[Federal Register Volume 76, Number 104 (Tuesday, May 31, 2011)]
[Notices]
[Pages 31354-31355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13384]


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 DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning the Transit 
Connect Electric Vehicle

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 the Transit Connect Electric Vehicle. Based upon 
the facts presented, CBP has concluded in the final determination that 
the United States is the country of origin of the vehicle for purposes 
of U.S. Government procurement.

DATES: The final determination was issued on May 24, 2011. 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 June 30, 2011.

FOR FURTHER INFORMATION CONTACT: Barbara Kunzinger, Valuation and 
Special Programs Branch: (202) 325-0359.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 24, 2011, 
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 the Transit Connect Electric Vehicle which may be 
offered to the U.S. Government under an undesignated procurement 
contract. This final determination, in HQ H155115, was issued at the 
request of Azure Dynamics 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, the Transit Connect 
Electric Vehicle, assembled in the United States from parts made in the 
United States, Turkey, Switzerland, Hungary, Japan, Germany, Canada, 
the United Kingdom, and various other countries is substantially 
transformed in the United States, such that the United States is the 
country of origin of the finished article 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, Customs 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: May 24, 2011.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.
Attachment

HQ H155115

May 24, 2011
OT:RR:CTF:VS H155115 BGK
CATEGORY: Marking

Scott T. Harrison
Chief Executive Officer
Azure Dynamics Corporation
14925 W 11 Mile Road
Oak Park, MI 48237

RE: Government Procurement; Country of Origin of Electric Vehicles; 
Substantial Transformation

Dear Mr. Harrison:
    This is in response to your letter, dated March 16, 2011, as 
amended April 6, 2011, and April 7, 2011, requesting a final 
determination on behalf of Azure Dynamics (Azure), pursuant to 
subpart B of 19 C.F.R. part 177.
    Under these regulations, which implement Title III of the Trade 
Agreements Act of 1979, as amended (19 U.S.C. 2511 et seq.), U.S. 
Customs and Border Protection (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 purpose 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 the 
Transit Connect Electric Vehicle (TCE). We note that Azure, the U.S. 
importer and manufacturer, is a party-at-interest within the meaning 
of 19 C.F.R. 177.22(d)(1) and is entitled to request this final 
determination under 19 C.F.R. 177.23(a).

FACTS:

    Azure purchases and imports a Transit Connect glider from 
Turkey. A glider is a non-functional base without a powertrain or 
exhaust components, and consists of a frame, body, axles, and 
wheels. The TCE is then assembled in the U.S. from both imported and 
U.S.-origin components.
    A Bill of Materials was submitted with the request. Apart from 
the glider, parts for the TCE are also imported from Switzerland, 
Hungary, Japan, Germany, Canada, the United Kingdom, and various 
other countries. According to the submission, the TCE vehicle is 
composed of 31 components, of which 14 are of U.S.-origin. For 
purposes of this decision, we assume that the components of U.S. 
origin are produced in the U.S. or are substantially transformed in 
the U.S. and considered products of the U.S.
    The U.S. assembly occurs at various stations. The assembly 
stations at AM General, the manufacturing subcontractor, are 
described as follows:

    Station 0: A visual quality inspection of the glider is 
performed and the materials necessary for assembly are delivered to 
the proper stations.
    Station 1: A Vehicle Identification Number is assigned. Holes 
are drilled into the glider and brackets are installed to support 
the battery pack and other electric assembly components. The fuel 
door of the glider is removed, assembled into a charge port, and the 
charge port is installed. The cab wiring harnesses and instrument 
clusters are removed and replaced with U.S. origin cab wiring 
harnesses and Hungarian instrument clusters appropriate for electric 
vehicles. The low-voltage battery is removed.
    Station 2: A U.S.-origin battery pack, U.S. engine bay wiring 
harness, German power steering pump and motor, German battery 
coolant pump heater, and Turkish power steering lines are installed. 
Four subassemblies, which previously are assembled at four 
substations using certain U.S. and foreign components, are also 
assembled and installed: Cooling pack subassembly, hoses assembly, 
high voltage junction box assembly, and traction assembly.
    The cooling pack subassembly involves the removal of the 
condenser from the radiator included with the glider and the 
replacement of the radiator included with glider with a Canadian 
radiator that is compatible with electric vehicles. U.S. hoses are 
then installed onto the radiator.
    The hoses subassembly involves measuring and cutting U.S.-origin 
coolant hoses and installing U.S.-origin hoses clips to the hoses.
    The high voltage junction box subassembly involves integrating a 
Canadian active discharge unit with various U.S. and foreign origin 
vent plugs, mounting studs, internal harnesses, fuses and a fuse 
holder, and various cables.
    The traction subassembly involves the assembly of a U.S. origin 
motor controller (manufactured by Azure at a different plant and 
referred to as the Force Drive electric powertrain), a U.S. origin 
gearbox, a German electric motor, a German origin vacuum pump, a 
Swiss charger, a Japanese AC compressor, and a Japanese DC-DC 
converter.
    Station 3: Multiple quality control inspections are performed. 
Various brackets, gaskets, nuts and bolts, and cords and wires are 
installed. The original-low voltage battery

[[Page 31355]]

is re-installed, along with the U.S. origin vehicle control unit, a 
German driveshaft, and a Japanese heater assembly.
    Station 4: The coolant, power steering, and windshield washer 
reservoirs are filled. A functional electric test, a diagnostic 
test, and a complete system check are performed. Other various 
parts, including a potentiometer to the heater blend door, a data 
link control wiring harness, and a brake sensor to the brake petal, 
are installed, and a tire inflation kit, labels, books, and manuals 
are added to the vehicle.
    Station 5: A tire pressure check, wheel alignment, headlight 
aiming, brake test, battery charge, road test, and underbody check 
are performed.

