VES-3-02-OT:RR:BSTC:CCI H214719 LLB
Category: Carriers
Jeffrey R. Kallstrom, Esquire
Associate General Counsel
Public Utility District No. 1 of Snohomish County
2320 California Street
Everett, Washington 98201
Re: Reconsideration of HQ H196496 (Mar. 12, 2012); 19 U.S.C. § 1625(b); 46 U.S.C. §§ 2101, 50503, 55102; oceanographic research; tidal turbines.
Dear Mr. Kallstrom:
This letter is in response to your April 13, 2012, letter in which you request reconsideration of HQ H196496 (Mar. 12, 2012) that was issued to your company, Public Utility District No. 1 of Snohomish County (hereinafter “utility company”). In HQ H196496, CBP held that the activities related to the coastwise activities of the special purpose vessel the OPENHYDRO INSTALLER did not constitute oceanographic research and therefore, the contemplated transportation would violate 46 U.S.C. § 55102. You state that the basis for your request for reconsideration is that the December 8, 2011, ruling request submitted in HQ H196496 “did not adequately describe the research nature of the proposed project and, as a result, implied that the purpose of the project was to generate electric energy.” Your position was discussed further in a conference call with this office on May 4, 2012. We have reviewed your request for reconsideration. Our decision follows.
FACTS
The following facts, pertinent to this reconsideration request, are from the FACTS section in H196496. Additional facts provided in the reconsideration request are discussed in the LAW and ANALYSIS section below.
The subject utility company is implementing a pilot research program (hereinafter “the Project”) to confirm the feasibility of generating electricity from the tidal currents within Puget Sound. The utility company intends to use the foreign-built, foreign-flagged, special purpose vessel the OPENHYDRO INSTALLER (the “vessel”) to deploy two open-center tidal turbines developed by OpenHydro Group Ltd. (OpenHydro) to implement the program. The manufacturer of the tidal turbines, OpenHydro, is also the builder of the vessel.
The utility company proposes to lade the tidal turbines aboard the vessel at a point either in Anacortes, Seattle, or Everett in the state of Washington. Once the turbines are laden aboard the vessel, the vessel will be coupled to a coastwise-qualified cable-laying vessel and towed by coastwise-qualified tugboats to the Admiralty Inlet off of Whidbey Island where the turbines will be deployed to the seafloor. Once the turbines are unladen, the vessel is uncoupled from the cable-laying vessel and is towed from the deployment site.
According to OpenHydro’s statement dated December 6, 2011, submitted in support of the subject ruling request:
The [vessel] barge is a purpose-built, 3 point heavy-lift barge designed solely for the installation and recovery of subsea base-mounted Open-Centre Turbines. The [vessel] has been designed and optimized to preliminarily test the operation of the turbine prior to installation, carry the subsea base and turbine to site, and lower it onto the seabed. The [vessel] is not intended to be used for any purpose not associated with the testing, installation, or recovery of Open-Centre turbines. The vessel is classified by the Bureau Vertitas as a special service, non-propulsion, and unmanned vessel.
. . .
The design of the [vessel] includes a “moon pool,” lifting mechanisms, video and GPS equipment, a platform to access the turbine, a purpose-built lifting frame for the turbines, an attachment system to allow in-water testing of the turbine, and other features tailored specifically to the limited tasks for which the barge is intended. The [vessel] relies on local tug boats to travel between a local dock and the installation site and to hold the [vessel] in place while the installation takes place as well as support vessels to carry personnel and equipment to the installation site and assist in other facets of the installation process.
These same features make the [vessel] unsuitable for other tasks, such as the transportation of general cargo or people. The [vessel] has no cargo or deck to store containers or other cargo and no accommodation. The [vessel] is also is unsuitable for lifting objects off the seafloor apart from the Open-Centre Turbine as it relies on the specialized lifting frame to retrieve an Open-Centre Turbine from the sea floor and it has no ability to completely remove an object out of the water.
(emphasis added).
