Coastwise Transportation; Undersea Cable Laying; Dredging; 46 U.S.C. § 55102; 46 U.S.C. § 55109; 19 C.F.R. § 4.80b

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H332364 July 25, 2023 VES-3-02-OT:RR:BSTC:CCR H332354 TNA CATEGORY: Carriers John S. West, Esq. Troutman Pepper Hamilton Sanders LLP Troutman Pepper Building 1001 Haxall Point Richmond, VA 23219 RE: Coastwise Transportation; Undersea Cable Laying; Dredging; 46 U.S.C. § 55102; 46 U.S.C. § 55109; 19 C.F.R. § 4.80b Dear Mr. West: This letter is in response to your May 24, 2023, ruling request on behalf of your client, [], (“the Company”) regarding whether dredging and cable laying activities, related to the installation of electric power transmission cable by a non-coastwise-qualified vessel, would violate the coastwise laws. Our decision follows. FACTS The following facts are taken from your ruling request. The Company is a prime contractor on a multi-stage cable-laying and dredging project that will take place in the Hudson River. This project involves the installation of two solid state high voltage direct current electric cables in New York State. The project is slated to begin no earlier than August 2023, and will continue through 2025. This project will use a variety of vessels to complete the work. It will use one trenching support vessel (“TSV”), which will be the Greek-flagged, non-coastwise-qualified []. It will also use two cable lay vessels, the [] and the [], both of which are Greek-flagged, non-coastwise-qualified vessels. The TSV will be equipped with a medium sized work class remotely operated vehicle (“ROV 1”), which will support the TSV’s underwater operations, including post-installation survey operations to determine the burial depth of the installed cables. ROV 1 will be launched from, and recovered to, the TSV. Cable Lay Vessel 1 will be equipped with an ultra-compact work class remotely operated vehicle (“ROV 2”), which provides underwater support for underwater operations, including touchdown monitoring of the cables during free-lay and visual inspections of utility crossings prior to the cables being laid. The ROV 2 will be launched from and recovered to Cable Lay Vessel 1. Cable Lay Vessel 2 will be equipped with a work class remotely operated vehicle (“ROV 3”) that will provide underwater support, including touchdown monitoring of the cables during free-lay and visual inspections of utility crossings before these cables are laid. ROV 3 will be launched from and returned to Cable Lay Vessel 2. The project will also use several burial tools. The first is the [] (“Burial Tool 1”), a soft soil, lightweight jetting sled. Burial Tool 1 is equipped with a water jetting system that supplies high pressure water to the cutting nozzles of a stinger to fluidize the riverbed for purposes of laying and burying cable. It can create a trench up to 0.4 meters wide and up to 3.0 meters deep. The [] (“Remedial Burial Tool 2”) is a shallow-water tool that is capable of burying cables up to 2.2 meters deep. Although it can be operated in other modes, the Remedial Burial Tool 2 will only be used in jetting mode throughout the project. The [] (“Remedial Burial Tool 3”) can create a trench up to 0.75 meters wide and up to two meters deep. The [] (“Remedial Burial Tool 4”) can create a trench up to 0.48 meters wide and up to three meters deep. These three remedial burial tools are jet-trencher burial tools that use water jets to fluidize the riverbed, allowing the cable to settle into the trench that the tool creates. After the cables are buried, the fluidized soil will naturally settle over the buried cable. This project will be completed in five phases. In Phase One, if it is deemed necessary by permitting authorities, the TSV will conduct four days of turbidity or total suspended solids trials on the riverbed of the Upper Hudson River. The TSV will use Remedial Burial Tool 2 to fluidize the riverbed in various locations. This will measure the amount of turbidity the tool creates when performing jetting activities to install or bury cable. No soil or sediment will be removed, and no cable installation will take place during these trials. Phase One will take place during August 2023. In the project’s second phase, Cable Lay Vessel 1 will load in [], a foreign country, and transit to the Upper Hudson River, close to the town of Catskill, New York. Cable Lay Vessel 1 will assist with cable pull-in operations at previously constructed horizontal directional drilling (“HDD”) near Catskill. During this phase, local subcontractors will be hired to use coastwise-qualified vessels and divers to support cable pull-in onshore operations through the HDD. The coastwise qualified vessels could be vessels such as barges and/or workboats; they and the divers will assist in operations such as de-burying, preparing, and monitoring the