HQ 085145

September 15, 1989

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

CATEGORY: Classification

TARIFF NO.: 7308.90.30; 7308.90.90

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

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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.

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 \* \* \* \[emphasis added\]

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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.

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,

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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.

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