Coastwise Transportation; Offshore Wind Turbines; 46 U.S.C. § 55102; 46 U.S.C. § 55109; 19 C.F.R. § 4.80b.

HQ H325120 May 23, 2023 OT:RR:BSTC:CCR H325120 AFM CATEGORY: Carriers Constantine G. Papavizas, Esq. Winston & Strawn, LLP 1901 L Street, NW Washington, DC 20036 RE: Coastwise Transportation; Offshore Wind Turbines; 46 U.S.C. § 55102; 46 U.S.C. § 55109; 19 C.F.R. § 4.80b. Dear Mr. Papavizas: This letter is in response to your ruling request of April 12, 2022, supplemented with responses to our requests for information on August 11, 2022, March 1, 2023, March 22, 2023, April 3, 2023, April 25, 2023, and May 12, 2023, on behalf of your client New England Aqua Ventus, LLC (“Aqua Ventus”) regarding whether certain activities related to the laying of export cables (“cables”) would be in violation of the Jones Act, 46 U.S.C. § 55102, and the Dredging Act, 46 U.S.C. § 55109. Our decision follows. FACTS The following facts are from your April 12, 2022, ruling request, and subsequent responses to our requests for information of August 11, 2022, March 1, 2023, March 22, 2023, April 3, 2023, April 25, 2023, and May 12, 2023. Aqua Ventus is proposing the installation of a floating wind turbine off the coast of Maine as part of a floating offshore wind demonstration project, the Maine Research Array, where a portion of the cable laying and burial will occur outside the U.S. three nautical mile limit. Diamond Offshore Wind and RWE Renewables will be part of the joint venture for this project. The Bureau of Ocean Energy Management (“BOEM”) will be issuing the lease for this project to the State of Maine. The object of the present transaction is to lay and bury cables both within and outside the U.S. three nautical mile limit that will transmit electricity generated by offshore wind turbines more than three nautical miles off the coast of Maine, starting from a coastwise point near East Boothbay, Maine, to a coastwise point approximately 3 miles south of Monhegan Island, Maine, as seen in the draft cable route map submitted in response to our requests for information. The cable will be laded onto a non-coastwise-qualified vessel either in a U.S. port or from another non-coastwise-qualified vessel in a U.S. port. The prospective transaction involves three possible scenarios: Aqua Ventus seeks to bury cable with a jet trenching cable burial tool with no plow or hoe-type aspects deployed by a non-coastwise-qualified vessel, with the cable burial occurring either when the cable is laid or as a separate operation after the cable has been laid. If the cable burial occurs when the cable is laid, a non-coastwise-qualified cable burial vessel will install the cable, with a jet trenching burial tool pulled behind the cable lay vessel to bury the cable in one pass. If the cable burial occurs as a separate operation after the cable has been laid, the non-coastwise-qualified cable lay vessel will lay the cable on the seabed for the subsea burial tool(s) to later pick up and bury using a non-coastwise-qualified trenching support vessel. The jet trenching cable burial tool, equipped with water jets and jetting nozzles to fluidize the soil, would open a trench, likely 1-2 meters deep. A depressor would then push the cable into the trench. Displaced soil would partially subside and collapse into the trench to bury the cable after the tool passes. No seabed material would be transported away from the trench. If soil characteristics or rocks on the seabed preclude installation of the cable with the jet trenching cable burial tool and placement of the cable with armoring (rock bags, concrete mattresses, or rip rap) is either not a practical solution or permit restrictions do not allow, Aqua Ventus seeks to bury cable with the use of a mechanical cutter cable burial tool operated by a non-coastwise-qualified vessel. The tool would open a trench, likely 1-1.5 meters deep. A depressor would then push the cable into the trench. The trench would fill with sediments gradually once the tool passes, and some parts of the sidewalls may partially collapse to assist in burying the cable. The tool may have jetting capabilities which could be used to assist in fluidizing the soils in softer ground or keeping the trench clear in harder ground. No seabed material would be transported away from the trench. The cable burial would occur either when the cable is laid or as a separate operation with the use of either the non-coastwise-qualified cable lay vessel or a different non-coastwise-qualified vessel. If the cable burial is done at the same time as the cable is laid, the cable burial tool would be