HDD conduit. A shore-side messenger line will be retrieved from the offshore end of the HDD and delivered to the vessel deck using either divers from the coastwise-qualified vessels or ROV 2. The cable will be attached to the messenger line and pulled through the HDD conduit by means of a winch positioned onshore. Cable Lay Vessel 1 will then move away from the site of the HDD and use Burial Tool 1 to simultaneously lay and bury cable on the riverbed on the Upper Hudson River. Cable Lay Vessel 1 will also surface lay cable that will later be buried by Remedial Burial Tool 2, or, in the alternative, by the other remedial burial tools, all of which will be operated by the TSV. The TSV may also use any of the remedial burial tools to improve the cable’s burial depth by making remedial burial passes that fluidize the soil beneath the cable and allow the cable to settle naturally to a greater depth. After completing the cable laying and burial, Cable Lay Vessel 1 will place a cable end in wet storage on the riverbed. This will involve positioning a sealed cable end fitted with a standard cable recovery system on the riverbed. It will also be equipped with a buoy for later retrieval. When Cable Lay Vessel 1 completes Phase Two, it will return to Europe. Coastwise-qualified U.S.-flagged vessels will then be used to conduct pre-lay grapnel run operations prior to cable laying and burial operations. Phase Two will begin in in June 2024, and cable laying and burial activities will begin in August 2024. Pre-lay grapnel run operations will take place in August and September 2024. In Phase Three, Cable Lay Vessel 2 will load cable in [], a foreign country, and transit to the Upper Hudson River. Cable Lay Vessel 2 will first pick up the end of the cable left on the riverbed by Cable Lay Vessel 1 and join that to new cable. Cable Lay Vessel 2 will then use Burial Tool 1 to simultaneously lay and bury cable using the same process as in Phase Two. Cable Lay Vessel 2 will also surface lay cable, which the TSV will then bury using Remedial Burial Tool 2 using the same process as in Phase Two. The TSV may also use Remedial Burial 2 to improve the burial depth of the cable by making remedial burial passes using the same process described in Phase Two. After completing the cable laying and burial, Cable Lay Vessel 2 will place a cable end in wet storage on the riverbed, using the same procedures as in Phase Two. The vessel will then transit to a local port and trans-pool additional cable from a non-coastwise qualified vessel carrying cable laded on that vessel in [], a foreign country. Phase Three will commence in July 2024, with cable laying and burial beginning in September 2024. In Phase Four, Cable Lay Vessel 2 will pick up the end of the cable left in the riverbed at the end of Phase Three and join it to new cable. It will then use Burial Tool 1 to simultaneously lay and bury cable, the same way as described in Phase Two. Cable Lay Vessel 2 will also surface lay cable, which the TSV will subsequently bury using Remedial Burial Tool 2, using the same process as described in Phase Two. The TSV may also use Remedial Burial Tool 2 to improve the cable’s burial depth by making remedial burial passes using the same process as described in Phase Two. After completing the cable laying and burial, Cable Lay Vessel 2 will assist with cable pull-in operations at an HDD near Stony Point, New York. Local subcontractors will use coastwise qualified vessels such as barges or workboats and divers to support pull-in onshore operations. This includes de-burying, preparing, and monitoring the HDD conduit. Cable will be floated from the Cable Lay Vessel 2 to the entrance of the HDD. It will then be attached to a shore winch wire passed through the entry point and pulled through the entry point via a winch positioned on shore. When the cable pull-in is complete, Cable Lay Vessel 2 will return to Europe. Phase Four will begin in September 2024, with cable laying and burial activities beginning in October 2024. In Phase Five, Cable Lay Vessel 2 will load cable in [], a foreign country, and transit to the Lower Hudson River between Congers, New York and the Harlem River. It will first float cable to a position near or in the Harlem River in order to join that cable to cable laid in previous phases. If the joining is in the Harlem River, it will be performed aboard a coastwise qualified vessel or barge. If the joint is in the Hudson River, it may be performed by either Cable Lay Vessel 2 or aboard a coastwise qualified vessel or barge. Cable Lay Vessel 2 will then use Burial Tool 1 to simultaneously lay and bury cable using the same process described in Phase Two. It will also surface lay cable. Cable Lay Vessel 2 will then assist with cable pull-in operations at an HDD near Clarkstown, New York. Local subcontractors will