HQ 109081: Applicability of 46 U.S.C. App. 292 and 883 to the exploration for, or the extraction of, resources from the outer Continental Shelf outside the United States territorial waters.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                       HQ 109081

                                     May 12, 1988


            VES 3-14 CO:R:P:C  109081 BEW

            CATEGORY:  CARRIERS

            Dr. David H. Grover
            Maritime Information Associates
            677 Rio Vista Drive
            Napa, California 94558

            RE:  Applicability of 46 U.S.C. App. 292 and 883 to the
            exploration for, or the extraction of, resources from the outer
            Continental Shelf outside the United States territorial waters.

            Dear Dr. Grover:

                 This is in reference to your correspondence of July 28,
            1987, in which you requested an interpretation of the legality
            of the use of foreign-built dredges or mining vessels for
            mining on the United States outer Continental Shelf.

            FACTS:

                 You state that the mining would be conducted 10 miles off
            the North Carolina coast, and that the operation would involve
            hydraulic suction dredging of material which would be placed on
            barges for transport ashore.  You state that the mining vessel
            would be foreign-built and documented as an American flag
            vessel and that barges and tugs which would be used in the
            operation would be built and documented in the United States.
            You further state that while the vessel may use techniques
            associated with dredging and may be identified as a dredge, you
            would in fact be mining for phosphate ore on the outer
            Continental Shelf.  You also state that while you may be using
            a foreign-built American-flag vessel, the vessel would only
            enter the port for refuel and resupply.

                 It is requested that we rule on the following issues:

            ISSUES:

                 1.  Whether a foreign-built dredge documented in the
                 United States may engage in dredging in the United States.














                                         - 2 -


                 2.  Whether the use of a foreign-built dredge documented
                 as an American-flag vessel for mining phosphate ore on the
                 outer Continental Shelf is an engagement in dredging in
                 the United States for the purposes of 46 U.S.C. App. 292.

                 3.  Whether the transportation of dredged phosphate ore
                 from a dredging site on the outer Continental Shelf to a
                 United States port is coastwise transportation.

            LAW AND ANALYSIS:

                 Section 1 of the Act of May 28, 1906 (34 Stat. 204; 46
            U.S.C. App. 292), provides that "a foreign-built dredge shall
            not, under penalty of forfeiture, engage in dredging in the
            United States unless documented as a vessel of the United
            States."  In our interpretation of this statute, we have ruled
            that dredging in the United States is prohibited to any
            foreign-built dredging vessel except one of those named in
            section 2 of the 1906 Act (see Customs Service Decision
            (C.S.D.) 85-11).

                 For purposes of 46 U.S.C. App. 292, dredging in the United
            States includes dredging in United States territorial waters,
            generally defined as the belt, 3 nautical miles wide, adjacent
            to the coast of the United States and seaward of the
            territorial sea baseline, and certain dredging on the United
            States outer Continental Shelf outside territorial waters (see
            C.S.D. 85-11).

                 In our application of 46 U.S.C. App. 292, we have long
            held that "dredging," for purposes of that statute, means the
            use of a vessel equipped with excavating machinery in digging
            up or otherwise removing submarine mineral.  In the absence of
            other information, it appears that the mining vessel or dredge
            you describe would meet this definition and we so assume for
            purposes of this ruling.

                 You inquire as to whether a foreign-built dredge
            documented under the laws of the United States may engage in
            dredging 10 miles off the coast of North Carolina.  As stated
            above, it is the position of the Customs Service that the
            prohibition in 46 U.S.C. App. 292 relates to build, and not to
            the documentation of a dredge.  Accordingly, even though a
            foreign-built dredge has been documented as a vessel of the
            United States, it would be prohibited by 46 U.S.C. App. 292
            from engaging in dredging in the United States.















                                         - 3 -


                 With regard to the applicability of section 292 to the
            outer Continental Shelf, we have held that the statute only
            applies with regard to dredging on the outer Continental Shelf
            for the purposes described in section 4(a) of the Outer
            Continental Shelf Lands Act of 1953, as amended (43 U.S.C.
            1333(a)) (OCSLA).  That statute 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 therefrom ... to the same extent as if
            the outer Continental Shelf were an area of exclusive Federal
            jurisdiction located within a State."

                 Under the foregoing provision, we have 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 outer
            Continental Shelf.  We have applied the same principles to
            drilling platforms, artificial islands and similar structures,
            as well as devices attached to the seabed of the outer
            Continental Shelf for the purpose of resource exploration
            operations.  We have not, to this date, ruled on the
            applicability of the coastwise laws and other Customs and
            navigation laws to the exploration for, development or
            production of, resources other than petroleum related
            resources.

