Coastwise Transportation; Outer Continental Shelf; Cable Laying; 46 U.S.C. §§ 55102 and 55103; 46 U.S.C. § 55109; 19 CFR §§ 4.80a and 4.80b

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H330764 April 12, 2023 VES-3-02-OT:RR:BSTC:CCR H330764 HKC CATEGORY: Carriers Joshua P. Stein, Esq. Cozen O’Connor 1200 19th Street, NW Washington, DC 20036 RE: Coastwise Transportation; Outer Continental Shelf; Cable Laying; 46 U.S.C. §§ 55102 and 55103; 46 U.S.C. § 55109; 19 CFR §§ 4.80a and 4.80b Dear Mr. Stein: This letter is in response to your December 13, 2022 ruling request on behalf of your client [ ] regarding whether the transportation and installation of offshore wind export cables on the U.S. outer continental shelf (“OCS”) by non-coastwise-qualified vessels, as described below, would violate the coastwise laws. Our decision follows. FACTS The following facts are from your December 13, 2022 ruling request. Your client has been contracted to perform the transportation and installation of [ ] export cables from [ ] offshore substations at the [ ] Offshore Wind Farm located on the OCS [ ], to onshore connection points at [ ]. The export cables will be manufactured outside of the U.S. and transported by non-coastwise-qualified transport vessels to a port on the East Coast of the U.S. close to the [ ] windfarm site. Once in port, the export cables will be trans-spooled from the transport vessels to a quayside carrousel. The export cables will subsequently be trans-spooled from the quayside carrousel to a different, non-coastwise-qualified cable lay vessel (“CLV”). Once the export cables have been spooled onto the CLV, the CLV will lay [ ], as well as [ ] and interlink cables between the offshore substations. The cable section closest to the offshore substations will be laid on the seabed for wet storage. The cables will be buried using a jetting plow which simultaneously lays and buries the cable, creating a slot trench which closes immediately following the jetting plow’s passage. In the event the jetting plow is unable to achieve the required burial depth, the cable will be buried using a remote operating vehicle jetting tool which will similarly fluidize the soil. The CLV will arrive from Europe laden with concrete mattresses or other protective materials: these materials will remain on the CLV when it enters the U.S. port. In the event the export cable crosses telecommunications cables, these concrete mattresses will be placed by the CLV on top of the telecommunications cables before the export cable is laid. When operating in vicinity of offshore substations and telecommunications cables, the CLV will utilize a Controlled Flow Excavation (“CFE”) tool to lay the cable via seabed liquefication. The CLV will also install cable protection systems, to be loaded on the CLV from a port outside of the U.S., on a portion of the cable before it is laid. Remaining overlengths of export cable will be returned by the CLV to the same point of loading at the same U.S. port. Following cable laying, various operations will occur. A jointing vessel will lift cable sections from the seabed, connect them, and lay them back onto the seabed. Concrete mattresses or rock may be transported by a non-coastwise-qualified foreign vessel directly from a foreign port and installed on the cable as protection. Throughout operations, all crew transfers will be conducted in port or using coastwise-qualified crew transfer vessels. ISSUES Whether the transportation of export cables laden at a foreign port to a quayside point in a U.S. port by a non-coastwise-qualified transport vessel would violate the Jones Act. Whether the lading of export cables at a U.S. port onto a non-coastwise-qualified CLV, the wet storage of these export cables, their subsequent laying into the seabed by the CLV, and other ancillary operations would violate the Jones Act. Whether the use of a jet plow, remote operating vehicle jetting tool, or CFE tool to lay export cable would violate the dredging statute.  Whether the transportation of crewmembers aboard the non-coastwise-qualified CLV Vessel violates the Passenger Vessel Services Act, 46 U.S.C. § 55103? LAW AND ANALYSIS The coastwise law applicable to the transportation of merchandise, known as the Jones Act, is found at 46 U.S.C. § 55102, and 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 a foreign port, unless the vessel— is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and 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. The coastwise laws generally apply 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 CFR § 2.22(a)(2). In addition, Section 4(a)(1) of the Outer Continental Shelf Lands Act of 1953 (“OCSLA”), as amended by The William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, H.R. 6395, 116th Cong. § 9503 (2021), provides that the Constitution and laws and civil and political jurisdiction of the United States are extended 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). Accordingly, the OCSLA, as amended in 2021, extends U.S. jurisdiction to devices attached to the seabed of the OCS for the purpose of producing non-mineral energy such as wind energy. Pursuant to 46 U.S.C. § 55109, only coastwise-qualified vessels may engage in dredging in the navigable waters of the United States, which provides, 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 the Latin 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. Pursuant to 46 U.S.C. § 55103 (“the Passenger Vessel Services Act” or PVSA), only coastwise-qualified vessels may transport passengers between ports or places in the United States, providing in the pertinent part: Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel- (1) wholly owned by U.S. citizens; and (2) has a certificate of documentation with a coastwise