HQ 116624 - Salvage; Coastwise Transportation; Outer Continental Shelf; Use of Foreign- Flagged Vessel; 43 U.S.C. 1333(a); 46 U.S.C. App. 316(d), 883 - United States International Trade Commision Rulings

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HQ 116624

March 17, 2006

VES-3-15/VES-10-01-RR:BSTC:CCI 116624 rb

CATEGORY: CARRIER

Stuart S. Dye
Holland & Knight LLP
2099 Pennsylvania Avenue, NW., Suite 100
Washington, D.C. 20006

RE: Salvage; Coastwise Transportation; Outer Continental Shelf; Use of Foreign- Flagged Vessel; 43 U.S.C. 1333(a); 46 U.S.C. App. 316(d), 883

Dear Mr. Dye:

In your letter of March 10, 2006, on behalf of your client, Adams Vessels (BILBAO) Ltd., you request an expedited ruling concerning whether the intended use of a foreign-flagged diving support vessel (M/V ADAMS ARROW) on the United States Outer Continental Shelf would implicate either the coastwise salvage or coastwise merchandise law, respectively, 46 U.S.C. App. 316(d) or 883. Our ruling follows.

FACTS:

Due to a recent hurricane, a number of oil and gas production platforms on the United States Outer Continental Shelf (OCS) in the Gulf of Mexico were torn from their piles. Also, other platforms that were not toppled must still be inspected at depths of below 300 feet under Level II requirements of the Minerals Management Service (MMS) (U.S. Department of the Interior). A chartered foreign-flagged diving support vessel, with geotechnical and/or diving equipment, would be used to survey/inspect the extent of the damage, make determinations as to engineering and the final scope of the work involved, and carry out some minor repairs.

The toppled platforms and their associated wells and pipelines, capped and shut down, lie on the seabed in varying states of disrepair, with most components, including their wells, having been destroyed, and with those platform piles still embedded in the OCS having been rendered nonfunctional or useless. Debris is strewn about the seabed surrounding the overthrown platforms; some of the debris may possibly be removed by the vessel during its damage survey and inspection operations, although there is at present no intention to do so.

ISSUES:

Whether the proposed inspection and survey operations, and any minor repairs, performed with the use of a foreign-flagged diving support vessel, under the facts presented herein, would violate 46 U.S.C. App. 316(d) or 883; and whether the possible recovery/removal, by the vessel, of platform-related debris from the ocean floor on the OCS (and beyond U.S. territorial waters), and its subsequent lading aboard the vessel for transportation to and unlading at a U.S. port, would violate section 316(d) or 883.

LAW AND ANALYSIS:

Under 46 U.S.C. App. 316(d), with exceptions not here applicable, a foreign vessel is prohibited from engaging in salvaging operations in the territorial waters of the United States on the Gulf of Mexico; and, under 46 U.S.C. App. 883, merchandise may not be transported between ports or places embraced within the coastwise laws in any other vessel than one which is coastwise-qualified (i.e., built in and documented under the laws of the United States, and owned by persons who are citizens of the United States).

Generally, insofar as concerned herein, the coastwise laws apply to any point in the territorial waters of the United States, defined as the belt, three (3) nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline (T.D. 78-440). In addition, under the Outer Continental Shelf Lands Act (OCSLA), as amended, 43 U.S.C. 1333(a), the laws of the United States are extended to the subsoil and seabed of the OCS and to all artificial islands, and all installations and other devices, that are 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 OCS were an area of exclusive Federal jurisdiction within a State. Thus, the laws applicable to the OCS include the customs and navigation laws, as well as the coastwise laws, such as sections 316(d) and 883 (Headquarters ruling (HQ) 116586, dated December 29, 2005).

Diving Support Vessel Used to Perform Inspections/Surveys, Minor Repairs

It is well settled that the transportation of equipment, supplies and materials by a diving support vessel that are for use on or from the vessel in effecting services such as inspections/surveys of, and/or repairs to, offshore or subsea structures, including the repair of pipelines, does not constitute a use of the vessel under section 883, provided such equipment supplies and materials are necessary for accomplishing the vessel’s mission and are usually carried aboard the vessel as a matter of course (such articles are not considered “merchandise” for section 883 purposes) (e.g., HQ 113838, dated February 25, 1997 (involving, inter alia, inspection/survey/repair of production platforms and oil and gas pipelines); accord, HQ 115771, of August 19, 2002 (pipeline repairs)). As such, the use of the chartered diving support vessel in this case in conducting the intended damage inspections/surveys, and performing any minor repairs, would not involve the coastwise transportation of merchandise under section 883 with respect to the vessel’s geotechnical and/or diving equipment (ibid.). Nor would the use of the support vessel in conducting the inspections/surveys, or repairs, as described, constitute a salvaging operation under section 316(d) (see HQ 113838, supra, and authorities cited and discussed therein).

Recovery/Removal of Debris on OCS Floor

Most significantly, when the OCSLA, supra, was amended in 1978 in relation to temporary attachment, the legislative history further made 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.

H.Rept. No. 95-590, reprinted at, 1978 U.S. Code Cong. & Admin. News 1450, at 1534.

Accordingly, the possible recovery/removal of any debris surrounding the toppled platforms on the OCS beyond U.S. territorial waters, and its subsequent transportation to, and unlading at, a coastwise point would not implicate section 316(d) or 883. To this end, the subject debris can in no way legally be perceived as being affixed or attached to the seabed for exploration, development or production purposes pursuant to the OCSLA; and, hence, such debris locations would not be considered coastwise points under the OCSLA (see HQ 116593, dated January 6, 2006 (debris strewn along OCS seabed not affixed or attached thereto for purposes of, and thus not coastwise points under, OCSLA); see also HQ 115850, of November 12, 2002 (severed leg remnants of toppled production platforms not coastwise points)).

HOLDING:

Under the facts presented in this case, the proposed inspection and survey operations, and any minor repairs, performed with the use of a foreign-flagged diving support vessel would not violate 46 U.S.C. App. 316(d) or 883; and the possible recovery/ removal, by the vessel, of platform-related debris from the ocean floor on the OCS (and beyond U.S. territorial waters), and its subsequent lading aboard the vessel for transportation to and unlading at a U.S. port, would not violate section 316(d) or 883.

Sincerely,

Glen E. Vereb

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