HQ 0111175 - Coastwise Trade; Jack-up Derrick Barge; Documentation; 46 U.S.C. App. 289, 883; 46 U.S.C. 12105, 12106 - United States International Trade Commision Rulings

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HQ 111175

September 5, 1990

VES-3-06-CO:R:P:C 111175 GV

CATEGORY: CARRIER

Darrell L. Evans
President
Judd Development Company, Inc.
19627 145 N., Ste. 200
Spring, Texas 77388

RE: Coastwise Trade; Jack-up Derrick Barge; Documentation; 46 U.S.C. App. 289, 883; 46 U.S.C. 12105, 12106

Dear Mr. Evans:

This is in reference to your letter dated July 17, 1990, enclosing correspondence and information that has been sent to the U.S. Coast Guard regarding the documentation of the EAGLE I under the U.S. flag.

FACTS:

Judd Development Company, Inc. ("Juddco"), the operator of the EAGLE I, on behalf of Riggers Manufacturing Company (the owner), is requesting that the EAGLE I be documented under the U.S. flag. The EAGLE I is a 600 ton, heavy lift, jack-up derrick rig which was originally built in Germany but has undergone various rebuilding and modification operations (specifications provided) in the United States. We note that Juddco's letter to the U.S. Coast Guard, dated June 12, 1990, requests that the vessel be issued a certificate of documentation with a coastwise endorsement whereas their letter of July 17,1990, to Customs requests a certificate of documentation with a registry endorsement.

ISSUE:

Whether a foreign-built, 600 ton, heavy lift, jack-up derrick rig that has undergone several rebuilding and modification operations in the United States may be documented under the laws of the United States with either a coastwise or registry endorsement.

LAW AND ANALYSIS:

Generally, the laws referred to as the coastwise laws (e.g., 46 U.S.C. App. 289 and 883, and 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 by any vessel other than a vessel built in, properly documented under the laws of, and owned by citizens of the United States (i.e., a coastwise-qualified vessel). 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.

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.

It has long been the position of the Customs Service that the use of a non-coastwise-qualified crane or derrick vessel to load and unload cargo or to construct or dismantle a marine structure is not coastwise trade and does not violate 46 U.S.C. App. 883, provided, that any movement of merchandise is effected exclusively by the operation of the crane and not by movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. Movement of merchandise while it is suspended from a crane on a crane or derrick vessel, even if such movement is only between two points within a harbor, which is effected by a movement of the vessel which is neither necessary nor incidental to the lifting operation would constitute coastwise transportation of merchandise within the purview of 46 U.S.C. App. 883.

Although Customs determines whether an activity constitutes an engagement in the coastwise trade as discussed above, the documentation of vessels under the laws of the United States is solely within the jurisdiction of the U.S. Coast Guard. Furthermore, in regard to the rebuilding or modification of foreign-built vessels, it should be noted that whether such work done to a vessel of 5 net tons or greater is sufficient for it to be considered coastwise-qualified is also a determination of the U.S. Coast Guard. This determination is dependent upon whether that agency considers the vessel to be "built in the United States" as that term is defined in Section 67.09-3, Coast Guard Regulations (46 CFR 67.09-3).

Accordingly, whether the EAGLE I could be issued a certificate of documentation with either a coastwise or registry endorsement is within the jurisdiction of the U.S. Coast Guard. We defer to that agency's determination in this matter.

HOLDING:

Whether a foreign-built, 600 ton, heavy lift, jack-up derrick rig that has undergone several rebuilding and modification operations in the United States may be documented under the laws of the United States with either a coastwise or registry endorsement is within the jurisdiction of the U.S. Coast Guard.

Sincerely,

B. James Fritz

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