CBP Ruling H225102

HQ H225102 September 24, 2012 VES-3-02 OT:RR:BSTC:CCI H225102 LLB CATEGORY: Carriers Alexander W. Koff, Esquire Whiteford, Taylor and Preston LLP Seven Saint Paul Street Baltimore, Maryland 21202-1636 Dear Mr. Koff: This letter is in response to your July 6, 2012, ruling request, and your August 28, 2012, supplement thereto, on behalf of your client, [ ] (hereinafter “the requester”). In your letter, you request that this office determine whether the proposed lifting and installation operations of your client’s vessel the [ ] (hereinafter “the non-coastwise qualified vessel”) would violate 46 U.S.C. § 55102. Our decision follows. FACTS The requester proposes to use the subject non-coastwise qualified vessel to transfer a topside to a single point anchor reservoir (SPAR). The topside will be laden aboard a coastwise-qualified launch barge at a point in a U.S. port as indicated in the supplement to the ruling request. The launch barge will be towed by coastwise-qualified tugboats. The launch barge will be towed to your client’s non-coastwise qualified vessel which, using dynamic positioning, will be stationary and adjacent to the SPAR. The topside will then be lifted from the launch barge by the non-coastwise-qualified vessel using its [ ] which will also temporarily suspend the topside. Thereafter, the non- coastwise-qualified vessel, under its own propulsion, will begin a 90-degree pivoting rotation on its central axis. Because the 90-degree pivoting rotation will cause the side of the non-coastwise qualified vessel to come in contact with the SPAR, the non-coastwise-qualified vessel, under its own propulsion, will move a short distance away from the SPAR and return to its pivoting point. The non-coastwise-qualified vessel will then unlade the topside onto the SPAR. ISSUE Whether the transportation of the topside by the subject dynamically-positioned, non-coastwise-qualified vessel to a coastwise point (the SPAR), subsequent to receiving the topside from a coastwise-qualified vessel that will have previously laden the topside at a coastwise point (a point in a U.S. port), would constitute a violation of 46 U.S.C. § 55102. LAW and ANALYSIS Pursuant to 46 U.S.C. § 55102, which provides, in pertinent part: Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via foreign port, unless the vessel— (1) is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and (2) has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement. (emphasis added). The regulations promulgated under the authority of 46 U.S.C. § 55102(a), provide in pertinent part: A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise. 19 C.F.R. § 4.80b(a). The coastwise laws are extended by Section 4(a) of the OCSLA, as amended, 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, or any such installation or device (other than a ship or vessel) for the purpose of transporting such resources, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State. See 43 U.S.C. § 1333(a)(1). As an initial matter, we note that the requester does not dispute that the topside is merchandise or that the SPAR is a coastwise point pursuant to the OCSLA. Insofar as the vessel will not be anchored or otherwise attached to the seafloor; rather, it will maintain its position next to the SPAR using dynamic positioning, consistent with CBP rulings, and as argued by the requester, the subject non-coastwise qualified vessel would not be considered a coastwise point. See HQ H008396 (holding that a floating hotel that remains stationary on the OCS using dynamic positioning is not a coastwise point pursuant to the OCSLA insofar as it is not attached to the seabed); HQ 115134 (Sept. 27, 2000)(stating that floating offshore facility vessel would not be subject to Customs and navigation laws pursuant to the OCSLA insofar as “onboard propulsion system,” rather than anchoring was used to maintain the vessel’s position next to a drilling unit). Therefore, the remaining issue for our consideration is whether the transportation and unlading of the topside by the subject non-coastwise qualified vessel, once it receives the topside from the coastwise-qualified vessel, would be a violation of 46 U.S.C. § 55102. As stated above, pursuant to 46 U.S.C. § 55102, “a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply” unless it is coastwise-qualified. In W116737 (Feb. 16, 2007), the requester proposed to use a non-coastwise-qualified drill ship to drill and test wells on the OCS. During the drilling and testing process, the non-coastwise-qualified vessel, using dynamic-positioning, would gather hydrocarbons and produced water (merchandise); move to a location on the high seas; and transship the merchandise to a coastwise-qualified barge. The coastwise-qualified barge would subsequently transport the merchandise to a Gulf Coast refinery. CBP ruled that the transportation of the merchandise by the non-coastwise qualified vessel was a violation of 46 U.S.C. § 55102. CBP reasoned that 46 U.S.C. § 55102 prohibits vessels from engaging in any part of the transportation of merchandise between coastwise points unless they are coastwise-qualified and the non-coastwise-qualified vessel provided part of the transportation between the drill site where the merchandise was laden and the Gulf Coast refinery where it was unladen. Similarly here, a coastwise-qualified vessel will lade the topside at a point in a U.S. port in Texas or Louisiana (a coastwise point); transship it onto a dynamically-positioned, non-coastwise-qualified vessel that will pivot on its central axis; move a “short distance” back; and return to the same point where it pivoted on its central access. Subsequently, the non-coastwise qualified vessel will unlade the topside onto the SPAR (the second coastwise point). Based on the foregoing, insofar as the subject non-coastwise-qualified vessel will move a short distance off its central axis in order to avoid hitting the SPAR before it unlades the topside onto the SPAR, the vessel has provided part of the transportation of the topside between a point in the U.S and the SPAR. The requester argues that CBP rulings have held that a pivoting motion by a non-coastwise-qualified vessel on its central axis does not constitute transportation of merchandise within the meaning of 46 U.S.C. § 55102. See HQ 115985 (May 21, 2003) (holding that the stationary movement of foreign-flagged vessel on its central axis did not constitute transportation of a truss spar between two coastwise points) and HQ 111684 (June 26, 1991) (holding that the 90 degree rotation of a non-coastwise-qualified barge on its axis did not constitute transportation of a hull between two coastwise points). However, in the present case, the subject vessel will do more than pivot on its central axis while in a stationary position--it will move off of its central axis before it unlades the topside onto the SPAR and therefore, the foregoing cases are not applicable. In conclusion, because the subject vessel will provide part of the transportation of the topside between a U.S. port and the SPAR such transportation would be in violation of 46 U.S.C. § 55102. HOLDING The transportation of the topside by the dynamically-positioned, non-coastwise-qualified vessel to a coastwise point (the SPAR), subsequent to receiving the topside from a coastwise-qualified vessel that previously laded the topside at a coastwise point (a point in a U.S. port) constitutes a violation of 46 U.S.C. § 55102. Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Restricted Merchandise Branch Office of International Trade, Regulations & Rulings