HQ 0109833 - Applicability of the coastwise laws to stationary vessel to be used as an oil storage facility while anchored next to an oil well, eight miles off the Coast of Texas - United States International Trade Commision Rulings

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HQ 109833
November 30, 1988

VES-3-21-CO:R:P:C 109833 LLB

CATEGORY: CARRIER

Ms. Jeri L. Jordan
United Texas Corporation
Post Office Box 22763
Houston, Texas 77227

RE: Applicability of the coastwise laws to stationary vessel to be used as an oil storage facility while anchored next to an oil well, eight miles off the Coast of Texas

Dear Ms. Jordan:

Reference is made to your letter of October 27, 1988, in which you request that we rule upon the proposed use of a non- coastwise-qualified vessel to act as a stationary oil storage facility while anchored next to a producing oil well located off the Texas Coast.

FACTS:

A 326 net ton Honduran-flag tanker vessel the M/T MARK III, has been purchased for the purpose of anchoring it next to an oil well owned by the vessel owner. It is planned to "produce oil into the tanker for storage" from the adjacent well which is located eight miles off the Coast of Texas. For the purpose of this ruling it is assumed that the stored oil will be removed and transported to either foreign or domestic ports by other vessels.

ISSUE:

Whether the coastwise laws are violated when a non- coastwise-qualified tanker vessel is anchored next to, and receives oil for purpose of storage from, a producing oil well located eight miles off the Texas Coast.

LAW AND ANALYSIS:

Title 46, United States Code App., section 883 (46 U.S.C. App. 883) in pertinent part, 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 persons who are citizens of the United States.

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 U.S. 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, or any such installation or other device (other than a ship or vessel) for the purpose of transporting such resources, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State...

The Customs Service consistently has held that the use of a foreign-flag vessel as a storage facility does not violate the coastwise laws, or any other law administered by the Customs Service, provided that the vessel remains stationary. Customs also has held that if the vessel is being loaded or unloaded and must be moved to another location because of stress of weather or other reason involving the vessel's safety, subsequently is returned to the same point to continue its loading or unloading, and loads or unloads no merchandise at any other point in the United States, the coastwise laws are not violated.

Although the vessel will not be engaging in coastwise trade while in operation as a stationary storage facility, the point should be made that by virtue of its being anchored next to and receiving petroleum products from an oil well located on the outer Continental Shelf, the vessel itself will become a coastwise point through operation of the OCSLA. The practical effect of this fact is that any vessel moving merchandise (including oil products) or passengers between the storage vessel and another coastwise point (in either direction), must itself be documented for the coastwise trade.

HOLDING:

The use of a stationary non-coastwise-qualified storage vessel does not violate the coastwise laws administered by the Customs Service.

Sincerely,

B. J. Fritz

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