CLA-2 CO:R:CV:G: 085145 JLV; 085068 JLV

Joseph F. Donohue, Sr., Esq.
Donohue and Donohue
26 Broadway, Suite 1111
New York, New York 10004

RE: Offshore oil drilling and production platform; offshore platform jacket; platform main pilings, skirt pilings, and conductor pilings; topside structural components

Dear Mr. Donohue:

On behalf of your client, Exxon Company, USA, you have requested rulings on merchandise which constitutes the various components for two offshore drilling and production platforms named "Harmony" and "Heritage" which will be attached to the seabed in Santa Barbara Channel, California. You have submitted letters dated June 13, June 19, and June 27, 1989, which were expanded and incorporated into your request of July 6, 1989 (our file 085068), on the jackets, main and skirt pilings, and certain "shiploose" items for the platforms, and your request of July 21, 1989 (our file 085145), supplemented by letters of August 14 and August 25, 1989, on the conductor pilings and topside structural components for the platforms. This ruling addresses the classification of the merchandise described in both requests.


Except for the overall platform dimensions, the Harmony and the Heritage are substantially the same in design. Unless otherwise noted, the description of the various components applies to both platforms. The Harmony is designed for a water depth of 1,200 feet, and the Heritage is designed for a

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water depth of 1,075 feet. The size of each jacket is appropriate for these depths; both platforms, when complete, will have 60 well slots.

The jacket is a one-piece construction described as an 8- legged, pile founded structure for the support of two drilling rigs, production equipment, and personnel quarters. The jacket is X-braced and contains pre-installed curved conductors, the conductor guides, and other structural components necessary to complete the structural integrity of the jacket which will support the topside components and operations. The jacket was (since the date of your request, the jacket for the Harmony was entered) shipped on a barge to location, offloaded, sunk, and then anchored to the seabed by the main pilings and the skirt pilings, which were also entered subsequent to your original request.

The main piles are heavy tubular steel sections, 72 inches in diameter, with wall thicknesses varying from 1.75 to 3 inches, in sections approximately 150 feet in length. The wall thicknesses and the chemistry of the steel at various locations on these piles are designed for placement at various points in the leg. As each section is lowered into a leg, the section is welded to the preceding section until it forms a completed unit of approximately 1,600 feet, of which 280 feet is driven into the seabed. Once installed in a leg, a cement is pumped into the space between the leg and the piling. This bonding transfers most of the weight of the jacket from the main legs to the interior main pilings.

The skirt piles are similar in construction and purpose, except that when completed, they constitute units of approximately 325 feet in length, are 84 inches in diameter, and vary in chemistry and wall thickness along their length. They are also designed to be permanently attached to the jacket in order to complete the structural design of the fixed base on which the topside components can safely be installed.

Drive heads, drive shoes, cutting tips and stabbing guides are welded to the appropriate sections of the main and skirt piles.

The topside structures, when complete, will consist of three levels designed for supporting materials, machinery, processing equipment, living quarters, heliport, and crane pedestals. The topside structures are modular in design and

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consist of 18 separate modules and 4 module support frames. Each level consists of two or more basic modules. The sub- cellar deck is divided into two support modules that attach to the jacket and provide the structural integrity between the jacket and the two upper decks. The cellar deck consists of four basic modules which are designed to contain equipment necessary for the platform operations, as well as to form the structural support for the next deck. The next or top deck, also called the drill deck, consists of four basic modules which are designed to contain equipment and to support the drilling rigs. The quarters and heliport modules will be supported by an extension of one module in the cellar deck.

At the time of importation these modules will be incomplete and unassembled. Few, if any of the components will be assembled. Although the original contract called for assembled modules ready for attachment to the platform, modifications to the contract now require that the unassembled or partially assembled components for these modules be imported and assembled in the United States prior to attachment to the platform. Furthermore, the imported components only include structural framework for the platform. In your letters of July 21 and August 25 you describe these topside components: module floor panels; skid beam sections; built-up girders; module support frame legs; crane pedestals; padeye plates; coped truss braces; coped beams; cut plate or stiffeners; cut grating; deck plate; module plate; module beams; and module secondary steel.

Module floor panels are fabricated from multiple lengths of wide flange beams and form the foundation flooring for the topside modules. The skid beam sections are built-up, reinforced horizontal beams that are designed as runways for the drilling rigs, and must support the rigs and the drill string on the drilling deck. The built-up girders are the structural components which are designed to support the vertical loads of the skid beams, wellhead equipment, and other structural members.

