[Federal Register Volume 89, Number 94 (Tuesday, May 14, 2024)]
[Notices]
[Pages 41971-41973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10504]



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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Battery-
Electric Semi-Trucks

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 Nikola's Tre Bev, class 8, battery-electric semi-
truck. Based upon the facts presented, CBP has concluded that various 
imported components do undergo a substantial transformation in the 
United States when assembled into the battery-electric semi-truck.

DATES: The final determination was issued on May 8, 2024. 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 
no later than within 30 days of publication of this determination in 
the Federal Register.

FOR FURTHER INFORMATION CONTACT: Ani Mard, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade, at (202) 
325-0737.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on May 8, 2024, 
U.S. Customs and Border Protection (CBP) issued a final determination 
concerning the country of origin of Nikola's Tre Bev, class 8, battery-
electric semi-truck for purposes of title III of the Trade Agreements 
Act of 1979. This final determination, HQ H335387, was issued at the 
request of Carter Machinery Co., 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 has concluded that, based upon the facts presented, 
the various imported components do undergo a substantial transformation 
in the United States when assembled into the battery-electric semi-
truck.
    Section 177.29, CBP Regulations (19 CFR 177.29), provides that a 
notice of final determination 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.

Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.
HQ H335387
May 8, 2024
OT:RR:CTF:VS H335387 a.m.
CATEGORY: Origin
Aaron Sullivan
    Carter Machinery Co., Inc. 1330 Lynchburg Turnpike, Salem, VA 24153
RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. 2511); subpart B, part 177, CBP Regulations; Country of 
Origin of Battery-Electric Semi-Truck.
    Dear Mr. Sullivan:
    This is in response to your request, dated November 1, 2023, on 
behalf of Carter Machinery Co., Inc. (``Carter Machinery''), for a 
final determination concerning the country of origin of Nikola's Tre 
Bev, class 8, battery-electric semi-truck pursuant to Title III of the 
Trade Agreements Act of 1979 (``TAA''), as amended (19 U.S.C. 2511 et 
seq.), and subpart B of part 177, U.S. Customs and Border Protection 
(``CBP'') Regulations (19 CFR 177.21, et seq.). Carter Machinery is a 
party-at-interest within the meaning of 19 CFR 177.22(d)(1) and 
177.23(a) and is therefore entitled to request this final 
determination.
FACTS
    The merchandise at issue is Nikola's Tre Bev, class 8, battery-
electric semi-truck (``Tre Bev''). The Tre Bev is a battery-electric, 
zero emission, heavy duty truck, with a 330-mile range. It is described 
as a 6x2 cab over style truck designed for short-haul regional-metro 
applications.
    In response to a request from this office for a more detailed 
breakdown of components, Carter Machinery submitted a bill of materials 
(BOM) containing the country of origin of the Tre Bev components, as 
well as documents illustrating the assembly process. According to the 
submission, the Tre Bev is comprised of 1,349 individual parts. The 
total cost of the parts was provided, and it is indicated that 67% of 
that cost is represented by U.S.-made products. The trucks are built in 
Coolidge, AZ.
    The U.S. assembly process is described as follows:
    Station 0: The chassis \1\ (product of Mexico) is brought inside 
the manufacturing plant. Based on the photograph submitted, the chassis 
is a black rectangular base metal structure/frame. It is imported in 
its ``bare'' form, and the mechanical components are incorporated into 
the frame in subsequent stations. Each chassis is loaded in the upside 
position onto a set of automatic guided vehicles (``AGV'').
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    \1\ The term ``chassis'' refers to the frame of the vehicle. The 
chassis is the main supporting structure of the vehicle and is also 
described as the ``skeleton.'' Carter Machinery uses the terms 
``frame'' and ``chassis'' interchangeably.
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    Station 1: AGVs are moved from station zero to station one. Several 
major components and brackets are installed, including suspension 
brackets, cab tilt pump, rear axle alignment, air spring brackets, high 
voltage routing brackets, and the steering gear (product of USA).
    Station 2: Pre-cut pneumatic lines (product of USA) are transported 
from the subassembly station to the mainline. These lines control air 
flow to help with steering, turning, and braking functions. The low 
voltage harnesses (product of Spain) are installed, which help route 
power from the batteries to areas that require a lower voltage to 
operate.
    Station 3: High voltage cables are bundled and assembled. These 
cables are directly connected to the batteries (product of USA) and e-
axle. E-motor hoses, inverter pipes, and air spring suspension are also 
installed. Additionally, the DCDC converter (product of USA) is 
installed.
    Station 4: The front axle (product of USA), tag axle (product of 
Italy), and e-axles (product of Italy) are installed. The e-axle houses 
twin motors that power the vehicle.
    Station 5: Station five focuses on the final preparation of the 
chassis. The last of the major internal support brackets, battery 
brackets, radiator support brackets, front under rider protection 
assembly, high voltage compressor, and HVAC are installed.
    Station 6: The vehicle gets flipped in the truck position. The AGV 
is moved out of the station and the AGVs for the second half of the 
assembly process move into the station. The flip equipment releases the 
chassis back down onto the new AGV in truck position.
    Station 7: The high voltage cable bundles are routed. The rear 
Power Distribution Unit (``PDU'') (product of Malta) is installed and 
connected to the rear inverter (product of USA). Simultaneously, the 
front PDU is installed and connected to the high voltage lines that 
will be connected to the batteries. The heat compressor, fuse box, and 
expansion tanks are connected to brake resistor lines. Thermal lines 
are also connected in the front.

