VES-3-01-RR:IT:EC 113711 CC
Martha J. Schoonover
Fulbright & Jaworski
801 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2604
RE: Laying of Umbilicals on OCS; Coastwise Trade;
46 U.S.C. App. 883
Dear Ms. Schoonover:
This is in response to your letter of October 1, 1996, on
behalf of Coflexip Stena Offshore, Inc., requesting a ruling
concerning whether the laying of certain umbilicals on the Outer
Continental Shelf (OCS) violates the coastwise trade laws.
You state that your client, Coflexip, has been awarded a
contract for the installation of two seabed umbilicals on the OCS
in the Gulf of Mexico. Both umbilicals will be installed between
a subsea umbilical termination base and a platform. The platform
is located in 280 feet of water approximately 60 miles off the
coast of Louisiana; the termination base is located in 1500 feet
of water over 65 miles off the coast of Louisiana.
Both umbilicals to be installed measure approximately 13.2
miles in length. The first umbilical (E/H) is manufactured in
Newcastle, U.K. The second umbilical (CI) is manufactured in
Channelview, Texas. The umbilicals will be used for the
distribution of hydraulic and other fluids and transmission of
electrical control signals.
Due to the nature of the operations, your client proposes to
use a specialized vessel for installation of the umbilicals, most
likely the M/V CSO Flex Installer, a Cayman Island flagged
vessel. If that vessel is not available, a similar vessel would
be used, most likely a vessel found in the North Sea area and
The installation vessel will be pre-equipped with all
installation equipment and means in Europe. The vessel will sail
to Newcastle, U.K., where the E/H umbilical will be transferred
to the vessel. The vessel will sail from there to a U.S. port
(probably New Orleans, Louisiana or Houston, Texas). At that
port, the reel containing the CI umbilical will be loaded on the
vessel. A Remote Operated Vehicle (ROV) spread and specific
positioning equipment will also be loaded on board with personnel
to operate them.
The vessel will then sail to the site and install one
umbilical after the other from the umbilical termination base
towards the platform. The umbilicals will be inserted in a
receptacle on the site of the termination base. The actual
hydraulic and electrical connection of the umbilical to the
termination base will be performed at a later stage using client-
supplied U.S. equipment. The umbilicals will be paid out from
the carrousel on the installation vessel in a process identical
to the laying of cable and pipe. At the platform, at a water
depth of 280 feet, the umbilical is first cut to the proper
length, then abandoned on the seabed, including some additional
length, to allow for pulling up to the platform, laid in a U
pattern. The ROV on the vessel will connect the pull-in wire
from the platform to the end of the umbilical.
When installing the E/H umbilical, it will be cut to the
proper required length when nearing the arrival point. It is
anticipated that approximately 4% (3000 feet) of umbilical will
be left unused. The full length of the CI umbilical that is
loaded onto the vessel will be installed.
Each umbilical is pulled through the platform I-tube, using
a winch on the platform deck, until its end reaches the deck
level. Each umbilical is then secured on the top of the I-tube.
Once the installation of both umbilicals is complete, the
vessel will sail back either to the same U.S. port as for
mobilization or a different U.S. port. The ROV, positioning
equipment and installation personnel taken on at the U.S. port
will be unloaded and demobilized. The spare length of the UK-
made umbilical will also be unloaded, to be sent by a local barge
of the client's storage area in Channelview. The vessel will
then sail back to Europe and demobilize. All equipment loaded on
board in Europe will leave the U.S. with the vessel and return to
(1) Is the installation of the E/H umbilical manufactured in the U.K. and transported and installed on the OCS by a foreign-flagged installation vessel a violation of the coastwise trade laws?
(2) Is the installation of an umbilical manufactured in the
U.S., and transported and installed on the OCS by a foreign-flagged vessel, a violation of the coastwise trade laws?
(3) Is the loading of auxiliary equipment on board the
installation vessel, for use in installation of the
umbilical (primarily the remote operated vehicle) at one
U.S. port, and unloading it at the same port or at a second
U.S. port upon completion of the installation, a violation
of the coastwise trade laws?
(4) Is the unloading of the unused portion of the umbilical
manufactured in the U.K. (less than 5% of the umbilical
laden on the vessel) at a U.S. port different from the U.S.
port of mobilization a violation of the coastwise trade
(5) Is the only dutiable portion of the umbilical
manufactured in the U.K. and installed on the OCS the
portion that runs from the seabed through the I-tube to the
point of attachment on the platform?
(6) Is the unused portion of the umbilical manufactured in
the U.K. (less than 5% of the total umbilical) which is
unloaded at the U.S. port dutiable?
LAW AND ANALYSIS:
46 U.S.C. App. 883, the coastwise merchandise statute
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 a vessel built in, documented under the laws
of, and owned by citizens of the United States. In interpreting
the coastwise laws (i.e., 46 U.S.C. App. 289, 883) Customs
has ruled that a point in the United States territorial waters is
a point in the United States embraced within the coastwise laws.
