (which previously did not include a reference to “non-mineral energy resources”) to include “devices attached to the seabed of the OCS for the purpose of resource exploration operations, including warehouse vessels anchored over the OCS when used to supply drilling rigs on the OCS.” CBP has specifically found jack-up vessels to be coastwise points when secured to the seabed of the OCS for a purpose elaborated in the OCSLA. Similarly, in the present matter, we find that the Jack-Up Vessel would become a coastwise point when attached to the seabed of the OCS for the purpose of directly supporting the contemporaneous installation and commissioning of offshore substations to be used for the production of wind energy.
Based on the foregoing, we find that the transportation of merchandise between a U.S. port on the eastern seaboard and the Jack-Up Vessel, while attached to the OCS, to be coastwise transportation. Similarly, transportation of merchandise by the Jack-Up Vessel between the first OSS site and the second OSS site would be coastwise transportation. Your client has stated they will utilize coastwise-qualified supply vessels to conduct all transportation of fuel and provisions between U.S. ports and the Jack-Up Vessel, and that all fuel (except for bunker fuel necessary for the vessel’s movement) and provisions aboard the Jack-Up Vessel will be offloaded before it departs the first OSS site. Because the fuel and provisions are offloaded before the Jack-Up Vessel departure is underway, we need not determine whether these supplies are merchandise or ship stores. Because all coastwise transportation is being conducted by coastwise qualified vessels, and the non-coastwise qualified Jack-Up Vessel is not transporting merchandise between coastwise points, the scenario outlined would not be violative of the Jones Act.
Issue Two: Whether the transportation of core marine operational crew, subcontracted hotel personnel, and OSS Commissioning Personnel between coastwise points, as described above, violates the Passenger Vessel Services Act, 46 U.S.C. § 55103?
The Passenger Vessel Services Act (“PVSA”), 46 U.S.C. § 55103, 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.
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.
In the present case, the non-coastwise qualified Jack-Up Vessel is transporting the 22 core marine crew between coastwise points (first OSS location and the second OSS location). However, the core marine crew here are directly responsible for operating the vessel and therefore would not be considered passengers. Therefore, the transportation of these core marine crew between coastwise points would not violate the PVSA. The final transportation of core marine crew from the Heavy Lift Vessel to a U.S. port similarly would not violate the PVSA because a coastwise-qualified crew transfer vessel will be utilized.
In addition to the core marine personnel, the Jack-Up Vessel will house OSS Commissioning Personnel, responsible for commissioning the two OSSs, and 14 subcontractor personnel, responsible for hotel and catering services aboard the Jack-Up Vessel. These crew will only be aboard the Jack-Up Vessel while it is attached to the seabed, and depart the Jack-Up Vessel before it is underway. Accordingly, the Jack-Up Vessel will not transport these OSS Commissioning Personnel and hotel and catering services personnel. Rather, coastwise-qualified crew transfer vessels will be utilized to transport these personnel between U.S. ports and the Jack-Up Vessel. Because all coastwise transportation of these personnel is conducted by coastwise-qualified vessels, there would be no violation of the PVSA. We need not determine whether the OSS Commissioning Personnel or the subcontractor personnel would be considered crewmembers because no coastwise transportation of these personnel by non-coastwise qualified vessels is contemplated.
Finally, your client contemplates the OSS Commissioning Personnel walking between the Jack-Up Vessel and the OSSs’ utilizing a gangway. Although both locations are coastwise points, there is no violation of the PVSA because 46 U.S.C. § 55103 contemplates only transportation by vessel. Here, the Jack-Up Vessel remains stationary while the OSS Commissioning Personnel transport themselves by foot.
HOLDING
The transportation of merchandise by coastwise-qualified supply vessels, between a U.S. port located on the eastern seaboard and a jack-up vessel secured to the seabed of the U.S. OCS as described above, would not violate the Jones Act, 46 U.S.C. § 55102.
The transportation of core marine operational crew, subcontracted hotel personnel, and OSS Commissioning Personnel between coastwise points, as described above, would 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