HQ 113113

VES-3-15-CO:R:IT:C 113113 LLB

Mr. Harold E. Mesirow
Robins, Kaplan, Miller, and Ciresi
1801 K Street, N.W.
Washington, D.C. 20006-1301

RE: Coastwise trade; Dry towing; Outer continental shelf; Temporarily abandoned oil well site; 43 U.S.C. 1333; 46 U.S.C. App. 883

Dear Mr. Mesirow:

Reference is made to your letter of May 23, 1994, in which you request that Customs rule upon the applicability of the coastwise merchandise transportation statute (46 U.S.C. App. 883), commonly known as the Jones Act, to the proposed transportation of a jack-up type drilling rig from a site in the territorial waters off Alaska, to a site on the Outer continental shelf off the coast of California at which is located a temporarily abandoned well. It is requested that confidential treatment be accorded the identifying information submitted with the ruling request.


It is proposed that a jack-up type drilling rig be transported as deck cargo aboard a foreign-flag vessel. The rig would be loaded aboard the foreign vessel while located in the territorial waters of Alaska. The vessel with the rig aboard would be towed by a qualified U.S.-flag towing vessel to a location on the Outer continental shelf off the coast of California at which there is a well site which has been temporarily abandoned and capped. The rig, which to this point would have been transported as merchandise, would then be unladed from the foreign vessel and would undertake to permanently cap the well site. Other well sites would be subsequently plugged, all of which lie within the three-mile territorial waters off the California coast. The rig would be moved under wet tow, as a vessel, from the first well site to all of the other sites by use of a coastwise-qualified towing vessel.



Whether a temporarily abandoned oil well site located on the Outer continental shelf is considered a coastwise point, so as to preclude the use of a foreign-flag vessel to undertake the transportation of deck cargo in the form of a jack-up drilling rig from a coastwise point to that site.


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...

When a vessel is carried aboard another vessel, it assumes the character of merchandise whose carriage is governed by the same requirements applicable to any other category of goods. 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 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. The sole remaining issue is whether a site located on the Outer continental shelf at which there is located a temporarily abandoned oil well would be considered a location to which the coastwise laws are extended as contemplated under 43 U.S.C. 1333.

On July 14, 1989 (Ruling Letter 110228), Customs had occasion to rule upon the question of whether a, "...site on the OCS at which there are foundation templates, piles, a mooring system, and temporarily abandoned wells which are to be used for future production of oil and gas [is] a coastwise point." We found at that time that such a site is a coastwise point.

While there is a distinction between the contemplated future of the site previously ruled upon and the one presently under consideration, in that the former was to be utilized in future production and the latter is to have its abandonment perfected, we do not find the distinction to be meaningful for purposes of the Jones Act as extended through the OCSLA. In both cases there is present something more than a pristine sea bottom, and some structure integral to the exploitation of the mineral resources of the Outer continental shelf. Both locations require purposeful transportation to a fixed site which should be reserved for qualified vessels.


Following a thorough review of the evidence and applicable law and precedents, we find that a well site on the Outer continental shelf which has not been permanently abandoned and capped, remains a location to which the coastwise laws of the United States are extended. It is necessary to employ a coastwise-qualified vessel to undertake transportation of merchandise from a point within the territorial waters of the United States to such a location.


Arthur P. Schifflin
Carrier Rulings Branch