tethered to and operated from the non-coastwise-qualified cable lay vessel. If the cable burial is done after the cable is laid as a separate operation, the cable burial tool would be operated either from the non-coastwise-qualified cable lay vessel that was previously used for laying the cable, or from a different non-coastwise-qualified vessel. If needed, Aqua Ventus may install cable protection utilizing rock bags, concrete mattresses, or loose rock to cover the cable. These items would be laded onto a coastwise-qualified vessel from a U.S. port and transshipped to a non-coastwise-qualified vessel for installation over pre-laid cable on the seabed outside the U.S. three nautical mile limit. The vessel used for installing rock bags, concrete mattresses, or loose rock to cover the cable will not be the same vessel used to install the cable. The rock bags, concrete mattresses, or loose rock would be placed directly onto the newly installed cable and would only be installed in locations where it is not possible to bury the cable to a depth required for sufficient cover of the cable. ISSUES Whether the use of the jet trenching cable burial tool deployed by a non-coastwise-qualified vessel to bury cable, either as the cable is laid or as a separate operation following when the cable is laid, constitutes a violation of the coastwise dredging statute, 46 U.S.C. § 55109? Whether the use of the mechanical cutter cable burial tool deployed by a non-coastwise-qualified vessel to bury cable, either as the cable is laid or as a separate operation following when the cable is laid, constitutes a violation of the coastwise dredging statute, 46 U.S.C. § 55109? Whether the transportation or installation of rock bags, concrete mattresses, or loose rocks to be placed over the subject cable on board a non-coastwise-qualified vessel violate the Jones Act, 46 U.S.C. § 55102? LAW AND ANALYSIS Your request presents three separate issues as outlined above. This ruling analyzes each below. Issue One: Whether the use of the trenching tool deployed by a non-coastwise-qualified vessel to bury cable, either as the cable is laid or as a separate operation following when the cable is laid, constitutes a violation of the coastwise dredging statute, 46 U.S.C. § 55109? Pursuant to 46 U.S.C. § 55109(a), only coastwise-qualified vessels may engage in dredging in the navigable waters of the United States, providing, in pertinent part: [A] vessel may engage in dredging in the navigable waters of the United States only if— (1) the vessel is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; (2) the charterer, if any, is a citizen of the United States for purposes of engaging in the coastwise trade; and (3) the vessel has been issued a certificate of documentation with a coastwise endorsement under chapter 121 of this title or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement Dredging is defined as “excavation” by any means: The word “excavate” is derived from a latin (sic.) word meaning to hollow out. Its common, plain and ordinary meaning is to make a cavity or hole in, to dig out, hollow out, to remove soil by digging, scooping out, or other means. The common plain and ordinary meaning of the word “dredging” is the removal of soil from the bottom waters by suction or scooping or other means. CBP (to include its predecessor, the U.S. Customs Service) has consistently held that the term “dredging” within the meaning of 46 U.S.C. § 55109, is “the use of a vessel equipped with excavating machinery in digging up or otherwise removing submarine material.” See HQ 103692 (Dec. 28, 1978), published as Customs Service Decision (C.S.D.) 79-331; HQ 109910 (Jan. 26, 1989), published as C.S.D. 89-64. However, CBP has consistently held that the use of certain devices to create underwater trenches for the purpose of cable laying does not constitute “dredging.” In particular, CBP has stated that the use by cable-laying vessels of cable-burial devices employing a jetting action resulting in the emulsification of the seabed, temporarily displacing sediment, surrounding the cable does not constitute an engagement in dredging. See, e.g., HQ 109412 (March 29, 1988), published at C.S.D. 88-7; HQ 109882 (Dec. 2, 1988); HQ 115646 (Apr. 12, 2002); HQ 115972 (Apr. 22, 2003); HQ 116117 (Feb. 26, 2004); HQ H311602 (Mar. 25, 2022); HQ H300962 (Apr. 14, 2022). Furthermore, CBP has also determined that the use of “a share or plow and cutting disc” that creates “a very narrow ‘slice” of the seabed under which the cable is buried is not an engagement in dredging.” See, e.g., HQ 113223 (Sept. 29, 1994) (relating to