HQ 0111103 - Coastwise; Drilling; Dredging; Construction; Territorial Waters; Outer Continental Shelf; 46 U.S.C. App. 883; 46 U.S.C. App. 292; 43 U.S.C. 1333. - United States International Trade Commision Rulings

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HQ 111103

August 8, 1990

VES-3-06/3-15 CO:R:P:C 111103 JBW

CATEGORY: CARRIER

W. H. Boland, Jr.
Captain, United States Coast Guard
Officer in Charge, Marine Inspection
455 Commercial Street
Boston, Massachusetts 02109-1045

RE: Coastwise; Drilling; Dredging; Construction; Territorial Waters; Outer Continental Shelf; 46 U.S.C. App. 883; 46 U.S.C. App. 292; 43 U.S.C. 1333.

Dear Captain Boland:

This letter is in response to your inquiry of June 5, 1990, regarding the use of a non-coastwise-qualified Mobile Offshore Drilling Unit (MODU) on a project located in Boston Harbor.

FACTS:

In your letter, you state that your office has received a proposal that will involve the use of a foreign-flag MODU on a project to install effluent diffusers in Boston Harbor at a point approximately 9.5 miles off the coast of Massachusetts. The MODU is a non-self-propelled drill barge attached to the seabed that will be used for construction purposes only, not oil or gas exploration. From a telephone call with Lieutenant Commander Fink of your office, we learned that the barge will also be engaged in dredging operations. You state that the activity will take place in United States waters within the Boundary Line as defined in 46 C.F.R. Part 7. Because of the proximity of the operation to the territorial limits, we will also analyze the activity for its compliance with laws administered by the Customs Service that are applicable beyond the territorial waters of the United States.

ISSUE:

Whether the coastwise laws prohibit the use of a non- coastwise-qualified stationary platform or barge for drilling or dredging that is not related to natural resource exploration or extraction in territorial waters or on the outer continental shelf.

LAW AND ANALYSIS:

The coastwise laws of the United States prohibit the transportation of merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built and documented under the laws of the United States and owned by persons who are citizens of the United States. (46 U.S.C.A. App. 883 (West Supp. 1990), referred to as "the Jones Act"). Likewise, the dredging statute 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." 46 U.S.C. App. 292 (Supp. III 1985). Generally, the coastwise laws and the dredging laws include points within the territorial waters of the United States, which consist of the territorial sea, defined as the belt, three nautical miles wide, adjacent to coast of the United States and seaward of the territorial sea baseline.

The Customs Service has consistently held that a non- coastwise-qualified vessel used as a moored facility within territorial waters does not engage in the coastwise trade and consequently does not violate the coastwise laws provided that the vessel remains stationary. E.g., C.S.D. 89-107, 23 Cust. B. & Dec., No. 44, 8, 9 (1989). Thus, the use within territorial waters of a foreign-registered stationary MODU for construction operations does not violate the coastwise laws.

In our interpretation of 46 U.S.C. App. 292, we have ruled that dredging in the United States is prohibited to any foreign-built dredging vessel except those named in section 2 of the Act of May 28, 1906 (34 Stat. 204). C.S.D. 85-11, 19 Cust. B. & Dec. 509, 511-513 (1985). However, a dredging vessel built in the United States, but documented under a foreign-flag may engage in dredging in the United States. Id. From the information provided, we cannot determine conclusively that the foreign-flag MODU is eligible to be engaged in dredging in the United States.

Pursuant to Section 4(a) of the Outer Continental Shelf Lands Act of 1953 (OCSLA), as amended, 43 U.S.C. 1333(a) (1982), the Customs Service has ruled that the coastwise laws are extended to mobile oil drilling rigs during the period they are secured to or submerged onto the seabed of the Untied States outer continental shelf. T.D. 54281(1), 92 Trace. Dec. 8 (1957); see also, C.S.D. 89-115, 23 Cust. B. & Dec., No. 45, 7, 13-14 (1989). The Customs Service has applied this principle 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, including warehouse vessels anchored over the outer continental shelf when used to supply drilling rigs on the outer continental shelf. Id. However, the OCSLA does not extend jurisdiction to activities wholly unrelated to the exploration, development, or production of natural resources on the seabed of the outer continental shelf. 106 Mile Transport Associates v. Koch, 656 F. Supp. 1474, 1482 (S.D.N.Y. 1987). Therefore, if the proposed construction activities will take place beyond territorial waters, then they would not fall within the jurisdictional ambit of the OCSLA. The use of an MODU secured to the seabed for construction activities on the outer continental shelf consequently would not be subject to the coastwise laws.

The Customs Service has furthermore held that 46 U.S.C. App. 292 applies to certain dredging operations on the outer continental shelf in support oil and gas resource exploration. C.S.D. 85-11. The application of the dredging statute, however, extends only to those operations that are in furtherance of the extraction of, the exploration for, or the development of resources from the outer continental shelf. Headquarters Ruling Letter 109016, dated July 22, 1987. The dredging activities described in your letter do not appear to meet the requirements of the OCSLA, and, consequently, 46 U.S.C. App. 292 would not prohibit the dredging by a foreign-built vessel on the outer continental shelf.

We note that although the MODU under consideration will not be engaging in the coastwise trade while in operation as a stationary construction facility either within or beyond the territorial waters, the vessel itself will become a coastwise point if within territorial waters. C.S.D. 89-107. Therefore, any vessel moving merchandise or passengers between the stationary platform and another coastwise point must be documented for the coastwise trade. 46 U.S.C. App. 289 & 883 (1982). Furthermore, United States law requires that a coastwise-qualified vessel tow the vessel under consideration between coastwise points. 46 U.S.C.A. App. 316(a) (West Supp. 1990).

Finally, we add that 46 U.S.C.A. App. 883 requires that the transportation of the dredged material be effected by a coastwise-qualified vessel. Public Law 100-329 expanded the definition of coastwise trade in 46 U.S.C.A. App. 883 to include:
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 with the Exclusive Economic Zone 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 with the Exclusive Economic Zone.

46 U.S.C.A. 883. From this section, the movement of dredged material would constitute an engagement in the coastwise trade unless the dredged material is brought beyond the 200 mile exclusive economic zone.

HOLDING:

The coastwise laws do not prohibit the use of a non- coastwise-qualified stationary platform or barge used for construction activities within or beyond the territorial waters of the United States. If within territorial waters, the vessel itself becomes a coastwise point. Only coastwise-qualified vessels may transport merchandise and passengers between the platform and another coastwise point. Likewise, coastwise- qualified vessels must be used to tow the vessel between coastwise points.

The dredging laws prohibit the use of foreign built vessels from engaging in dredging activities within the territorial waters of the United States. If the vessel is built in the United States, but documented under a foreign-flag, then it may engage in dredging activities. If the dredging will take place beyond territorial waters, then the dredging statute does not apply, for the vessel is not engaged in resource extraction or exploration. However, transportation of the dredged materials within the territorial waters or the exclusive economic zone must be by a coastwise-qualified vessel.

Sincerely,

B. James Fritz
Chief

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