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

HQ H333884 June 03, 2024 VES-3-02-OT:RR:BSTC:CCR H333884 HKC CATEGORY: Carriers Stefanos N. Roulakis Blank Rome 1825 Eye Street, NW Washington, DC 20006 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. Roulakis, This letter is in response to your August 15, 2023 ruling request, and subsequent communications, on behalf of your client [ ] regarding whether the transportation and installation of offshore wind export cables and associated seabed preparatory work 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 August 15, 2023 ruling request and subsequent correspondence. Your client has been awarded a contract to perform the transportation and installation of an export cable system (“ECS”) at the [ ] located on Bureau of Ocean Energy Management (BOEM) Renewable Energy Lease Area [ ]. The ECS will consist of two High Voltage Direct Current (“HVDC”) cores and one Fiber Optic (“FO”) cable. In order to complete the project scope, your client will perform various operations on the OCS, to include boulder removal, cable transportation and laying, equipment transportation, jointing operations, cable pull-in, trenching/excavation, and transportation of crewmembers, each of which is described in detail below. ISSUES Whether the relocation of boulders by a non-coastwise qualified vessel would violate the Jones Act, 46 U.S.C. § 55102, or the Dredging Statute, 46 U.S.C. § 55109. Whether the transportation and laying of cable would violate the Jones Act, 46 U.S.C. § 55102. Whether the transportation of cable installation equipment would violate the Jones Act, 46 U.S.C. § 55102. Whether the performance of cable jointing operations, and transportation of associated equipment including joint habitats and temporary cable hang-offs would violate the Jones Act, 46 U.S.C. § 55102. Whether the performance of cable pull-in operations violates the Jones Act, 46 U.S.C. § 55102. Whether the transportation of “free issued items” between different U.S. ports would violate the Jones Act, 46 U.S.C. § 55102. Whether the performance of controlled flow excavation activities by non-coastwise qualified vessels, or trenching works conducted by a jet trenching ROV, would violate the Dredging Statute, 46 U.S.C. § 55109. Whether the transportation and installation of remedial cable protection items would violate the Jones Act, 46 U.S.C. § 55102. Whether excess cable transported to a U.S. port or a foreign port by a non-coastwise qualified vessel would violate the Jones Act, 46 U.S.C. § 55102. Whether the transportation of marine crew personnel, as described below, would violate 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 Jones Act specifically prohibits the coastwise transportation of “merchandise” between coastwise points by non-coastwise qualified vessels. 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.” Further, 46 U.S.C. § 55102(a) also provides: “[m]erchandise includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material.” For purposes of the Jones Act, merchandise also includes “valueless material.” 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, 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, 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 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 relocation of boulders by a non-coastwise qualified vessel would violate the Jones Act, 46 U.S.C. § 55102, or the Dredging Statute, 46 U.S.C. § 55109. In the present matter, your client proposes utilizing a non-coastwise qualified vessel (either a foreign-flagged cable laying vessel or a foreign-flagged trenching support vessel) to relocate boulders located on the seabed in order to prevent such boulders from obstructing the export cable system route. The boulders in question are located both within U.S. territorial waters (three nautical miles from shore) and the seabed of the OCS (more than three nautical miles from shore). The boulders in question rest on a seabed bottom consisting of medium dense sand. They will be removed from seabed locations where there is no offshore wind or subsea infrastructure within 50 meters. The boulders will be picked up by what you describe as a “grab” or “boulder grab” device and relocated 10 to 50 meters away from their initial locations (clear of the cable route). To accomplish this, your client proposes utilizing a “grab” device launched from the non-coastwise qualified vessel above the target boulder. The grab secures the boulder and lifts it vertically a few meters above the seabed. While the vessel remains stationary, the vessel crane pivots on its axis with the boulder attached, moving it to a new location. The vessel crane uses the grab to lower the boulder back onto the seabed at a new location. The only equipment which will touch the seabed is the boulder grab. No suction devices are used in the boulder relocation. We next examine whether the transportation of boulders as described above would violate the Jones Act. Because the definition of “merchandise” includes valueless material, the boulders are considered merchandise. The coastwise laws generally apply to points in the territorial sea three nautical miles from shore. Therefore, the transportation of boulders between seabed locations as described in your request within the three nautical mile limit would be coastwise transportation for the purposes of the Jones Act, and the use of a non-coastwise-qualified vessel to conduct such transportation would violate 46 U.S.C. § 55102. However, here, “transportation” of the boulders for purposes of the coastwise laws does not occur. Specifically, the movement of the boulders 10 to 50 meters using the non-coastwise qualified vessel’s crane occurs while the vessel remains stationary. CBP has previously held that the use of a non-coastwise-qualified crane vessel to lade and unlade cargo or to construct or dismantle a marine structure is not coastwise trade and does not violate the coastwise laws, provided any movement of merchandise is effected exclusively by the crane and not by any movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. Similarly here, any movement of the boulders – whether on the seabed of the territorial sea or the OCS – is effected exclusively by the crane, as the vessel will remain stationary. Therefore, “transportation” of merchandise does not occur, and the relocation of the boulders would not be in violation of the coastwise laws. The Dredging Statute applies to the navigable waters of the United States, which is defined as the waters of the United States and the territorial seas, i.e., internal waters, landward of the territorial sea baseline and the belt, three nautical miles wide, seaward of the territorial sea baseline. CBP also extends the coastwise laws to the OCS (by virtue of the OCSLA) if the activity governed by a particular federal law (such as the Dredging Statute) is tied to the OCSLA’s purposes of exploring for, developing, producing, transporting, or transmitting resources. However, because the OCSLA only extends the civil and political jurisdiction to the OCS for purposes related to the OCSLA, dredging on the OCS that is not done in connection with such a purpose is not covered by 46 U.S.C. § 55109. Without deciding whether this activity is embraced by an OCSLA purpose, CBP does not consider the activity to be “dredging.” 