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HQ 112218

July 22, 1992

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.


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.


Whether non-coastwise-qualified barges may be utilized as workover, service, and transportation vessels in operations involving offshore oil and gas wells.


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.


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.


B. James Fritz

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