                 "Exploration," "development," and "production" are
            generally defined under the OCSLA to include the process of
            searching for minerals, the activities which take place
            following discovery of minerals, and those activities which
            take place after the successful completion of any means for the
            removal of minerals from the outer Continental Shelf.  The term
            "minerals" includes oil, gas, sulphur, geopressured-geothermal
            and associated resources, and all other minerals which are
            authorized by an Act of Congress to be produced from "public
            lands" as defined in 43 U.S.C. 1702 (43 U.S.C. 1331)(k), (l),
            (m) and (q)).

                 It is clear that the OCSLA was intended to apply to the
            exploration for, development or production of resources other
            than petroleum related resources.  This position is consistent
            with judicial interpretations of the OCSLA.  
















                                         - 4 -


                 In Guess v. Read, C.A. La. 290 F.2d 622, 625 (1961), cert.
            denied 386 U.S. 957, 82 S.Ct. 394, 7 L.Ed.2d 388 (1962), the
            Court held that "[t]he Continental Shelf Act was enacted for
            the purpose, primarily, of asserting ownership of and
            jurisdiction over the minerals in and under the Continental
            Shelf."  In Treasure Salvors Inc. v. Unidentified Wrecked and
            Abandoned Sailing Vessel, C.A. Fla. 1978, 569 F.2d 330, 339,
            the Court held that, "(t)he structure of the Act itself, which
            is basically a guide to the administration and leasing of
            offshore mineral-production properties, reinforces this
            conclusion."  The Court said that "[t]he Act consists almost
            exclusively of specific measures to facilitate exploitation of
            natural resources on the continental shelf."  The Court noted
            that the interpretations of the Convention of the Continental
            Shelf and the Act by legal scholars have, with remarkable
            accord, reached the same conclusion regarding the nature of
            control of the United States over the Continental Shelf.

                 In CSD 85-11 (referred to above) we ruled that 46 U.S.C.
            App. 292 applied to certain dredging on the outer Continental
            Shelf in support of oil and gas resource exploration
            operations.  In our Case No. 109016, March 22, 1987, we ruled
            that the prohibition against dredging on the outer Continental
            Shelf extends only to those operations which are in furtherance
            of the extraction of or the exploration for, or the development
            or production of, resources from the outer Continental Shelf.
            The OCSLA does apply to the exploration for, development or
            production of minerals, in addition to petroleum related
            resources, from the outer Continental Shelf.  Accordingly, we
            find that the described mining of the phosphate ore from the
            seabed of the outer Continental Shelf outside the territorial
            waters of the United States would constitute dredging in the
            United States for purposes of 46 U.S.C. App. 292.  Therefore,
            the engagement of a foreign-built, United States-flag mining
            vessel or dredge for such exploration of phosphate ore would be
            prohibited.

                 Among navigation laws other than section 292 which Customs
            interprets and enforces is the so-called Jones Act (41 Stat.
            999; 46 U.S.C. App. 883).  This statute prohibits the
            transportation of merchandise 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 vessel other than a vessel built in and documented under
            the laws of the United States and owned by citizens of the
            United States (see also 46 U.S.C. App. 316a, the coastwise
            towing statute).














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                 While we have held that the act of dredging is not,
            itself, deemed to be coastwise trade, we have consistently held
            that "merchandise" for the purpose of 46 U.S.C. App. 883,
            includes anything of commercial value.  In applying this
            statute to the transportation of the mining resource exploited
            from the outer Continental Shelf to a coastwise port, we have
            consistently ruled that the use of a foreign vessel for such
            transportation would be prohibited under the statute.  However,
            transportation of the mining resources by coastwise qualified
            barges and tugs would be permitted under the provisions of
            section 883 and 316(a).

                 In addition to the above cited statutes, you attention is
            directed to Presidential Proclamation 5030 of March 10, 1983,
            whereby the President of the United States proclaimed an
            Exclusive Economic Zone of the United States of America, and to
            the Deep Seabed Hard Mineral Resources Act (Public Law 96-283,
            94 Stat. 553, 30 U.S.C. 1401 et seq.).

            HOLDINGS:

            1.   A  foreign-built dredge documented in the United States
                 may not engage in dredging in the United States.

            2.   The use of a foreign-built dredge documented as an
                 American-flag vessel for mining for minerals, including
                 phosphate ore, on the outer Continental Shelf is an
                 engagement in dredging in the United States for the
                 purposes of 46 U.S.C. App. 292.

            3.   The transportation of the dredged phosphate ore from a
                 dredging site on the outer Continental Shelf to a United
                 States port is coastwise transportation which may only be
                 effected by coastwise qualified vessels.

            EFFECT ON OTHER RULINGS:

                 None.




                                         Edward T. Rosse
                                         Acting Director, Regulatory
                                         Procedures and Penalties Division



            CO:R:P:C:BEWhiting:4/20/88:retyped:5/6/88