In HQ H196496, this office determined that the transportation of the tidal turbines by the OPENHYDRO INSTALLER did not constitute oceanographic research reasoning:
The vessel itself has no purpose related to the study of the sea; rather, it is an installation vessel. Likewise, the company installing the turbines, which as noted above, is the manufacturer of the turbines and the builder of the vessel, does not engage in the study of the sea; rather, according to OpenHydro’s webpage, it “is a technology business that designs and manufactures marine turbines to generate renewable energy from tidal streams.” Pursuant to Openhydro’s statement, the vessel serves and cannot be used for any other purpose, but installing and testing tidal turbines manufactured by Openhydro. The vessel is not equipped to transport people; thus, no scientific personnel or individuals engaged in the study of the sea will be aboard the vessel. The purpose of the tidal turbines themselves is to generate electricity and their deployment is not for the purpose of studying or exploring the ocean. Insofar as the vessel has no purpose related to the study of the sea, the company installing the turbines and their employees is not engaged in a study of the sea, and the purpose of the turbines themselves is to generate electricity, we conclude that the installation and transportation of the turbines do not constitute oceanographic research.
ISSUE
Whether the use of the OPENHYDRO INSTALLER as described herein constitutes coastwise trade in violation of 46 U.S.C. § 55102.
LAW and ANALYSIS
Pursuant to 46 U.S.C. § 55102, 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 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 46 U.S.C. § 55102(a), "[m]"erchandise, includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material." As such, any cargo, regardless of its value or ownership, would be considered merchandise for the purpose of 46 U.S.C. § 55102. The U.S. Customs and Border Protection (CBP) regulations promulgated under the authority of 46 U.S.C. § 55102(a), provide in pertinent part:
A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise.
19 C.F.R. § 4.80b(a).
In its interpretation of the coastwise laws with regard to the issue under consideration, CBP has long held that the use of a vessel solely to engage in oceanographic research is not considered a use in the coastwise trade. See HQ H008902 (May 17, 2007) (holding that scientists transported aboard scientific research vessel to gather data from rocks in seafloor); HQ 113461 (June 8, 1995)(scientific personnel transported by oceanographic research vessel to conduct seismic surveys); HQ 112122 (July 22, 1992)(scientists transported by survey ship to map the ocean floor); HQ 110399 (Aug. 23, 1989)(biologists and chemists transported aboard an oceanographic research vessel to collect algae and water samples). Accordingly, if such a vessel transported between coastwise points, or provided part of the transportation between coastwise points, of any persons other than the vessel crew and scientists and students engaged in the oceanographic research or any merchandise other than the usual supplies and equipment necessary for that research and/or research specimens or samples, the coastwise laws would be violated. HQ 112316 (July 22, 1992).
CBP’s interpretation of the coastwise laws as it relates to oceanographic research, in part, has been in concert with the Oceanographic Research Vessel Act, as amended, and codified at 46 U.S.C. § 2101(18); which defines an “oceanographic research vessel” as:
. . . a vessel that the Secretary finds is being employed only in instruction in oceanography or limnology, or both, or only in oceanographic or limnological research, including studies about the sea such as seismic, gravity meter, and magnetic exploration and other marine geophysical or geological surveys, atmospheric research, and biological research.
See also 46 U.S.C. § 50503 (“An oceanographic research vessel (as defined in section 2101 of this title) is deemed not to be engaged in trade or commerce.”). We note that although the above-cited CBP rulings do not determine whether the vessels themselves are oceanographic research vessels under 46 U.S.C. § 2101(18), the sole use of the vessel or the type of vessel has been a considering factor as to whether the activities aboard those vessels constituted oceanographic research. In addition, these rulings consider the activities of the individuals transported aboard a vessel alleged to be solely engaged in oceanographic research.
The crux of the utility company’s argument in H196496 is that the activities of the OPENHYDRO INSTALLER in the scope the entire project should be considered “oceanographic research”. In response, and in accordance with CBP rulings cited herein, CBP stated in H196496 that “the activities of the vessel and the persons aboard the vessel are determinative of whether the vessel is engaged in oceanographic research.” However, in attempt to address the utility company’s argument in H196496, CBP continued its analysis and addressed whether the project itself constituted oceanographic research perhaps implying that the project itself was a determining factor in whether the vessel was engaged in oceanographic research. In addition, CBP concluded in its reasoning that the purpose of the tidal turbines was not for the study of the sea but to generate electricity perhaps implying that the article being transported is determinative of whether the vessel is being used for oceanographic research and the persons transported thereon are engaged in oceanographic research.
