United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 2001 HQ Rulings > HQ 115296 - HQ 115412 > HQ 115372

Previous Ruling Next Ruling
HQ 115372





June 15, 2001

VES-3-15-RR:IT:EC 115372 GEV

CATEGORY: CARRIER

Matthew D. Eisele, Esq.
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760

RE: Ballasting Operations; Coastwise Trade; Outer Continental Shelf Lands Act; 43 U.S.C. § 1333(a); 46 U.S.C. App. § 883

Dear Mr. Eisele:

This is in response to your letter dated May 17, 2001, requesting an expedited ruling pursuant to § 177.2(d), Customs Regulations (19 CFR § 177.2(d)), concerning your client’s proposed use of vessels in a ballasting operation. The ruling you seek is set forth below.

FACTS:

A SPAR measuring approximately 750-775 feet in length with a diameter of 140-160 feet will be floated to its installation site on the Outer Continental Shelf (OCS) with the assistance of a number of coastwise-qualified tugs. At the installation site, compartments on the lower end of the SPAR will be flooded with water until the structure tips to a vertical position. Then magnetite will be pumped into the SPAR to ballast it down.

During the ballasting operation the SPAR will not be in contact with the seabed. A mooring system, consisting of anchor pilings in the seabed and a wire and chain connection, will be in place but not yet attached to the SPAR. Wellheads will also have been drilled in the seabed in the vicinity of the installation site in anticipation of the SPAR. The SPAR will not be attached to the seabed until after the ballasting procedure is completed.

The ballast material, magnetite, will be loaded into a hopper barge at a U.S. port and carried to the installation site. There it will be processed into slurry form by adding water and mixing the material with specialized batching equipment. Then using pumps, the processed material will be transferred through specially deployed slurry pipe to the SPAR. The hopper barge containing the magnetite, like the SPAR discussed above, will not be attached to the seabed during the ballasting operations.

ISSUE:

Whether a non-coastwise-qualified hopper barge, carrying magnetite from its U.S. port of lading to an installation site located outside U.S. territorial waters where it will be processed on board the barge then transferred as ballast to a floating SPAR not attached to the OCS, violates 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).

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.

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 Customs and navigation laws, including 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 (Treasury Decision (T.D.) 54281(1)). 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 proposed operations, upon reviewing the above-cited authority, it is readily apparent that since the SPAR is to be floating and not attached to the OCS at the time the processed magnetite is to be transferred to it, it is not a coastwise point within the meaning of the OCSLA. Consequently, the hopper barge would not be engaging in the transportation of merchandise between two coastwise points. It therefore would not be in violation of 46 U.S.C. App. § 883.

Parenthetically, we note your inquiry as to whether our decision in this case would be affected if the hopper barge holding the magnetite being pumped into the SPAR were anchored or otherwise attached to the seabed. It would not. The magnetite was already loaded at a coastwise point. The critical element is therefore whether the
magnetite is unloaded onto another coastwise point. If the SPAR were attached to the OCS, it would be a coastwise point for purposes of the OCSLA and the unloading of the magnetite would constitute an unlawful coastwise transportation of merchandise in violation of 46 U.S.C. App. § 883.

HOLDING:

A non-coastwise-qualified hopper barge, carrying magnetite from its U.S. port of lading to an installation site located outside U.S. territorial waters where it will be processed on board the barge then transferred as ballast to a floating SPAR not attached to the OCS, does not violate 46 U.S.C. App. § 883.

Sincerely,

Larry L. Burton

Previous Ruling Next Ruling