H307832

90 K Street, N.E., Washington, D.C. 20229-1177 U.S. Customs and Border Protection HQ H307832 July 29, 2021 ENT 1-01 OT:RR:CTF:ER H307832 ABH Mr. David McGurk, Center Director Petroleum, Natural Gas & Minerals (PNGM) Center of Excellence and Expertise Office of Field Operations U.S. Customs and Border Protection Re: Internal Advice Request: Pipeline Inspection Gauges Dear Mr. McGurk: This is in response to the Petroleum, Natural Gas & Minerals (“PNGM”) Center of Excellence and Expertise (“CEE”) request for Internal Advice (“IA”) dated December 27, 2019, in which you seek clarification regarding reporting requirements for pipeline inspection gauges or pipeline intervention gadgets (“PIGS”). Our analysis is below. FACTS: A pipeline inspection gauge, commonly referred to as a “PIG,” is a device used to clean and/or inspect an oil and gas pipeline. The spherical or cylindrical devices manufactured today vary greatly in construction material, size, color, and accessory components. There are a variety of PIGs used in the pipeline industry, including utility PIGs, inspection PIGs, specialty PIGs, and gel PIGs. The most common use for a PIG is to clear the pipeline of debris. Smart PIGs are also commonly used to detect information about the pipeline. In order to verify pipeline integrity, the PIGs can collect information regarding temperature and pressure, corrosion/metal loss, diameter, bends, and curvature. At issue in this IA are two different PIGs. The first PIG is the EDX, sold by Apache Pipeline Products. The EDX is a bi-directional cleaning PIG designed to clean the inside of a pipeline. The EDX is a cylindrical PIG, fitted with two guide discs, four sealing discs, and a variety of brushes, all affixed to a central steel mandrel. The EDX can be fitted with spring loaded block brushes or circular flange brushes. These brushes may have flat wire or pencil bristles, and may be made of carbon steel, stainless steel, plastic, or tin-coated bristles. The EDX can also be fitted with magnets to collect ferrous debris, or to provide a change in magnetic field to accommodate a separate PIG signaler detection device. Moreover, the EDX can be fitted with urethane “plow blades,” designed to remove paraffin wax and similar deposits from the pipeline, or for use in non-metallic or internally coated pipe where a bristle brush might cause damage. The second PIG is a locating and tracking PIG sold by Enduro Pipeline Services (model number 380-12-AS). The Enduro PIG is an eleven-inch cylinder, three inches in diameter, designed to be mounted to another PIG to aid a user in locating a stopped PIG in the pipeline. The device is powered by eight AA cell batteries allowing up to 380 hours of operation. When powered on, the transmitter emits a 22 Hertz signal from within the pipeline, at intervals determined by the user. The default interval is a signal every 1.5 seconds. The signal can be detected by a user above-ground, using a receiver like Enduro’s ER-0402 (“the receiver”). The receiver emits an audible tone with each detected signal received from the transmitter, and an indicator needle on the receiver moves each time a signal is detected from the transmitter. Using the ER-0402 or similar receiver, a user can detect the transmitter in the pipeline from up to 40 feet away. The Port of Houston received a request for Internal Advice regarding the entry and reporting requirements for PIGs in the case where a third-party company (contractor) is hired to run a PIG through the pipeline. The pipeline operators maintain records of all PIGs moving through their pipeline system into the United States. Two different scenarios will potentially occur. In the first scenario, the PIG will cross into the United States within the pipeline and will remain in the United States. In the second scenario, the PIG will move through the pipeline between two points in a contiguous country, but travel through the United States. The pipeline operator raised the following issues: ISSUES: Is entry required for the PIGs that cross into the territory of the United States? If entry is required, is the pipeline operator also responsible to report a PIGs when it goes through the pipeline (similar to a carrier)? How is this reporting done? If entry is required, what is the appropriate classification of the two types of PIGs? LAW AND ANALYSIS: Is entry required for the PIGs that cross into the territory of the United States? As discussed above, two different scenarios will potentially occur. In the first scenario, the PIG will cross into the United States within the pipeline and will remain in the United States. For the PIG that remains in the United States, formal entry is required by the importer of record. Upon importation into the United States, merchandise must be entered and payment of potential duties secured with a bond. 19 U.S.C. § 1484(a)(1)(A); 19 C.F.R. § 142.4(a). Under U.S. customs regulations, “[a]ll merchandise imported into the United States is required to be entered, unless specifically excepted.” 