As stated above in H196496, the activities of the vessel, e.g. the use of the vessel, and the persons aboard the vessel are determinative of whether the vessel is engaged in oceanographic research. The consideration by this office of activities of persons who are not aboard the vessel or activities outside of what the vessel is actually engaged in during the proposed voyage is inconsistent with CBP rulings that have applied the “oceanographic research” exception. In addition, the article being transported is not a considering factor as to whether the vessel or the individuals transported aboard are solely engaged in oceanographic research; rather, once CBP has determined that the vessel and/or the individuals transported aboard the vessel are solely engaged in oceanographic research, then any equipment used in such research by the individuals transported thereon may be transported aboard the vessel without violating 46 U.S.C. § 55102.
In their reconsideration request, the utility company offers the following facts related pertinent to the use of the OPENHYDRO INSTALLER:
The subsea base and attached equipment will be connected to the [OPENHYDRO INSTALLER], a designed and purpose-built barge intended only for the preliminary testing, deployment, and retrieval of the subsea base and associated equipment. Once connected, the [OPENHYDRO INSTALLER] will be towed to the proposed site by separately-employed tugboats. At the site, the [OPENHYDRO INSTALLER], with assistance from supporting vessels, will proceed with deploying the subsea base and attached equipment. Deployment of the subsea bases is similar to the installation of pipe on the seafloor. Once the subsea bases are deployed, the [OPENHYDRO INSTALLER] will return to the site, retrieve each subsea base, and bring it back to port.
The [OPENHYDRO INSTALLER] crew itself will be engaged in scientific research to the extent that they are assisting in the deployment of equipment necessary for an oceanographic research project. While the [OPENHYDRO INSTALLER] crew will not be directly analyzing the results of the research, by deploying the subsea bases and attached turbines, monitoring equipment, and instrumentation packages, they will enable critical research needs to be met. As discussed above, researchers can review the data in near real time from remote locations. However, before useful data can be collected, the subsea base and the associated equipment must be deployed. As a result, the [OH INSTALLER] and her crew are a necessary piece of the research project.
(emphasis added).
Our review of the facts that the utility company presents in its request for reconsideration do not reveal any new evidence that the OPENHYDRO INSTALLER is anything other than a purpose-built, installation vessel. In addition, the OPENHYDRO INSTALLER will not be transporting individuals aboard her let alone individuals that would be solely engaged in the study of the sea. We note that the utility company’s reconsideration request makes reference to the OPENHYDRO INSTALLER’s “crew” above; however, it is clear from OpenHydro’s December 6, 2011, statement that it is “unsuitable” for the OPENHYDRO INSTALLER to transport people and that it is an “unmanned vessel”. Insofar as the vessel is only carrying merchandise and is not carrying individuals that would be using the vessel to solely engage in oceanographic research, we find that the use of the vessel is not to engage in oceanographic research but for the sole use of transportation and installation of merchandise.
The utility company argues, however, that the facts of the proposed voyage of the OPENHYDRO INSTALLER are analogous to HQ H010661 (May 4, 2007). In HQ H010661, the carrier proposed to transport an individual by non-coastwise qualified vessel between Honolulu, Hawaii to San Diego, California. During the voyage, the individual was to deploy ocean floats and National Oceanic and Atmospheric Association (NOAA) surface drifters in international waters. CBP held that “the use of a non-coastwise-qualified vessel to transport the subject individual, who will be engaged in oceanographic research, specifically, deploying ocean floats and NOAA surface drifters, is permissible under the coastwise laws.” The utility company argues that the “OH Installer will deploy a package of research equipment for the purpose of collecting information about the oceanographic environment. The actual information will be collected remotely and analyzed by a group of scientists and other oceanographic and marine experts.”
