HQ W116634 - 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 W116634

March 29, 2006

VES-3-15/VES 10-01-RR:BSTC:CCI W116634 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 23, 2006, on behalf of your client, Khalifa A Algosaibi Diving and Marine Services Company, you request an expedited ruling as to whether the intended use of a foreign-flagged support vessel (DPSV ADAMS SURVEYOR) on the United States Outer Continental Shelf would violate either the coastwise salvage or coastwise merchandise law, 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 were torn from their piles on the United States Outer Continental Shelf (OCS) in the Gulf of Mexico beyond U.S. territorial waters. Also, other platforms which were similarly located but not overthrown must still be inspected at depths 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 other diving equipment, including a Remote Operated Vehicle (ROV), would be used to survey/inspect the extent of the damage, make determinations as to engineering and the final scope of the work involved, carry out repairs, and remove/relocate wreckage and debris.

Specifically, 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 the wells, having been destroyed, and with those platform piles still embedded in the OCS having been rendered nonfunctional or useless.

Debris from the toppled platforms and their components, including pipelines and the piles still attached to the OCS seabed, may be recovered/removed from the ocean floor and thereafter be laden and transported to a U.S. port aboard either the diving support vessel or a non-coastwise-qualified material barge.

ISSUES:

Whether the proposed inspection and survey operations, and any repairs, performed with the use of a foreign-flagged diving support vessel would violate 46 U.S.C. App. 316(d) or 883; and whether the recovery/removal, by the vessel, of any platform-, pipeline-, or pile-related debris from the ocean floor on the OCS (and beyond U.S. territorial waters), and the subsequent lading thereof aboard either the vessel or a non-coastwise qualified material barge 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 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 exclusive area of Federal jurisdiction within a State. Thus, the laws applicable to the OCS encompass the customs and navigation laws, including 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

Initially, however, 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, 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 a chartered foreign-flagged diving support vessel in this case in performing the intended damage inspections/surveys, and in effecting any repairs, would not involve the coastwise transportation of merchandise with respect to the vessel’s geotechnical, ROV and/or any other diving equipment (ibid.). Nor would the use of the support vessel in performing 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 platform-, pipeline-, or pile-related debris from the ocean floor on the OCS beyond U.S. territorial waters (including piles from toppled platforms still embedded in the OCS), and their subsequent transportation to, and unlading at, a U.S. port would not involve section 316(d) or 883. To this end, such debris can in no way legally be perceived as thereafter 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 (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); accord, HQ 116624, of March 17, 2006; see also HQ 115850, of November 12, 2002 (severed leg remnants of overthrown production platforms, still clinging to OCS seabed, not coastwise points)).

HOLDING:

Under the facts presented herein, the proposed inspection and survey operations, and any 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 recovery/removal, by the vessel, of any platform-, pipeline-, or pile-related debris from the ocean floor on the OCS (and beyond U.S. territorial waters), and the subsequent lading thereof aboard either the vessel or a non-coastwise qualified material barge for transportation to and unlading at a U.S. port, would not violate section 316(d) or 883.

Sincerely,

/S/ Glen E. Vereb

Glen E. Vereb

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