VES-3-01-OT:RR:BSTC:CCI H205655 WRB
CATEGORY: Carriers
Robert H. Nicholas, Jr., Esq.
Phelps Dunbar, LLP
700 Louisiana Street
Suite 2600
Houston, TX 77002
RE: Coastwise Transportation; Research; 46 U.S.C. § 55102; 46 U.S.C. § 55103
Dear Mr. Nicholas:
This letter is in response to your correspondence dated February 16, 2012, in which you inquire on behalf of your client, Fairfield Industries Incorporated d/b/a FairfieldNodal (hereinafter Petitioner), about whether a non-coastwise-qualified Oceanographic Research Vessel (ORV) may be used to conduct seismic survey activities using nodal technology without violating 46 U.S.C. § 55102, or 46 U.S.C. § 55103. Our ruling on your request follows.
FACTS
Petitioner operates specially-equipped, U.S.-flag, coastwise-qualified Oceanographic Research Vessels. These vessels conduct offshore seismic survey activities on the U.S. outer continental shelf (OCS) utilizing technology that requires the deployment of “nodes” on the seabed. Petitioner is contemplating acquiring foreign-flag, non-coastwise-qualified vessels that it plans to modify and equip with the specialized machinery, systems, and equipment necessary to use nodal seismic survey technology. These vessels would be modified and equipped to deploy seismic survey nodes in the same manner as do Petitioner’s current U.S.-flag vessels.
Petitioner’s nodal seismic technology differs from the traditional method of conducting seismic surveys, which involves the towing of a lengthy cable or array containing the hydrophones used to acquire the seismic data. With Petitioner’s technology, the seismic sensors, instead of being part of a towed cable array, are installed within nodes which are deposited onto the seabed where they can record seismic data.
The Petitioner’s nodal seismic technology utilizes two different types of nodes, the Z700 and Z3000, which use of two different vessel deployment and recovery systems. The Z700 system is used for seismic survey work in water depths of 700 meters or less, with a seabed battery life of 15 days maximum. The Z3000 system is used at water depths up to 3000 meters, with a maximum seabed battery life of 60 days.
The Z700 or the Z3000 nodes may be placed at various locations on the U.S. OCS. These locations may be in open areas on the ocean seabed. Nodes may also be placed in close proximity to existing OCS facilities or structures, such as both fixed and floating platforms. In some cases Z3000 nodes may be placed directly under an offshore oil and gas production facility. Nodes may also be placed on the bottom in areas inside the U.S. territorial waters.
Each node contains seismic sensors used to record sound waves created by compressed air guns aboard a source vessel. Firing of the air guns sends a sound wave which penetrates the seabed and is then reflected back to the surface. The reflected sound waves are recorded by the seismic sensors contained in each node.
The Z700 system, used for seismic survey activities in waters 700 meters or less, is placed on the seabed on a long line. The nodes are attached at predetermined intervals to a line as they are moved into position onboard the vessel’s node deployment equipment. Deployment and node recovery takes place while the vessel is underway. The nodes on the line are deposited over the stern of the vessel onto the seabed in lines of varying lengths, depending upon the number of nodes required to be deployed for the survey. In order to utilize Z700 nodal technology a vessel which deploys, recovers, recharges and downloads the data collected by the Z700 nodes must be equipped with specialized equipment to operate the system designed and built by Petitioner. Typically the system consists of the following components:
• Bins to accommodate in excess of 100 kilometers of custom manufactured line.
• Conveyor assemblies used to move the nodes through the stages of storage, recharging, starting, downloading, and deployment of the Z700 nodes.
• Data Collection and Starting System (DCSS) used to charge, start, collect, and correct timing of the Z700 nodes.
• Power sheaves used to deploy and recover the line and nodes from the seabed.
The Z700 nodes may remain on the seabed for up to 15 days. The node deploying vessel recovers the nodes over the stern of the vessel employing the same system used to deploy them. The end of the Z700 node line is picked up by the vessel which then hauls in the line with nodes attached. Once aboard, the nodes are diverted to the node service area of the vessel for recharging and data extraction.