The proposed voyage of the OPENHYDRO INSTALLER is distinguishable from the facts in HQ H010661. First, in HQ H010661, the ocean floats and NOAA surface drifters were not transported between coastwise points; rather, they were transported between Honolulu, Hawaii and international waters. In the present case, the merchandise is being transported between Seattle, Anacortes, or Everett which are points in the coastal U.S. and Admiralty Inlet, a point within U.S. territorial waters, e.g. between coastwise points. Second, the issue raised in HQ H010661 was whether the transportation of the individual aboard the non-coastwise qualified vessel between coastwise points violated the Passenger Vessel Services Act (46 U.S.C. § 55103). Here, no persons are being transported aboard the OPENHYDRO INSTALLER, and according to the vessel’s manufacturer “[t]he [vessel] relies on local tug boats to travel between a local dock and the installation site and to hold the [vessel] in place while the installation takes place as well as support vessels to carry personnel and equipment to the installation site and assist in other facets of the installation process. These same features make the [vessel] unsuitable for other tasks, such as the transportation of general cargo or people.” (emphasis added).
The utility company also argues that “[w]hile the vessel to be used in the proposed project, the [OPENHYDRO INSTALLER], is simply [a] deployment vessel, and not a ‘research’ vessel per se, CBP has stated that its rulings are not intended to determine whether the vessel itself is an oceanographic research vessel under [46] U.S.C. § 2101(18) . . . Rather it is the use of the vessel that matters, such that ‘the use of a vessel solely to engage in oceanographic research is not considered a use in the coastwise trade. HQ H008902 (May 17, 2007).’” (footnote omitted)(emphasis in original). Thus, the utility company asserts “the [OPENHYDRO INSTALLER] is an essential piece of a project attempting to research the effects of marine energy development on the ocean environment.” The sole “use” of the vessel contemplated by CBP rulings, including the ruling cited by the utility company, HQ H008902, considers the sole “use” of the vessel by persons being transported by the vessel. See HQ H008902 (sole use of the vessel’s scientific laboratories by 50 scientists transported aboard the vessel); see also, H216579 (May 15, 2012) (sole use of scientific personnel to conduct geophysical data collection service); HQ 113461, supra, (scientific personnel transported by oceanographic research vessel to conduct seismic surveys); HQ 112122 supra (scientists transported by survey ship to map the ocean floor); HQ 110399 (Aug. 23, 1989)(biologists and chemists transported aboard an oceanographic research vessel to collect algae and water samples). To interpret CBP rulings to allow the oceanographic research exception to extend to oceanographic research “projects”, regardless of whether the vessels and any individuals transported aboard those vessels are solely engaged in oceanographic research, would lead to a result that would be contrary to the protectionist nature of the Jones Act.
Alternatively, the utility company asserts that if we determine that the use of the OPENHYDRO INSTALLER does not constitute oceanographic research, then the use of the OPENHYDRO INSTALLER is more akin to cable-laying and therefore not coastwise trade. Cable-laying involves the “paying out” or laying of cable from reels aboard a vessel simultaneously as the vessel is moving from point to point. Here, the turbines will be laden and placed aboard the OPENHYDRO INSTALLER at a coastwise point and then transported to another coastwise point in U.S. territorial waters where the turbines will be unladen. The movement of the OPENHYDRO INSTALLER from point to point does not involve the installation of cable that is paid out simultaneously as the vessel is moving; rather, the OPENHYDRO INSTALLER will be lading the merchandise at one coastwise point, transporting that merchandise to another coastwise point, and then unlading the merchandise.
Accordingly, based on the foregoing analysis, the use of the OPENHYDRO INSTALLER does not constitute oceanographic research; nor does it constitute cable-laying; therefore, the transportation of the turbines between coastwise points would be in violation of 46 U.S.C. § 55102.
HOLDING
The use of the OPENHYDRO INSTALLER as described herein constitutes coastwise trade in violation of 46 U.S.C. § 55102.
HQ H196496 (March 12, 2012) is affirmed.
Sincerely,
Glen E. Vereb
Director
Border Security and Trade Compliance Division