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    Station 8: The high voltage batteries are installed using a lift 
assist into the individual housing units creating by the battery 
brackets. Additionally, two low voltage batteries are installed in a 
small housing under the cab to power cab functions such as instrument 
panel, doors, lights, etc.
    Station 9: The cab is prepared to be mounted in the next station. 
This includes installing and securing the brackets onto which the cab 
will slide. Radiators, rear cargo lights, rear cameras, quick exhaust, 
and Tire Pressure Monitoring System (TPMS) fuse boxes are also 
installed.
    Station 10: The cab is lifted using an overhead lift assist. The 
cab is married onto the support brackets installed in the previous 
station. The electrical harness and pneumatic connections between the 
cab and chassis are made. The tilt pin that allows the cab to lift is 
also installed here.
    Station 11: The cab steps, lower side plates for batteries, fifth 
wheel, and mud flaps are all installed. The horn and speakers are 
installed to the cab. The rear inverter is also routed and connected.
    Station 12: The electrical side panels, storage boxes, and side 
steps are installed. The wheel trim is installed on the cab tires and 
are then mounted to the axles. Air conditioning coolant, battery 
coolant, windshield wiper, and power steering fluids are filled. The 
chassis steps are also installed.
    Station 13: Bonding checks on high voltage components like 
batteries, compressors, DCDC converters are done to ensure they are 
grounded. Unified Diagnostic Services (UDS) routines are completed. 
Manual service disconnects are installed, completing the battery 
circuits. Skid plates are installed under the batteries. Electronic 
Braking Software (EBS) is flashed before high voltage is brought up.
    Station 14: The truck is powered on at this point in the assembly 
process. The e-axle and controllers are paired to the accelerator 
through resolver learning. Air conditioning is activated, and the 
odometer is reset. Additionally, the lane departure warning system is 
programmed.
    Alignment: The front axle alignment is adjusted. Rear axle 
alignment and thrust angle are measured. Headlamps are adjusted. Lane 
departure warning and autonomous emergency brake systems are also 
calibrated.
    Dyno: The Dyno \2\ confirms vehicle propulsion including 
acceleration/deceleration, braking, and vehicle speed sensors. The 
vehicle function lights, windshield wipers, and cruise control are also 
tested.
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    \2\ A dynamometer, also known as a ``dyno'', is a device that 
measures force, torque, or power.
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ISSUE
    Whether the imported components are substantially transformed when 
made into the Tre Bev, class 8, battery-electric semi-truck in the 
United States.
LAW & ANALYSIS
    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, pursuant 
to subpart B of part 177, 19 CFR 177.21 et seq., which implements title 
III, Trade Agreements Act of 1979, as amended (19 U.S.C. 2511-2518).
    CBP's authority to issue advisory rulings and final determinations 
is set forth in 19 U.S.C. 2515(b)(1), which states:

    For the purposes of this subchapter, the Secretary of the 
Treasury shall provide for the prompt issuance of advisory rulings 
and final determinations on whether, under section 2518(4)(B) of 
this title, an article is or would be a product of a foreign country 
or instrumentality designated pursuant to section 2511(b) of this 
title.

Emphasis added.
    The Secretary of the Treasury's authority mentioned above, along 
with other customs revenue functions, are delegated to CBP in the 
Appendix to 19 CFR part 0--Treasury Department Order No. 100-16, 68 FR 
28,322 (May 23, 2003).
    The rule of origin set forth in 19 U.S.C. 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 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 Acquisition Regulation 
(``FAR''). See 19 CFR 177.21. In this regard, CBP recognizes that the 
FAR restricts 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 25.403(c)(1).
    The FAR, 48 CFR 25.003, defines ``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.

