VES-3-15/16-RR:IT:EC 113838 GEV
CATEGORY: Carriers
Harold E. Mesirow, Esq.
Robins, Kaplan, Miller & Ciresi L.L.P.
1801 K Street, N.W.
Suite 1200
Washington, D.C. 20006-1301
RE: Coastwise Trade; Salvage; Outer Continental Shelf; Dive
Support Vessels; Dynamic Positioning
Vessels; Derrick Barge; 46 U.S.C. App. 289, 883, 316(d); 43
U.S.C. 1333
Dear Mr. Mesirow:
This is in response to your letter dated February 10, 1997,
on behalf of your client, requesting a ruling confirming your
understanding of the applicability of the above-referenced
statutes to a myriad of activities involving your client’s use of
non-coastwise-qualified vessels in operations either within the
territorial waters of the United States or in waters over the
Outer Continental Shelf (“OCS”). Our determinations with respect
to your inquiry are set forth below.
FACTS:
Your client and its subsidiaries own and operate non-coastwise-qualified vessels (both U.S. and foreign-flagged) which
they propose to use in providing various services in conjunction
with subsea construction, inspection, maintenance, repair, and
salvage operations for the offshore natural gas and oil industry
in the territorial waters and OCS of the United States. These
services, which would be primarily in support of offshore
production-related natural gas and oil field infrastructure
projects, would include the inspection, installation,
maintenance, repair, and removal of underwater oil and natural
gas pipelines, the inspection, maintenance, and repair of
production platforms, rigs, and wellheads, and the installation
of wellheads and coring.
The operation of the vessels in question would entail their
departing a U.S. port and proceeding to one or more points,
either in U.S. territorial waters or in waters over the OCS,
where one or more of the aforementioned services would be
performed, and thereafter returning
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to their U.S. port of departure. In addition to the crew, other
personnel would be carried aboard the vessels in furtherance of
their respective missions. Each vessel would also carry
consumables, materials and equipment necessary to perform the
services noted above.
The vessels, their work, and the articles and personnel to
be carried on board are detailed below.
Vessel Descriptions
One class of vessel to be used during the operations in
question is a saturation diving vessel with a dynamic positioning
(“DP”) system. These DP vessels, which would operate exclusively
beyond U.S. territorial waters over the OCS for marine
construction and subsea services, are specially constructed to
provide an above water platform that functions as an operational
base for divers. The DP system allows the vessels to maintain
position without the use of anchors, and therefore, enhances
productivity in extreme weather conditions. Computer controlled
thrusters mounted on the vessels’ hulls ensure the proper
counteraction to wind, current, and wave forces to maintain
position. There are no anchors, chains, or cables deployed to
hold the DP vessels in position.
Another class of vessel involved in these operations is a
four-pointed, moored, saturation (“SAT”) diving vessel. SAT
diving, required at water depths greater than 300 feet, involves
divers working from special chambers for extended periods at a
pressure equivalent to the depth of the work site. The divers
are transferred from the surface to the work site by diving
bells. The SAT vessels would customarily operate in U.S.
territorial waters (but may operate over the OCS) and would be
anchored to the seabed during operations for safety purposes.
A third class of vessel to be engaged in the aforementioned
services is a dive support vessel. These vessels would be used
for surface diving involving the use of divers linked to the
surface by a diving umbilical containing compressed air lines and
communication equipment. They would also be used to transport
personnel, supplies, equipment, consumables and materials from
U.S. ports to the above-discussed DP vessels when the DP vessels
are operating over the OCS.
Finally, a U.S.-flagged, non-coastwise-qualified derrick
barge would be used in salvage operations of oil facilities
within U.S. territorial waters and over the OCS.
