HQ 114347 - Coastwise transportation; Outer Continental Shelf; Oil development and production; Thirteenth proviso; Use of crane vessel; 46 U.S.C. App. 883 - United States International Trade Commision Rulings

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HQ 114347

September 18, 1998

VES-3-RR:IT:EC 114347 LLB

CATEGORY: CARRIER

Mr. Russell W. MacKechnie, Jr.
80 Broad Street, 34th Floor
New York, New York 10004-2209

RE: Coastwise transportation; Outer Continental Shelf; Oil development and production; Thirteenth proviso; Use of crane vessel; 46 U.S.C. App. 883

Dear Mr. MacKechnie:

Reference is made to your request that this office rule upon the proposed use of a foreign-built launch barge in the movement of modular components of an oil development and production platform from a port in the United States to an established site on the Outer Continental Shelf. Our determination follows.

FACTS:

The Exxon Company, U.S.A., a division of Exxon Corporation, is proposing to engage in a large scale project to develop oil and gas reserves on the Outer Continental Shelf (OCS) of the United States. The project is to be conducted in block 945 of the so-called East Breaks area of the OCS. The site is approximately 165 miles east of Corpus Christi, Texas, and lies under 4,634 feet of water.

The project actually entails the simultaneous development of two resources located up to sixteen miles distant from one another. The primary site will be the Hoover reserve at which is located a large fluid oil reserve. The secondary element involves the Diana reserve which is primarily a reservoir of natural gas with a rim of thin fluid oil. Development of the Diana reserve may involve up to four separate drilling sites.

The deep water aspect of the project necessitates the use of one of a new generation of production platforms, known as a Deep Draft Caisson Vessel (DDCV). Two classes of structural components comprise the DDCV proposed for use in this project, a hull or "caisson" unit, and a topsides or "twin deck platform" unit.

The caisson is a cylindrical steel structure of 705 feet in length, 122 feet in diameter, and 38,000 short tons in weight. It is being manufactured in Finland in two longitudinal sections. The two sections will be transported in separate movements by vessel from the construction yard to a Gulf port shipyard in the United States where they will be joined together as a single unit. Once joined together, the caisson will be ready for towing from the port location in the United States to the production site on the OCS, which location is considered to be a coastwise point. The movement will be by means of a wet tow and will be accomplished with the use of some eight to ten coastwise-documented towing vessels.

The topsides element will consist of two large deck modules, each weighing 7,800 short tons. The deck modules will be constructed in Houston, Texas. These modules, unlike the caisson, are not suitable for wet towing and must travel by vessel from the shore facility to the production site. In order to be so transported, the company wishes to engage the services of one of two large capacity non-coastwise-qualified launch barges, either the S-44 or the INTERMAC 650. Each of the named barges has a launch capacity of greater than 12,000 long tons.

Following arrival of the caisson and topsides components at the site, it is proposed to engage a non-coastwise-qualified deep draft crane vessel known as the SSCV S-7000. This vessel, which has two 7,700 ton cranes, is the largest vessel of its type in the world. The crane would be used to place the deck modules upon the caisson which by that time would already have been secured to the deep seabed by an elaborate mooring system. The crane vessel would remain dynamically positioned during the transfer process, and the modules would be placed on the caisson by movement of the cranes only, and not by movement of the crane vessel.

ISSUE:

Whether approval may be obtained under the terms of the thirteenth proviso to the so-called Jones Act, for the transportation of two deck modules or "topsides" from a port in the United States to a coastwise point on the Outer Continental Shelf of the United States by means of a non-coastwise-qualified launch barge. Further, whether a non-coastwise-qualified crane vessel may be utilized to accomplish final placement of the modules on to an anchored caisson at the site.

LAW AND ANALYSIS:

Section 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. 883, often called the Jones Act), provides, in pertinent part, that:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to 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 other vessel 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 883 was amended by the Act of June 7, 1988 (Public Law 100-329; 102 Stat. 588). Among other things, Public Law 100-329 added the so-called launch barge amendment or thirteenth proviso. Under this proviso:

The transportation of any platform jacket in or on a launch barge between two points in the United States, at one of which there is an installation or other device within the meaning of section 1333(a) of Title 43, shall not be deemed transportation subject to this section if the launch barge has a launch capacity of 12,000 long tons or more, was built as of June 7, 1988, and is documented under the laws of the United States, and the platform jacket cannot be transported on and launched from a launch barge of lesser launch capacity that is identified by the Secretary of Transportation and is available for such transportation.

Section 4(a) of the Outer Continental Shelf Lands Act of 1953, as amended (67 Stat. 462; 43 U.S.C. 1333(a)) (OCSLA), provides, in pertinent 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 located within a State.

Under this provision, Customs has 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 United States OCS. The same principles have been applied to drilling platforms, artificial islands, and similar structures attached to the seabed of the OCS for the purpose of resource exploration operations, including warehouse vessels anchored over the OCS when used to supply drilling rigs on the OCS.

By C.S.D. 89-115, the transportation of the separate hull and deck components of a Tension Leg Platform on a foreign-built launch barge from coastwise points to offshore launch points was permitted, so long as the barge used had a launch capacity of 12,000 long tons or more, was built as of June 7, 1988, was documented under U.S. law, and otherwise met the requirements of the thirteenth proviso. Determinations as to the ultimate qualification of a vessel under the terms of the proviso are within the jurisdiction of the United States Maritime Administration (MARAD). Their counsel must be sought as to whether, as required by the statute, the transportation might be accomplished with the use of a vessel of lesser capacity, and whether such a vessel might be available. This office contacted MARAD and made all materials available to that agency.

On September 18, 1998, Customs received correspondence from the Maritime Administration (MARAD) which presented the views and findings of that agency. The purpose of the review conducted by MARAD was twofold. First, the materials were reviewed for the purpose of determining whether the proposed transportation might be safely conducted by any known vessels which are documented for engagement in the coastwise trade. Secondly, MARAD undertook to conduct a survey of the operators of qualified vessels in order to determine whether any qualified launch barges might be made available for the stated employment. The results of these efforts on the part of MARAD are a finding favorable to Exxon Company, U.S.A., the applicant in this matter.

Customs has held that the use of a non-coastwise-qualified crane vessel to load and unload cargo is not coastwise trade and does not violate 46 U.S.C. App. 883, provided, that any movement of articles 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 (see Ruling Letter 111446). However, movement of articles while they are aboard the crane vessel or suspended from the crane, including movements only between two points within a harbor, which is neither necessary nor incidental to a lifting operation by the crane would constitute coastwise transportation of merchandise within the purview of 46 U.S.C. App. 883. In the present matter it is stated that the crane vessel will remain stationary during actual lifting and setting operations. In light of these facts, we find that the proposed lifting and setting operation is permissible under 46 U.S.C. App. 883.

HOLDING:

Following a thorough review of the facts as well as analysis of the law and applicable precedent, and in accord with the findings of the United States Maritime Administration, we have determined that the vessels proposed for use in the transportation and assembly operations described in the Facts portion of this ruling may be employed without incurring a violation of 46 U.S.C. App. 883.

Sincerely,

Jerry Laderberg
Chief
Entry Procedures and Carriers

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