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HQ 115799

September 30, 2002

VES-3-15-RR:IT:EC 115799 GEV


Steven F. Neuendorff
Clipper Elite Carriers
2500 City West Boulevard
Suite 500
Houston, Texas 77046

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

Dear Mr. Neuendorff:

This is in response to your letter dated September 11, 2002, as supplemented by your fax of September 23, 2002, on behalf of your principals, Consolidated Pipe Carriers Ltd. (CPC), requesting a ruling as to the applicability of 46 U.S.C. App. § 883 to the proposed use of foreign-flagged vessels. Our ruling is set forth below.


The SOLITAIRE is a Panamanian-flagged, dynamically positioned pipe lay vessel (DPPLV) that will lay three separate pipelines comprising the Mardi Gras Transportation System Intermediate Water Depth Pipeline Installation Project. Due to the distance from the load-out port to the area where the pipelines will be installed, it is proposed to use a number of foreign-flagged general cargo vessels for the purpose of transporting sections of line pipe to the SOLITAIRE. These vessels will load pipe sections in Theodore, Alabama, and discharge them in the SOLITAIRE at a location beyond the 3-mile U.S. territorial sea. The SOLITAIRE will not be anchored to the seabed during this operation but will be dynamically positioned via powerful thrusters and a global positioning system (GPS). During the installation of the pipeline there will be no connection between any platform and the pipeline, nor will any such connection activity be part of the scope of work of the SOLITAIRE.


Whether the use of foreign-flagged vessels to transport pipe sections from Theodore, Alabama, to the DPPLV SOLITAIRE at a location beyond the 3-mile territorial sea as described above constitutes a violation of 46 U.S.C. App. § 883.


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.

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 that Customs has previously held that the lack of any permanent or temporary attachment to the seabed operates to exclude dynamically positioned vessels operating over the OCS from becoming points on the OCS to which the coastwise laws are extended by the OCSLA. (Customs ruling letters 109576, dated July 12, 1988, and 113838, dated February 25, 1997). We have also held that a vessel used solely for pipelaying purposes and not for the purpose of “exploring for, developing, or producing resources” from the OCS is not considered “attached” to the seabed as that term is used in the OCSLA and therefore is not a coastwise point. (Customs ruling letter 111126, dated August 16, 1990) In view of these rulings, and upon reviewing the facts presented, we are also of the opinion that the SOLITAIRE would not be attached to the OCS during the pipe transshipments in question so as to be considered a coastwise point pursuant to the OCSLA. Consequently, the use of foreign-flagged vessels in the manner described above would not violate 46 U.S.C. App. § 883.


The use of foreign-flagged vessels to transport pipe sections from Theodore, Alabama, to the DPPLV SOLITAIRE at a location beyond the 3-mile territorial sea as described above does not constitute a violation of 46 U.S.C. App. § 883.


Georgina Grier

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