VES-3-15-RR:IT:EC 115531 GEV
Matthew D. Eisele, Esq.
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
RE: Coastwise Trade; Outer Continental Shelf; Pipeline;
Concrete Pad Installation; 43 U.S.C. § 1333(a); 46 U.S.C. App.
Dear Mr. Eisele:
This is in response to your letter dated November 2, 2001, requesting a ruling regarding the use of a foreign-flagged installation vessel for subsea operations. Our ruling is set forth below.
A foreign-flagged installation vessel equipped with a crane and a Remotely Operated Vehicle (ROV) will arrive from a foreign port to participate in subsea work on the Outer Continental Shelf (OCS). That work will require the vessel to load a number of concrete pads (approximately 6 meters by 2 meters) at a U.S. port. The vessel will then proceed to an offshore location on the OCS. The concrete pads will be lifted by the ship’s crane and lowered to the subsea floor. A ROV equipped aboard the vessel will then be used to unhook each concrete pad from the crane and to position it on the subsea floor such that it lies over an existing pipeline. These concrete pads will be laid at intervals along the pipeline in anticipation of additional pipeline being laid across the existing pipeline. The concrete pads will act as a cushion at those points where the pipelines cross.
- 2 -
With respect to the proposed operation, the vessel will be specifically outfitted to carry out its service. Its primary use will be as a platform to perform the installation work. The vessel will be dynamically positioned during the concrete pad installation operation.
Whether the use of a foreign-flagged vessel for the installation of concrete pads over an existing pipeline on the OCS as described above constitutes a violation of 46 U.S.C. App. § 883.
LAW AND ANALYSIS:
Title 46, United States Code Appendix, § 883 (46 U.S.C. App. § 883, the merchandise coastwise law often called the “Jones Act”), provides, in part, that no merchandise shall 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 vessel other than one that is coastwise-qualified (i.e., U.S.-built, owned and documented). Pursuant to § 4.80b(a), Customs Regulations (19 CFR § 4.80b(a)), promulgated pursuant to 46 U.S.C. App. § 883, a coastwise transportation of merchandise takes place when merchandise laden at one coastwise point is unladen at another coastwise point.
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 internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ.
Section 4(a) of the Outer Continental Shelf Lands Act of 1953, as amended (67 Stat. 462; 43 U.S.C. § 1333(a)) (OCSLA), provides, in part, that 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 within a State.
- 3 -
The statute was substantively amended by the Act of September 18, 1978 (Pub. L. 95-372, Title II, § 203, 92 Stat. 635), to add, among other things, the language concerning temporary attachment to the seabed. The legislative history associated with this amendment is telling, wherein it is stated that:
...It is thus clear that Federal law is to be applicable to all activities or all devices in contact with the seabed for exploration, development, and production. The committee intends that Federal law is, therefore, to be applicable to activities on drilling rigs, and other watercraft, when they
are connected to the seabed by drillstring, pipes, or other appurtenances, on the OCS for exploration, development,
or production purposes. [House Report 95-590 on the
OCSLA Amendment of 1978, page 128, reproduced at 1978 U.S.C.C.A.N. 1450, 1534.]
Under the foregoing provision, we have ruled that the coastwise laws, the laws on entrance and clearance of vessels, and the provisions for dutiability of merchandise, are extended to mobile oil drilling rigs during the period they are secured to or submerged onto the seabed of the OCS. (See Treasury Decisions (T.D.s) 54281(1)), 71-179(1), 78-225, and Customs Service Decision (C.S.D.) 85-54) We have applied the same principles to drilling platforms, artificial islands, and similar structures, as well as 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. (see Customs Service Decisions (C.S.D.s) 81-214 and 83-52, and Customs Ruling Letter 107579, dated May 9, 1985)
With respect to the issue presented for our consideration, we note Customs has previously held that the use of a dynamically positioned foreign-flag vessel over the OCS for various marine construction and subsea services pertaining to pipelaying and related activities, including the installation of concrete mats between and over pipelines, is not in contravention of 46 U.S.C. App. § 883. (Customs ruling letter 113838, dated February 25, 1997) Consequently, the subject vessel may engage in the activity as proposed.
- 4 -
The use of a foreign-flagged vessel for the installation of concrete pads over an existing pipeline on the OCS as described above does not constitute a violation of 46 U.S.C. App. § 883.
Larry L. Burton
Entry Procedures and Carriers Branch