endorsement. The coastwise laws apply to the United States, including U.S. island territories and possessions, except for American Samoa, the Northern Mariana Islands, and the Virgin Islands. A non-coastwise-qualified vessel transporting passengers embarking from a U.S. port must disembark them at the same U.S. port in order to avoid a violation of 46 U.S.C. § 55103. A passenger is defined under 46 U.S.C. § 55103 and 19 C.F.R. § 4.50(b) as “any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business.” Furthermore, the shipboard activities engaged in by such aforementioned individuals while traveling on a non-coastwise-qualified vessel between coastwise ports must be “directly and substantially” related to the operation, navigation, ownership, or business of the vessel itself in order for such individuals to not be considered as passengers under these provisions of law. Issue One: whether the transportation of export cables laden at a foreign port to a quayside point in a U.S. port by a non-coastwise-qualified transport vessel would violate the Jones Act. In the present matter, the export cables will be manufactured outside of the United States and transported by non-coastwise-qualified transport vessels to a port on the East Coast of the U.S. Once in port, the export cables will be trans-spooled from the transport vessels to a quayside carrousel. 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 previously determined that cable transported, but not paid out onto the seabed, by a vessel is merchandise. Accordingly, cable carried aboard a vessel between two ports would be considered merchandise. The Jones Act specifically prohibits the coastwise transportation of “merchandise” between coastwise points by non-coastwise-qualified vessels. To determine if the proposed transportation occurs between coastwise points, we must examine the points at which the subject merchandise will be laden and unladen. The Jones Act extends 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. OCSLA Section 4, as amended by the 2021 NDAA, extends U.S. law to “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.” Here, the proposed transportation is occurring between a foreign port and a U.S. port. Because a foreign port is not a coastwise point, the Jones Act prohibition on the transportation of merchandise between coastwise points is not implicated. Therefore, the use of a non-coastwise-qualified vessel to transport export cables between a foreign port and a U.S. port would not violate 46 U.S.C. § 55102. Issue Two: whether the lading of export cables at a U.S. port onto a non-coastwise-qualified CLV, the wet storage of these export cables, their subsequent laying onto the seabed by the CLV, and other ancillary operations would violate the Jones Act. CBP has long held that the sole use of a vessel in laying pipe or cable between two coastwise points is not considered a use in the coastwise trade of the United States. In doing so, CBP has reasoned that situations in which material is not landed as cargo but is only paid out in the course of the installation operation makes such operation permissible (i.e., “paid out/not unladen”). Further, since the use of a vessel in pipe or cable laying is not a use in the coastwise trade, a non-coastwise-qualified vessel may carry pipe or cable which is laid between such points by that vessel. However, the transportation of pipe or cable by any vessel other than the vessel that is laying pipe to a pipe-laying location at a point within U.S. territorial waters would be considered coastwise trade and would therefore have to be accomplished by a vessel meeting the statutory requirements entitling it to engage in such trade. In line with these rulings, your request describes a scenario in which the subject cable will initially be paid out by the CLV onto the seabed of U.S. territorial waters and the OCS. As such, the proposed use of the non-coastwise-qualified CLV to lay cable within U.S. territorial waters and on the OCS would not be in violation of the Jones Act, 46 U.S.C. § 55102. Similarly, CBP has held the “wet storage” of cable does not constitute coastwise trade. CBP has also previously confirmed that the movement of submarine cable to effect the repair, replacement, or installation of a section of cable does not constitute coastwise trade. Furthermore, CBP contemplated a situation in which an umbilical would be “cut to the proper length, then abandoned on the seabed, including some additional length, to allow for pulling up to the platform….” CBP determined that such an operation, including the initial “abandonment” and eventual cable pull in, would not violate the Jones Act because it still constituted a cable-laying operation. In relevant part, your request states that the cable sections closest to an offshore substation will be laid on the seabed for wet storage. Once the cable is ready for attachment, the CLV will return to pull in the cable. In line with CBP precedent, this movement of the cable as a part of a cable-laying operation would not be in violation of the Jones Act, 46 U.S.C. § 55102. Finally, your request contemplates the placement of protective concrete mattresses, rock, and cable protection systems on portions of the cable. Pursuant to 19 U.S.C. § 1401(c), the word “merchandise” means goods, wares and chattels of every description and includes merchandise the importation of which is prohibited. Monetary instruments as defined in section 5312 of Title 31 of the United States Code are also considered merchandise. Further, the Jones Act, 46 U.S.C. § 55102, states “[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 the board.” CBP has previously ruled that concrete mats and other cable protection materials carried aboard a CLV should be considered merchandise, not