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HQ 113439





May 18, 1995

VES-3/VES-3-02/VES-3-15/VES-10-03-R:IT:C 113439 GOB

CATEGORY: CARRIER

Andrew Podolnick, Esq.
Senior Counsel
Law Department
Chevron U.S.A. Production Co.
935 Gravier Street
New Orleans, LA 70112

RE: 46 U.S.C. App. 289, 316(a), 883; Coastwise transportation; Towing; Outer continental shelf

Dear Mr. Podolnick:

This is in response to your letter dated May 5, 1995.

FACTS:

You state as follows:

Chevron U.S.A. Production Company is exploring the possibility of using a modified semisubmersible drilling vessel operating under foreign flag in its offshore drilling and producing operations. The unit would be used under the following conditions:

1. The non-self-propelled unit will be towed to a surface location at the Outer Continental Shelf.

2. The unit will be anchored at that location where it will drill approximately 12 wells.

3. The unit will not be used for drilling or producing operations at any other location.

4. Upon completion of drilling operations, commercial wells will be produced from the unit. Oil and gas, or both, produced from these wells will be transported to locations in the United States by regulated pipeline.

You stated telephonically that there is no structure or fixture of any kind at the location on the outer continental shelf. You further stated that the semisubmersible drilling vessel ("the vessel") will not transport any materials other than its equipment. Additionally, the vessel will not transport any individuals other than crewmembers or individuals associated with the work of the vessel.

You also asked telephonically that we address the situation of the vessel moving to another surface location on the outer continental shelf after it has completed its work at the first location.

ISSUE:

Whether the proposed activity may be accomplished in compliance with the coastwise laws.

LAW AND ANALYSIS:

Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States.

The coastwise laws generally apply to points in the territorial sea, which is defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline.

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, documented under the laws of, and owned by citizens of the United States.

The coastwise law applicable to the carriage of passengers is found in 46 U.S.C. App. 289 and provides that:

No foreign vessel shall transport passengers between ports or places in the United States, either directly or by way of a foreign port, under a penalty of $200 for each passenger so transported and landed.

Section 4.50(b), Customs Regulations (19 CFR 4.50(b)) states as follows:

A passenger within the meaning of this part is any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business.

46 U.S.C. App. 316(a) prohibits the use of a non-coastwise-qualified vessel to tow any vessel, other than a vessel in distress, between ports or places in the United States embraced within the coastwise laws, either directly or by way of a foreign port, or to do any part of such towing, or to tow any such vessel between points in a harbor 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 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 that principle to drilling platforms, artificial islands, and similar structures, as well as to devices attached to the seabed of the outer Continental Shelf for the purpose of resource exploration operations.

After a consideration of this matter we make the following determinations based on the facts presented.

The vessel is not engaged in the transportation of merchandise between coastwise points. Vessel equipment of the transporting vessel is not considered merchandise within the meaning of 46 U.S.C. App. 883. We note, however, that after the vessel is anchored on the outer continental shelf, the vessel itself becomes a coastwise point. Accordingly, any merchandise, including equipment for the anchored vessel, which is transported from a coastwise point to the anchored vessel (also a coastwise point), must be transported on a coastwise-qualified vessel.

The vessel is not engaged in the transportation of passengers between coastwise points. The facts indicate that no individuals other than those individuals connected with the operation, ownership, navigation, or business of the vessel are being transported. We note, however, that inasmuch as the vessel itself becomes a coastwise point after it is anchored on the outer continental shelf, any passengers
transported from a coastwise point to the anchored vessel (also a coastwise point) must be transported on a coastwise-qualified vessel. Individuals who are to be crewmembers or workers on the anchored vessel, who are not connected with the operation, navigation, ownership, or business of the transporting vessel, would be considered passengers on the transporting vessel.

The drilling and producing operations are not an engagement in coastwise trade.

The transportation of oil and gas by regulated pipeline is not coastwise trade.

Inasmuch as there are no structures of any kind at the surface location, such location is not a coastwise point until the vessel is anchored at that location. Accordingly, 46 U.S.C. App. 316(a) does not apply to the towing of the vessel from a U.S. point to the surface location on the outer continental shelf.

There is no prohibition in the coastwise laws with respect to the movement of the vessel from the first location to a second surface location on the outer continental shelf provided that (a) no merchandise or passengers are transported on the vessel; or (b) there is no structure of any kind at the second location.

HOLDING:

As detailed supra, and based on the facts and conditions set forth supra, the proposed activity may be accomplished in compliance with the coastwise laws.

Sincerely,

Arthur P. Schifflin
Chief

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