HQ 110959

August 8, 1990

VES-3-15 CO:R:P:C 110959 BEW

CATEGORY: Carriers

Martha J. Schoonover, Esq.

Fulbright & Jaworski

1150 Connecticut Avenue, N.W.

Washington, D.C. 20036

RE: Applicability of the coastwise laws to transportation and

installation of marker buoys to be used as a lateral

mooring system for a tension leg platform on the United

States outer Continental Shelf; 46 U.S.C. App. 883; 43

U.S.C. 1331

Dear Ms. Schoonover:

This is in reference to your letters of March 30, April 5,

April 24 and July 17, 1990, concerning your request for a ruling

on the impact of the coastwise trading provisions of the Jones

Act on the transportation and installation of a lateral mooring

system (LMS) to be connected to a tension leg platform (TLP) to

be used for deep water oil and gas production and development on

the United States outer Continental Shelf (OCS) in the Gulf of

Mexico.

FACTS:

You state that in approximately three years, Shell Offshore,

Inc. (Shell) plans to install a TLP for deep water petroleum

exploration and production on the OCS in the Gulf of Mexico.

The site is approximately 150 miles from shore off the coast of

Louisiana. You state that when the TLP is first brought to the

site, it will be moored using a LMS consisting of eight lines,

each anchored to the OCS.

You state that the LMS will consist of eight or more

individual mooring lines made up of wire rope, chain, buoys, and

anchors. You state that the LMS will eventually help secure the

TLP in place and move it laterally when needed, and will be

installed in two separate phases, as much as one year apart. Its

purpose is to move and hold the hull and deck in various surface

positions during drilling and production activities and to help

to hold the TLP on location during storm conditions.

For the transportation and installation of the eight preset

LMS, you state that Coflexip will use the FLEXSERVICE III, a

foreign-owned vessel built in Norway and registered in the

Bahamas.

The components of each preset LMS would be transported from

a port in Houston, Texas, to the installation site aboard the

FLEXSERVICE III. The anchor would be deployed first by attaching

it to the ground wire and lowering it to the sea bed. The

various other components, the dip chain, riser wire, lower

connection pendant, riser buoy, upper connection pendant, pendant

with flotation collars and finally the marker buoy, would be

sequentially connected and deployed by the FLEXSERVICE III. At

the conclusion of the first phase of installation of the LMS,

each of the eight present LMS \"legs\" would have been deployed.

The eight preset LMS would remain exactly as installed by

the LMS contractor for up to a year, until the TLP is brought to

the site and installed; they would not be connected to each other

or to anything else, except to the seabed by the anchor, unless a

drilling vessel employed by Shell would require their use at the

site prior to the arrival of the TLP. They would be marked only

by marker buoys, one marker buoy to each leg.

You state that as a part of the second phase, i.e., the

attachment of the LMS to the TLP, the marker buoys of each leg

would be retrieved and the intermediate and platform sections of

the LMS would be installed and attached to the TLP. The marker

buoy and pendant with flotation collars would be part of the LMS

only to facilitate the eventual retrieval of the preset LMS, and

would not be incorporated in the eventual lateral mooring system.

In your letter dated April 5, 1990, you state that at the

present time there is nothing on the seabed at the LMS site, but

that at the time that Coflexip would install its preset LMS,

there might be one or more temporarily abandoned wells in the

vicinity of the LMS installation site. The wells will not be

marked on the surface by a buoy marker or other device or

installation.

Additional facts stated in your April 24, 1990, letter

indicate that the mission of the FLEXSERVICE III is to pay out a

series of chains and wires which will eventually be used by the

TLP as the LMS, that the FLEXSERVICE III is designed to pay out

cable and flexible pipe from a basket on its deck. It is used

exclusively for such cable or pipe laying operations, and it is

not used to transport cargo. The LMS system will be paid out

from the FLEXSERVICE III in the following series of steps:

1\. The cables and associated items on the layout and

configuration of the FLEXSERVICE III (submitted with

your request) are all items on the vessel which are to

be integral parts of the mooring system or are the

ship\'s equipment necessary to install the LMS.

