Demystifying OCS Cable Dutiability: What Customs Brokers Need to Know

For customs brokers navigating the complexities of the Outer Continental Shelf (OCS), understanding OCS cable dutiability and the duty implications for subsea cables is crucial. While the general rule might seem straightforward, specific scenarios dictate what portions of laid cable are, or are not, considered dutiable merchandise. Let’s break down the nuances of Customs and Border Protection (CBP) rulings on this specialized area.

The “Paid Out, Not Unladen” Principle: A Key Distinction

Generally, cable that is laid on the seabed of the OCS between two coastwise points is not considered dutiable for the portion resting on the seabed. The fundamental reason for this lies in the “paid out, not unladen” principle. 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. This is because the material is not “landed” as cargo but is continuously “paid out” during the installation operation, making such an operation permissible. The OCS seabed between structures like production platforms is not considered a point to which U.S. laws apply for dutiable purposes, unless that specific part of the cable is unloaded in a U.S. port or onto one of the platforms before being laid on the seabed.

What Portions Are Dutiable?

Despite the general exemption for seabed-laid cable, OCS cable dutiability comes into play in specific situations and portions that will incur duties:

Portion Rising Along Structures: The part of an umbilical or cable that rises along an OCS platform’s structures, from its initial attachment point to the platform (often through an I-tube), is dutiable under the Outer Continental Shelf Lands Act (OCSLA).

Foreign-Manufactured Unused or Excess Cable Unloaded in a U.S. Port: Any foreign-manufactured cable (e.g., from the U.K.) that is unloaded at a U.S. port is considered dutiable foreign merchandise entering the U.S.. This applies regardless of the amount; if a UK-made umbilical is unladen at a U.S. port, it is dutiable. Flexible flowlines and risers arriving from a foreign country that are temporarily offloaded onto a dock or barge in a U.S. port for immediate loading onto an installation vessel are deemed imported and dutiable in their entirety when offloaded at the U.S. port, notwithstanding their subsequent installation on the OCS.

Excess Cable Transported Between U.S. Ports: While returning unused excess cable (5% or less of the total laden amount) to the same U.S. port and berth where it was originally laden does not trigger a Jones Act violation, transporting unusedmerchandise like spare cable jointing bodies and accessories or spare cable protection systems between different U.S. ports by a non-coastwise-qualified vessel would violate the Jones Act. This is because these items are considered merchandise if not “paid out” with the cable.

Understanding “Coastwise Points” on the OCS

The OCSLA (43 U.S.C. 1333(a)) is key to defining “coastwise points” beyond the traditional territorial sea (the three-nautical-mile belt seaward of the baseline). It extends U.S. laws to:

The subsoil and seabed of the OCS.

Artificial islands, installations, and other devices permanently or temporarily attached to the seabed for exploring for, developing, or producing resources, including non-mineral energy resources like offshore wind platforms.

Any such installation or device (excluding ships or vessels) for transporting or transmitting these resources.

These installations and devices, once attached, constitute “coastwise points”. Importantly, electric transmission cables placed on the OCS for transmitting power are explicitly included as coastwise points under the OCSLA, as amended in 2021— a designation that can directly affect OCS cable dutiability. However, thepristine seabed of the OCS is generally not considered a coastwise point until an installation or device is attached to it for OCSLA purposes.

Beyond OCS Cable Dutiability: Other OCS Activities for Brokers

While the focus here is dutiability, it’s worth noting how CBP distinguishes other activities on the OCS:

Cable Laying and Repair Operations: CBP has consistently held that the sole use of a vessel for cable laying or repair by “paying out” material is not considered coastwise trade. This includes moving submarine cable for repair, replacement, or installation of a section. Even cable pull-in operations are considered part of a cable-laying operation.

Dredging vs. Seabed Manipulation: Not all seabed manipulation is considered “dredging” under the law (46 U.S.C. § 55109). CBP defines dredging as “the use of a vessel equipped with excavating machinery in digging up or otherwise removing submarine material”.

The use of water jetting tools that fluidize the seabed for cable burial, or cutting devices that create a narrow slice without removing material, arenot typically classified as dredging and can be performed by foreign-flagged vessels. This applies to pure chain cutting, hybrid water jet/chain cutter, or pure water jet devices.

However, pulling a plow to create a trench can be considered dredging.

Retrieval of out-of-service cable or subsea debris with a grapnel is not considered dredging, as grapnels are not excavation equipment.

Transportation of Other Materials: Unlike cable being “paid out,” items likeconcrete mats or rock bags placed over already laid cable are considered “merchandise”. If these items are laden at a U.S. port (a coastwise point) and unladen at another coastwise point (like the cable on the OCS), their transportation by a non-coastwise-qualified vessel would violate the Jones Act. This is due to a shift in CBP’s interpretation, revoking previous “mission of the vessel” rationales for classifying such items as vessel equipment. These items are considered merchandise because they do not aid the operation of the vessel itself, are not used as tools for actual installation, and are left behind on the seabed rather than returned to the vessel.

Vessel Equipment vs. Merchandise: Items deemed “vessel equipment”—portable articles necessary and appropriate for the navigation, operation, or maintenance of the vessel and for the comfort and safety of persons on board—are generally not considered merchandise under the Jones Act. This includes jointing habitats that remain on the vessel and empty containers for cable protection materials. Cable pullheads and cable protection system pullheads, if returned to the CLV, can also be considered vessel equipment.

Conclusion

For customs brokers, the key takeaway is to meticulously evaluate the origin, destination, and method of deployment for all components used in OCS subsea cable projects. The “paid out, not unladen” rule provides significant flexibility, but exceptions — particularly for any materials physically unladen at a U.S. port or attached to a platform structure — must be carefully considered when assessing OCS cable dutiability.