[Federal Register Volume 75, Number 192 (Tuesday, October 5, 2010)]
[Notices]
[Pages 61509-61511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25024]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Solar 
Photovoltaic Panel Systems

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

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SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (``CBP'') has issued a final determination concerning the 
country of origin of certain solar photovoltaic systems which may be 
offered to the United States Government under a government procurement 
contract. Based upon the facts presented, in the final determination 
CBP concluded that the U.S. is the country of origin of the solar 
photovoltaic systems for purposes of U.S. Government procurement.

DATES: The final determination was issued on September 29, 2010. A copy 
of the final determination is attached. Any party-at-interest, as 
defined in 19 CFR 177.22(d), may seek judicial review of this final 
determination on or before November 4, 2010.

FOR FURTHER INFORMATION CONTACT: Karen S. Greene, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of International Trade 
(202-325-0041).

SUPPLEMENTARY INFORMATION: Notice is hereby given that on September 29, 
2010, pursuant to subpart B of part 177, Customs Regulations (19 CFR 
part 177, subpart B), CBP issued a final determination concerning the 
country of origin of certain solar photovoltaic systems which may be 
offered to the United States Government under a government procurement 
contract. This final determination, in HQ H095409 was issued at the 
request of Solyndra, Inc. under procedures set forth at 19 CFR part 
177, subpart B, which implements Title III of the Trade Agreements Act 
of 1979, as amended (19 U.S.C. 2511-18). In the final determination, 
CBP concluded that, based upon the facts presented, certain articles 
will be substantially transformed in the U.S. Therefore, CBP found that 
the U.S. is the country of origin of the finished articles for purposes 
of U.S. Government procurement.
    Section 177.29, Customs Regulations (19 CFR 177.29), provides that 
notice of final determinations shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any 
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial 
review of a final determination within 30 days of publication of such 
determination in the Federal Register.

    Dated: September 29, 2010.
Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

HQ H095409

September 29, 2010

OT:RR:CTF:VS H095409 KSG

Joshua Holzer, Wilson Sonsini Goodrich & Rosati, 1700 K Street NW, 
Fifth Floor, Washington, D.C. 20006-3817

Re: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979; Country of Origin of solar photovoltaic panel system; 
substantial transformation

Dear Mr. Holzer:

    This is in response to your letter, dated February 17, 2010, 
requesting a final determination on behalf of Solyndra, Inc., 
pursuant to subpart B of 19 CFR Part 177. Your submission of August 
4, 2010, was considered as part of the file.

[[Page 61510]]

    Under these regulations, which implement Title III of the Trade 
Agreements Act of 1979, as amended (19 U.S.C. 2511 et seq.) 
(``TAA''), CBP issues country of origin advisory rulings and final 
determinations as to whether an article is or would be a product of 
a designated country or instrumentality for the purposes of granting 
waivers of certain ``Buy American'' restrictions in U.S. law or 
practice for products offered for sale to the U.S. Government.
    This final determination concerns the country of origin of 
certain photovoltaic panel systems that Solyndra may sell to the 
U.S. Government. We note that Solyndra is a party-at-interest within 
the meaning of 19 CFR 177.22(d)(1) and is entitled to request this 
final determination.

Facts:

