Coastwise Transportation; Outer Continental Shelf; Wind Turbines; 46 U.S.C. §§ 55102; 19 CFR §§ 4.80b; 43 U.S.C. § 1333.

HQ H338525 May 28, 2024 VES-3-02-OT:RR:BSTC:CCR H338525 HKC CATEGORY: Carriers Constantine G. Papavizas, Esq. Winston & Strawn LLP 1901 L Street, N.W. Washington, DC 20036 RE: Coastwise Transportation; Outer Continental Shelf; Wind Turbines; 46 U.S.C. §§ 55102; 19 CFR §§ 4.80b; 43 U.S.C. § 1333. Dear Mr. Papavizas: This letter is in response to your April 9, 2024 ruling request on behalf of your client [ ] regarding whether various ancillary vessel activities relating to the installation of monopile foundations on the U.S. outer continental shelf (“OCS”), as described below, would violate the coastwise laws. Our decision follows. FACTS The following facts are from your April 9, 2024 ruling request. Your client has been contracted to perform the transport and installation of monopile foundations for the [ ], located entirely on the U.S. OCS on BOEM Lease Area [ ] (the “lease area”). The lease area is approximately [ ]. [ ] will consist of up to [ ] wind turbine generators (“WTG”) and [ ] Offshore Converter Stations. Monopile installation activities will involve the movement and use of (1) navigation aids, (2) anode cages, and (3) bubble curtains. We discuss each set of ancillary operations in detail below. Navigation Aids Your client proposes using two foreign-flagged installation vessels (“IVs”) to install monopile foundations in the lease area. Both IVs are floating and do not have jack-up capabilities. The first IV, [ ] (“IV 1”), will install a monopile foundation, and place navigation aids on the foundation it just installed. The navigation aids will be loaded aboard IV 1 at a European port and remain on the foundation for an interval of time, after which the second IV, [ ] (“IV 2”), will arrive to install secondary steel elements on top of the foundation. IV 2 will lift the navigation aids off the monopile foundation and place them on a coastwise-qualified vessel. IV 2 will then proceed to install steel elements (transported to the installation site from a U.S. port using a coastwise-qualified vessel) atop the foundation. Once the navigation aids are loaded aboard the coastwise-qualified vessel, they will either (1) be transported by the coastwise-qualified vessel to a second monopile foundation, where the first IV will lift them onto the foundation, or (2) be transported directly to IV 1, where the IV will lift the navigation aids on its deck, travel to the second monopile foundation, and place the navigation aids aboard the second foundation. Once construction of all monopiles is complete, the navigation aids will travel on board the deck of IV1 to a European port. All movement of the navigation aids between the deck of the IV 1, the monopile foundations, and the coastwise-qualified vessel will occur using IV 1’s cranes while IV 1 remains stationary. Anode Cages As part of monopile installation, anode cages will be placed by one of the IVs around the monopile foundations. An anode cage consists of a ring-shaped steel structure with anodes on it which fits around the bottom of the monopile to prevent it from rusting. The anode cages in this project will be transported from a U.S. port to one of the IVs located at the monopile foundation. There, one of the IV’s cranes will lift the anode cage from the coastwise-qualified vessel to the IV’s deck while the IV remains stationary. Aboard the IV’s deck, a separate rigging tool will be attached to the anode cage. The IV’s crane will then lift the anode cage from the IV’s deck to the monopile foundation while the IV remains stationary. Bubble Curtains Prior to monopile foundation installation, double bubble curtains will be temporarily placed at the installation site for noise and vibration mitigation purposes. The double bubble curtains consist of two hose reels with loaded hoses. The inner hose is placed at a radius of between [ ] meters from the monopile installation site. The outer hose is placed surrounding the inner hose at an even greater radius. Two potential installation scenarios are currently contemplated: Scenario A: A foreign-flagged vessel (“the Bubble Curtain Vessel” or “BCV”) loads up to five hose reels at a foreign port. The BCV sails to a U.S. port, and offloads two hose reels at the U.S. port. The BCV sails with the remaining three hose reels to the lease site, where it lays two hoses using two of the hose reels surrounding the installation site. The installation site will be pristine with the exception of scour protection in the area where the monopile will be