The module support frame legs are tubular steel sections which are designed to support the entire vertical load of the topsides and transfer the load to the main pilings in the eight jacket legs. These supports appear to consist of several basic sections, one of which is 72 inches in diameter, a tapered section, a conical reducer, and a top section which is 36 inches in diameter. The crane pedestals are tubular in appearance, measure 36 feet in height and 8 feet in diameter, are made of high-strength steel, and are the static structural supports for the cranes. These pedestals will also house fuel tanks and related items.

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The conductor piling, described in the letter of July 21, 1989, is 26 inches in diameter, has a varying wall thickness of 0.75 to 1.0 inch, and will be imported in lengths of 33 feet to lengths of 148 feet. The conductor pilings will be driven approximately 300 feet into the seabed to provide structural support and protection for the casing strings. These conductor piles are the "holes" through which the drilling and extraction take place. Similar conductor pilings were described in our ruling of March 30, 1987 (file 079943), and were classified as parts of offshore drilling platforms in item 652.9700, Tariff Schedules of the United States Annotated (TSUSA).

The padeye plates are five-sided steel plates with a reinforced hole that will be welded to the fully assembled and outfitted (process equipment and piping) topside modules. The padeyes will allow the modules to be lifted by crane and placed in position on the platform.

The coped truss braces are tubular sections of heavy steel that are designed as load bearing components for the topside modules. They were designed and manufactured to withstand extraordinary forces and loads from all directions. The coped beams are wide flange sections that are cut for precise fit as components in the module floor panels.

The cut grating consists of flooring sections constructed from steel bars measuring 1-1/2 inches in width. They are ready for installation in the appropriate modules. The deck plate is a checkered steel plate, rectangular in shape, but made to specific dimensions suitable for use on the platform. The module plate, like the checkered deck plate, is made to rigid specifications and size suitable for use as floor plate or as wall plate. The floor plate is 3/8 inch thick and the wall plate is 1/4 inch thick; both are apparently rectangular in shape. The module beams are made from wide flange sections for use as the main horizontal support beams of the modules.

The module secondary steel, said to consist of walkways, stairways, handrails, and mezzanine steel, made to order in specified lengths to allow for cutting and fitting to precise sizes, is not further described as to actual extent of fabrication.

The "shiploose" items which have already been imported (approximately the same time as the jacket for the Heritage) consist of various safety handrails, walkways, conductor pile

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guide assembly, and electronic equipment and related apparatus which were used in the offloading and sinking of the jacket. The conductor pile assemblies, designed to be permanently attached to the jacket, could not be attached until the skirt piles had been inserted.

A brief review of the topside components makes it clear that, with the exception of the fabricated floor panels, crane pedestals, padeye plates, cut floor grating, walkways, stairways, handrails, and mezzanine steel, the topside steel components consist of unassembled built-up structural support members and wide flange sections or tubular sections which have been cut and coped into structural members. There is one other category of steel products: the flat-rolled deck plate, module plate, and similar sheets or plates of steel which will be cut at the time of assembly into the modules.


Whether the structural components are classified as parts of offshore drilling and production platforms in subheading 8431.43, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), or are more specifically described as other structures, parts of structures, and shapes and tubes prepared for use in structures, in subheading 7308.90, HTSUSA?

Whether the imported components are subject to the Voluntary Restraint Agreements (VRA's) on steel from Japan or Korea?


The legal arguments presented by you have been extensively researched and developed in your presentations to this office. The core of your argument is that note 2(a) to section XVI, HTSUSA, is a specific section note which requires that, under the proviso in General Rule of Interpretation (GRI) 1, the various structural components be classified under the subheading for parts of offshore oil and natural gas drilling and production platforms, subheading 8431.43.40, HTSUSA. The relevant language in GRI 1 is as follows:

1. * * * classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the following * * * [emphasis added]

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The relevant language of section XVI note 2(a) is as follows:

2. Subject to [exceptions not relevant at this time] parts of machines * * * are to be classified according to the following rules:

(a) parts which are goods included in any of the headings in chapters 84 and 85 * * * are in all cases to be classified in their respective headings; [emphasis added]

The language "in all cases" is read by you as requiring classification in a parts heading (e.g., heading 8431) rather than according to the GRI 3(a), which would require classifi- cation under the most specific provision in the HTSUSA.

