United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1990 HQ Rulings > HQ 0087425 - HQ 0109366 > HQ 0109081

Previous Ruling Next Ruling

---

HQ 109081

May 12, 1988

VES 3-14 CO:R:P:C 109081 BEW

CATEGORY: CARRIER

Dr. David H. Grover
Maritime Information Associates
677 Rio Vista Drive
Napa, California 94558

RE: Applicability of 46 U.S.C. App. 292 and 883 to the exploration for, or the extraction of, resources from the outer Continental Shelf outside the United States territorial waters.

Dear Dr. Grover:

This is in reference to your correspondence of July 28, 1987, in which you requested an interpretation of the legality of the use of foreign-built dredges or mining vessels for mining on the United States outer Continental Shelf.

FACTS:

You state that the mining would be conducted 10 miles off the North Carolina coast, and that the operation would involve hydraulic suction dredging of material which would be placed on barges for transport ashore. You state that the mining vessel would be foreign-built and documented as an American flag vessel and that barges and tugs which would be used in the operation would be built and documented in the United States. You further state that while the vessel may use techniques associated with dredging and may be identified as a dredge, you would in fact be mining for phosphate ore on the outer Continental Shelf. You also state that while you may be using a foreign-built American-flag vessel, the vessel would only enter the port for refuel and resupply.

It is requested that we rule on the following issues:

ISSUES:

1. Whether a foreign-built dredge documented in the United States may engage in dredging in the United States.

2. Whether the use of a foreign-built dredge documented as an American-flag vessel for mining phosphate ore on the outer Continental Shelf is an engagement in dredging in the United States for the purposes of 46 U.S.C. App. 292.

3. Whether the transportation of dredged phosphate ore from a dredging site on the outer Continental Shelf to a United States port is coastwise transportation.

LAW AND ANALYSIS:

Section 1 of the Act of May 28, 1906 (34 Stat. 204; 46 U.S.C. App. 292), provides that "a foreign-built dredge shall not, under penalty of forfeiture, engage in dredging in the United States unless documented as a vessel of the United States." In our interpretation of this statute, we have ruled that dredging in the United States is prohibited to any foreign-built dredging vessel except one of those named in section 2 of the 1906 Act (see Customs Service Decision (C.S.D.) 85-11).

For purposes of 46 U.S.C. App. 292, dredging in the United States includes dredging in United States territorial waters, generally defined as the belt, 3 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline, and certain dredging on the United States outer Continental Shelf outside territorial waters (see C.S.D. 85-11).

In our application of 46 U.S.C. App. 292, we have long held that "dredging," for purposes of that statute, means the use of a vessel equipped with excavating machinery in digging up or otherwise removing submarine mineral. In the absence of other information, it appears that the mining vessel or dredge you describe would meet this definition and we so assume for purposes of this ruling.

You inquire as to whether a foreign-built dredge documented under the laws of the United States may engage in dredging 10 miles off the coast of North Carolina. As stated above, it is the position of the Customs Service that the prohibition in 46 U.S.C. App. 292 relates to build, and not to the documentation of a dredge. Accordingly, even though a foreign-built dredge has been documented as a vessel of the United States, it would be prohibited by 46 U.S.C. App. 292 from engaging in dredging in the United States.

With regard to the applicability of section 292 to the outer Continental Shelf, we have held that the statute only applies with regard to dredging on the outer Continental Shelf for the purposes described in section 4(a) of the Outer Continental Shelf Lands Act of 1953, as amended (43 U.S.C. 1333(a)) (OCSLA). That statute provides, in pertinent 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 located within a State."

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 outer Continental Shelf. We have applied the same principles to drilling platforms, artificial islands and similar structures, as well as devices attached to the seabed of the outer Continental Shelf for the purpose of resource exploration operations. We have not, to this date, ruled on the applicability of the coastwise laws and other Customs and navigation laws to the exploration for, development or production of, resources other than petroleum related resources.