Work Descriptions
The work to be performed from the above vessels can be
grouped into the following four categories: (1) pipelaying and
repair; (2) platform-related work; (3) wells, wellheads and
coring-related work; and (4) salvage-related work. These work
categories are detailed below:
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The services to be performed with respect to pipelaying and
repair include the following: connecting pipelines to platforms
via risers and other pipelines via side taps or hot taps; burial
of laid pipelines to specified depths below the mudline using
hand jetting by divers and/or machine jetting; setting of
pipeline crossings in connection with laying pipelines (i.e.,
separating pipelines by inserting sand bags or concrete mats
between and over the lines); at the conclusion of pipelaying,
hydrostatically testing and then dewatering the lines; repairing
of leaking pipelines by the installation of clamps around the
damaged area or installing a new section of pipe to replace the
damaged area; installing risers (i.e., the vertical portion of a
pipeline clamped to a platform leg); laying of flexible and hard
pipe using conventional s-lay, j-lay or reeled methods; pipeline
flushing and abandonment at the end of its use which entails
flushing with chemicals and seawater (using a pig) and then
cutting, plugging and burying the pipeline; pipeline inspection;
and laying umbilicals (control and ejection) alongside of the
pipeline for activation of control valves subsea, electrical
supply or chemical injection.
The services to be performed with respect to platforms
include the following: anode installation on platforms (i.e., the
replacement of sacrificial cathodic protection devices); removal
of debris (trash) from the ocean floor around platforms; platform
inspection (i.e., visual and non-destructive testing of platform
members); platform repair including the replacement or repair of
the tubular members; and the salvage of platforms and wellheads
by removal of existing structures.
The services to be performed with respect to wells,
wellheads and coring include the following: pigging (i.e., the
clearing of a pipeline with water) and abandonment of wells by
cementing them in at the end of production; drilling support by
assisting and observing drilling operations; well servicing and
testing; installation of new and repaired wellheads; servicing
and repair of wellheads; use of drilling for coring to collect
geotechnical data; and performing bottom surveys (i.e., mapping
debris and bottom contours).
The services to be performed with respect to salvage
operations, include not only the removal of existing platform and
wellhead structures mentioned above, but specifically the use of
the aforementioned derrick barge in lifting and depositing
salvage materials at a fixed site.
Descriptions of Items/Personnel Carried Aboard The Vessels
The various items and personnel carried aboard the subject
vessels, both permanently and for the purpose of effecting the
work described above, include the following:
Equipment – water blasters, hot tap machines, fabrication
equipment, welding habitat,
bolt tensioners, jet pump hoses, jetting
machines, test pumps, manifolds,
chart recorders, hoses, test flanges, pig
traps/launchers, hydraulic pipe-
line cutters, x-ray equipment, tensioners,
welding equipment, pipehandling systems,
stingers, piperacks, robotic vehicles (ROVs), reel lay equipment,
test equipment, winches, trash baskets, sonar,
buffers/grinders, magnetic
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particle inspection equipment, video and
photographic equipment, ultra- sound testing
equipment, epoxy injection equipment, handling frames, spreader bars, wireline equipment, cementing pumps,
perforating guns, wirelines, electric lines,
coiled tubing, production risers, well test equip-
ment, logging equipment, acidation equipment and materials,
flare equip- ment, wellhead adapter tools, drill
string, drill rigs, mud tanks, geotechnical
equipment and buoys, survey and positioning equipment, diving
equipment, surface burning equipment,
underwater burning equipment, jetting equip- ment,
rigging slings, shackles, rope, winches, burning rods, welding
rods,
air or water lifts, tool compressors, tools
(hand and hydraulic), and pipeline completion
tools.
Consumables – epoxy, pigs, explosives, tie down materials,
compressed gasses, fittings, plugs, fuel, water,
chemicals, cargo mats, pipelay consumables and
groceries.
Materials – pipe, hot tap fittings, flanges, bolts/o-rings,
sand bags/cement mats, valve
assemblies, repair clamps, wellhead repair parts,
cement, pipe end con-
nectors, termination skids, piles, anodes, bridge
plugs and miscellaneous
repair parts not preventive in nature.
Personnel – vessel crew, employees of the vessel
owner/operator making up the
vessel’s dive crew (including divers, tenders,
technicians and supervisors), subcontractors
hired as part of the dive crew, client supervisors for whom
the work is being performed, welders and survey
positioning equipment and personnel.