We do not agree with your conclusion. Without going into a detailed analysis of the related provisions which disprove such a reading of note 2(a), we simply draw attention to the fact that such a reading would preclude classification of pumps, cranes, boilers, and similar equipment -- all of which are described in headings of chapters 84 and 85 -- from classification in those headings if they are suitable for use solely or principally with an offshore drilling and production platform. We conclude that the phrase "any of the headings" in note 2(a) applies only to the headings which describe specific articles, and does not apply to parts headings.

The Explanatory Notes (I)(A) and (II) to the notes of section XVI are instructive. The Explanatory Notes (EN) are the official interpretation of the HTSUSA at the international level. EN (II) instructs that parts, subject to the exclusions in EN (I), supra, are classified with the article (or in the specific parts heading for the article) of which they are solely or principally suitable for use, but that such rules do not apply to parts "which in themselves constitute an article covered by a heading of this Section." This last clause is a paraphrase of note 2(a) and gives a clearer statment of the intent of that note.

Finally, EN (I)(A), cited above, states, in pertinent part, " * * * and apart from goods covered more specifically in other Sections, this Section [XVI] covers * * *" [emphasis added]. As an example of the application of these EN on the notes to section XVI, we look to the discussion in the EN on the treatment of certain static structural elements for machinery described in section XVI. We refer to the EN on heading 8426 (page 1194):

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The heading covers lifting or handling machines usually based on pulley, winch or jacking systems, and often including large proportions of static structural steelwork, etc.

These static structural elements (e.g., crane pedestals and gantries) are classified in this heading when they are presented as part of a more or less complete handling machine. When presented separately, they are also classified in the heading provided they are fitted or designed to be fitted with the mechanical features essential for the operation of the moving parts of the complete installation (wheels, rollers, pulleys, running or guide rails, etc.) Otherwise these structural elements are excluded (heading 7308).

Therefore, we conclude that the more reasonable, consistent, and correct reading of note 2(a) is to limit the reference to "headings" in that note as referring to headings of chapters 84 and 85 which describe specific articles, such as pumps, engines, and cranes. It does not refer to the "parts headings" in those chapters.

The various components in issue, imported in several distinct shipments, do not constitute in any one shipment an article that, under GRI 2(a), would be classifiable as unfinished extracting or boring machinery of heading 8430, HTSUSA. At best, the structural components would be static structural work for a specific type of extracting or boring machinery. Heading 7308 specifically provides for certain types of structural steel articles, described in part as structures, parts of structures (for example, pillars and columns) and plates, angles, shapes, sections, tubes and the like prepared for use in structures.

The characterization of the jacket, the topside components, and the various types of pilings, are as structural elements of the offshore platform. None of the drilling or production equipment are at issue. The closest analogy (one that is often used with regard to such platforms) is that a platform is an artificial island which provides a surface over the sea on which the drilling operations on the seabed can take place, helicopters can land, and a small community can live. The merchandise in issue, in this case, is static structural steelwork. The jacket is a structure that constitutes the base for the topside structures. The main and skirt pilings, as well as the conductor pilings, are

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structural components which complete the structural integrity of the jacket and are designed to support most of the vertical load of the platform, the down-hole tubulars, and the topside equipment, as well as to withstand the environmental stresses. The skid beams are special drill deck sections on which the two drilling rigs will move.

The imported topside components perform similar structural functions. When assembled into the distinct modules, these components will constitute the floors, walls, and supports for the platform. All of these items are static structural steel and are not significantly distinguishable from that which is used in constructing the pilings and framework of a parking garage, office building, or bridge. These items are even called girders, beams, flooring, truss braces, and support frame legs, among others, and, furthermore, from the photographs of these unassembled items, we are unable to distinguish them from the general class or kind of structural units commonly known by these names. Based on their function, construction, and condition as imported, the unassembled topside components which have been cut to length, coped, built-up, or reinforced with stiffeners, are either columns and girders and similar structural units, if they are designed as load-bearing components, or are sections and tubes and the like prepared for use in a structure, in subheading 7308.90, HTSUSA.

The flat-rolled checkered plate and the module plate, although made to metallurgical specifications and widths for use in the platform, are merely flat-rolled materials for tariff purposes. They have not been advanced or made up into recognizable articles and, therefore, remain classified in the appropriate headings in chapter 72.