The Z3000 nodes are much larger than the Z700 nodes and are capable of being deployed to ocean depths up to 3000 meters. The system for the deployment of Z3000 nodes is different from the system used to deploy the Z700 nodes. Each Z3000 node must be individually deployed by a surface-controlled remote operating vehicle (ROV). This method of deployment requires the use of specialized equipment on board the vessel.
A vessel employing Z3000 technology will have a node storage area where the nodes are kept in storage racks, accessible to the battery charging and data recovery cables. An overhead gantry crane is utilized to lift and move the node racks to various parts of the vessel where the Z3000 nodes can be placed into a node loader ready for deployment or reloaded into the racks for return to the node storage area for recharging and data extraction. A node loader holds up to 12 nodes and can be lowered by one of the vessel’s cranes to the seabed where the nodes can be accessed by the ROV. The ROV docks to the node loader to receive “fresh” nodes or offload fully-populated nodes. The node loader, like the ROV, is a component of the Z3000 system. Its purpose is to have a number of nodes available on the seabed located close to the ROV operating area. This permits the ROV to have ready access to nodes without having to be brought back to the surface for reloading.
The ROV used for deployment of the Z3000 nodes is equipped with special tools on the ROV’s arms to handle the nodes either from the node loader or to and from the seabed. The ROV unit consists of the ROV and the ROV tether management system (“TMS”). The two components are lowered together by a heavy-duty vessel crane designed to both deploy and recover the ROV. Once the ROV and docking unit reach a predetermined depth above the seabed, the ROV undocks and moves about freely under the control of a surface operator on board the vessel. During the period of time the ROV is operating, it remains tethered to the TMS which is suspended by a cable from the crane on the vessel. As the ROV moves about the seabed, either deploying or recovering nodes, a control cable is paid out from the TMS. The ROV can carry up to twelve nodes at a time and can load additional nodes from a prepositioned node loader which has also been lowered to the operational area by another crane located on board the seismic vessel. The recovery process is accomplished by the ROV picking up the Z3000 nodes from the seabed and returning them to an empty node loader where they can be hoisted to the surface for recharging and data extraction.
The Z3000 nodes may remain on the seabed up to 60 days. The acquisition of data by the Z3000 takes place in similar fashion as that described for the Z700 nodes. A seismic source vessel traverses the locations where the nodes have been placed, discharging its compressed air guns to produce the sound waves which penetrate the seabed. The data from the reflected sound waves is then recorded by the Z3000 nodes.
Both types of nodes, the Z700 and Z3000, are a necessary part and component of the vessel’s seismic survey equipment. Without the use of the nodes, the seismic vessels could not perform their intended mission. The nodes cannot be used for their intended purpose except for the integrated vessel nodal handling system which has been designed and constructed to deploy, recover and extract seismic data from the nodes. This combination of components, including the nodes, constitutes Petitioner’s nodal seismic system. All such equipment is necessary for an ORV on which it has been installed to be able to carry out its mission as a nodal seismic survey vessel. The installation of the nodal seismic survey system on a vessel is permananet and the vessel is thereafter uses solely as a seismic survey vessel.
ISSUE
Whether the proposed operation constitutes an engagement in coastwise trade for purposes of 46 U.S.C. § 55102 and/or 46 U.S.C. § 55103?
LAW and ANALYSIS
Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.”
The coastwise laws generally apply to points in the territorial sea, which is 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. Title 46 United States Code § 55102, provides, in pertinent part:
Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via foreign port, unless the vessel—
(1) is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and
(2) has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
Pursuant to 46 U.S.C. § 55102(a), “[m]erchandise, includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material.” As such, any cargo, regardless of its value or ownership, would be considered merchandise for the purpose of 46 U.S.C. § 55102. The U.S. Customs and Border Protection (CBP) regulations promulgated under the authority of 46 U.S.C. § 55102(a), provide in pertinent part:
A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise.
19 C.F.R. § 4.80b(a).
Similarly, the coastwise law applicable to the carriage of passengers is found in 46 U.S.C. § 55103 which provides:
(a) In General. Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel-
is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and
has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
(b) Penalty. The penalty for violating subsection (a) is $300 for each passenger transported and landed.
The Customs and Border Protection (“CBP”) Regulations, promulgated under the authority of 46 U.S.C. § 55103, provide:
A passenger within the meaning of this part is any person carried on a vessel who is not connected with the operation of the vessel, her navigation, ownership, or business. 19 C.F.R. § 4.50(b).