In support of the position that the operation of the subject
non-coastwise vessels as described above is not in violation of
the coastwise laws, the following appendixes to the ruling
request have been submitted: Appendix A which lists the types of
work performed, and equipment, personnel, consumables and goods
utilized by, the non-coastwise-qualified vessels in question;
and Appendix B consisting of a compilation of six rulings issued
by Customs (101925, dated October 7, 1976, published as Treasury
Decision (T.D.) 78-387; 108442, dated August 13, 1986; 109516,
dated June 15, 1988; 109576, dated July 12, 1988; 110391, dated
May 3, 1990; and 113247, dated October 26, 1994).
We note that in addition to the above information regarding
the non-coastwise-qualified vessels under consideration and their
proposed activities, Cal Dive intends to use chartered third
party coastwise-qualified vessels to perform the following
services: (1) the transportation of materials to be used in work
performed off of the subject non-coastwise-qualified vessels
which are preventive in nature and not de minimis in value, such
as anodes, new and repaired wellheads and tubular members; (2)
the transportation of materials salvaged by the derrick barge;
(3) the transportation of hydrocarbons produced by testing or
servicing wells; (4) the transportation of
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corings taken on the subject non-coastwise-qualified vessels; and
(5) the transportation of personnel and/or supplies, equipment or
other materials which are not an integral part of the operation
of the vessels but rather are off-loaded to a vessel, platform or
structure in U.S. territorial waters or to a vessel, platform or
other installation or device permanently or temporarily attached
to the seabed of the OCS.
Notwithstanding the magnitude of the proposed operations,
your ruling request is limited to our opinion as to the three
issues specified on page 8 of your letter as set forth below.
ISSUES:
1. Whether the use of non-coastwise-qualified diving
support vessels in providing the services described herein for
subsea construction, inspection, maintenance, coring, repair and
salvage operations is in contravention of 46 U.S.C. App. 883,
289 and/or 316(d).
2. Whether the use of non-coastwise-qualified diving
support vessels for the carriage of supplies, equipment,
materials and personnel from a U.S. port to DP vessels operating
over the OCS as described herein is in contravention of 46 U.S.C.
App. 883 and/or 289.
3. Whether the use of a U.S.-flagged, non-coastwise-qualified derrick barge in the lifting and depositing of salvage
materials at a fixed site in U.S. territorial waters or over the
OCS as described herein is in contravention of 46 U.S.C. App.
883, 289 and/or 316(d).
LAW AND ANALYSIS:
The coastwise law pertaining to the transportation of
merchandise, 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, in pertinent part, 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 transportation,
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…
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The term “merchandise” as used in 883 includes valueless
material (see amendment to
883 by the Act of June 7, 1988, Pub.L. 100-329; 102 Stat. 588).
Furthermore, the statute provides that the prohibitions set forth
therein apply to the transportation of “valueless material or
any dredged material regardless of whether it has commercial
value, from a point or place in the United States or a point or
place on the high seas within the Exclusive Economic Zone [(EEZ)]
as defined in the Presidential Proclamation of March 10, 1983, to
another point or place in the United States or a point or place
on the high seas within that [EEZ].” Id. The March 10, 1983,
Presidential Proclamation defined the EEZ as a zone contiguous to
the territorial sea extending to a distance 200 nautical miles
from the territorial sea baseline.
Further in regard to the term “merchandise” as used in
883, it should be noted that Customs has long-held the equipment
of a vessel to be considered as other than merchandise. To that
end, vessel equipment has 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.” (T.D. 49815(4), dated March 13, 1939)
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.
Customs has consistently interpreted the above 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; 19 CFR 4.80). Furthermore, for purposes of
the above statute a “passenger” is defined as “…any person
carried on a vessel who is not connected with the operation of
such vessel, her navigation, ownership, or business.” (See 19
CFR 4.50(b))
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.
