HQ H012082 - 46 U.S.C. § 55109; dredging; suction piles; dynamically positioned vessel; pipe laying; Outer Continental Shelf Lands Act - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 2007 HQ Rulings > HQ H011823 - HQ H012795 > HQ H012082

Previous Ruling Next Ruling
HQ H012082

August 27, 2007

VES-10-02-OT:RR:BSTC:CCI H012082 LLB

Alexander W. Koff, Esquire
Whiteford, Taylor and Preston
Seven Saint Paul Street
Baltimore, Maryland 21202-1626

RE: 46 U.S.C. § 55109; dredging; suction piles; dynamically positioned vessel; pipe laying; Outer Continental Shelf Lands Act

Dear Mr. Koff:

This is in response to your letter dated May 31, 2007, in which you request a ruling, on behalf of your client [ ], (“the Company”) on the applicability of the Outer Continental Shelf Lands Act and coastwise laws to the project described therein using the foreign-flag vessel [ ] (“the vessel”). Our decision follows.

In conjunction with your request, and pursuant to your supplemental letters of June 22, 2007 and July 2, 2007, you have asked this office for “confidential treatment” of the name of your client, the name of the project, the vessel in question, the location of the proposed activity, and the names of other company projects mentioned in the request. If this office receives a request pursuant to the Freedom of Information Act for your submission, CBP Regulations (19 C.F.R. § 103.35, et seq.) regarding the disclosure of business information provide that the submitter of business information will be advised of receipt of a request for such information whenever the business submitter has in good faith designated the information as commercially or financially sensitive information. We accept your request for confidential treatment as a good faith request, albeit, an unperfected one. Accordingly, you will be notified if a disclosure request is received.

FACTS

The subject foreign-flag vessel is being contracted for a project involving pipeline installation and removal of temporary anchors in the Gulf of Mexico. In order to guide the beginning of the pipeline, the Company proposes using temporary suction piles. Once the pipeline is laid, the Company will remove the suction piles.

The process for installing each suction pile is as follows. The vessel will position itself over the installation location by using its dynamic positioning system. The pile is lowered to a location on the seabed floor that will be identified by marker buoys. Prior to contact with the seabed floor, the descent of the pile is halted and then lowered slowly so that the pile may penetrate the seabed by its own weight. An ROV will adjust the pile should vertical or other repositioning be required. Once the piles have been properly aligned, the vessel will pay out on its winch and permit the pile to continue its descent into the seabed through self-weight penetration.

Once the pile ceases its deadweight descent, the ROV will release the installation sling connecting the pile to the winch onboard the vessel. The ROV will then close all the valves on the top of the piles and install an expansion ring connected to the ROV into the pump interface flange on top of the pile. Seawater is then pumped from the top of the piles. Once the seawater is removed, the change of pressure will allow the pile to further descend into the seabed.

To remove the piles, the ROV reattaches the installation/recovery wire to the piles and reconnects the pump interface to the top of the piles. The pumps will then fill the piles with seawater which will result in the pile rising out of the seabed due to the change in pressure. The winch will then bring the pile to the water surface and then to the deck of the vessel.

The foregoing installation and removal processes temporarily displace the sediment on the seafloor; however, no backfill procedure is required and the seafloor is restored to its original state when the sediment settles back into the area by the flow of the sea currents.

Issues

1. Whether the installation or removal processes of the subject piles described in the FACTS section above is in engagement in dredging for purposes of 46 U.S.C. §55109.

2. Whether the vessel or the suction piles constitute a coastwise point.

Law and Analysis

Pursuant to 46 U.S.C. § 55102(b), the merchandise coastwise law often called the “Jones Act”, 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. Likewise, 46 U.S.C. § 55103(a) prohibits the transportation of passengers between points in the United States embraced within the coastwise laws, either directly or by way of a foreign port, in a non-coastwise-qualified vessel. Further, only coastwise-qualified vessels, with certain exceptions, may dredge in the navigable waters of the U.S. See 46 U.S.C. § 55109, infra.

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. See 33 C.F.R. § 2.22(a)(2).

Section 4(a) of the Outer Continental Shelf Lands Act of 1953 (OCSLA), 67 Stat. 462; 43 U.S.C. § 1333(a). 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.

(emphasis added).

Issue 1

Pursuant to 46 U.S.C. § 55109,
Formerly 46 U.S.C. App. § 883. Recodified by Pub. L. 109-304, enacted on October 6, 2006. also known as the coastwise dredging statute, vessels may dredge in the navigable waters of the United States, with one exception not herein applicable, only if they meet the requirements of 46 U.S.C. § 55102, specifically, that they are 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. § 55109 is the use of a vessel equipped with excavating machinery in digging up or otherwise removing submarine material.