the use of an underwater trencher digging a 300 mm width trench) (citing to HQ 109412 (Mar. 29, 1988), published as C.S.D. 88-7). Specifically, CBP has reasoned that the use of a jetting tool to temporarily lift a “narrow ‘slice’” of the seabed amounts to a “temporary manipulation of the seabed” as opposed to the creation of a furrow or trench by operation of a share or plow and disc cutting wheel. See HQ 109412 (Mar. 29, 1988), published at C.S.D. 88-7. As such, this process is not “dredging” within the meaning of 46 U.S.C. § 55109. You have provided a detailed description and technical specifications for an example tool demonstrating that the trenching cable burial tool would open a 1 to 2-meter-deep trench, with an approximate width of 340 mm, to bury a cable, either simultaneously as the cable is laid, or as a separate operation. You also note that following the use of the tool, displaced soil would subside and collapse to bury the cable in the trench. In the present matter, we find that the use of the subject trenching tool is consistent with the activity described in HQ 115646 (Apr. 12, 2002) and HQ 113223 (Sept. 29, 1994) in that the machine will utilize jetting implements to bury a cable. Additionally, the displaced soil collapsing to bury the cable is consistent with HQ 115646 (Apr. 12, 2002). Accordingly, this activity does not constitute “dredging” within the meaning of 46 U.S.C. § 55109, regardless of whether the cable burial occurs simultaneously with laying of the cable or as a separate operation. Issue Two: Whether the use of the mechanical cutter cable burial tool deployed by a non-coastwise-qualified vessel to bury cable, either as the cable is laid or as a separate operation following when the cable is laid, constitutes a violation of the coastwise dredging statute, 46 U.S.C. § 55109? You have provided a detailed description and technical specifications for an example tool demonstrating that the mechanical cutter cable burial tool would open a 1 to 1.5-meter-deep trench, approximately 0.25 to 0.45 m wide, to lay and bury a cable, either simultaneously as the cable is laid, or as a separate operation. Similar to issue one, we find that the use of the mechanical cutter cable burial tool and the trench filling with sediment and sidewall parts, facilitating cable burial, is consistent with the activity described in HQ 113223 (Sept. 29, 1994) and HQ 109412 (Mar. 29, 1988), published at C.S.D. 88-7, in that the machine will utilize cutting implements to bury a cable and that the seabed will be left “virtually undisturbed.” HQ 109412 (Mar. 29, 1988). Therefore, use of the mechanical cutter cable burial tool deployed by a non-coastwise-qualified vessel to bury cable, either as the cable is laid or as a separate operation following when the cable is laid, does not constitute “dredging” within the meaning of 46 U.S.C. § 55109. See also HQ H327804 (Oct. 28, 2022); HQ H300962 (Apr. 14, 2022). Issue Three: Whether the transportation or installation of rock bags, concrete mattresses, or loose rocks to be placed over the subject cable on board a non-coastwise-qualified vessel violate the Jones Act, 46 U.S.C. § 55102? The coastwise law applicable to this portion of Aqua Ventus’ contemplated activity is the Jones Act, 46 U.S.C. § 55102, which prohibits the coastwise transportation of “merchandise” between coastwise points by non-coastwise-qualified vessels. As such, in order to determine whether the transportation of rock bags, concrete mattresses, or loose rocks violates the Jones Act, this section analyzes (1) whether the material transported constitutes “merchandise” under the Jones Act, (2) whether the transportation will occur between two coastwise points, and (3) whether installation of these materials on pre-laid cable on the seabed outside the U.S. three nautical mile limit violates the Jones Act. Pursuant to 46 U.S.C. § 55102: “[m]erchandise includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material.” As such, any cargo, regardless of value, is generally considered merchandise for the purpose of the Jones Act. CBP has also held, however, that “vessel equipment” or “equipment of the vessel” is not included within the general meaning of merchandise. “Vessel equipment” has been defined as “portable articles necessary and appropriate for the navigation, operation or maintenance of the vessel and for the comfort and safety of the persons on board.” Treasury Decision 49815(4) (1939). Items considered “necessary and appropriate for the operation of the vessel” are those items that are integral to the function of the vessel and are carried by