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HQ 116607





February 13, 2006

VES-3-15/VES-10-01-RR:BSTC:CCI 116607 rb

CATEGORY: CARRIER

Dennis L. Bryant
Holland & Knight LLP
2099 Pennsylvania Avenue, NW.
Washington, D.C. 20006-6801

RE: Salvage; Coastwise Transportation; Outer Continental Shelf; 46 U.S.C. App. 316(d), 883; 43 U.S.C. 1333(a)

Dear Mr. Bryant:

In your letter of February 2, 2006, on behalf of your client, Bisso Marine Company of New Orleans, you request an expedited ruling concerning the applicability of the coastwise merchandise law, 46 U.S.C. App. 883, and the law covering coastwise salvaging operations, 46 U.S.C. App. 316(d), in connection with the employment of non-coastwise-qualified vessels in facilitating the recovery/removal of the remnants of four jack-up drilling rigs that, due to recent storms, were ripped from their moorings on the United States Outer Continental Shelf in the Gulf of Mexico. Our ruling in this matter follows.

FACTS:

Due to recent storms, four jack-up drilling rigs were ripped from their moorings on the United States Outer Continental Shelf (OCS) and sunk. The rigs had been engaged in the exploitation of offshore oil and gas resources on the OCS. The remnants of the rigs have now been located beyond the three (3) nautical-mile limit of United States territorial waters and some miles from their original moorings, at points where no wells or similar devices exist for OCS exploration, development or production. It is intended that non-coastwise-qualified barges be employed to raise/recover the rigs from the seabed, and then to transport the rigs to a port in the United States for repair.

ISSUES:

Whether the recovery of the sunken drilling rigs from the seabed at locations beyond the three-mile limit of U.S. territorial waters in the Gulf of Mexico constitutes salvaging operations under 46 U.S.C. App. 316(d); and whether the lading and transportation of such recovered rigs for unlading and repair at a U.S. port would constitute coastwise transportation subject to 46 U.S.C. App. 883.

LAW AND ANALYSIS:

Under 46 U.S.C. App. 316(d), a foreign vessel, with certain exceptions not here relevant, is prohibited from engaging in salvaging operations in the territorial waters of the United States on the Gulf of Mexico; and, under 46 U.S.C. App. 883, merchandise may not be transported between ports or places in the United States embraced within the coastwise laws in any vessel other than one which is coastwise-qualified (i.e., built in and documented under the laws of the United States and owned by persons who are citizens of the United States).

In pertinent part, the coastwise laws apply to any point in the territorial waters of the United States, defined as the belt, three (3) nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline (T.D. 78-440).

In addition, under the Outer Continental Shelf Lands Act (OCSLA), as amended, 43 U.S.C. 1333(a), the laws of the United States are extended to the subsoil and seabed of the 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. Thus, the laws applicable to the OCS in this specific regard include the customs and navigation laws, as well as the coastwise laws, which of course encompass sections 316(d) and 883 (see, e.g., T.D. 54281(1); and Headquarters ruling (HQ) 113838, of February 25, 1997). Notably, when the OCSLA was amended in 1978 regarding temporary attachment, the legislative history further made 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.

H. Rept. 95-590, reprinted at, 1978 U.S. Code Cong. & Admin. News 1450, at 1534

(emphasis added). However, in light of the facts presented herein, the drilling rigs, having been ripped from their moorings on the OCS and now lying on the seabed beyond U.S. territorial waters, are clearly no longer “connected to the seabed by drillstring, pipes, or other appurtenances, on the OCS for exploration, development, or production purposes.” Hence, against this backdrop, the particular locations where the sunken rigs are now situated are plainly not coastwise points. To this same overall end, see also HQ 116558, of October 25, 2005, and HQ 115850, of November 15, 2002. In short, therefore, since the current locations of the sunken rigs are not coastwise points, the provisions of 46 U.S.C. App. 316(d) and 883 would simply not apply or extend to the operations contemplated within the context of this ruling.

HOLDING:

The recovery/removal, lading and transportation of the sunken drilling rigs from the seabed at locations beyond the U.S. territorial sea, and the subsequent unlading of such materials at a U.S. port, are not subject to either 46 U.S.C. App. 316(d) or 883. As such, the use of non-coastwise-qualified vessels in these circumstances and for these purposes would not violate either section 316(d) or 883.

Sincerely,

Glen E. Vereb

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