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HQ 115069

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June 14, 2000

VES-10-03-RR:IT:EC 115069 GEV

CATEGORY: CARRIER

Harold E. Mesirow, Esq.
Robins, Kaplan, Miller & Ciresi L.L.P.
1801 K Street, N.W.
Suite 1200
Washington, D.C. 20006-1301

RE: Towing; Outer Continental Shelf Lands Act; 46 U.S.C. App.

Dear Mr. Mesirow:

This is in response to your letter dated June 8, 2000, on behalf of your client, Global Marine Drilling Company (the “Company”), requesting a ruling regarding the applicability of 46 U.S.C. App. § 316(a) to a proposed towing operation by a foreign-flag vessel. Pursuant to your request, your letter is being given expedited consideration as provided in § 177.2(d), Customs Regulations (19 CFR § 177.2(d)).

FACTS:

The Company, a U.S. drilling contractor headquartered in Houston, Texas, owns and operates a specially designed Arctic drilling unit (a Concrete Island Drilling System known as the “CIDS”) which currently is moored in U.S. waters on the U.S. Outer Continental Shelf (“OCS”) in Alaska (at latitude 70 degrees 2.57 minutes north, longitude 144 degrees 55.03 minutes west). The CIDS is designed as a self-contained mobile offshore drilling unit (“MODU”) for exploration drilling in the severe ice conditions of the shallow waters of the Beaufort Sea. The CIDS essentially is a floating caisson that is designed to be ballasted down to rest on the sea floor and to resist the oncoming ice floes by its great weight and large contact area with the sea bottom. In addition to operating as a drilling unit while secured to the sea floor, the CIDS also may operate in a floating mode, but it is not capable of self-propelled movement while afloat in ocean waters.

The Company is required to remove the drilling unit from its current location at a well site on the OCS by the August ice window in the Beaufort Sea pursuant to the terms of the permit issued by Minerals Management Service for the operation of the vessel. The Company intends to move the drilling unit to a new, pristine location on the OCS where there is currently no installation, device, artificial island or structure of any kind, and where the vessel in essence will be placed in storage (at latitude 70 degrees 30.05 minutes north, longitude 148 degrees 40.25 minutes west).

ISSUE:

Whether the use of a foreign-flag vessel to tow the CIDS from its current location at a well site on the OCS to a pristine location on the OCS constitutes a violation of 46 U.S.C. App. § 316(a).

LAW AND ANALYSIS:

Title 46, United States Code Appendix, § 316(a) (46 U.S.C. App. § 316(a), the coastwise towing law) prohibits the use of any vessel not having in force a certificate of documentation endorsed for the coastwise trade (46 U.S.C. § 12106) 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, either directly or by way of a foreign port or place, or for any part of such towing.

The coastwise laws generally apply to points in the territorial sea, 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, in cases where the baseline and the coastline differ.

Furthermore, § 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 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.

The statute was substantively amended by the Act of September 18, 1978 (Pub. L. 95-372, Title II, § 203, 92 Stat. 635), to add, among other things, the language concerning temporary attachment to the seabed. The legislative history associated with this amendment is telling, wherein it is stated that:

...It is thus clear that Federal law is to be applicable to all activities or all devices in contact with the seabed for exploration, development, and production. The committee intends that Federal law is, therefore, to be applicable to activities on drilling rigs, and other watercraft, when they are connected to the seabed by drillstring, pipes, or other appurte- nances, on the OCS for exploration, development, or production purposes. [House Report 95-590 on the OCSLA Amendment of 1978, page 128, reproduced at 1978 U.S.C.C.A.N. 1450, 1534.]

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 OCS (T.D. 54281(1)). We have applied the same principles to drilling platforms, artificial islands, and similar structures, as well as devices attached to the seabed of the OCS for the purpose of resource exploration operations. (Customs Service Decisions (C.S.D.s) 81-214 and 83-52)

In regard to the Company’s proposed towing operation, while the tow will commence at an existing well site on the OCS which is a location embraced within the coastwise laws pursuant to the OCSLA, it will terminate at a pristine site on the OCS which is not considered to be a coastwise point (see Customs letter 109855, dated November 14, 1988). Consequently, 46 U.S.C. App. § 316(a) is inapplicable to the towing scenario in question.

HOLDING:

The use of a foreign-flag vessel to tow the CIDS from its current location at a well site on the OCS to a pristine location on the OCS does not constitute a violation of 46 U.S.C. App. § 316(a).

Sincerely,

Acting Chief

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