the vessel. This may include those items that aid in the installation and construction of offshore infrastructure. The fact that an item is returned to and is not left behind on the seabed is a factor that weighs in favor of an item being classified as vessel equipment but is not a sole determinative factor. Whether such articles constitute vessel equipment is a fact-specific, case-by-case determination. CBP had previously held that concrete mats or other protective material placed over pipelines situated on the Outer Continental Shelf (“OCS”) would not be in contravention of 46 U.S.C. § 883 (now 46 U.S.C. § 55102). See HQ 115531 (Dec. 3, 2001) and HQ 113838 (Feb. 25, 1997). These rulings were based on an interpretation that the concrete mats were “necessary for the accomplishment of the vessel’s mission.” See HQ 113838 (the placement of sand bags or concrete mats “between and over” OCS pipelines “does not constitute the use of the vessel in coastwise trade, provided, such articles are necessary for the accomplishment of the vessel’s mission…”) (emphasis added). Similarly, in HQ 115531, CBP held that the placement of concrete mats “laid at intervals along the pipeline in anticipation of additional pipeline being laid” did not constitute coastwise trade, relying directly upon HQ 113838, which, as noted, applied the “mission of the vessel” standard. CBP has since revoked the “mission of the vessel” analysis as a means of characterizing items as “vessel equipment,” pursuant to its authority under 19 U.S.C. § 1625. See Customs Bulletin and Decisions, Vol. No. 53, No. 45 at 84 (Dec. 11, 2019). We remarked that, “…several CBP rulings analyzing the status of various items as “vessel equipment” departed from the language in T.D. 49815(4) in such a manner that the original meaning was expanded and, thus, used out of context…. As such, although T.D. 49815(4) formed the underlying criteria, its original meaning was expanded by the phrases quoted above and, thus, used out of context, with the expanded reading applied as the rule in these cases. Such an application, however, is less consistent with the more narrow meaning of “vessel equipment” contemplated by T.D. 49815(4).” Accordingly, CBP has clarified that the scope of vessel equipment includes items considered “necessary and appropriate for the navigation, operation or maintenance of the vessel,” as outlined above. The purpose and result of CBP’s December 2019 action was to narrow the scope of what had been interpreted to be “vessel equipment” by, in part, eliminating certain rationales such as “mission of the vessel.” As a result, we must determine whether the subject mats or other protective material constitute “vessel equipment” under the revised standard. In response to CBP’s follow-up communication, you clarified that the vessels to be used in the above proposed scenarios have not yet been contracted. CBP nevertheless notes that the concrete mats or other protective material do not aid the operation of the installation vessel itself. Also, the items are not utilized to aid actual installation, and thus are dissimilar from things used as tools for installation operations. Furthermore, the mats or other protective materials are put in a specific place, where they remain, to protect existing cable or pipeline. The concrete mats or other protective material thus will not be returned to the transporting vessel but will instead be left on the seabed. The facts that the items are not used by the vessel itself to operate the vessel, nor used as tools, and are not returned to the vessel, are persuasive evidence these items are not “vessel equipment” as interpreted by CBP. As a result, we conclude that the concrete mats or other protective materials are merchandise. Because the subject mats or other protective material to be placed over the transmission cable constitute merchandise, we next determine if the proposed transportation of such materials occurs between coastwise points. To do so, we examine the points at which the subject material will be laden and unladen. Your request states that rock bags, concrete mattresses, or loose rock to cover the cable would be laded on a non-coastwise-qualified vessel at a U.S. port and unladed onto previously laid cable on the seabed outside the U.S. three nautical mile limit. We determine that this scenario involves the lading of merchandise at a coastwise point (here, a U.S. port). With respect to the unlading of the subject mats or rocks, it is clear that the cable is a coastwise point. Section 4(a)(1) of the Outer Continental Shelf Lands Act of 1953 (“OCSLA”) provides that the Constitution and laws and civil and political jurisdiction of the United States extend to: the subsoil and seabed of the outer Continental Shelf; all artificial islands on the outer Continental Shelf; 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, including non-mineral energy resources; or any such installation or other device (other than a ship or vessel) for the purpose of transporting or transmitting such resources. (Emphasis added.) First, portions of cable resting in U.S. territorial waters are a coastwise point because the Jones Act unambiguously applies to points in the territorial sea, which is 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. 