    Therefore, the question presented in this final determination is 
whether, as a result of the operations performed in the United States, 
the Tre Bev is substantially transformed into a product of the United 
States.
    In deciding 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. See Belcrest Linens v. 
United States, 6 CIT 204 (1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). 
Assembly operations that are minimal or simple, as opposed to complex 
or meaningful, will generally not result in a substantial 
transformation. Factors, which may be relevant in this evaluation, may 
include the nature of the operation (including the number of components 
assembled), the number of different operations involved, and whether a 
significant period of time, skill, detail, and quality control are 
necessary for the assembly operation. 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. If the 
manufacturing or combining process is a minor one, which leaves the 
identity of the article intact, a substantial transformation has not 
occurred. See Uniroyal, Inc. v. United States, 3 CIT 220 (1982), aff'd, 
702 F.2d 1022 (Fed. Cir. 1983).
    In order to determine whether a substantial transformation occurs 
when components of various origins are assembled into completed 
products, CBP considers the totality of the circumstances and makes 
such determinations on a case-by-case basis. 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. 
Additionally, factors such as the resources expended on product design 
and development, the extent and nature of post-assembly inspection and 
testing procedures, and worker skill required during the actual 
manufacturing process will be considered when determining whether a 
substantial transformation has occurred. No one factor is 
determinative.

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    In Headquarters Ruling Letter (``HQ'') H155115, dated May 24, 2011, 
CBP found that assembly in the United States of an imported glider, and 
other imported and U.S.-origin parts, constituted a substantial 
transformation into the electric vehicle, an article with a new name, 
character, and use. The electric vehicle was composed of 31 components, 
of which 14 were of U.S. origin. The assembly process in the United 
States was complex and time-consuming and involved a significant U.S. 
contribution in both parts and labor. CBP determined that the country 
of origin of the electric vehicles for purposes of U.S. Government 
procurement was the United States. See also HQ H229157, dated November 
16, 2012.
    In HQ H118435, dated October 13, 2010, CBP determined the United 
States to be the country of origin for purposes of U.S. Government 
procurement for a line of electric golf and recreational vehicles. In 
this case, CBP found that a Chinese-origin chassis, plastic body parts 
and pieces of plastic trim were substantially transformed when they 
were assembled with U.S.-origin battery packs, motors, electronics, 
wiring assemblies, seats, and chargers in the United States. The 
vehicles were composed of approximately 53 and 62 inputs, of which 
between 12 and 17 inputs were U.S. components and critical in making 
the electric vehicle. The imported parts lost their individual 
identities and became integral parts of a new article possessing a new 
name, character, and use.
    In HQ H022169, dated May 2, 2008, CBP held that a mini-truck glider 
from India was substantially transformed when assembled in the United 
States with approximately 87 different components, 68 of which were of 
U.S. origin, to produce an electric mini-truck. CBP found that the 
imported glider lost its individual identity and became an integral 
part of a new article possessing a new name, character and use. 
Accordingly, CBP determined the assembly process was complex and time-
consuming and involved a significant U.S. contribution, in both parts 
and labor. The components used to power the vehicle were assembled in 
the United States, and then incorporated into the vehicle in the United 
States.
    In the case at hand, various imported components such as the 
chassis, e-axle, and PDU cannot independently function and operate as 
an electric vehicle. These components need to be assembled in the 
United States with other necessary components of U.S. origin, such as 
the batteries, converter, wheels, and front axle. Furthermore, given 
the complexity and duration of the U.S. manufacturing process, such as 
installation, calibration, mounting, and preparation of the product, we 
consider these operations to be more than mere assembly. Importantly, 
67% of the total cost of the truck is comprised of U.S.-made products.
    This case is distinguishable from HQ H302821, dated July 26, 2021, 
in which we held that the assembly of Volvo vehicles in Sweden as part 
of a ``knockdown operation'' did not result in a substantial 
transformation. Unlike in that case, where the Chinese subassemblies 
had pre-determined end uses and did not undergo a change in character 
and use during the assembly process in Sweden, here, applying the name, 
character and use test, the imported components lose their individual 
identities and will become an integral part of a new article possessing 
a new name, character, and use. The assembly of the Tre Bev in the 
United States constitutes a substantial transformation resulting in an 
article with a new name, character, and use.
    Based on the foregoing, we find that the last substantial 
transformation occurs in the United States, and therefore, the Tre Bev 
battery-electric semi-truck is not a product of a foreign country or 
instrumentality designated pursuant to 25 U.S.C. 2511(b). As to whether 
the Tre Bev produced in the United States qualifies as a ``U.S.-made 
end product,'' you may wish to consult with the relevant government 
procuring agency and review Acetris Health, LLC v. United States, 949 
F.3d 719 (Fed. Cir. 2020).
HOLDING
    Based on the information outlined above, we determine that the 
components imported into the United States undergo a substantial 
transformation when made into Nikola's Tre Bev, class 8, battery-
electric semi-truck.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR 177.29. Any party-at-interest other 
than the party which requested this final determination may request, 
pursuant to 19 CFR 177.31, that CBP reexamine the matter anew and issue 
a new final determination. Pursuant to 19 CFR 177.30, any 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 U.S. Court of International Trade.

    Sincerely,

Alice A. Kipel,
Executive Director, Regulations & Rulings, Office of Trade.

[FR Doc. 2024-10504 Filed 5-13-24; 8:45 am]
BILLING CODE 9111-14-P