installed. The third hose reel remains aboard the BCV as a spare. Once the hoses have been laid, the BCV sails to a U.S. port where it offloads the two empty hose reels. It will load two full hose reels and sails to a second work site where it lays two more hoses. The BCV then returns to the first installation site, where it uses air compressors to inflate the two hoses there, creating the bubble curtains while monopile installation occurs. Once monopile installation is complete, the BCV picks up the two hoses and transports them to a third installation site where they are laid. This leapfrogging process continues until all monopiles are installed, after which the BCV recovers all five hose reels and hoses and returns them to a foreign port. Scenario B: A foreign-flagged vessel (“BCV”) transports three reels and hoses from a foreign port directly to the first monopile installation site, where it lays two of the hoses. One of the IVs loads the remaining reels and hoses at a foreign port, and arrives in the U.S. territorial sea with the reels and hoses aboard. The BCV then meets one of the IVs at a location less than three nautical miles from the U.S. coast where it offloads one or two empty hose reels onto the IV and loads another two hose reels with hoses from the IV. The BCV then uses these two hose reels to lay hose at the second installation site. After this, the BCV returns to the first installation site and inflates the two hoses there, creating the bubble curtains while the monopile is installed. It then recovers the two hoses and lays them at the third installation site, proceeding in a leapfrogging fashion as described in Scenario A. Once all foundations are installed, the BCV meets one of the IVs at a location less than three nautical miles from the U.S. coast, where it offloads one or two full hose reels onto the IV. The IV transports these hose reels to a foreign port where they are unloaded. The BCV then transports the remaining full hose reels to a foreign port. ISSUES Whether the transportation and installation of navigation aids, as described above, violates the Jones Act, 46 U.S.C. § 55102? Whether the transportation and installation of anode cages, as described above, violates the Jones Act, 46 U.S.C. § 55102? Whether the transportation and installation of bubble curtains, as described above, violates the Jones Act, 46 U.S.C. § 55102?  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, 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. Issue One: Whether the transportation and installation of navigation aids, as described above, violates the Jones Act, 46 U.S.C. § 55102? 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.” Also, the Jones Act provides at 46 U.S.C. § 55102(a): “[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 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. As a threshold matter, we determine that the navigation aids are merchandise, not vessel equipment. In the present case, the navigation aids belong to IV 1, arriving and departing the lease area aboard IV 1. However, they are not utilized to assist with the navigation of IV 1, rather they are used to assist the navigation of IV 2. Because the navigation aids are not “necessary and appropriate for the navigation, operation or maintenance of the vessel (“IV 1”)”, they cannot be considered IV 1’s vessel equipment. Accordingly, the navigation aids are merchandise. The Jones Act prohibits a non-coastwise-qualified vessel from performing “any part” of the transportation of merchandise between two U.S. points to which the coastwise laws apply, meaning a violation would occur even if the merchandise is transferred to a coastwise-qualified vessel before reaching its destination, or vice versa. 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. In the present case, your client contemplates two alternative scenarios for transporting the navigation aids between monopile foundations. First, the second installation vessel will use a crane to lift the navigation aids off the monopile and onto a coastwise qualified vessel. The navigation aids will then either (1) be transported by the coastwise-qualified vessel to a second monopile foundation, where IV 1 will lift them onto the foundation, or (2) be transported by the coastwise qualified vessel directly to IV 1, where the IV 1 will lift the navigation aids on its deck, travel to the second monopile foundation, and place the navigation aids aboard the second foundation. Here, each installed monopile foundation is a coastwise point under OCSLA. Scenario 1 would be permissible even if the navigation aids