    The photovoltaic panels convert sunlight on low-slope commercial 
rooftops into electricity. The solar photovoltaic (``PV'') panel 
systems contain both U.S. and foreign-origin raw materials and 
components. The following components are of U.S. origin: Ammonium 
hydroxide, an optical coupling agent, the middle tube, the outer 
tube, a frit, a gas bag, grease, a frame adhesive, wire harnesses, 
and the label nameplate.
    The following raw materials are from foreign sources (Austria, 
Japan, the Netherlands, the United Kingdom, Belgium, and 
Switzerland): Molybdenum, copper, indium, gallium, selenium, cadmium 
sulfide, hydrochloric acid, and transparent conductive oxide. The 
manufactured components, which are produced in Germany, Switzerland, 
Singapore, Malaysia, Belgium, and China, are: An inner glass tube, 
an outer cap, an assembled pin, an inner contact, harness adhesive, 
beam, frames, universal, welded aluminum mounts, panel mount screw, 
lateral clip, grounding strap assembly, and a grounding strap screw.
    Solyndra has a manufacturing facility in California where both a 
front end process and a back end process are performed, which takes 
approximately six and one half days to complete. Solyndra also 
conducts all its research and development for its product in the 
U.S. The front end process converts bare glass tubes into functional 
PV cells. The back end process encapsulates these tubes in a glass 
outer tube, isolating the active material from the environment by a 
true hermetic seal. The last step in the back end process is to 
assemble these finished modules onto a panel frame, resulting in a 
solar panel ready for rooftop installation.
    The front end process includes five steps which turn a raw glass 
tube into a component for a PV system. The five steps are as 
follows:
    (1) Bare glass tubes are cleaned using standard ultra-sonic bath 
and surfactant technology.
    (2) Quality assurance testing is conducted using precisely 
calibrated machinery.
    (3) Using Solyndra's proprietary in-line vacuum systems and 
physical vapor deposition and evaporation techniques, several layers 
of different thin films of molybdenum, copper, indium, gallium, and 
selenium, are deposited on the glass tube.
    (4) The glass tubes are immersed into a precise chemical 
mixture, at a controlled temperature and Cadmium Sulfide is 
deposited onto the glass at a controlled thickness.
    (5) Using either lasers or mechanical scribes to define solar 
cells and interconnect them, the deposited films are precisely 
patterned to increase the solar collection efficiency of the glass 
tubes.
    The back end process, which includes eight steps described 
below, subjects the treated glass tubes to additional processes to 
create finished modules that protect the solar cells from 
degradation over their 25-year service life in a rooftop 
installation. The Modules are then assembled into panels and 
combined with mounts, cable management components, and mounting 
hardware, resulting in a finished PV system. The eight steps are as 
folllows:
    (1) The processed glass tubes are encapsulated in a plastic 
middle tube and a glass outer tube, creating a Module.
    (2) Metal connectors are placed at each end of the Module to 
enable the Module to float in the completed PV System.
    (3) Through a complex process that involves melting glass and 
metal together, the ends of each Module are covered with a stainless 
steel cap, creating a hermetic seal.
    (4) After removing water and air from the Module, an optical 
coupling agent is used to fill the space between the inner and outer 
glass tubes and a plug is placed at the end of the Module to 
complete the sealing process.
    (5) The plug is laser welded in place, and the weld is inspected 
for defects.
    (6) Using a mass spectrometer based Helium leak detection 
system, each Module is checked for leaks.
    (7) The approved Modules are then subjected to artificial 
sunlight and tested to determine the level of electricity being 
produced.
    (8) Based on their performance, tubes are grouped in sets of 40 
to make each solar panel.
    Forty (40) finished Modules are pressed into each panel frame. 
Solyndra's customized mounts and mounting hardware are added to each 
panel to create a complete PV system, ready for rooftop 
installation.

Issue:

    What is the country of origin of the solar PV panel system 
described above for the purposes of U.S. government procurement.

Law and Analysis:

