Chevron U.S.A., Inc. v. State Bd. of Equalization

This is a tax case, in which the question is whether Platform Gail, a partially built oil drilling platform, was “delivered” to its purchaser when the original builder’s cost overruns and other construction problems required a mid-construction switch to a new builder. Our answer is “no,” which means Platform Gail was not delivered within this state, which in turn means there was no taxable event for California sales tax purposes, which in turn means we reverse the trial court’s judgment, with directions to enter judgment for the purchaser.

Facts

Chevron U.S.A., Inc., leased an area of ocean floor off the coast of Southern California from the United States Department of Interior, Bureau of Land Management. As part of the deal, Chevron was obligated to erect and maintain offshore oil drilling facilities at the site, including the topside platform referred to by the parties as Platform Gail, and to pay rent that included a royalty on the value of minerals and other products extracted from the site. At the end of the lease, Chevron was obligated to remove the drilling facilities, including Platform Gail.

In 1985, Chevron retained Atkinson Mechanical Contractors Company to…