be hired to use coastwise qualified vessels such as barges and workboats and divers to support cable pull-in onshore operations through the HDD, including de-burying, preparing and monitoring the HDD conduit. Cable will be floated from Cable Lay Vessel 2 to the entrance of the HDD, attached to a shore winch wire passed through the entry point, and pulled through the entry point via a winch positioned onshore. Cable Lay Vessel 2 will then transit to a mobilization port and exchange Burial Tool 1 for Remedial Burial Tool 2, which will be used to bury the surface-laid cable using the same process described in Phase Two. Cable Lay Vessel 2 may also use Remedial Burial Tool 2 to improve the burial depth of the cable by making remedial burial passes using the same process as described in Phase Two. Following the completion of all cable laying and burying activities, Cable Lay Vessel 2 will return to Europe. Phase 5 will commence in July 2025 with cable laying and burial activities beginning in August 2025. ISSUES Whether the proposed cable laying and burial operations constitute a violation of 46 U.S.C. § 55109? Whether the proposed cable lay and burial operations by a non-coastwise-qualified vessel violate the Jones Act, 46 U.S.C. § 55102? LAW AND ANALYSIS Generally, the coastwise laws prohibit the transportation of merchandise or passengers between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.” 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. Issue One: Whether the Creation of the Cable Pathway Violates 46 U.S.C. § 55109 Pursuant to 46 U.S.C. § 55109, 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 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. CBP 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 109108 (Nov.13, 1987); HQ 109910 (Jan. 26, 1989 published as C.S.D. 89-64). By contrast, CBP has long 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 consistently stated that the use of cable-burial devices by cable-laying vessels, which employ a water jetting action that emulsifies or fluidizes the seabed surrounding the cable, does not constitute an engagement in dredging. This fluidizing process creates a long, narrow trench as the jetting action displaces the particles of the seabed until the cables are buried. The particles then return to the seabed by way of the ocean currents to bury the cables; none of the seabed material is removed in the process. See HQ 109412 (March 29, 1988); HQ 109882 (December 2, 1988); HQ 115646 (Apr. 12, 2002); HQ 115972 (April 22, 2003); HQ 116117 (February 26, 2004); HQ H311602 (March 25, 2022); HQ H300962 (April 14, 2022). Furthermore, in HQ 113223 (Sept. 29, 1994), CBP reasoned that this process “temporarily lift[s]” a “narrow ‘slice’” of the seabed, which 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; see also HQ H311602; HQ H300962; HQ H329630 (Mar. 9, 2023). As such, this process is not “dredging” within the meaning of 46 U.S.C. § 55109. In the present case, the Hudson River is an internal waterway of the United States, landward of the territorial sea baseline. As such, the coastwise laws apply. In addition, the cable laying and burial process at issue is similar to the CBP rulings regarding cable laying and burial described above. The burial tool uses a water jetting system that supplies high pressure water to the cutting nozzles of a stinger to fluidize the riverbed, and the remedial burial tools use water jets to fluidize the riverbed. Both allow the cable to settle into the trench that these tools create. They also move the seabed in such a way that the seabed’s particles are replaced once the cables are buried. Both act without the use of a mechanical plow or cutter. Similarly, the TSV’s turbidity trials on the Upper Hudson River in August 2023 will use Remedial Burial Tool 2 to fluidize the riverbed in various locations in order to measure the amount of turbidity the tool creates when performing jetting activities. It uses the same process to fluidize the riverbed as when laying and burying cable. No soil or sediment will be removed during these trials. The same is also true for the remedial tools when they perform remedial burial passes to deepen the trench in which the cables are buried. As such, we find that these actions constitute a “temporarily lift” of a “narrow ‘slice’” of the seabed that amounts to a “temporary manipulation of the seabed” rather than the creation of a furrow or trench by operation of a share or plow and disc cutting wheel. As a result, we find that this does not constitute dredging for the purposes of 46 U.S.C. § 55109. Issue Two: Whether the Cable Lay and Burial Violate the Jones Act, 46 U.S.C. § 55102 The Jones Act, 46 U.S.C. § 55102, 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. Pursuant to 19 U.S.C. § 1401(c), the word “merchandise” is defined as “goods, wares, and chattels of every description, and includes merchandise the importation of which is prohibited, and monetary instruments as defined in section 5312 of Title 31.” For purposes of the Jones Act, merchandise also includes “valueless material.” 