You assert that because the vessel is engaging in oceanographic research, specifically seismic surveys, its use, as contemplated in the FACTS section above, would not constitute coastwise trade. In its interpretation of the coastwise laws with regard to the issue under consideration, CBP has long held that the use of a vessel solely to engage in oceanographic research is not considered a use in the coastwise trade. See HQ H008902 (May 17, 2007) (holding that scientists transported aboard scientific research vessel to gather data from rocks in seafloor); HQ 113461 (June 8, 1995)(scientific personnel transported by oceanographic research vessel to conduct seismic surveys); HQ 112122 (July 22, 1992)(scientists transported by survey ship to map the ocean floor); HQ 110399 (Aug. 23, 1989)(biologists and chemists transported aboard an oceanographic research vessel to collect algae and water samples). Accordingly, if such a vessel transported between coastwise points, or provided part of the transportation between coastwise points, of any persons other than the vessel crew and scientists and students engaged in the oceanographic research or any merchandise other than the usual supplies and equipment necessary for that research and/or research specimens or samples, the coastwise laws would be violated. HQ 112316 (July 22, 1992).
CBP’s interpretation of the coastwise laws as it relates to oceanographic research, in part, has been in concert with the Oceanographic Research Vessel Act, as amended, and codified at 46 U.S.C. § 2101(18); which defines an “oceanographic research vessel” as:
. . . a vessel that the Secretary finds is being employed only in instruction in oceanography or limnology, or both, or only in oceanographic or limnological research, including studies about the sea such as seismic, gravity meter, and magnetic exploration and other marine geophysical or geological surveys, atmospheric research, and biological research. (Emphasis Supplied)
See also 46 U.S.C. § 50503 (“An oceanographic research vessel (as defined in section 2101 of this title) is deemed not to be engaged in trade or commerce.”). We note that although the above-cited CBP rulings do not determine whether the vessels themselves are oceanographic research vessels under 46 U.S.C. § 2101(18), the use of the vessel or the type of vessel has been a considering factor as to whether the activities aboard those vessels constituted oceanographic research. In addition, these rulings consider the activities of the individuals transported aboard a vessel alleged to be engaged in oceanographic research.
United States Customs and Border Protection, and its predecessor agency, the Customs Service, has previously examined the question of seismic surveying as oceanographic research. In HQ 112830, dated August 12, 1993, we stated, “…vessels exclusively engaged in seismic survey research present no violation of the coastwise laws pursuant to 46 U.S.C. App. 441(1). While the list of activities which constitute “oceanographic research” contained in 46 U.S.C. App. 441(1) is not a complete list, it expressly provides that seismic surveying does not constitute trade or commerce.” Similarly, in HQ 112923, dated October 21, 1993, we held that the use of a non-coastwise-qualified vessel to engage in seismic surveying research was permissible under the coastwise laws. And, in HQ 110364, dated September 29, 1989, we determined that a non-coastwise-qualified barge vessel could be used as a seismograph vessel for research purposes in the Cooke Inlet Area of Alaska without violating the coastwise laws, based on the Oceanographic Research Vessel Act.
Notwithstanding the employment of new technology, the central function of the vessels and their associated equipment described in the FACTS section supra remains seismic marine geophysical exploration and research. While the deployment of nodes, and the equipment associated with the nodes, represents a change from the traditional method of conducting seismic surveys using a lengthy cable or array containing hydrophones to acquire seismic data, the central function remains the same. Accordingly, we are of the opinion that the activities described in the FACTS section supra constitute the type of seismic surveys contemplated in the Oceanographic Research Vessel Act and are of the sort of activities which we have previously determined to be oceanographic research of the type in which a non-coastwise-qualified vessel may engage.
HOLDING:
Under the facts herein presented, and for the reasons explained above, the proposed seismic survey activities to be performed constitute oceanographic research, and would not involve either the coastwise transportation of passengers or merchandise under 46 U.S.C. § 55102, or 46 U.S.C. § 55103. As such, a foreign-flagged, or other non-coastwise-qualified, vessel may be employed in conducting the proposed seismic survey activities.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Immigration Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection