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HQ H010211





December 30, 2007

VES-3-15 OT:RR:BSTC:CCI H010211 LLB

Category: CARRIER

Fred Baldwin, Esquire
1321 State Street
New Orleans, Louisiana 70118

RE: Coastwise transportation; Outer Continental Shelf; gangway; modification of HQ 114607 (Mar. 1, 1999)

Dear Mr. Baldwin:

On March 1, 1999, U.S. Customs and Border Protection (“CBP”) issued Headquarters Ruling (“HQ”) 114607 to you, on behalf of Saipem, Inc. In HQ 114607, CBP held, in part, that the placement of a gangway between a dynamically positioned vessel and a facility moored to the Outer Continental Shelf (OCS) would render such vessel an extension of the moored facility and thereby a coastwise point. We have recently recognized that the foregoing holding in HQ 114607 is contrary to CBP decisions which interpret the Outer Continental Shelf Lands Act (OCSLA). Consequently, this ruling, HQ H010211, modifies HQ 114607, in part, and provides a decision consistent with current CBP decisions. Because the remainder of HQ 114607 is correct, we do not address it here.

FACTS

The pertinent facts in HQ 114607 provide as follows. Saipem informed this office that it planned to use two foreign-flag cargo barges (the “barges”) to transport J-lay pipelay equipment (“J-lay equipment” or “equipment”) to and from a foreign-flag heavy lift/pipelaying semisubmersible (“S-7000" or “pipelaying vessel”). The S-7000 is a multipurpose vessel used for heavy lift and pipelaying. The equipment was to be placed upon the barges in Rotterdam and towed directly to a location on the Gulf Coast of the U.S., where the equipment will be stored on board the barges. When the equipment was needed on board the S-7000, the barges were to be towed offshore to rendezvous with the S-7000. The pipelaying equipment was to be transferred from the barges to the S-7000 using the cranes onboard the S-7000. The rendezvous site was to be located beyond three miles from the U.S. shoreline, but within the waters of the U.S. that come within the provisions of the OCSLA. The S-7000 was to be held in place using dynamic positioning during the transfer and the two barges were to be moored directly to the S-7000 during the transfer activity. Neither the S-7000 nor the barges were to be attached to the seabed.

While the pipelaying activity is occurring, the barges were to be towed to a location on the U.S. Gulf Coast and stored until the equipment was ready to be offloaded from the S-7000. Upon completion of the pipelaying activity, the barges were to be towed to a site beyond three miles from the U.S. shoreline, but within the waters so as to come within the provisions of the OCSLA. Saipem proposed possibly using non-coastwise-qualified vessels to tow the barges and in such case the equipment was to be transferred from the S-7000 to the barges. The S-7000 was to be held in place using its dynamic positioning system during the transfer and the two barges were to be moored directly to the S-7000. Neither the S-7000 nor the barges were to be attached to the seabed while the equipment was being transferred to the barges. In fact, Saipem stated that the S-7000 was not being attached to the seabed at any time during the described events, including prior to and subsequent to the transfer of equipment to the S-7000.

Under the foregoing scenario, CBP held in HQ 114670, in part, that the S-7000 was not a coastwise point insofar as it was not attached to the seabed. However, when Saipem presented an alternative scenario which included connecting the SF-7000 by gangplank to a facility moored to the OCS, CBP held that the SF-7000 would be considered a coastwise point insofar as it would be an extension of the moored facility. As explained in the “Law and Analysis” section of this ruling, the latter holding is inapposite to the OCSLA and the CBP decisions interpreting that law.

ISSUE

Whether a dynamically positioned vessel, which is not attached to the OCS, is deemed an extension of a moored facility that is a coastwise point pursuant to the OCSLA, merely by virtue of connection to such moored facility by gangway.

LAW AND ANALYSIS

Pursuant to 46 U.S.C. § 55102(b), the merchandise coastwise law often called the “Jones Act”, 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. Likewise, 46 U.S.C. § 55103(a) prohibits the transportation of passengers between points in the United States embraced within the coastwise laws, either directly or by way of a foreign port, in a non-coastwise-qualified vessel.

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. See 33 C.F.R. § 2.22(a)(2). In addition, Section 4(a) of the OCSLA,

67 Stat. 462; 43 U.S.C. § 1333(a). 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.

(emphasis added).

The subject of this revocation is whether the S-7000 is a coastwise point when using dynamic positioning and then connected by gangway to a moored facility. As stated above, the OCSLA, extends the laws of the U.S. 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.” The statute was substantively amended by the Act of September 18, 1978, Pub. L. 95-372, Title II, § 203, 92 Stat. 635. adding, inter alia, language concerning temporary attachment to the seabed. The legislative history provides, in pertinent part:

...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.

(emphasis added). H. Rep. No. 95-590; 1978 U.S.C.C.A.N. 1450, 1534.

Pursuant to 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; see also, Cust. Serv. Dec. 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 Cust. Serv. Dec. 81-214 and 83-52; see also, HQ 107579 (May 9, 1985).

In HQ 114607, Saipem indicates that S-7000 would be dynamically positioned next to a moored production facility and connected thereto by gangway. We note that with respect to dynamically positioned vessels, this agency has long-held that the lack of any permanent or temporary attachment to the seabed operates to exclude such vessels operating over the OCS from becoming coastwise points pursuant to the OCSLA. HQ 109576 (July 12, 1988) and HQ 113838 (Feb. 25, 1997). Consequently, unless the S-7000 itself is connected to the seabed, as required by the OCSLA, it will not be considered a coastwise point merely by virtue of its connection to a moored production facility by gangway. See HQ H008396 (June 4, 2007)(holding that a foreign-flag floatel was not a coastwise point by virtue of its connection to a moored floating production facility by gangplank unless it also attaches to the seabed.); HQ 115431 (Sept. 4, 2001)(stating that hotel vessel would not be considered a coastwise point pursuant to the OCSLA unless anchored or moored to the seabed); see also HQ 115134 (Sept. 27, 2000)(stating that a floating offshore service facility vessel would not be subject to Customs and navigation laws pursuant to the OCSLA insofar as an “onboard vessel propulsion system,” rather than anchoring, was used to maintain the vessel’s position next to drilling unit).

HOLDING

A dynamically positioned vessel, which is not attached to the OCS, is not deemed an extension of a moored facility that is a coastwise point pursuant to the OCSLA, merely by virtue of connection to such moored facility by gangway.

EFFECT ON OTHER RULINGS

HQ 114607, dated March 1, 1999, is hereby modified.

Sincerely,

Jeremy Baskin, Acting Director

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