HQ 116117 - Dredging; 46 U.S.C. App. § 292 - United States International Trade Commision Rulings

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HQ 116117

February 26, 2004

VES-10-02-RR:IT:EC 116117 CK

CATEGORY: CARRIER

Charles A. Patrizia, Esq.
Paul, Hastings, Janofsky & Walker LLP
1299 Pennsylvania Avenue, NW
10th Floor
Washington, D.C. 20004-2400

RE: Dredging; 46 U.S.C. App. § 292

Dear Mr. Patrizia:

This is in response to your letter dated January 27, 2004 with attachments, on behalf of your client, Allseas Group, S.A. and its members (“the Company”), requesting a ruling regarding a pipelaying/burial project. Our ruling on this matter is set forth below.

FACTS:

This is the third ruling in a series regarding the same pipelaying/burial project for the Allseas Group, S.A. (“Allseas”). The first ruling, HQ 115972, dated April 22, 2003, approved the use of a seabed emulsifying tool in the laying of pipes below the seabed. A general information letter, HQ 116082, issued December 17, 2003, clarified the definition of U.S. navigable waters and the ability of Allseas to use various seabed emulsifying tools interchangeably in its pipelaying/burial project. With respect to the matter currently under consideration, we have been provided the following information.

Allseas will anchor a non-coastwise-qualified vessel within the territorial waters of the United States. The anchored vessel will carry only its usual crew and equipment.

In order to connect undersea pipe already laid to onshore facilities, additional piping must be routed through the near shore and onshore areas. The piping will be routed below the seabed surface so as to avoid interference with navigation and other activities. Based on environmental factors and because of the depth required, the project at issue requires a horizontal bore from the onshore facility to the offshore connection point.

To accomplish the horizontal bore an U.S. onshore drill rig located on the mainland will drill a hole approximately 12 inches in diameter to a depth ranging from 0 to 75 feet vertically below the seabed level. The onshore drill rig will then drill horizontally, i.e., parallel to the seabed surface, but below it. The horizontal drilling will continue from the onshore location of the rig, under the shoreline and then beneath the seabed, to a point 2450 feet offshore, i.e., roughly .46 miles offshore. At this point, within U.S. territorial waters, the onshore drill rig will cause the drill bit to route upward and exit the seabed at a designated point where the pipeline connection will be made. The non-coastwise vessel, which will be anchored near this designated point, will send divers to inspect the bore hole and the drill pipe string which connects the drill bit to the onshore rig and supports the bore hole. The divers will then attach a sling to the drill string and recover the drill string seaward end to the anchored vessel. The string will be connected and supported by a crane located on the anchored vessel. The onshore drill rig will feed drill string pipe as necessary to permit recovery of the seaward pipe end to the anchored vessel.

Because the horizontal boring completed at that point is only approximately 12 inches in diameter, the bore running from the connection point on the seabed to the onshore drill rig location must be enlarged in order to accept the connecting pipe that will actually carry product to the mainland. To accomplish the enlargement, reamers of increasing diameters are attached to the end of the drill string, which extends through the length of the bore hole. The drill string is then pulled back by, and toward, the onshore rig bringing the reamer through the existing bore hole, enlarging the bore diameter as it proceeds.

To conduct the reaming, once the drill string pipe end is on board the anchored vessel, the drill crew will attach the reamer. The reamer sizes vary up to 54 inches in diameter. They are equipped with jet-nozzles.

Once the reamer is attached to the drill pipe, the onshore drill rig pulls the drill string (and reamer) back through the bore hole and, eventually, onto the U.S. mainland. To complete the enlarged bore hole, drill string will be fed from the anchored vessel, behind the reamer. You note that the attachment of the reamer and the feeding of the drill pipe back to shore will be performed by individuals employed by the U.S. onshore rig. The employees and crew of the anchored vessel will not participate in the attaching and feeding of the drill pipe, except to the extent necessary to provide assistance with cranes to receive the pipe and to attach the reamer.

As the reamer enters the bore hole created by the onshore drill rig, the jetting nozzles of the reamer will be activated. The power for the reamer is supplied by the U.S. onshore rig. The jetting nozzles emulsify the bore hole walls and use drilling mud to carry the emulsified material in slurry form. You note that the reamer will be operated completely beneath the seabed and will not disturb or otherwise displace seabed sediment. In addition, no soil from the seabed will be removed by the use of digging arms or similar means. The drill mud, instead, flows from onshore through the original drill string. A valve will be placed behind the reamer to prevent drill mud castings from the bore hole from traveling to the anchored vessel.

Once the reamer reaches the U.S. mainland, it will be detached and the U.S. onshore rig will store the reamer in a secure location. The final step is the laying of the actual pipeline which will be connected to the seaward end of the drill string and, pinned and pulled, from the seabed to the onshore location through the enlarged bore hold.

ISSUE:

Whether the operation described in the FACTS portion of this ruling constitutes dredging for purposes of 46 U.S.C. App. §292.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, § 292 (46 U.S.C. App. § 292, the coastwise dredging statute), provides that with one exception not herein applicable, vessels may dredge in the navigable waters of the United States only if they meet the requirements of 46 U.S.C. App. § 883 (i.e., built in and documented under the laws of the United States and owned by persons who are citizens of the United States (i.e., a coastwise-qualified vessel)).

U.S. Customs and Border Protection (CBP) has long-held that “dredging” for purposes of 46 U.S.C. App. § 292 is the use of a vessel equipped with excavating machinery in digging up or otherwise removing submarine material. With respect to the use of cable burial devices employing a jetting action resulting in the emulsification of the seabed surrounding the cable, CBP has also long-held that such an operation does not constitute an engagement in “dredging” for purposes of the aforementioned statute. (See, CBP ruling letter 109412, dated March 29, 1988, published as Customs Service Decision (C.S.D.) 88-7; CBP ruling letter 109882, dated December 2, 1988, published as C.S.D. 89-40; and CBP ruling letter 115646, dated August 12, 2002).

As you have also pointed out, CBP has consistently held that a vessel solely involved in drilling operations is not engaged in the coastwise trade, provided that the vessel carried no persons other than the usual crew and personnel engaged in the drilling operations and no merchandise other than the usual supplies and equipment necessary for the drilling operations. See, CBP ruling letter 109817, dated November 14, 1998. Additionally, in both CBP ruling letters 109817, supra, and 109849 (dated November 18, 1998) CBP has held that a drilling vessel is considered a coastwise point during the period it is secured to the seabed of the Outer Continental Shelf (OCS).

A more relevant issue in this case is whether any portion of the entire operation you propose constitutes dredging within the purview of the dredging statute. In this regard we note that not only does drilling not constitute dredging pursuant to the aforementioned CBP rulings, but also that dredging, as defined above, is the use of a vessel equipped with excavating machinery in digging up or otherwise removing submarine material. In the case you present, an onshore drill rig, not a vessel, will drill horizontally below the seabed approximately .46 miles. This activity is therefore not within the ambit of 46 U.S.C. App. §292. Once the drill reaches the vessel anchored within the territorial waters, the drill with drill string attached will be hoisted out of the water and placed on board the vessel where a reamer will be attached. This attached unit will then be pulled back through the bore hole by the onshore drill rig. The anchored vessel in this operation is merely a platform for the attachment of the drill, drill string, and reamer. Such use of a vessel does not constitute dredging. Accordingly, the operation you propose does not constitute dredging for purposes of 46 U.S.C. App. §292.

HOLDING:

The operation described in the FACTS portion of this ruling does not constitute dredging for purposes of 46 U.S.C. App. §292.

Sincerely,

Glen E. Vereb

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