19 C.F.R. § 141.4(a). There is no relevant exception for PIGs and PIGs constitute “merchandise.” See 19 U.S.C. § 1401(c) (stating that “[t]he word ‘merchandise’ means goods, wares, and chattels of every description”). Accordingly, it is incumbent upon the importer of record to file entry for the PIG upon importation into the United States. The date of importation for merchandise imported by pipeline is “the date on which the merchandise arrives within the Customs territory of the United States.” 19 C.F.R. § 101.1. The fact that the PIG is being conveyed across the United States border via pipeline (as opposed to by truck or rail) does not change entry requirements. For purposes of importation, a pipeline is considered a carrier. 19 C.F.R. § 18.0. In guidance issued on December 22, 1992, “Requirements for Pipeline Operators,” CBP stated that “[e]ntry must be made for every importation through a pipeline.” Requirements for Pipeline Operators, available at https://www.cbp.gov/trade/entry-summary/pipeline-monthly-entry-processing/pipeline-directors (December 22, 1992). CBP further stated that “[m]erchandise imported through pipelines without entry having been made is imported contrary to law . . . and all Customs laws and regulations dealing with such importations are applicable (see 19 U.S.C. § 1595A, 19 C.F.R. Part 162).” Id. In sum, a PIG that crosses into the United States within a pipeline must be entered in accordance with Customs laws and regulations. Accordingly, if a PIG crosses into the United States and the intent is to enter it into the commerce of the United States, an entry for consumption must be filed. See generally, 19 C.F.R. Part 141. If, however, the intent is to retrieve the PIG and export it back to Canada and all other legal requirements are met, an entry for transportation and exportation may be appropriate. See generally, 19 C.F.R. Part 18. With regard to whether the pipeline operator or the vendor is required to make entry, section 484(a)(1) of the Tariff Act of 1930, as amended (19 U.S.C. § 1484(a)(1)) provides that only parties qualifying as the “importer of record” may make entry. Those qualified parties are identified as the “owner” or “purchaser” of the goods or a broker appointed on behalf of an owner, purchaser, or consignee under 19 U.S.C. § 1484(a)(2)(B). Owner and purchaser are further defined in Customs Directive, (“C.D.”), 3530-002A, dated June 27, 2001. Section 5.3.1 of the directive provides: 5.3.1 The terms “owner” and “purchaser” include any party with a financial interest in a transaction, including, but not limited to, the actual owner of the goods, the actual purchaser of the goods, a buying or selling agent, a person or firm who imports on consignment, a person or firm who imports under loan or lease, a person or firm who imports for exhibition at a trade fair, a person or firm who imports goods for repair or alteration or further fabrication, etc. Any su

Is entry required for the PIGs that cross into the territory of the United States?As discussed above, two different scenarios will potentially occur. In the first scenario, the PIG will cross into the United States within the pipeline and will remain in the United States. For the PIG that remains in the United States, formal entry is required by the importer of record. Upon importation into the United States, merchandise must be entered and payment of potential duties secured with a bond. 19 U.S.C. § 1484(a)(1)(A); 19 C.F.R. § 142.4(a). Under U.S. customs regulations, “[a]ll merchandise imported into the United States is required to be entered, unless specifically excepted.” 19 C.F.R. § 141.4(a). There is no relevant exception for PIGs and PIGs constitute “merchandise.” See 19 U.S.C. § 1401(c) (stating that “[t]he word ‘merchandise’ means goods, wares, and chattels of every description”). Accordingly, it is incumbent upon the importer of record to file entry for the PIG upon importation into the United States. The date of importation for merchandise imported by pipeline is “the date on which the merchandise arrives within the Customs territory of the United States.” 19 C.F.R. § 101.1. The fact that the PIG is being conveyed across the United States border via pipeline (as opposed to by truck or rail) does not change entry requirements. For purposes of importation, a pipeline is considered a carrier. 19 C.F.R. § 18.0. In guidance issued on December 22, 1992, “Requirements for Pipeline Operators,” CBP stated that “[e]ntry must be made for every importation through a pipeline.” Requirements for Pipeline Operators, available at https://www.cbp.gov/trade/entry-summary/pipeline-monthly-entry-processing/pipeline-directors (December 22, 1992). CBP further stated that “[m]erchandise imported through pipelines without entry having been made is imported contrary to law . . . and all Customs laws and regulations dealing with such importations are applicable (see 19 U.S.C. § 159