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.” 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). The picking up of boulders utilizing a grab as described above would not be the use of “excavating machinery”. Therefore, the use of a grab device to pick up and put down boulders from the seabed as contemplated above would not violate the Dredging Statute, 46 U.S.C. § 55109. Issue Two: Whether the transportation and laying of cable would violate the Jones Act, 46 U.S.C. § 55102. In the present matter, your client proposes loading cable aboard the non-coastwise-qualified Cable Laying Vessel (“CLV”) in Fredrikstad, Norway, and transporting such cable to the project site located on the OCS where it will be paid out. Your client also proposes to load cable aboard a second non-coastwise qualified CLV at Charleston, South Carolina, and transporting it to the project site where it will be paid out. 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 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 on the OCS would not be in violation of the Jones Act, 46 U.S.C. § 55102. Issue Three: Whether the transportation of cable installation equipment would violate the Jones Act, 46 U.S.C. § 55102. During the course of ECS cable installation, the non-coastwise qualified CLV will lade various items of cable installation equipment in either Norway or a U.S. port and use them to install cable offshore. Such cable installation equipment will include jointing habitats and tools, as well as spare HVDC/FO cable jointing bodies and accessories, both laded at either a U.S. port or in Norway; and spare HVDC/FO cable sealing kits laded in Norway. Subsequently, this equipment will be unladed at a U.S. port (different from the U.S. port at which it was laded if it was laded at a U.S. port), or paid out with the cable as described below. The jointing habitat consists of a set of containers that is positioned over separate cable ends. This facilitates cable jointing operations of unjointed cable ends in a dry and clean environment offshore. The jointing habitat remains on the CLV throughout operations, and will be unladen from the vessel at a U.S. port upon the completion of cable installation. The spare HVDC/FO cable jointing body is a cylindrical shaped cover in which both cable ends that require jointing are placed once jointed. This cylindrical cover serves to protect the cable joint. At both sides of the jointing body additional jointing body accessories are mounted as part of the joint assembly to assist in protecting the cable over the first meters either side. If used, the cable jointing body is attached to the cable aboard the CLV, and subsequently paid out with the cable. The jointing body remains on the seafloor with the cable after it is paid out. If not used, the spare HVDC/FO cable jointing body remains on the CLV throughout operations, and will be unladen from the vessel at a U.S. port upon the completion of cable installation (see Issue 6 analysis). The spare HVDC/FO cable sealing kit is a cable end assembly consisting of a protecting sleeve and an end cap to protect the cable end. If used, the spare cable sealing kit is attached to the cable aboard the CLV as a cable seal, and subsequently paid out with the cable. The used cable seal then either is lifted back aboard the CLV and removed, in which case it will be unladen for scrap by the CLV at a foreign port (Option 1); or remains on the seafloor with the cable after it is paid out after the CLV has departed, until a third-party contractor removes it for scrap (Option 2). To clarify, under Option 1, some cable ends are subsequently lifted back aboard the CLV, where they are joined to another cable end using the jointing habitat. Prior to these cables being joined, the cable seals are removed. These used cable seals will remain aboard the CLV throughout operations, and are subsequently unladen at a foreign port when the CLV returns to Europe. In contrast, under Option 2, other cable ends remain on the seabed with the sealing kit attached when the CLV departs the project site; these cable ends are pulled onboard the offshore converter station, and the used cable seals are removed by a third-party contractor for scrap after the CLV has departed. If not used, the spare HVDC/FO cable sealing kit remains on the CLV throughout operations, and will be unladen from the vessel at a U.S. port upon the completion of cable installation (see Issue 6 analysis). CBP has held that “vessel equipment” or “equipment of the vessel” is not included within the general meaning of merchandise for purposes of the Jones Act. “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 clarified its consideration of vessel equipment in 2019, indicating that vessel equipment includes “all articles or physical resources serving to equip the vessel, including the implements used in the vessel’s operation or activity.” CBP elaborated that 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.” Whether such articles constitute vessel equipment is a fact-specific, case-by-case determination. Additionally, CBP has held that “[v]essel equipment placed aboard a vessel at one United States port may be removed from the vessel at another United States port at a later date without violation of the coastwise laws.” The fact that an item is returned to the vessel and not left behind on the seabed is a factor that weighs in favor of an item being classified as vessel equipment, but is not the sole determinative factor. Here, the jointing habitat is integral to the CLV’s cable-laying function, remains aboard the CLV throughout operations, and is transported to a U.S. port aboard the vessel upon completion of operations. Accordingly, the jointing habitat listed above would not be consider