    Pursuant to Subpart B of Part 177, 19 CFR Sec.  177.21 et seq., 
which implements Title III of the Trade Agreements Act of 1979, as 
amended (19 U.S.C. Sec.  2511 et seq.), CBP issues country of origin 
advisory rulings and final determinations as to whether an article 
is or would be a product of a designated country or instrumentality 
for the purposes of granting waivers of certain ``Buy American'' 
restrictions in U.S. law or practice for products offered for sale 
to the U.S. Government.
    The rule of origin set forth in 19 U.S.C. Sec.  2518(4)(B) 
states:
    An article is a product of a country or instrumentality only if 
(i) it is wholly the growth, product, or manufacture of that country 
or instrumentality, or (ii) in the case of an article which consists 
in whole or in part of materials from another country or 
instrumentality, it has been substantially transformed into a new 
and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was so 
transformed. See also 19 CFR Sec.  177.22(a) defining ``country of 
origin'' in identical terms.
    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of Subpart B of Part 177 consistent with the Federal Procurement 
Regulations. See 19 CFR Sec.  177.21. In this regard, CBP recognizes 
that the Federal Procurement Regulations restrict the U.S. 
Government's purchase of products to U.S.-made or designated country 
end products for acquisitions subject to the TAA. See 48 CFR Sec.  
25.403(c)(1). The Federal Procurement Regulations define ``U.S.-made 
end product'' as: * * * an article that is mined, produced, or 
manufactured in the United States or that is substantially 
transformed in the United States into a new and different article of 
commerce with a name, character, or use distinct from that of the 
article or articles from which it was transformed. 48 CFR Sec.  
25.003. Therefore, the question presented in this final 
determination is whether, as a result of the operations performed in 
the United States, the foreign materials and components are 
substantially transformed into a product of the United States.
    In determining whether the combining of parts or materials 
constitutes a substantial transformation, the determinative issue is 
the extent of the operations performed and whether the parts lose 
their identity and become an integral part of the new article. 
Belcrest Linens v. United States, 6 Ct. Int'l Trade 204, 573 F. 
Supp. 1149 (1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). If the 
manufacturing or combining process is a minor one that leaves the 
identity of the imported article intact, a substantial 
transformation has not occurred. Uniroyal, Inc. v. United States, 3 
Ct. Int'l Trade 220, 542 F. Supp. 1026 (1982). Assembly operations 
that are minimal or simple, as opposed to complex or meaningful, 
generally will not result in a substantial transformation. See 
C.S.D. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 
90-51, and C.S.D. 90-97.
    In order to determine whether a substantial transformation 
occurs when components of various origins are assembled to form 
completed articles, CBP considers the totality of the circumstances 
and makes such decisions on a case-by-case basis. The country of 
origin of the article's components, the extent of the processing 
that occurs within a given country, and whether such processing 
renders a product with a new name, character, and use are primary 
considerations in such cases. Additionally, resources expended on 
product design and development, the extent and nature of post-
assembly inspection procedures, and the worker skill required during 
the actual manufacturing process will be considered when analyzing 
whether a substantial transformation has occurred; however, no one 
factor is determinative.
    In this case, the solar PV systems are produced in a production 
facility located in

[[Page 61511]]

the U.S. All the research and development for the solar PV panel 
system is performed in the U.S. A significant number of the 
components used to make these products are of U.S.-origin. Further, 
this case clearly involves complex and meaningful assembly 
operations performed in the U.S. Several layers of thin film 
deposits are placed on the bare glass tubes which are then 
transformed into a module for a solar PV panel system with a new 
name, different and specialized characteristics and use. Therefore, 
we find that the imported components are substantially transformed 
in the U.S. and that the country of origin of the solar PV panel 
systems is the U.S. for purposes of U.S. Government procurement.
    We suggest that you contact the Federal Trade Commission to 
determine whether the solar panel systems may be marked ``Made in 
the U.S.A.'', which is within their jurisdiction.

Holding:

    Based on the facts of this case, the country of origin of the 
solar PV panel systems is the U.S. for purposes of U.S. Government 
procurement.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR Sec.  177.29. Any party-at-interest 
other than the party which requested this final determination may 
request, pursuant to 19 CFR Sec.  177.31 that CBP reexamine the 
matter anew and issue a new final determination. Pursuant to 19 CFR 
Sec.  177.30, any party-at-interest may, within 30 days after 
publication of the Federal Register Notice referenced above, seek 
judicial review of this final determination before the Court of 
International Trade.

Sincerely,

Sandra L. Bell,
Executive Director, Office of Regulations and Rulings, Office of 
International Trade.

[FR Doc. 2010-25024 Filed 10-4-10; 8:45 am]
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