The remaining steel items, such as the padeyes, the walkways, the railings, and the conductor guides, all of which have been made up into articles for the platforms, are parts of the structure insofar as they are static structural components which merely complete the structure. These items are parts of structures in subheading 7308.90, HTSUSA.

Although the HTSUSA subheadings applicable to the imported steel are designated as subject to the VRA's with Japan and Korea, we note that under the former Tariff Schedules of the United States (TSUS), the merchandise would have been classified in part under provisions that were not subject to the VRA's with Japan and Korea. Specifically, the jacket, the pilings, the assembled floor sections, the cut floor grating, the skid beams, the handrails, stairs, crane pedestal, padeyes, and other components which are classified

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as structures or as parts of structures in subheading 7308.90.90, HTSUSA, would have been classified as parts of offshore drilling and production platforms in item 652.97, TSUS. See, for example, ruling letter of March 30, 1987 (file 079943); ruling letter of December 20, 1985 (file 816393); J. Ray McDermott & Co. v. United States, 69 Cust. Ct. 197 (1972); and W.Y. Moberly, Inc. v. United States, __ CIT __ (Slip Op. 89-86, decided June 22, 1989).

The articles classified as columns, pillars, posts, beams, girders, and similar structural units in subheading 7308.90.30 or 7308.90.60, HTSUSA, would have been subject to the VRA under the TSUS because, although identifiable as structural components for an offshore platform, they would have been classified under the more specific provisions in items 652.94 to 652.96, TSUS. W.Y. Moberly, Inc., supra.

The flat-rolled products classified in chapter 72, HTSUSA, would have been subject to the VRA's because they would have been classified under the appropriate provisions for plates and sheets in items 607.62 to 608.14, TSUS. Finally, the various cross bracing, whether made from tubing or angles or other shapes, although classified in subheading 7308.90.90, HTSUSA, as articles prepared for use in structures, would have been subject to the VRA's under the TSUS as angles, shapes, or sections in items 609.84 to 609.90, TSUS, and the tubular sections in the appropriate provisions for pipes and tubes in schedule 6, part 2, subpart B, TSUS.


The jacket, the main pilings, the skirt pilings, the conductor pilings, and the assembled module floor panels, the skid beam, the cut grating, and the conductor guides are classified as other structures (the jacket) and as parts of structures (pilings and the assembled components) in subheading 7308.90.9090, HTSUSA, dutiable at 5.7 percent ad valorem as products of Japan or Korea. The unassembled components, whether or not built-up, which constitute the floor girders, support columns, and similar vertical or horizontal structural units, are classified in subheading 7308.90.3000 (if in part of alloy steel) or 7308.90.6000 (if not in part of alloy steel), HTSUSA, dutiable at 2.6 or 3.9 percent ad valorem, respectively. The the deck plate and the module plate are classifiable under the appropriate provision for flat-rolled products in chapter 72, HTSUSA. The other steel components, such as the padeyes, stiffeners, secondary steel, and coped truss braces, are classified as plates,

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angles, shapes, sections, tubes and the like, prepared for use in structures, in subheading 7308.90.9090, HTSUSA, and dutiable at 5.7 percent ad valorem.

These items are classified under HTSUSA provisions which are subject to the VRA restraints with Japan and Korea. However, it is our understanding that the conversion from the TSUS to the HTSUSA was not intended to expand the scope of the VRA's. Therefore, with the exception of the articles that would have been classified in items 652.94 to 652.96 or in schedule 6, part 2, subpart B, TSUSA, as indicated in this ruling, all of the remaining components would have been classified as parts of offshore drilling and production platforms in item 652.97, TSUS, and would not have been subject to the VRA's with Japan or Korea.

The Department of Commerce has jurisdiction in determining the application of the VRA's under the HTSUSA subheadings. A copy of this ruling will be sent to the Director, Agreements Compliance, ITA, for appropriate action. You should contact that office to confirm the status of these structural components under the VRA's with Japan and Korea.


John Durant, Director
Commercial Rulings Division

6cc: AD NY Seaport
1cc: Paula Ilardi, NIS
1cc: DD, Los Angeles
1cc: RC, Pacific Region
1cc: Director, Trade Ops.
1cc: Director, ORR
1cc: AC, CO
1cc: Durant
1cc: Reading File

LIBRARY: valentin
FILE NAME: 085145