HQ 115217 - Floating Offshore Service Facility; Outer Continental Shelf Lands Act; Coastwise Trade; 43 U.S.C. § 1333(a); 46 U.S.C. App. - United States International Trade Commision Rulings

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HQ 115217

December 7, 2000

VES-3-15-RR:IT:EC 115217 GEV

CATEGORY: CARRIER

John J. Jaskot, Esq.
Jones, Walker, Waechter, Poitevent
Carrère & Denègre, L.L.P.
499 South Capitol St., S.W.
Suite 600
Washington, D.C. 20003

RE: Floating Offshore Service Facility; Outer Continental Shelf Lands Act; Coastwise Trade; 43 U.S.C. § 1333(a); 46 U.S.C. App.

Dear Mr. Jaskot:

This is in response to your letter dated October 25, 2000, requesting a ruling concerning your client’s proposed operation of a Floating Offshore Service Facility (FOSF). The ruling you seek, which is in furtherance of our prior ruling on this matter (Customs ruling letter 115134, dated September 27, 2000) and our meeting of October 11, 2000, is set forth below.

FACTS:

The vessel in question is a foreign-built, foreign-flagged vessel of approximately 150,000 deadweight tons that would be located approximately 100 miles or more beyond the territorial sea of the United States that would serve as a Floating Offshore Service Facility (FOSF) for nearby Outer Continental Shelf deepwater drilling and production activities. It would be used to carry onboard diesel fuel, aviation fuel, potable water, food supplies, drill pipe, drilling mud and cement, and other necessary consumables and supplies to support deepwater operations. Additionally, the FOSF vessel would provide offshore warehouse space, heliport services, berthing accom-modations, hospital and emergency room facilities, and other onboard
logistics services to support OCS operations. The FOSF vessel itself would obtain merchandise and passengers, for further delivery to OCS platforms and other units, (1) through offshore supply vessel (OSV) deliveries from U.S. ports, (2) through supply vessel deliveries from foreign ports, and on rare occasions, (3) during visits by the FOSF vessel itself to foreign ports.

Additionally, severe weather conditions or other vessel safety concerns may require the FOSF vessel to temporarily move from its anchored location.

ISSUES:

Whether a foreign-flagged, foreign-built FOSF vessel may be anchored to the OCS for the purpose of providing logistics support and other services for the exploration, development or production of OCS resources.

Whether, a foreign-flagged, foreign-built FOSF vessel anchored to the OCS becomes a coastwise point and does not violate the coastwise laws or any other law administered by the U.S. Customs Service.

3. Whether a foreign-flagged, foreign-built FOSF vessel violates the coastwise laws when it departs from and subsequently returns to its same OCS anchorage without lading or unlading merchandise or passengers at another coastwise point during such transit.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, § 883 (46 U.S.C. App. § 883, the merchandise coastwise law 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 one that is coastwise-qualified (i.e., U.S.-built, owned and documented). Pursuant to § 4.80b(a), Customs Regulations (19 CFR § 4.80b(a)), promulgated pursuant to 46 U.S.C. App. § 883, a coastwise transportation of merchandise takes place when merchandise laden at one coastwise point is unladen at another coastwise point.

Title 46, United States Code Appendix, § 289 (46 U.S.C. App. § 289, the passenger coastwise law), prohibits the transportation of passengers between coastwise points, either directly or by way of a foreign port, in any vessel other than one that is coastwise-qualified.

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.

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 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 appurtenances, 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 are extended to mobile oil drilling rigs during the period they are secured to or submerged onto the seabed of the OCS (Treasury Decision (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, including warehouse vessels anchored over the OCS when used to supply drilling rigs on the OCS. (see Customs Service Decisions (C.S.D.s) 81-214 and 83-52, and Customs Ruling Letter 107579, dated May 9, 1985)

With respect to the issues presented for our consideration, we note at the outset that no law administered by the U.S. Customs Service would per se prohibit a foreign-flagged, foreign-built vessel from operating as a FOSF. However, such a vessel must be in compliance with those laws that are incidental to its operation (i.e., the coastwise laws discussed herein).

In regard to the applicability of the coastwise laws to the subject FOSF vessel, we note that its anchoring to the OCS as described above renders it a coastwise point pursuant to the OCSLA. Id. Consequently, any vessel transporting merchandise or passengers between the United States mainland or any other coastwise point and the FOSF while it is considered to be a coastwise point would be required to be coastwise-qualified. (see Customs ruling letter 109849, dated November 18, 1988)

We further note that no violation of the coastwise laws would arise during such time as the FOSF is moored and remains stationary and is not being used to transport passengers or merchandise between coastwise points. (see Customs ruling letter 111615, dated May 8, 1991; see also 19 CFR §§ 4.80a and 4.80b(a)) The temporary movement of the vessel from its OCS anchorage (e.g., for severe weather conditions or other vessel safety concerns) and its subsequent return to the same location without the unlading of merchandise or disembarkation of passengers at a coastwise point different from the point of lading or disembarkation would not give rise to a violation of the coastwise laws. (Customs ruling letters 109833, dated November 30, 1988 and 110127, dated April 5, 1989)

HOLDINGS:

A foreign-flagged, foreign-built FOSF vessel may be anchored to the OCS for the purpose of providing logistics support and other services for the exploration, development or production of OCS resources.

A foreign-flagged, foreign-built FOSF vessel anchored to the OCS becomes a coastwise point and does not violate the coastwise laws or any other law administered by the U.S. Customs Service.

3. A foreign-flagged, foreign-built FOSF vessel does not violate the coastwise laws when it departs from and subsequently returns to its same OCS anchorage without lading or unlading merchandise or passengers at another coastwise point during such transit.

Sincerely,

Larry L. Burton

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