ISSUE:

    What is the country of origin of the subject TCE vehicles for 
purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    Pursuant to subpart B of part 177, 19 C.F.R 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 purpose of granting waivers of certain ``Buy 
American'' restrictions in U.S. law or practice for products offered 
for sale to the U.S. Government.
    Under the rule of origin set forth under 19 U.S.C. Sec.  
2518(4)(B):

    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 C.F.R Sec.  177.22(a).

    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 C.F.R. 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 
C.F.R. Sec.  25.403(c)(1). The Federal Procurement Regulations, 48 
C.F.R. Sec.  25.003, define ``U.S.-made end product'' as:

    [A]n 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.

    In determining whether the combining of parts or materials 
constitutes a substantial transformation, the determinative issue is 
the extent of operations performed and whether the parts lose their 
identity and become an integral part of the new article. Belcrest 
Linens v. United States, 573 F. Supp. 1149 (Ct. Int'l Trade 1983), 
aff'd, 741 F.2d 1368 (Fed. Cir. 1984). The country of origin of the 
item's components, extent of the processing that occurs within a 
country, and whether such processing renders a product with a new 
name, character, and use are primary considerations in such cases. 
Assembly operations that are minimal or simple, as opposed to 
complex or meaningful, will generally 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. Whether an operation 
is complex and meaningful depends on the nature of the operation, 
including the number of components assembled, number of different 
operations, time, skill level required, attention to detail, quality 
control, the value added to the article, and the overall employment 
generated by the manufacturing process.
    You claim that the U.S. assembly operations, along with the 
value of the U.S. origin contributions (labor and components), 
results in a substantial transformation of the imported parts, and 
warrants a determination that the U.S. is the country of origin for 
purposes of U.S. Government procurement. You also note that ``the 16 
foreign components used in the assembly of the TCE vehicle cannot 
function alone and must be assembled with the U.S.-origin parts in 
order to constitute a working TCE vehicle.'' You cite Headquarters 
Ruling Letter (HRL) H022169, dated May 2, 2008, and HRL H118435; 
dated October 13, 2010, in support of your argument.
    In HRL H118435, the U.S. was determined to be the country of 
origin for purposes of U.S. Government procurement for a line of 
electric golf and recreational vehicles. In that case, the chassis, 
plastic body parts, and various miscellaneous pieces of plastic trim 
were imported into the U.S. from China and assembled with U.S.-
origin battery packs, motors, electronics, wiring assemblies, seats, 
and chargers. The vehicles were composed of approximately 53 to 62 
components, of which between 12 and 17 were of U.S. origin. HRL 
H118435 held that none of the imported parts could function as an 
electric vehicle on their own and needed to be assembled with other 
necessary U.S. components. Additionally, it was held that given the 
complexity and duration of the U.S. manufacturing process, the 
operations were more than mere assembly. It was determined that a 
substantial transformation occurred, and further, the critical 
components to making an electric vehicle--battery pack, motor, 
electronics, wiring assemblies, and charger--were of U.S.-origin. 
The same conclusion was reached in HRL H133455, dated December 9, 
2010, in which a chassis and various parts were imported from China 
to be combined with U.S.-origin battery packs, motors, electronics, 
wiring assemblies, seats, and chargers. The ratio of imported 
components to U.S.-made components varied, but the assembly process 
was the same.
    In HRL H022169, CBP found that an imported mini-truck glider was 
substantially transformed as a result of assembly operations 
performed in the U.S. to produce an electric mini-truck. The 
decision was based on the fact that, under the described assembly 
process, the imported glider lost its individual identity and became 
an integral part of a new article possessing a new name, character, 
and use. In addition, a substantial number of the components added 
to the imported glider were of U.S. origin. The glider was assembled 
with approximately 87 different components, 68 of which were of U.S. 
origin. The batteries, charger, and gear box were of U.S. origin, 
and other major parts, including the electric motor and brakes, were 
of foreign origin.
    As stated in HRL H022169 (citing HRL 731076, dated November 1, 
1988), CBP considers the manufacture of an automobile more than a 
mere simple assembly operation. The assembly process here is complex 
and time-consuming and involves a significant U.S. contribution, in 
both parts and labor. The components used to power the vehicle are 
assembled together in the U.S., and then incorporated into the 
vehicle in the U.S. For example, the U.S.-origin battery pack, motor 
controller, and wiring harnesses are all critical components for the 
operation of the electric vehicle. Furthermore, in HRLs H118435, 
H133455, and H022169, it was found that the assembly of the U.S. and 
imported components was necessary for the vehicles to function, and 
that the assembly resulted in a substantial transformation. We find 
the same to be true in this case. The glider and other components 
cannot function as an electric vehicle on their own. Therefore, 
based on the information discussed and the rulings cited, we find 
that the assembly of the glider and other components of various 
origins constitutes a substantial transformation and results in an 
article with a new name, character, and use, such that the country 
of origin for the TCE vehicle is the U.S. for purposes of U.S. 
Government procurement.

HOLDING:

    Based on the facts of this case, the country of origin of the 
TCE vehicle is the United States for purposes of U.S. Government 
procurement.
    Notice of this final determination will be given in the Federal 
Register as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31 that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, lany party-at-interest may, 
within 30 days of 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. 2011-13384 Filed 5-27-11; 8:45 am]
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