[Federal Register Volume 75, Number 241 (Thursday, December 16, 2010)]
[Notices]
[Pages 78726-78729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31638]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning the Fairplay 
Hoss and the Fairplay Eve Electric Vehicles

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 Fairplay Hoss and the Fairplay Eve lines of 
electric vehicles. Based upon the facts presented, CBP has concluded in 
the final determination that the United States is the country of origin 
of the Fairplay Hoss and Eve lines of electric vehicles for purposes of 
U.S. Government procurement.

[[Page 78727]]


DATES: The final determination was issued on December 9, 2010. A copy 
of the final determination is attached. Any party-at-interest, as 
defined in 19 CFR Sec.  177.22(d), may seek judicial review of this 
final determination on or before January 18, 2011.

FOR FURTHER INFORMATION CONTACT: Heather K. Pinnock, Valuation and 
Special Programs Branch: (202) 325-0034.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on December 9, 
2010, pursuant to subpart B of part 177, Customs and Border Protection 
Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of the Fairplay Hoss and 
Eve lines of electric vehicles which may be offered to the U.S. 
Government under an undesignated government procurement contract. This 
final determination, in HQ H133455, was issued at the request of 
Fairplay Electric Cars, LLC (``Fairplay''), 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 
Fairplay Hoss and Eve lines of electric vehicles, assembled to 
completion in the United States from parts made in non-TAA countries 
and TAA countries and/or the United States, are substantially 
transformed in the United States, such that the United States is the 
country of origin of the finished articles for purposes of U.S. 
Government procurement.
    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.

    Dated: December 9, 2010.
Harold Singer,
Acting Executive Director, Regulations and Rulings, Office of 
International Trade.

Attachment

HQ H133455
December 9, 2010
CLA-2 OT:RR:CT:VS H133455 HkP

CATEGORY: Marking

Mr. Keith Andrews, President
Fairplay Electric Cars
743 Horizon Ct., Suite 333
Grand Junction, CO 81506

RE: Government Procurement; Country of Origin of Fairplay ``Hoss'' and 
``Eve'' Electric Vehicles; Substantial Transformation

Dear Mr. Andrews:

    This is in response to your letter dated July 20, 2010, requesting 
a final determination on behalf of Fairplay Electric Cars, LLC 
(``Fairplay''), pursuant to subpart B of part 177 of the U.S. Customs 
and Border Protection Regulations (19 CFR Part 177).
    Under these regulations, which implement Title III of the Trade 
Agreements Act of 1979 (TAA), 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.
    This final determination concerns the country of origin of the 
Fairplay Hoss line of industrial and commercial vehicles and the 
Fairplay Eve line of low speed vehicles. We note that as a U.S. 
importer and manufacturer, Fairplay is a party-at-interest within the 
meaning of 19 CFR Sec.  177.22(d)(1) and is entitled to request this 
final determination. In reaching our decision, we have taken into 
account additional information submitted to this office on August 31, 
2010.

FACTS:

    For the Hoss line, the models of vehicles at issue are the 
following: Hoss LD, Hoss XD, and Hoss Quad. For the Eve line, the 
models of vehicles at issue are the Eve Deluxe 2P, Eve Deluxe XR 2P, 
Eve Deluxe LTD 2P, Eve Deluxe 4P, Eve Eco 2P, and the Eve Eco XR 2P.
    According to the information submitted, Fairplay imports parts for 
both these lines of vehicles from China. These include chassis, plastic 
body parts and various miscellaneous pieces of plastic trim, which are 
assembled together in the United States with U.S.-made battery packs, 
motors, electronics, wiring assemblies, seats, and chargers.
    For the Hoss line of vehicles, the bill of materials (BOM) 
submitted with the request indicates that, depending on the model, a 
vehicle may have between approximately 50 and 72 inputs, when items 
such as logos/decals, and warranty registration cards are counted along 
with the parts. Of these, between 11 and 15 inputs are of U.S. origin 
or are performed in the U.S. Between 48.1% and 58.9% of actual 
manufacturing costs are attributed to U.S. or TAA country manufacturing 
operations.
    For the Eve line of vehicles, the bill of materials (BOM) submitted 
with the request indicates that, depending on the model, a vehicle may 
have between approximately 67 and 78 inputs, when items such as logos/
decals, and warranty registration cards are counted along with the 
parts. Of these, between 21 and 27 inputs are of U.S. origin or are 
performed in the U.S. Between 52.2% and 64.8% of actual manufacturing 
costs are attributed to U.S. or TAA country manufacturing operations.
    For both the Hoss and Eve lines of vehicles, assembly in the U.S. 
takes place at five different stations, the operations performed at 
each station being described as follows:

Station 0: The electronic controller plate is assembled and tested.
Station 1: The chassis is unloaded and given a vehicle identification 
number. Wheels, tires, and the steering column are installed on the 
chassis using rivets, nuts, bolts, screws, and plastic push-ins.
Station 2: The batteries, motor, controller, solenoid, wiring harness 
and other crucial electronic parts are installed using rivets, nuts, 
bolts, and screws or special Molex connectors and plastic push-ins that 
must be soldered.
Station 3: The plastic front and rear body, bumpers and dashboard are 
installed over the chassis and electronic assembly, which gives the 
vehicle its finished appearance. Parts are attached with rivets, nuts 
and bolts. The vehicle is then removed from the assembly rack.
Station 4: The deep cycle batteries, upright canopy supports, canopy 
top, seat bottom and back, seat belts, lights, reflectors, decals, 
logos and final wiring are installed and tested. The parts are 
installed using rivets, Molex connectors, nuts, bolts, screws, and/or 
plastic push-ins, as required.