46 U.S.C. § 55102(a)(2). The CBP Regulations promulgated under the authority of 46 U.S.C. § 55102 provide that a coastwise transportation of merchandise takes place when merchandise laden at a coastwise point is unladen at another coastwise point, regardless of origin or ultimate destination. 19 C.F.R. § 4.80b(a). However, 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. See, e.g., HQ 115431 (Sept. 4, 2001); HQ H311602 (Mar. 25, 2022); HQ H318628 (June 30, 2022); HQ H329630 (Mar. 9, 2023). In doing so, CBP has reasoned that in these situations, material is not landed as cargo but is only paid out in the course of the installation operation (i.e., “paid out/not unladen”). Furthermore, 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 that pipe or cable at a point within U.S. territorial waters would be considered coastwise trade; therefore, that transportation would have to be accomplished by a coastwise-qualified vessel. See, e.g., HQ H311602; HQ H318628; HQ H329630. In the present case, you state that the subject cable will be laded onto the TSV in [], both for the initial laying of the cable and for the later phases of the project, which will connect cable with the cables that were laid in earlier phases. [] is a foreign location. The direct transportation of the cable between a foreign location and a U.S. point- i.e., the Hudson River- does not constitute coastwise transportation within the meaning of the Jones Act. Furthermore, even if the cable is laded at a U.S. point (i.e., via transfer to a vessel at a U.S. port or within U.S. territorial waters), the subject cable will initially be “paid out” from a the TSV onto the riverbed of U.S. territorial waters. As a result, we find that the initial cable placement does not constitute transportation under the Jones Act. Thus, the proposed use of the non-coastwise-qualified TSV would not be in violation of the Jones Act, 46 U.S.C. § 55102. In prior rulings, CBP has determined that the process in which previously placed cable ends may be picked up and connected with additional cable does not constitute coastwise trade, as this “still constitute[s] a cable-laying operation.” See, e.g., HQ H300962 (citing HQ 113711 (Nov. 26, 1996)); HQ H327804 (Oct. 28, 2022). Thus, in the present case, the TSV’s transportation of the cable in later phases of the project, in order to combine it with additional cable sections from prior phases, does not constitute coastwise trade in violation of 46 U.S.C. § 55102. Lastly, CBP has held that cable pull-in operations do not constitute coastwise trade because they are still part of the cable laying process. In HQ H311602 (Mar. 25, 2022), for example, CBP examined a cable pull-in operation where a CLV raised the cable from its resting point along the seabed and moved it to the location of an offshore platform while the cable end was in lifted position, and lowered the cable back to the seabed. There, CBP found that this did not violate the Jones Act. In support of this conclusion, HQ H322602 cited HQ 113711 (Nov. 26, 1996), where CBP determined that an operation that included “the initial ‘abandonment’ and eventual cable pull in, would not violate the Jones Act because it still constituted a cable-laying operation.” See HQ H322602, citing HQ 113711. In the present case, the CLV will be engaged in pull-in operations. This includes de-burying, preparing, and monitoring the HDD conduit. Cable will be floated from the CLV to the entrance of the HDD, attached to a shore winch wire passed through the entry point, and pulled through the entry point via a winch position on the shore. In accordance with HQ H311602 and HQ 113711, we find that this pull-in operation is part of the cable laying process, and therefore would not be in violation of the Jones Act. HOLDINGS The proposed cable laying and burial operations do not constitute dredging within the meaning of the Dredging Statute, 46 U.S.C. § 55109. The proposed cable laying and burial operations do not constitute coastwise trade within the meaning of the Jones Act, 46 U.S.C. § 55102 and 19 C.F.R. § 4.80b(a). 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 CBP 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 import or export contracts and results of the sampling records vary from the facts stipulated to herein, or CBP ascertains discrepancies based upon a review of any other pertinent information, 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/Supervisory Attorney-Advisor Cargo Security, Carriers and Restricted Merchandise Branch Office of Trade, Regulations and Rulings U.S. Customs and Border Protection