CBP has held that fluidization of the seafloor, that temporarily displaced the sediment and allowed pipe to sink into the seafloor by its own weight did not constitute an engagement in dredging for purposes of 46 U.S.C. § 55109. See HQ 115972 (April 22, 2003) and HQ 115823 (Oct. 28, 2002). 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 46 U.S.C. § 55109. See HQ 109412 (March 29, 1988); HQ 109882 (Dec. 2, 1988); and HQ 115646 (Aug. 12, 2002).

In the case you present, you state that the vessel is not equipped with excavating apparatus and that the pile is not equipped with sharp, cutting edges, digging arms, or other excavating tools. The pile penetrates the seafloor by its weight and any displacement of the seabed is temporary. This activity is therefore not within the ambit of 46 U.S.C. § 55109. Accordingly, the operation you propose does not constitute dredging for purposes of 46 U.S.C. § 55109.

Issue 2

You inquire as to whether the vessel and the pile are coastwise points under the facts presented. As stated above, the OCSLA, extends the laws of the U.S. 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.” The statute was substantively amended by the Act of September 18, 1978, Pub. L. 95-372, Title II, § 203, 92 Stat. 635. adding, inter alia, language concerning temporary attachment to the seabed. The legislative history provides, in pertinent part:

...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.

(emphasis added). H. Rep. No. 95-590; 1978 U.S.C.C.A.N. 1450, 1534.

Pursuant to the foregoing provision, we have ruled that the coastwise laws, the laws on entrance and clearance of vessels, and the provisions for dutiability of merchandise, are extended to mobile oil drilling rigs during the period they are secured to or submerged onto the seabed of the OCS. See Treasury Decisions (T.D.s) 54281(1), 71-179(1), 78-225; see also, Cust. Serv. Dec. 85-54. 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 Cust. Serv. Dec. 81-214 and 83-52; see also, HQ 107579 (May 9, 1985).

With regard to the subject vessel, you indicate in your ruling that it will be dynamically positioned over the installation location of the piles. We note that with respect to dynamically positioned vessels, this agency has long-held that the lack of any permanent or temporary attachment to the seabed operates to exclude such vessels operating over the OCS from becoming coastwise points pursuant to the OCSLA. HQ 109576 (July 12, 1988) and HQ 113838 (Feb. 25, 1997). Consequently, unless the vessel itself is connected to the seabed, as required by the OCSLA, it will not be considered a coastwise point. See HQ 115134 (Sept. 27, 2000)(stating that floating offshore service facility vessel would not be subject to Customs and navigation laws pursuant to the OCSLA insofar as “onboard vessel propulsion system,” rather than anchoring was used to maintain the vessel’s position next to drilling unit). In addition, we note that even though the vessel is connected temporarily to the piles by a winch, we have held that a vessel used solely for pipe laying purposes and not for the purpose of "exploring for, developing, or producing resources" from the OCS is not considered "attached" to the seabed as that term is used in the OCSLA and therefore is not a coastwise point. See HQ 115799 (Sep. 30, 2002); HQ 115531(Dec. 3, 2001); HQ 111126 (Aug. 16, 1990).

With regard to the piles themselves, you state that the purpose of the piles is to serve as a “start-up aid to help guide the pipe lay activity.” CBP has held that marker buoys attached to the OCS to mark drilling sites and to identify the location of the legs of a tension leg platform are not considered coastwise points within the meaning of the OSCLA. See Cust. Serv. Dec. 84-96 and HQ 110959 (Aug. 8, 1990). The foregoing holdings are based upon the legislative history to the 1978 Amendment to the OCSLA which states that for the purposes of the coastwise laws, the term "installations and other devices" in the OCSLA may be limited to something to which merchandise or passengers can be transported and on which they can be unladen. See House Conference Report No. 95-1474 (Aug.10, 1978). Similarly, the piles are used to mark locations at which pipe should be laid. For purposes of this ruling, we assume that the piles are not something to which merchandise or passengers can be transported and on which they can be unladen. As such, the piles would not be coastwise points pursuant to the OCSLA.

Holding

1. The operation described in the FACTS portion of this ruling does not constitute dredging for purposes of 46 U.S.C. § 55109.

2. The vessel, as described herein, is not a coastwise point pursuant to the OCSLA insofar as it will not be attached to the seabed for the purpose oil exploration, development, and production. Further, suction piles, as described herein, would not be considered coastwise points.

Sincerely,

Glen E. Vereb
Chief

Previous Ruling Next Ruling