"Exploration," "development," and "production" are generally defined under the OCSLA to include the process of searching for minerals, the activities which take place following discovery of minerals, and those activities which take place after the successful completion of any means for the removal of minerals from the outer Continental Shelf. The term "minerals" includes oil, gas, sulphur, geopressured-geothermal and associated resources, and all other minerals which are authorized by an Act of Congress to be produced from "public lands" as defined in 43 U.S.C. 1702 (43 U.S.C. 1331)(k), (l),

It is clear that the OCSLA was intended to apply to the exploration for, development or production of resources other than petroleum related resources. This position is consistent with judicial interpretations of the OCSLA.

In Guess v. Read, C.A. La. 290 F.2d 622, 625 (1961), cert. denied 386 U.S. 957, 82 S.Ct. 394, 7 L.Ed.2d 388 (1962), the Court held that "[t]he Continental Shelf Act was enacted for the purpose, primarily, of asserting ownership of and jurisdiction over the minerals in and under the Continental Shelf." In Treasure Salvors Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, C.A. Fla. 1978, 569 F.2d 330, 339, the Court held that, "(t)he structure of the Act itself, which is basically a guide to the administration and leasing of offshore mineral-production properties, reinforces this conclusion." The Court said that "[t]he Act consists almost exclusively of specific measures to facilitate exploitation of natural resources on the continental shelf." The Court noted that the interpretations of the Convention of the Continental Shelf and the Act by legal scholars have, with remarkable accord, reached the same conclusion regarding the nature of control of the United States over the Continental Shelf.

In CSD 85-11 (referred to above) we ruled that 46 U.S.C. App. 292 applied to certain dredging on the outer Continental Shelf in support of oil and gas resource exploration operations. In our Case No. 109016, March 22, 1987, we ruled that the prohibition against dredging on the outer Continental Shelf extends only to those operations which are in furtherance of the extraction of or the exploration for, or the development or production of, resources from the outer Continental Shelf. The OCSLA does apply to the exploration for, development or production of minerals, in addition to petroleum related resources, from the outer Continental Shelf. Accordingly, we find that the described mining of the phosphate ore from the seabed of the outer Continental Shelf outside the territorial waters of the United States would constitute dredging in the United States for purposes of 46 U.S.C. App. 292. Therefore, the engagement of a foreign-built, United States-flag mining vessel or dredge for such exploration of phosphate ore would be prohibited.

Among navigation laws other than section 292 which Customs interprets and enforces is the so-called Jones Act (41 Stat. 999; 46 U.S.C. App. 883). This statute prohibits the transportation of merchandise 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 a vessel built in and documented under the laws of the United States and owned by citizens of the United States (see also 46 U.S.C. App. 316a, the coastwise towing statute).

While we have held that the act of dredging is not, itself, deemed to be coastwise trade, we have consistently held that "merchandise" for the purpose of 46 U.S.C. App. 883, includes anything of commercial value. In applying this statute to the transportation of the mining resource exploited from the outer Continental Shelf to a coastwise port, we have consistently ruled that the use of a foreign vessel for such transportation would be prohibited under the statute. However, transportation of the mining resources by coastwise qualified barges and tugs would be permitted under the provisions of section 883 and 316(a).

In addition to the above cited statutes, you attention is directed to Presidential Proclamation 5030 of March 10, 1983, whereby the President of the United States proclaimed an Exclusive Economic Zone of the United States of America, and to the Deep Seabed Hard Mineral Resources Act (Public Law 96-283, 94 Stat. 553, 30 U.S.C. 1401 et seq.).

HOLDINGS:

1. A foreign-built dredge documented in the United States may not engage in dredging in the United States.

2. The use of a foreign-built dredge documented as an American-flag vessel for mining for minerals, including phosphate ore, on the outer Continental Shelf is an engagement in dredging in the United States for the purposes of 46 U.S.C. App. 292.

3. The transportation of the dredged phosphate ore from a dredging site on the outer Continental Shelf to a United States port is coastwise transportation which may only be effected by coastwise qualified vessels.

EFFECT ON OTHER RULINGS:

None.

Edward T. Rosse
Acting Director, Regulatory
Procedures and Penalties Division

CO:R:P:C:BEWhiting:4/20/88:retyped:5/6/88


Previous Ruling Next Ruling