VES-3-15-CO:R:IT:C 112218 LLB
Mr. Benjamin H. Flowe, Jr.
Verner, Liipfert, Bernhard,
McPherson and Hand
901 15th Street
Washington, D.C. 20005-2301
RE: Coastwise trade; Oil well servicing; Non-self-propelled
barges; Towing; Merchandise; Passengers; 46 U.S.C. App. 289,
316(a), and 883
Dear Mr. Flowe:
Reference is made to your letter of May 1, 1992, in which
you request that we confirm your opinion that certain activities
involving the use of non-coastwise-qualified vessels in
operations either within the territorial waters of the United
States or upon the outer continental shelf, will not violate the
coastwise laws of the United States.
FACTS:
It is proposed that the corporate owner and operator of
several non-self-propelled barges documented under the laws of
the United States with registry endorsements (non-coastwise-
qualified), bareboat charter several additional such barges for
use as oil and gas well drilling, workover, and service vessels.
We are informed that "workover" and "service" barges are used as
platforms or transport vessels for work to be performed at a
well. Such work may consist of removing broken tools from a well
shaft, repairing tools aboard a barge and placing them back in a
well shaft, well cleaning, and well stimulation (the injection of
chemicals into a well in order to stimulate the production of oil
and gas). Transportation services may include the carriage of
cement, chemicals, and other materials for use in drilling, as
well as crew stores. It is stated that the only persons
transported aboard the vessels are crew members, with those
persons being housed aboard such vessels themselves.
Occasionally it may be necessary to move a barge from one job
site to another with its compliment of crew and working
equipment. It is reported that no shore points are to be
involved in such movements, nor any fixed operating sites on the
water.
ISSUE:
Whether non-coastwise-qualified barges may be utilized as
workover, service, and transportation vessels in operations
involving offshore oil and gas wells.
LAW AND ANALYSIS:
The coastwise law pertaining to the transportation of
merchandise, section 27 of the Act of June 5, 1920, as amended
(41 Stat. 999; 46 U.S.C. App. 883, often called the Jones Act),
provides that:
No merchandise shall be transported by water,
or by land and water, on penalty of forfeiture
of the merchandise (or a monetary amount up to
the value thereof as determined by the Secretary
of the Treasury, or the actual cost of the trans-
portation, whichever is greater, to be recovered
from any consignor, seller, owner, importer,
consignee, agent, or other person or persons
so transporting or causing said merchandise to be
transported), between points in the United
States...embraced within the coastwise laws,
either directly or via a foreign port, or for
any part of the transportation, in any other
vessel than a vessel built in and documented
under the laws of the United States and owned
by persons who are citizens of the United
States...
The Act of June 19, 1886, as amended (24 Stat. 81; 46 U.S.C.
App. 289, sometimes called the coastwise passenger law),
provides that:
No foreign vessel shall transport passengers
between ports or places in the United States
either directly or by way of a foreign port,
under a penalty of $200 for each passenger so
transported and landed.
For your general information, we have consistently
interpreted this prohibition to apply to all vessels except
United States-built, owned, and properly documented vessels (see
46 U.S.C. 12106, 12110, 46 U.S.C. App. 883, and 19 C.F.R.
4.80).
The statute governing towing, title 46, United States Code
Appendix, section 316(a), as amended by the Act of May 19, 1986
(Pub. L. 99-307), prohibits the towing between coastwise points
of any vessel except a vessel in distress, by any but qualified
vessels of the United States. This restriction extends to
certain territories and possessions of the United States, to
towing between points within the same harbor, and to direct,
indirect, or partial towing operations.
The coastwise laws generally apply to points in the
territorial sea, defined as the belt, three nautical miles wide,
seaward of the territorial sea baseline, and to points located in
the internal waters, landward of the territorial sea baseline, in
cases where the baseline and the coastline differ. These laws
have also been interpreted to apply to transportation between
points within a single harbor. Merchandise, as used in section
883, includes any article, including even materials of no value
(see the amendment to section 883 by the Act of June 7, 1988,
Pub. L. 100-329; 102 Stat. 588).
Under Section 4(a) of the Outer Continental Shelf Lands Act
of 1953, as amended (43 U.S.C. 1333(a) (OCSLA)), the laws of the
United States are extended to the subsoil and seabed of the Outer
Continental Shelf and to all artificial islands, and all
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
therefrom to the same extent as if the Outer Continental Shelf
were an area of exclusive Federal jurisdiction located within a
State. The provisions for dutiability of merchandise, as well as
the coastwise and other navigation laws, apply to production
platforms. C.S.D. 83-52.
Not included within the general meaning of merchandise is
the equipment of a vessel which will be used by that vessel.
Such materials have been defined as articles, "...necessary and
appropriate for the navigation, operation or maintenance of the
vessel and for the comfort and safety of the persons on board."
(Treasury Decision 49815(4), March 13, 1939). Customs has
specifically ruled that, "Vessel equipment placed aboard a vessel
at one United States port may be removed from the vessel at
another United States port at a later date without violation of
the coastwise laws." (Customs Ruling Letter 102945, November 8,
1978).
For the purposes of the coastwise laws, the term "passenger"
is defined in section 4.50 (b), Customs Regulations (19 CFR 4.50
(b)), as "...any person carried on a vessel who is not connected
with the operation of such vessel, her navigation, ownership, or
business." Vessel crew members are not considered passengers.
In view of the fact that the vessels in question will have
aboard only necessary equipment and crew members during their
movements, we have determined that no coastwise laws will be
violated in the course of the proposed vessel voyages. Further,
to the extent that the vessels will be towed between coastwise
points and points on the high seas overlying the Outer
Continental Shelf at which no surface structure exists, the
towing statute will impose no impediment. It should be noted,
however, that the barges themselves will become coastwise points
once attached to the seabed, and any further movements of
equipment and personnel from a coastwise point to a well site
must be accomplished by use of coastwise qualified vessels.
HOLDING:
Following a thorough review of the facts and analysis of the
relevant law and precedents, we have determined, in accord with
the information set forth in the Law and Analysis section of this
ruling letter, the proposed operation does not violate any of the
coastwise laws administered by the Customs Service.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch