CON 9-04 RR:CR:DR 228304 CB
Port Director
U.S. Customs Service
P.O. Box 570
Pascagoula, MS 39568
ATTN: Insp. Richard Bryant
RE: Temporary Importations Under Bond; Mobile Offshore Drilling Unit; Exportation; Outer Continental Shelf
Dear Inspector Bryant:
This is in response to your memorandum dated January 7, 1999, requesting internal advice regarding the drilling rig “Paul Romano”. We have reviewed the record and our decision follows.
FACTS:
Noble Drilling (US) Inc. reconstructed a mobile offshore drilling unit (“MODU”) at the Ham Shipyard in Pascagoula, Mississippi. Certain material and equipment installed on the rig as a permanent part of the rig were imported into the United States under temporary importation bonds (“TIB”) through four different ports. The MODU is a foreign flagged vessel (Panamanian registry). According to the importer, the MODU is cleared to the first drilling location in international waters, i.e., outside of the Outer Continental Shelf (“OCS”).
The importer states that there appears to be differing opinions within Customs as to how the TIBs will be handled. Noble is requesting a ruling on whether the TIBs can be canceled by submitting a Shipper’s Export Declaration (“SED”) which shows the MODU as being exported to international waters.
Your memorandum states that during your initial conversations with Noble you understood the rig was scheduled to work on the Outer Continental Shelf of the United States. Therefore, you refused to extend the TIB entries and prepared anticipatory breach penalties on all of the TIB entries. You indicate that the rig is currently working at Mississippi Canyon Block 985 OCS-G 9912. You ask whether Customs would consider a location in international waters off the OCS of the United States as a true export for TIB purposes.
ISSUE:
Was the subject drilling rig exported for purposes of canceling the TIBs?
LAW AND ANALYSIS:
Section 4(a) of the Outer Continental Shelf Lands Act of 1953, amended (67 Stat. 462; 43 U.S.C. §1333(a))(OSCLA), provides, in 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 within a State.
The statute was substantively amended by the Act of September 18, 1978 (Pub. L. 95-372, Title II, §203, 92 Stat. 635), to add, among other things the language concerning temporary attachment to the seabed. The legislative history associated with this amendment is telling, wherein it is stated that:
. . . It is thus clear that Federal law is to be applicable to all activities or all devices in contact with the seabed for exploration, development, and production. The committee intends that Federal law is, therefore, to be applicable to activities on drilling rigs, and other water craft, when they are connected to the seabed by drill string, pipes, or other appurtenances, on the OCS for exploration, development, or production purposes. [House Report 95-590 on the OCSLA Amendment of 1978, page 128, reproduced at 1978 U.S.C.C.A.N. 1450, 1534.]
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 OCS (T.D. 54281(1)). We have applied the same principles to drilling platforms, artificial islands, and similar structures, as well as devices attached to the seabed of the OCS for the purpose of resource exploration operations. (Customs Service Decisions (C.S.D.s) 81-214 and 83-52).
The importer contends that the rig is located in international waters (i.e., outside the Outer Continental Shelf). However, the importer has not provided any evidence to substantiate this assertion. You have stated that the rig is currently working at Mississippi Canyon Block 985 OCS-G 9912. We have been informed by the Department of the Interior’s Minerals Management Service that the entire Gulf of Mexico is on the Outer Continental Shelf and, more importantly,
that Block 985 is within U.S. jurisdiction. Thus, given that the drilling rig is located within the OCS, we must conclude that it has not been exported from the United States.
Additionally, an “exportation” is defined as “. . . a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country.” See 19 C.F.R. §101.1 and Swan & Finch Company v. United States, 190 U.S. 143, 23 Sup. Ct. 702 (1903). Thus, in order to have an exportation two elements must be met: there must be a separation from the United States and there must be an intent to unite the good in a foreign country. As stated by the courts, both the element of severance and the element of intent must coincide in order to constitute an act of exportation. Moore Dry Goods Co. v. United States, 11 Ct. Cust. App. 449, T.D. 39531 (1923). In the instant case, it is obvious that although there may have been a movement of the rig from the United States there is no evidence to show an intent to unite it with the “mass of things” belonging to a foreign country. Rather, even assuming arguendo that the rig is located beyond the OCS, it is merely located in international waters. Therefore, the second requirement of an exportation has not been met. Furthermore, we note that the fact that rig is owned and operated by a U.S. company located in Houston, Texas is further evidence that the rig has not been exported.
HOLDING:
The subject drilling rig has not been exported. Therefore, we concur with your determination that the merchandise entered under the TIB(s) has not been exported and that the bond(s) has been breached.
You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide
Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division