Reconsideration of HQ H225102 (Sept. 24, 2012); 19 U.S.C. § 1625(b); 46 U.S.C. § 55102; 43 U.S.C. § 1333(a)(1); 19 C.F.R. § 4.80b(a).

HQ H235242 November 15, 2012 VES-3-02 OT:RR:BSTC:CCR H235242 LLB CATEGORY: Carriers Alexander W. Koff, Esquire Whiteford, Taylor and Preston LLP Seven Saint Paul Street Baltimore, Maryland 21202-1636 Dear Mr. Koff: Re: Reconsideration of HQ H225102 (Sept. 24, 2012); 19 U.S.C. § 1625(b); 46 U.S.C. § 55102; 43 U.S.C. § 1333(a)(1); 19 C.F.R. § 4.80b(a). Dear Mr. Koff: This letter is in response to your November 8, 2012, letter in which you request reconsideration of HQ H225102 (Sept. 24, 2012) that was issued to you on behalf of your client [ ]. In HQ H225102, CBP held that the proposed transportation of a topside by a dynamically-positioned, non-coastwise-qualified vessel to a SPAR on the OCS, subsequent to receiving the topside from a coastwise-qualified vessel that previously laded the topside at a coastwise point, would constitute a violation of 46 U.S.C. § 55102. We have reviewed your request for reconsideration. Our decision follows. FACTS The following facts are from the FACTS section in H225102. We note your request for reconsideration does not set forth any new 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). In W116737 (Feb. 16, 2007), the requester in that case 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. CBP held in HQ 225102, insofar as the foreign-flagged vessel will be providing part of the transportation of the topside between a point in the U.S and the SPAR, such transportation would violate 46 U.S.C. § 55102. CBP reasoned that similar to the drill ship in W116737, a coastwise-qualified vessel will be lading the topside at a point in a U.S. port; transshipping it onto a dynamically-positioned, non-coastwise-qualified vessel that will pivot on its central axis; move a “short distance” back; return to the same point where it pivoted on its central access and unlade the topside onto the SPAR (the second coastwise point). The requester argued 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, CBP correctly found the foregoing cases were not applicable insofar as 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. In its reconsideration request, the requestor does not address whether W116737 is applicable to the present case or otherwise addresses the basis for CBP’s holding in HQ 225102 other than to argue that the movement of the foreign-flagged vessel does not constitute any part of the transportation of the topside to the SPAR. Rather, the requester asserts that the transportation contemplated by the subject foreign-flagged vessel is similar to several cases in which CBP held that movement of a vessel was permissible. We address these arguments below. The requester argues, as it did in its initial ruling request, that “mere movement” of a vessel does not constitute transportation of merchandise. In support of its argument, the requester cites several rulings in which CBP ruled that non-coastwise-qualified vessels did not violate 46 U.S.C. § 55102 when such vessels proposed to unlade merchandise at the same coastwise point where the merchandise was laden.  The requester asserts, as it did its initial ruling request, that these rulings apply to the movement of the subject foreign-flagged vessel because it moves off of its pivot point and returns to the exact same pivot point; however, the requester has failed to address how a central axis coordinate point of a dynamically-positioned vessel, e.g. the location in the water where the vessel does its pivot, becomes a coastwise point under the OCSLA when the vessel itself is not a coastwise point. Further, in order for the foregoing cases cited by the requester to be applicable to the proposed transportation, the topside would have to be unladen at the original point where the topside was laden, e.g. a point in a U.S. port as indicated in the ruling request. Insofar as the point of unlading will be the SPAR, a second coastwise point, the rulings cited by the requester are inapplicable. The requester also argues that any movement of the foreign-flagged vessel should be considered an “incidental movement” to the lifting operation of the vessel. In support of its argument, the requester cites HQ 113858 (Apr. 4, 1997), in which CBP held that a non-coastwise qualified crane barge may be used to transfer merchandise from a lightering barge to ships at anchor in the San Francisco Bay provided that any movement of merchandise is effected by the operation of the crane and not by the movement of the vessel, except for necessary movement which is incidental to a lifting operation while the lifting is taking place. (emphasis added). Because you have requested confidentiality relating to the certain aspects of the lifting operation, including the capabilities of the vessel, we are limited in our statement how certain facts in HQ 113858 are distinguishable from the proposed transportation in your ruling request. In the present case, since the movement of the topside is effected by [ ] and not the movement of a crane, HQ 113858, is inapplicable to the proposed transportation; thus, the movement of the subject foreign-flagged vessel is not “incidental movement” necessary for a lifting operation. Accordingly, based on the foregoing analysis, the movement of the foreign-flagged vessel in question does not constitute a lading and unlading of merchandise at the same coastwise point and does not constitute “incidental movement” necessary to a lifting operation; therefore, part of the transportation of the topside provided by the foreign-flagged vessel between coastwise points 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. HQ H225102 (Sept. 24, 2012) is affirmed. Sincerely, Glen E. Vereb Director Border Security and Trade Compliance Division