Furthermore, 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
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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 appurte-
nances, on the OCS for exploration, development, or
production pur-
poses. [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 and other Customs and navigation laws are extended
to mobile oil drilling rigs during the period they are secured to
or submerged onto the seabed of the OCS (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. (Customs Service Decisions (C.S.D.s) 81-214 and 83-52)
With respect to salvage, paragraph (d) of the Act of June
11, 1940, as amended (46 U.S.C. App. 316(d)), provides, in
pertinent part, that:
No foreign vessel shall, under penalty of forfeiture,
engage in salvaging
operations on the Atlantic or Pacific Coast of the
United States,…or in
territorial waters of the United States on the Gulf of
Mexico, except when authorized by treaty…:
Provided, however, That if, on investigation, the Commissioner of Customs is satisfied that no suitable [U.S.-flagged vessel]
is available in any particular locality, he may
authorize the use of a foreign vessel or vessels in
salvaging operations in that locality and no penalty shall
be incurred for such authorized use.
It is noteworthy that although the aforementioned coastwise
laws (i.e., 46 U.S.C. App.
883, 289) prohibit the use of any vessel other than a U.S.-built, owned and documented vessel in the transportation of
merchandise or passengers, the prohibition in the salvage statute
is applicable only to a “foreign vessel.”
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In order for a marine operation to constitute “salvage,”
according to the law developed in this area (see B.V. Bureau
Wijsmuller v. United States, 702 F.2d 333, 337 (1983), in which
the history of salvage law is briefly discussed), three elements
are necessary. These elements are: “marine peril; service
voluntarily rendered, not required by duty or contract; and
success in whole or in part, with the service rendered having
contributed to the success.” (Wijsmuller, 702 F.2d at 338,
citing The Sabine, 101 U.S. 384, 25 L.Ed. 982 (1880)) To quote
further from Wijsmuller, 702 F.2d at 338: “[p]eril necessary to
give rise to a claim for salvage must be present and impending,
although it need not be immediate or absolute. ‘A situation of
actual apprehension, though not of actual danger, is sufficient.’
…Absent danger, any services rendered a vessel cannot properly
be called salvage…” (See also Cope v. Vallette Dry-Dock Co.,
119 U.S. 625 (1887); Simmons v. The Steamship Jefferson, 215 U.S.
130 (1909); de Kerchove’s International Maritime Dictionary, 2d
Ed., 1961, p. 680, and Black’s Law Dictionary, 5th Ed., 1979 p.
1202, 1203)
In applying the above authority to the facts of this
inquiry, our analysis is as follows.
Issue 1
The first issue for our consideration involves the use of
non-coastwise-qualified diving support vessels for surface diving
whereby divers operate via their linkage to the surface by a
diving umbilical containing compressed air lines and
communication equipment. The operation of these vessels would be
in conjunction with subsea construction, inspection, maintenance,
coring, repair and salvage services. All equipment, consumables
and materials to be carried on board as described above are to be
utilized in the various facets of the vessel’s work. Likewise,
all personnel on board are to be carried in furtherance of the
vessel’s operation in providing the aforementioned diving
support/assistance.
With respect to the operation of diving support vessels, it
has long been the position of the Customs Service that the
transportation by such vessels of equipment, supplies and
materials used on or from such vessels in effecting services such
as inspections of, and/or repairs to, offshore or subsea
structures, including the laying and repair of pipelines, and
marine coring, does not constitute a use of the vessel in the
coastwise trade, provided, such articles are necessary for the
accomplishment of the vessel’s mission, and are usually carried
on board as a matter of course. (Customs ruling letters 108442,
dated August 13, 1986; 109576, dated July 12, 1988; and T.D. 78-387) The underlying rationale for this position is that the
aforementioned articles are not considered “merchandise” for
purposes of 46 U.S.C. App. 883. Furthermore, crewmembers of
such vessels, including divers and technicians, as well as
construction personnel carried on board in connection with the
aforementioned services performed on or from the vessels, are not
considered “passengers” within the meaning of 19 CFR 4.50(b).
(Id., see also C.S.D.s 79-321, 81-214) We find the foregoing
precedents applicable to the activities of the diving support
vessels under consideration. – 9 –
Accordingly, the use of the subject non-coastwise-qualified
dive support vessels as described herein is not in violation of
46 U.S.C. App. 883 and/or 289. We note that although the
services these vessels provide may also be in support of salvage
operations, the facts as presented to us do not indicate that
these services meet the requisite criteria of “salvage” as
provided in the above-cited authority. Consequently, the
provisions of 46 U.S.C. App.
