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HQ 111126


August 16, 1990

VES-3-15/16-CO:R:P:C 111126 GV

CATEGORY: CARRIER

Mr. Mike Bletsch
Bletsch Steamship Company
1314 Texas Ave., Suite 1306
Houston, Texas 77002

RE: Coastwise Trade; Pipe-laying; Towing; OCS; 46 U.S.C. App. 883; 46 U.S.C. App. 316(a); 43 U.S.C. 1333(a)

Dear Mr. Bletsch:

This is in response to your facsimile transmission dated June 20, 1990, requesting a ruling regarding a project proposal of your company. Our ruling is set forth below.

FACTS:

Your company proposes to use a foreign-flag pipe-laying barge approximately 100 miles off the coast of Louisiana. You ask four questions regarding this proposed transaction:

1. Is a foreign-flag pipe-laying barge allowed to lay pipe on the United States outer continental shelf?

2. Do all vessels (crew boats, barges, supply vessels) transporting personnel or equipment from a U.S. port to the barge have be U.S.-flag?

3. Can a foreign-flag tug boat be used to tow the barge during the pipe-laying operation in the Gulf of Mexico and can it be used for anchor handling purposes for the foreign-flag barge?

4. Would a foreign-flag supply vessel be able to deliver equipment or supplies direct from foreign to the barge while in international waters 100 miles offshore Louisiana?

ISSUES:

1. Whether a foreign-flag barge may engage in the laying of pipe on the United States outer continental shelf without violating 46 U.S.C. App. 883.

2. Whether support vessels (crew boats, barges, supply vessels) transporting personnel or equipment from a U.S. port to a barge laying pipe on the United State outer continental shelf must be coastwise-qualified pursuant to 46 U.S.C. App. 289 and 883.

3. Whether a foreign-flag tug boat may be used to tow a barge during a pipe-laying operation in the Gulf of Mexico and for anchor handling purposes without violating 46 U.S.C. App. 316(a), 289 and 883.

4. Whether a foreign-flag supply vessel may deliver equipment or supplies direct from foreign to a pipe-laying barge in international waters without violating 46 U.S.C. App. 883.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, section 883 (46 U.S.C. App. 883), the coastwise merchandise statute often called the "Jones Act"), provides in part, that no merchandise shall be transported 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 (i.e., a coastwise-qualified vessel).

Title 46, United States Code Appendix, section 289 (46 U.S.C. App. 289, the passenger coastwise statute), prohibits the transportation of passengers between points embraced within the coastwise laws of the United States, either directly or by way of a foreign port, in a non-coastwise-qualified vessel. Pursuant to section 4.50(b), Customs Regulations (19 CFR 4.50(b)) a "passenger" for purposes of section 289 is defined as "any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership or business."

Title 46, United States Code Appendix, section 316(a) (46 U.S.C. App. 316(a), the coastwise towing statute) prohibits the use of a non-coastwise-qualified vessel to tow any vessel other than a vessel in distress, from any point or place embraced within the coastwise laws of the United States to another such port or place, or for any part of such towing.

Points embraced within the coastwise laws include all points within the territorial waters of the United States, including points within a harbor. The territorial waters of the United States consist of the territorial sea, defined as the belt, 3 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline.

Furthermore, section 4(a) of the Outer Continental Shelf Lands Act of 1953, as amended (43 U.S.C. 1333(a)) (OCSLA), provides, in 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 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 (OCS). 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.

In regard to the first issue under consideration, Customs has long-held that the use of a vessel solely in laying pipe is not considered a use in the coastwise trade of the United States, even when the pipe is laid between two points in the United States embraced within the coastwise laws. Accordingly, the use of a foreign-flag barge to lay pipe on the OCS would not violate 46 U.S.C. App. 883.

In regard to the second issue under consideration, in view of the fact that the barge in question would be used for pipe- laying purposes and not for the purpose of "exploring for, developing, or producing resources" from the OCS, it is not considered "attached" to the seabed as that term is used in the OCSLA and therefore not a coastwise point. Accordingly, support vessels transporting personnel or equipment from a U.S. port to the barge laying pipe on the OCS are not required to be coastwise-qualified pursuant to 46 U.S.C. App. 289 and 883.

In regard to the third issue under consideration, a foreign- flag tug may be used to tow the subject barge during the pipe- laying operation in the Gulf of Mexico provided it does not tow the barge between two points embraced within the coastwise laws (see discussion above as to what constitutes a coastwise point including points attached to the OCS). Furthermore, Customs has ruled that the use of a foreign-flag tug to move anchors for vessels, whether the vessels are in territorial waters or waters over the OCS, does not violate the coastwise laws since anchor handling is not considered to constitute coastwise trade.

In regard to the fourth issue under consideration, the coastwise laws would not prohibit a foreign-flag supply vessel from delivering equipment or supplies direct from foreign to the
barge (not considered a coastwise point as discussed above) while in international waters 100 miles offshore Louisiana. We reiterate, however, that under section 4(a) of the OCSLA, the Customs and navigation laws, including the coastwise laws, the laws on entrance and clearance of vessels, and the provisions for dutiability of merchandise, are extended mobile rigs during the period they are secured to or submerged onto the seabed of the OCS (Treasury Decision 54281(1), copy enclosed). Subsequent rulings applied the same principles to drilling platforms and production platforms, artificial islands, and other installations and devices attached to the OCS for any of the requisite purposes.

HOLDINGS:

1. A foreign-flag barge may engage in the laying of pipe on the United States outer continental shelf without violating 46 U.S.C. App. 883.

2. Support vessels (crew boats, barges, supply vessels) transporting personnel or equipment from a U.S. port to a barge laying pipe on the United States outer continental shelf is not required to be coastwise-qualified pursuant to 46 U.S.C. App. 289 and 883.

3. A foreign-flag tug boat may be used to tow a barge during a pipe-laying operation in the Gulf of Mexico provided the tow is not between two coastwise points, and may be used for anchor handling purposes, without violating 46 U.S.C. App. 316(a), 289 and 883.

4. A foreign-flag supply vessel may deliver equipment or supplies direct from foreign to a pipe-laying barge operating in international waters on the United States outer continental shelf without violating 46 U.S.C. App. 883.

Sincerely,

B. James Fritz

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