33 C.F.R. § 2.22(a)(2). Second, those portions of cable on the OCS also constitute a coastwise point, in accordance with the provisions of 43 U.S.C. § 1333(a)(1)(A)(iii) and (iv). Importantly, the plain language of the OCSLA makes clear that the Constitution and laws of the United States extend to installations or devices attached to the seabed serving a purpose as articulated in the OCSLA, including “any such installation or other device (other than a ship or vessel) for the purpose of transporting or transmitting such resources.” 43 U.S.C. § 1333(a)(1)(iv). The OCSLA’s legislative history further indicates that the coastwise laws extend to electric transmission cable placed on the seabed of the OCS. The initial language of the OCSLA, as passed in 1953, extended U.S. jurisdiction to “any such installation or other device…for the purpose of transporting such resources….” The relevant Senate Conference Report for this legislation further demonstrates that this language ensured U.S. jurisdiction over pipelines placed on the seabed of the OCS: “The new section 4 carries out the intent of the committee explained in [amendment 10] namely, that the jurisdiction of the Federal Government is extended to the seabed and subsoil of the outer continental shelf as such, as well as to artificial islands, and fixed structures, including pipelines, used in mineral resource development.” See Report from the Committee on Interior and Insular Affairs, U.S. Senate to Accompany S. 1901, the Outer Continental Shelf Lands Act at 23 (emphasis added). In amending the OCSLA, the 2021 NDAA adds the phrase “or transmitting,” which clearly extends the thrust of this language to include electric cable placed on the OCS for the purpose of transmitting electric power. See H300962 (Apr. 14, 2022) (determining that the text of OCSLA as well as the underlying legislative history extend U.S. jurisdiction to electric transmission cables placed on the U.S. OCS). Based on the foregoing, to the extent the rocks bags, concrete mattresses, or loose rock are transported on board a non-coastwise-qualified vessel from one U.S. point to the subject cable, which itself constitutes a coastwise point, then such transportation would be in violation of the Jones Act, 46 U.S.C. § 55102. HOLDINGS The use of the subject jet trenching cable burial tool with no plow or hoe-type aspects by a non-coastwise-qualified vessel to bury cable while simultaneously placing cable either as the cable is laid or as a separate operation following when the cable is laid, does not constitute “dredging” as contemplated by the coastwise dredging statute, 46 U.S.C. § 55109, and therefore would not be in violation of that law. The use of the subject mechanical cutter cable burial tool by a non-coastwise-qualified vessel to bury cable while simultaneously placing cable either as the cable is laid or as a separate operation following when the cable is laid, does not constitute “dredging” as contemplated by the coastwise dredging statute, 46 U.S.C. § 55109, and therefore would not be a violation of that law. The transportation of concrete mats and other material from one U.S. coastwise point to the subject cable constitutes coastwise trade under the Jones Act, 46 U.S.C. § 55102. CBP determines that such material is “merchandise” as contemplated by the Jones Act. As such, the use of a non-coastwise-qualified vessel to transport this material from one U.S. point to the subject cable, another coastwise point, would be in violation of the Jones Act. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” If the terms of the proposed activity vary from the facts stipulated to herein, this decision shall not be binding on CBP as provided for in 19 C.F.R. § 177(b)(1), (2) and (4), and § 177.9(b)(1) and (2). Sincerely, W. Richmond Beevers Chief, Cargo Security, Carriers, and Restricted Merchandise Branch Office of Trade, Regulations and Rulings U.S. Customs and Border Protection