316(d) are inapplicable to the operation of these vessels.
Issue 2
The second issue for our consideration concerns the use of
non-coastwise-qualified diving support vessels to transport
supplies, equipment, materials and personnel from a U.S. port to
DP vessels operating over the OCS. As previously stated, these
DP vessels will be operating without anchors, chains, or cables
deployed to hold them in position. In this regard we note that
Customs has previously held that the lack of any permanent or
temporary attachment to the seabed operates to exclude DP vessels
operating over the OCS from becoming points on the OCS to which
the coastwise laws are extended by the OCSLA. (Customs ruling
letter 109576, dated July 12, 1988) Consequently, since there is
no movement between two points embraced within the coastwise laws
in this particular scenario, the use of non-coastwise-qualified
diving support vessels for the transportation of supplies,
equipment, materials and personnel between a U.S. port and the
subject DP vessels operating over the OCS is not in contravention
of 46 U.S.C. App. 883 and/or 289.
Issue 3
The final issue for our review pertains to the use of a
U.S.-flagged, non-coastwise-qualified derrick barge in
conjunction with salvage operations in U.S. territorial waters
and over the OCS. These services do not include the
transportation of salvage materials but are limited solely to the
lifting and depositing of them onto a coastwise-qualified vessel
at a fixed site. From the facts presented, the engagement in
this activity by the subject derrick barge does not meet the
requisite elements of “salvage” as discussed in the above-referenced authority. This, coupled with the fact that the barge
is U.S.-flagged, renders inapplicable the provisions of 46 U.S.C.
App.
316(d).
In regard to the proposed use of the barge, we note that
Customs has long-held that the use of a non-coastwise-qualified
derrick barge to load and unload cargo or construct or dismantle
a marine structure is not coastwise trade and does not violate
the coastwise laws, provided, that any movement of the
merchandise is effected exclusively by the operation of a crane
aboard the derrick barge and not the movement of the vessel,
except for necessary movement which is incidental to a lifting
operation while it is taking place. (Customs ruling letters
106351, dated November 1, 1983; 108213, dated March 6, 1986; and
110391, dated May 3, 1990) This holding is applicable to such
service of a derrick barge either solely in territorial waters,
or on the OCS if the materials being lifted are considered to be
a coastwise point by virtue of the OCSLA. Thus, a non-coastwise-qualified derrick barge could lift merchandise with its crane at
one coastwise
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point, be pivoted while remaining at that location, and put down
the merchandise at a location other than that from which it was
lifted. The barge would be prohibited from lifting merchandise
with its crane at one coastwise point and, while the merchandise
is suspended from the crane, transport the merchandise to a
second coastwise point where it is placed by the crane.
Parenthetically, we note that if the service in question takes
place at a location on the OCS not considered to be a coastwise
point pursuant to the OCSLA, any movement of the barge is
irrelevant inasmuch as the coastwise laws would be rendered
inapplicable.
Accordingly, the use of a non-coastwise-qualified derrick
barge in the manner described herein does not constitute a
engagement in the coastwise trade in violation of 46 U.S.C. App.
883 and/or 289.
HOLDINGS:
1. The use of non-coastwise-qualified diving support
vessels in providing the services described herein for subsea
construction, inspection, maintenance, coring, repair and salvage
operations is not in contravention of 46 U.S.C. App. 883, 289
and/or 316(d).
2. The use of non-coastwise-qualified diving support
vessels for the carriage of supplies, equipment, materials and
personnel from a U.S. port to DP vessels operating over the OCS
as described herein is not in contravention of 46 U.S.C. App.
883 and/or 289.
3. The use of a U.S.-flagged, non-coastwise-qualified
derrick barge in the lifting and depositing of salvage materials
at a fixed site in U.S. territorial waters or over the OCS as
described herein is not in contravention of 46 U.S.C. App.
883, 289 and/or 316(d).
Sincerely,
Jerry Laderberg
Acting Chief
Entry and Carrier Rulings Branch