2\. Each of the eight LMS to be installed consists of an

anchor, a wire rope ground wire, a dip chain, a wire

rope riser wire, upper and lower wire rope connection

pendants, a riser buoy, a pendant with flotation

collars and a marker buoy.

You request that we rule on the following issues.

ISSUES:

1\. Is the installation site on the OCS, at which the only

contact with the seabed is a temporary wire rope and

chain, attached to the seabed by an anchor and marked

only by marker buoys, one marker buoy to each leg, an

anchor mooring system (LMS), which is intended to hold

the hull and superstructure (TPL) on location during

exploration, development, and production of oil

resources on the OCS, a coastwise point.

2\. Is the installation site on the OCS for purposes stated

in issue 1, where there are one or more temporarily

abandoned wells in the vicinity, a coastwise point

during the initial installation.

3\. If the installation site of the LMS is a coastwise

point would a foreign flag vessel be in violation of

the coastwise laws when the foreign-vessel is a cable

laying vessel and is laying cable or pipe-laying?

4\. Whether the installation of a lateral mooring system as

described in the FACTS is cable-laying within the

meaning of the coastwise laws.

LAW AND ANALYSIS:

Section 27 of the Act of June 5, 1920, as amended (41 Stat.

999; 46 U.S.C. App. 883, often called the Jones Act), provides,

in pertinent part, that:

No merchandise shall be transported by water, or by

land and water, on penalty of forfeiture of the

merchandise (or a monetary amount up to the value

thereof as determined by the Secretary of the Treasury,

or the actual cost of the transportation, whichever is

greater, to be recovered from any consignor, seller,

owner, importer, consignee, agent, or other person or

persons so transporting or causing said merchandise to

be transported), between points in the United States

\... embraced within the coastwise laws, either directly

or via a foreign port, or for any part of the

transportation, in any other vessel than a vessel built

in and documented under the laws of the United States

and owned by persons who are citizens of the United

States \....

For purposes of the coastwise laws, a point in United

States territorial waters is considered a point embraced within

the coastwise laws. The territorial waters of the United States

consist of the territorial sea, defined as the belt, 3 nautical

miles wide, adjacent to the coast of the United States and

seaward of the territorial sea baseline.

Section 4(a) of the Outer Continental Shelf Lands Act of

1953, as amended (67 Stat. 462; 43 U.S.C. 1333(a)) (OCSLA),

provides, in pertinent part, that the laws of the United States

are extended 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 there- from \... to

the same extent as if the outer Continental Shelf were

an area of exclusive Federal jurisdiction located

within a State.

Under this provision, Customs has ruled that the coastwise

laws and other Customs and navigation laws are extended to mobile

oil drilling rigs during the period they are secured to or

submerged onto the seabed of the United States OCS. The same

principles have been applied to drilling platforms, artificial

islands, and similar structures attached to the seabed of the OCS

for the purpose of resource exploration operations, including

warehouse vessels anchored over the OCS when used to supply

drilling rigs on the OCS.

Section 203 of the OCSLA Amendments of 1978 (92 Stat. 629,

635\) (1978 Amendments), amended section 4(a) of the OCSLA by

substituting \"\... and all installations and other devices

permanently or temporarily attached to the seabed \...\" for \"\...

and fixed structures \....\" The purpose of this change was

stated in the legislative history to be to make it clear \"\...

that Federal law is to be applicable to all activities on all

devices in contact with the seabed for exploration, develop-

ment, and production.\" Thus, Federal law was intended \"\... to

be applicable to activities on drilling ships, semisubmersible

drilling rigs, and other watercraft, when they are connected to

the seabed by drillstring, pipes, or other appurtenances, on

the OCS for exploration, development, or production purposes.\"

(reproduced at 1978 U.S.C.C.A.N. 1450, 1534.)

On the basis of the 1978 Amendments, we ruled that the

coastwise laws extend to devices such as a well casing with

attendant accessory systems when submerged into the seabed of the

OCS (see C.S.D. 81-95). We modified that ruling (see C.S.D. 84-

96\) by holding that a point at which no well has been sunk into

the seabed is not a coastwise point even if there are unrelated

buoys or wells in the general vicinity. We also ruled that

marker buoys attached to the OCS to mark drilling sites will not

be considered coastwise points within the meaning of the OCSLA.

