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.
FACTS:
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
- 2 -
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
- 3 -
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.
- 4 -
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
- 5 -
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.
ISSUE:
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?
LAW AND ANALYSIS:
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]
- 6 -
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):
- 7 -
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
- 8 -
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
- 9 -
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.
HOLDING:
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,
- 10 -
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.
Sincerely,
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