    Testing of the fully assembled vehicle lasts between 90 and 195 
minutes, depending on the vehicle. In addition, quality control 
inspections are performed at each station as well as randomly. Packing 
and shipping operations last between 30 and 45 minutes. The Standard 
Operating Procedures to assemble the vehicles are designed by staff 
engineers, who also select, approve and advise on the appropriate parts 
to be used for the manufacture of the vehicles.

ISSUE:

    What is the country of origin of the Fairplay Hoss line of 
industrial and commercial electric vehicles and of the Eve line of low 
speed vehicles for

[[Page 78728]]

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.
    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 define ``U.S.-made end product'' as:
    [A]n article that is mined, produces, 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). 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. 
89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. By contrast, in 
C.S.D. 85-25, 19 Cust. Bull. 844 (1985), CBP held that for purposes of 
the Generalized System of Preferences (``GSP''), the assembly of a 
large number of fabricated components onto a printed circuit board in a 
process involving a considerable amount of time and skill resulted in a 
substantial transformation. In that case, in excess of 50 discrete 
fabricated components (such as resistors, capacitors, diodes, 
integrated circuits, sockets, and connectors) were assembled. 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.
    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.
    You believe that the assembly operations that take place in the 
U.S. result in a substantial transformation of the imported parts. You 
note that these parts, by themselves, cannot function and must be 
assembled with the U.S.-made parts to constitute a working electric 
self-propelled vehicle. Given these considerations, you argue that the 
U.S. content along with the fact that 100% of the assembly operations 
takes place in the U.S. warrants a determination that the U.S. is the 
country of origin of the vehicles. In support of your argument, you 
cite Headquarters Ruling Letter (``HQ'') H022169 (May 2, 2008) and HQ 
558919 (Mar. 20, 1995).
    In HQ H022169, CBP found that an imported mini-truck glider was 
substantially transformed as a result of assembly operations performed 
in the United States to produce an electric mini-truck. Our 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.
    In HQ 558919, a country of origin marking case relied upon in HQ 
H022169, U.S. Customs (now CBP) held that an extruder assembly 
manufactured in England was substantially transformed in the United 
States when it was wired and combined with U.S. components (motor, 
electric controls and extruder screw) to create a vertical extruder. In 
reaching that decision, Customs emphasized that the imported extruder 
subassembly and the U.S. components each had important attributes that 
were functionally necessary to the operation of the extruder. 
Consequently, we found that the imported subassemblies should be 
excepted from individual marking, provided that the cartons in which 
the U.S. manufacturer received them were properly marked with their 
country of origin.
    In both HQ 558919 and HQ H022169, CBP found that assembly of the 
imported parts together with the U.S. made components were 
``functionally necessary'' to the operation of the finished product. 
The same is true in this situation. None of the imported parts, on 
their own, can function as an electric vehicle but must be assembled 
with other necessary U.S. components, such as the battery pack, motor, 
electronics, wiring assemblies and charger. Moreover, given the 
complexity and duration of the U.S. manufacturing process, we consider 
those operations to be more than mere assembly.
    Based on the information before us, and consistent with the CBP 
rulings cited above, we find that the Chinese-origin chassis, plastic 
body parts and plastic pieces of trim are substantially transformed by 
the assembly operations performed in the United States to produce both 
the Hoss and Eve lines of electric vehicles. Under the described 
assembly process, the imported parts lose their individual identities 
and become integral parts of a new article possessing a new name, 
character and use. Further, components crucial to the making of an 
electric vehicle (the battery pack, motor, electronics, wiring 
assemblies, and charger) are of U.S. origin. We conclude, based upon 
these specific facts, that the country of origin of the Fairplay Hoss 
and Eve lines of electric vehicles for purposes of U.S.

[[Page 78729]]

Government procurement is the United States.

HOLDING:

    The chassis, plastic body parts and plastic pieces of trim imported 
from China are substantially transformed when they are assembled in the 
United States with domestic components. As a result, the country of 
origin of Fairplay's Hoss line of industrial and commercial electric 
vehicles, specifically the Hoss LD, Hoss XD, and Hoss Quad, for 
purposes of U.S. Government procurement is the United States. The 
country of origin of Fairplay's Eve line of low speed electric 
vehicles, specifically the Eve Deluxe 2P, Eve Deluxe XR 2P, Eve Deluxe 
LTD 2P, Eve Deluxe 4P, Eve Eco 2P, and the Eve Eco XR 2P, for purposes 
of U.S. Government procurement is the United States.
    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, 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 Court of International Trade.

Sincerely,

Harold Singer
Acting Executive Director
Regulations and Rulings
Office of International Trade

[FR Doc. 2010-31638 Filed 12-15-10; 8:45 am]
BILLING CODE 9111-14-P