This is based upon the legislative history to the 1978 Amendment

to the OCSLA which states that for the purposes of the coastwise

laws, the term \"installations and other devices\" in the OCSLA may

be limited to something to which merchandise or passengers can be

transported and on which they can be unladen (see House

Conference Report No. 95-1474, dated August 10, 1978, page 124).

We assume for purposes of this ruling that the marker buoy

cannot be so employed.

Accordingly, marker buoys attached to the OCS for possible

future use with a TLP will not be considered coastwise points

within the meaning of the OCSLA until the time of attachment to

a drill ship or TLP. In addition, a non-coastwise-qualified

vessel may be used to transport merchandise between a point in

the territorial waters and a point at which no buoy marker is

submerged onto or attached to the shelf and no well has been sunk

into the seabed, even if there are buoys or wells in the general

vicinity, provided that such points are unrelated to the subject

activity.

You state that there may be temporarily abandoned wells at

or in the vicinity of the site where the LMS will be installed.

We have ruled that the plugging and permanent abandonment of a

well on the OCS results in the well no longer being considered a

coastwise point by virtue of the OCSLA (see Customs Service

Decision (C.S.D.) 83-13 and ruling dated July 9, 1984, File

Number 106910). However, the platform from which such a well is

drilled, while it is attached to the OCS, remains an

\"installation\" or \"other device\" attached to the seabed for the

purpose of exploring for, developing, or producing resources

therefrom. We have ruled that a drilling rig at anchor on the

OCS, whether preparatory to, at the conclusion of, or during

activities related to the exploration or exploitation of the

OCS, is a \"fixed structure\" for purposes of the OCSLA (before the

1978 Amendment, see ruling letters 105123 and 101466, and

subsequent rulings 109516 PH and 110385 PH).

In order to be permanently abandoned, the well must be

plugged and abandoned in accordance with the requirements of the

Department of the Interior (DOI) (See 30 CFR part 250).

In the case under consideration, you indicate that the

abandoned wells will be temporarily abandoned, that they will

not be plugged and abandoned in accordance with DOI requirements,

that the wells may be exploratory wells and not production wells.

Because the said regulations are DOI regulations, and subject to

approval by the Agency, the plugging and capping procedures may

vary somewhat from well to well depending on the circumstances.

Accordingly, we find that installation of the LMS at a site where

there are temporarily abandoned wells, is a coastwise point and

transportation of the LMS to such site would be in violation of

the coastwise laws.

With regard to the issues relating to cable-laying and pipe

laying, the operation differs from the precedents which address

the paying out of communication cables between two coastwise

points within the territorial or international waters of the U.S.

The operation as described would be prohibited by 46 U.S.C. App.

883\.

HOLDINGS:

1\. The installation site on the OCS, at which the only

contact with the seabed is a temporary wire rope,

chain, an anchor mooring system (LMS) which is intended

to hold the hull and superstructure (TPL) on location

during exploration, development, and production of oil

resources on the OCS, is not a coastwise point during

the installation of the marker buoys, until the time of

attachment to a drill ship, TLP or other point at

which merchandise or passengers can be unladed.

2\. The installation site on the OCS for purposes stated

above, where there are one or more temporarily

abandoned wells at the installation site, is a

coastwise point during the installation of the LMS,

which will be used for the production of oil and gas

because there would be \"\[an\] installation \[or\] other

device \... attached to the seabed \... for the purpose

of exploring for, developing, or producing resources

therefrom \[i.e., from the OCS\]\". However, where

abandoned wells or buoys are in the general vicinity of

the site rather than the installation site, and are

unrelated to any ongoing activity, a coastwise point

would not exist at the installation site.

3\. Once a coastwise point is established (see above) the

transportation of the components of the LMS as

described would be a coastwise transportation violative

of 46 U.S.C. App. 883.

Sincerely,

B. James Fritz

Chief

Carrier Rulings Branch