were found to be merchandise, not vessel equipment. The navigation aids are being moved between monopile foundations using a combination of stationary lifting operations (which we have held not to violate the coastwise laws) and a coastwise-qualified vessel. However, Scenario 2 involves the foreign-flagged IV 1 transporting the navigation aids part of the way between monopile foundations. Because the monopile foundations are coastwise points under OCSLA, this would be violative of the Jones Act if the navigation aids were merchandise. Because the navigation aids are merchandise, Scenario 1 would be permissible under the Jones Act but Scenario 2 would be violative. Issue Two: Whether the transportation and installation of anode cages, as described above, violates the Jones Act, 46 U.S.C. § 55102? In the present matter, the anode cages are being transported between a U.S. port and an installed monopile on the OCS. Because both these locations are coastwise points, any transportation of merchandise must be conducted exclusively by coastwise-qualified vessels. Here, your client proposes using a coastwise-qualified vessel to transport the anode cages from the U.S. port to the monopile installation site. Once at the installation site, one of the IVs will lift the anode cage off the coastwise qualified vessel with its crane and place the anode cage on the IV’s deck while the IV remains stationary. The IV will subsequently lift the anode cage off its deck and place it around the monopile while the IV remains stationary. All movement of the anode cage will be solely affected by through the lifting and rotation of the crane, and not by vessel movement. 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. Therefore, the lifting operations described above would not be considered transportation. Because the anode cages are being transported from a U.S. port to the monopile foundation using a coastwise qualified vessel, no violation of 46 U.S.C. § 55102 would occur. Issue Three: Whether the transportation and installation of bubble curtains, as described above, violates the Jones Act, 46 U.S.C. § 55102? CBP has previously held a bubble curtain system analogous to the bubble curtain reels and hose described in your request to be vessel equipment. Accordingly, the Bubble Curtain Vessel (“BCV”) may transport the bubble curtain reels and hose without implicating the Jones Act. Because Scenario A contemplates transportation of the bubble curtain reels and hose exclusively utilizing the BCV, it would be permissible under 46 U.S.C. § 55102. Scenario B, as described in the facts, contains multiple movements involving the IV. First, one of the IVs transports full hose reels from a foreign port to a point within the U.S. territorial sea, where the full hose reels are unladen aboard the BCV. This would not violate the Jones Act because the foreign port is not a coastwise point. Next, empty hose reels are laden aboard the IV from the BCV while it is in the territorial sea. This occurs after the first two hoses have been deployed by the BCV. At no point does the IV unlade these empty hose reels back onto the BCV, rather they remain aboard the IV until the IV travels to a foreign port after operations are complete. Because the foreign port is not a coastwise point, this transportation would not violate the Jones Act. Finally, more hose reels are laden aboard the IV from the BCV, once again within the territorial sea. This second lading occurs once all monopile foundations have been installed. The hose reels remain aboard the IV until it returns to a foreign port. As with the above, this would not violate the Jones Act. Because the bubble curtain reels and hose are the BCV’s vessel equipment, Scenario A does not violate the Jones Act. Because the IV does not transport bubble curtain reels and hose between coastwise points in Scenario B, Scenario B also would not violate the Jones Act. HOLDINGS The transportation and installation of navigation aids, as described above in Scenario 1, would not violate the Jones Act, 46 U.S.C. § 55102. The transportation of navigation aids as described above in Scenario 2, however, would violate the Jones Act, 46 U.S.C. § 55102. The transportation and installation of anode cages, as described above, would not violate the Jones Act, 46 U.S.C. § 55102. The transportation and installation of bubble curtains, as described above, would not violate the Jones Act, 46 U.S.C. § 55102. Sincerely, W. Richmond Beevers Chief Cargo Security, Carriers and Restricted Merchandise Branch Office of Trade, Regulations and Rulings U.S. Customs and Border Protection