HQ 0109817 - Operation of a drilling vessel on the outer continental shelf (OCS) - United States International Trade Commision Rulings

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HQ 109817
November 14, 1988

VES-3-15 CO:R:P:C 109817 DHR/PH

CATEGORY: CARRIER

J. Patrick Beauchamp
Phelps, Dunbar, Marks,
Claverie & Sims
400 Poydras Street
New Orleans, Louisiana 70130-3245

RE: Operation of a drilling vessel on the outer continental shelf (OCS)

Dear Mr. Beauchamp:

This is with reference to your letter of October 19, 1988, concerning the application of the coastwise laws to the activities of a mobile oil drilling vessel on the OCS.

FACTS:

It is proposed to operate a non-coastwise-qualified mobile oil drilling vessel on the OCS of the United States. The vessel will move to various locations on the OCS, anchor to the seabed and engage in drilling operations.

ISSUE:

Whether the engagement in drilling operations on the OCS by a non-coastwise-qualified mobile drilling vessel is prohibited by the coastwise laws.

LAW & ANALYSIS:

The coastwise laws (e.g., 46 U.S.C. App. 289 and 883, 46 U.S.C. 12106 and 12110) prohibit the transportation of merchandise or passengers between points in the United States embraced within the coastwise laws in any vessel other 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. A point in United States territorial waters is considered a point embraced within the coastwise laws for purposes of this provision.

Section 4(a) of the Outer Continental Shelf Lands Act of 1953, as amended (43 U.S.C. 1333(a)) (OCSLA), 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 are extended to mobile rigs during the period they are secured to or submerged onto the seabed of the OCS (Treasury Decision 54281(1)). Subsequent rulings applied the same principles to drilling platforms, artificial islands, and similar structures.

The Customs Service, in interpreting the coastwise laws, has consistently held that a vessel used solely in drilling operations is not considered to be engaged in the coastwise trade. Accordingly, the use of the non-coastwise-qualified drilling vessel under consideration solely for drilling purposes in United States coastal waters or waters over the OCS adjacent to the United States would not violate the coastwise laws, provided that the vessel carried no persons other than the usual crew and personnel engaged in the drilling operations and no merchandise other than the usual supplies and equipment necessary for the drilling operations.

As indicated in the above discussion of the applicability of the coastwise laws to the United States OCS, the drilling vessel would be considered a coastwise point while attached to the seabed of the OCS for the purpose of drilling or exploring for resources from the OCS. The vessel would be considered to be so attached to the seabed of the OCS while engaged in drilling operations and while at anchor before or after engaging in drilling at that location. Any service vessel transporting merchandise or passengers between the United States mainland or any other United States coastwise point and the vessel while it was considered to be a coastwise point would be required to be coastwise qualified.

HOLDING:

The engagement in drilling operations on the OCS by a non- coastwise-qualified mobile drilling vessel is not prohibited by the coastwise laws, provided that the drilling vessel carries no persons other than the usual crew and personnel engaged in the drilling operations and no merchandise other than the usual supplies and equipment necessary for the drilling operations.

Sincerely,

B. James Fritz
Chief,

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