vessel equipment, reasoning that such cable protection materials will not be used to aid in the operation of the CLV itself or in the actual installation of the subject cable. Rather, such materials will be unladed on top of the subject cables and are intended to perform a function separate from that of the vessel. Accordingly, the protective concrete mattresses, rock, and cable protection systems carried aboard the CLV will be considered merchandise. Each of these materials will be laden aboard the CLV (or another non-coastwise-qualified vessel) at a foreign port and will remain on board the vessel until the materials are unladed onto the cable on the OCS. CBP has previously ruled that the transportation of such materials from a U.S. point to an offshore transmission cable would be violative of 46 U.S.C. § 55102. However, your request notes that such materials will be laded aboard the subject vessels at a foreign port. Because a foreign port is not a coastwise point, the Jones Act prohibition on the transportation of merchandise between coastwise points is not implicated. Therefore, these proposed activities would not violate 46 U.S.C. § 55102. Issue Three: Whether the use of a jet plow, remote operating vehicle jetting tool, or CFE tool to lay export cable would violate the dredging statute. CBP has long 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.” CBP has also held, however, that the “use in United States territorial waters from a cable laying or repair vessel of cable burial devices which temporarily remove from the seabed, by either an emulsification or a share or plow and cutting disc, a very narrow ‘slice’ of the seabed under which the cable is buried is not an engagement in dredging in the United States . . . .” CBP has long ruled that the use of water jets does not constitute “dredging” under the Dredging Act and can be performed by a non-coastwise-qualified vessel in U.S. territorial waters and on the U.S. OCS. 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. CBP has distinguished between the use of a physical plow used to create an underwater furrow or trench, holding that this may constitute dredging, and the use of jetting system to fluidize the seabed (which does not constitute dredging). In the present matter, the subject cable-burial device employs a jetting action that would emulsify the soil of the seabed, creating a trench where cable will be installed creating a slot trench which closes immediately following the jetting plow’s passage. Such activity does not constitute “dredging.” Accordingly, the use of the devices by a non-coastwise-qualified vessel would not violate 46 U.S.C. § 55109. Issue Four: Whether Transportation of the Installation Crew Violates 46 U.S.C. § 55103. The Passenger Vessel Services Act (“PVSA”), 46 U.S.C. § 55103, provides, in relevant part: (a) In General. Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel- is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and 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. The applicable regulation at 19 CFR § 4.50(b) defines a passenger as “any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business.” In accordance with previous CBP rulings, individuals transported between coastwise points are not classified as “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b) if they are required to be onboard to contribute to the accomplishment of the operation or navigation of the vessel during the voyage or are onboard because of a necessary vessel ownership or business interest during the voyage. We have previously determined that CLV crew members directly and substantially connected with the laying of submarine electric transmission cables are not considered “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b). Here, you have provided a list of 13 vessel crew positions who will work aboard the non-coastwise-qualified CLV, jointing vessel, and/or rock installation vessel. These crewmembers will perform a range of technical, engineering, surveying, compliance, and supervisory functions. Because each of the individuals identified performs duties directly and substantially connected to the operation or navigation of the subject vessels, they are not passengers within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b). HOLDING The transportation of export cables laden at a foreign port to a quayside point in a U.S. port by a non-coastwise qualified transport vessel does not constitute coastwise trade as contemplated by the Jones Act, 46 U.S.C. § 55102 and 19 CFR § 4.80b(a). The lading of export cables at a U.S. port onto a non-coastwise qualified CLV, the wet storage of these export cables, their subsequent laying into the seabed by the CLV, and other ancillary operations do not constitute coastwise trade within the meaning of the Jones Act, 46 U.S.C. § 55102 and 19 CFR § 4.80b(a). The use of a jet plow, remote operating vehicle jetting tool, or Controlled Flow Excavation tool by the non-coastwise-qualified CLV to create a path along the seabed while simultaneously placing export cable does not constitute “dredging” as contemplated by the dredging statute, 46 U.S.C. § 55109, and therefore would not be a violation of that law. The transportation of CLV crew members directly and substantially connected with the laying of submarine electric transmission cables on board the CLV, jointing vessel, and or rock installation vessel would not be in violation of the PVSA, 46 U.S.C. § 55103, to the extent the crew are performing tasks on board the vessel that are directly and substantially related to the operation of the vessels. Sincerely, W. Richmond Beevers Chief Cargo Security, Carriers and Restricted Merchandise Branch Office of Trade, Regulations and Rulings U.S. Customs and Border Protection