The territorial waters of the United States consist of the
territorial sea, defined as the belt, 3 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 coastline differ.
Section 4(a) of the Outer Continental Shelf Lands Act of
1953, as amended (43 U.S.C. 1333(a)) (OCLSA) provides in part
that the laws of the United States are extended to the subsoil
and seabed of the Outer Continental Shelf (OCS) 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 OCS
were an area of exclusive Federal jurisdiction located within a
State. Under the foregoing provision, we have ruled that the
coastwise laws and other Customs and navigation laws are extended
to mobile oil drilling rigs during the period they are secured to
or submerged onto the seabed of the OCS. We have applied that
principle to drilling platforms, artificial islands, and similar
structures, as well as to devices attached to the seabed of the
OCS for the purpose of resource exploration operations.
The Customs Service has consistently held that the laying by
a foreign vessel of underwater cable between two points embraced
within the coastwise laws of the United States is not in
violation of 46 U.S.C. App. 883. See HQ 110403, dated
September 15, 1989. Customs has held that the sole use of a
vessel for the laying of cable is not coastwise trade subject to
46 U.S.C. App. 883. See HQ 105644 (dated June 7, 1982), HQ
105648 (dated July 21, 1982), and C.S.D. 79-346. Transportation
of the cable by the cable laying vessel from a point in the
United States to another United States point where the cable is
to be laid also is not considered coastwise trade. We have
stated that it is the fact the cable is not landed but is merely
paid out in the cable laying operation which makes this operation
permissible. See HQ 105648.
Concerning issues 1 and 2, the operations you describe are
cable laying operations. For both the E/H cable and the CI
cable, the cable will not be landed, but will be paid out during
the course of the operations. Based on the foregoing precedents,
the cable laying operations described in issues 1 and 2 do not
violate 46 U.S.C. App. 883.
The Customs Service has ruled that small amounts of
equipment laden on a vessel at a coastwise point and used by the
vessel for reasons relating to the operation of the vessel may be
later unladen at a second coastwise point without violation of
46 U.S.C. App. 883. See HQ 108945 (dated June 26, 1987),
HQ 110403, and HQ 105644. Based on your submissions, the
operations you describe in issue 3 would be considered the lading
of small amounts of equipment relating to the operation of the
vessel; consequently, such operations would not violate 46 U.S.C.
Concerning unloading the unused U.K. umbilical at a U.S.
port, issue number 4, such would not be a violation of 19 U.S.C.
App. 883 since the transportation of the umbilicals from the
U.K. to a U.S. port would be considered arrival from a foreign
port and not a coastwise movement. Since the U.K.-made umbilical
unladen at a U.S. port would be foreign merchandise entering the
U.S., it would be dutiable (issue number 6). If you have further
questions regarding dutiability of this merchandise or need to
know the specific rate of duty please contact:
Mr. Marvin Amernick
Metals & Machinery Branch
Office of Regulations and Rulings
U.S. Customs Service
1313 Constitution Ave., N.W.
Washington, D.C. 20229
Concerning issue number 5, in HQ 110403 we discussed this
issue, stating the following:
...As stated previously, under the Outer Continental
Shelf Lands Act (43 U.S.C. 1333(A), the cable laid on
the seabed between the production platforms will not be
delivered to a point to which the United States laws
apply. Thus, unless that part of the cable is unloaded
in a United States port or onto one of the platforms
before being laid on the seabed, that part of the cable
will not be dutiable. However, the part of the cable
which rises along the platforms' structures, from the
point at which it is first attached to the production
platforms will be dutiable, under the OCLSA.
Headquarters Decision 106454 PH (11-16-83).
Based on your submissions and the above precedent, we agree that
the dutiable portion of the umbilical will be the portion that
attaches to the platform through the I-tube, and the portion
lying on the OCS between the platform and the termination base is
not dutiable. In addition, assuming it is the end of the
umbilical that is attached to the termination base and it does
not rise along the base's structures, the portion of the
umbilical attached to the termination base would not be dutiable.
Finally, we note that you state that when the auxiliary
equipment is loaded at a U.S. port, personnel will also board the
vessel to operate the equipment. 46 U.S.C. App. 289 provides
that "[n]o foreign vessel shall transport passengers between
ports or places in the United States, either directly or by way
of a foreign port, under penalty of $200 for each passenger so
transported and landed." Pursuant to 19 CFR 4.80a and 4.50,
the term passenger, for purposes of 46 U.S.C. App. 289, is
defined as "any person carried on a vessel who is not connected
with the operation of such vessel, her navigation, ownership, or
business." If the personnel you describe meet this definition of
passenger, there would be a violation of 46 U.S.C. App. 289.
We will not address this issue since it has not been raised, and
there is insufficient information on which to make a
There is no violation of 46 U.S.C. App. 883 for the
operations described in issues 1-4. The umbilical installed
which rises along the platform structures, as discussed in the
preceding paragraph, will be dutiable. In addition, the excess
U.K. umbilical unloaded at a U.S. port will be dutiable.
Entry and Carrier Rulings Branch