I

103D CONGRESS

1ST SESSION H. R. 111

To establish domestic content requirements for motor vehicles sold or

distributed in interstate commerce in the United States.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. BURTON of Indiana introduced the following bill; which was referred

jointly to the Committees on Energy and Commerce and Ways and Means

A BILL

To establish domestic content requirements for motor vehicles sold or distributed in interstate commerce in the

United States.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Fair Practices in Auto5 motive Products Act’’.

6 SEC. 2. PURPOSE.

7 The purpose of this Act is to encourage the produc8 tion in the United States by American workers of auto9 motive products which are sold or distributed in interstate

10 commerce.
2

•HR 111 IH

1 SEC. 3. DEFINITIONS.

2 (a) IN GENERAL.—As used in this Act:

3 (1) The term ‘‘automotive products’’ means

4 motor vehicles and parts for use in the production

5 of new motor vehicles.

6 (2) The term ‘‘added domestic value’’, when

7 used with respect to a vehicle manufacturer for any

8 model year, means the aggregate of—

9 (A) the production costs of all automotive

10 products sold by the vehicle manufacturer in

11 the United States, other than for export, during

12 that model year, and

13 (B) the export value of all automotive

14 products that were either—

15 (i) manufactured by the vehicle manu16 facturer in the United States and exported

17 from the United States by, or on behalf of,

18 such manufacturer during that model year,

19 or

20 (ii) manufactured in the United

21 States by any other person and purchased

22 by the vehicle manufacturer and exported

23 from the United States by, or on behalf of,

24 such manufacturer during that model year,

25 but only to the extent that the export value

26 of such automotive products is not in-
3

•HR 111 IH

1 cluded in automotive products to which

2 clause (i) applies;

3 reduced by the aggregate appraised value, as deter4 mined for purposes of the customs laws, of all auto5 motive products that were entered by, or on behalf

6 of, the vehicle manufacturer during that model year.

7 (3) The term ‘‘domestic content ratio’’ means,

8 with respect to a vehicle manufacturer for any model

9 year, the percentage determined by multiplying by

10 one hundred the factor obtained by dividing—

11 (A) the added domestic value determined

12 for that manufacturer for that model year

13 under paragraph (2); by

14 (B) the production costs determined, for

15 purposes of paragraph (2)(A), for that manu16 facturer for that model year.

17 (4) The term ‘‘entered’’ means entered, or with18 drawn from warehouse for consumption, within the

19 customs territory of the United States.

20 (5) The term ‘‘export value’’ means, with re21 spect to an automotive product—

22 (A) the free-on-board price for which the

23 vehicle manufacturer sells the product for ex24 portation from the United States; or
4

•HR 111 IH

1 (B) if the vehicle manufacturer sells the

2 product for such exportation to a buyer that

3 controls, is controlled by, or is under common

4 control with, such manufacturer, the price at

5 which such or similar products are freely of6 fered for free-on-board sale to all purchasers in

7 the principal markets of the United States in

8 the usual wholesale quantities and in the ordi9 nary course of trade for such exportation.

10 (6) The term ‘‘model year’’ means a vehicle

11 manufacturer’s annual production period (as deter12 mined by the Secretary) which includes January 1

13 of a calendar year, or if a vehicle manufacturer does

14 not have an annual production period, the calendar

15 year. A model year shall be designated by the

16 year in which January 1 occurs.

17 (7) The term ‘‘motor vehicle’’ means any three18 wheeled or four-wheeled vehicle propelled by fuel

19 which is manufactured primarily for use on the pub20 lic streets, roads, and highways (except any vehicle

21 operated exclusively on a rail or rails), and which is

22 rated as ten thousand pounds gross vehicle weight or

23 less. Such term does not include (A) any motorcycle,

24 or (B) any vehicle determined by the Secretary to be

25 an automobile capable of off-highway operation with-
5

•HR 111 IH

1 in the meaning of section 501(3) of the Motor Vehi2 cle Information and Cost Savings Act.

3 (8) The term ‘‘production cost’’ means, with re4 spect to an automotive product, the wholesale price

5 to dealers in the United States for that product as

6 set forth in the vehicle manufacturer’s official dealer

7 price list that is in effect at the time the product is

8 sold at wholesale.

9 (9) The term ‘‘Secretary’’ means the Secretary

10 of Transportation.

11 (10) The term ‘‘vehicle manufacturer’’ means

12 any person engaged in the business of producing

13 motor vehicles for ultimate retail sale in the United

14 States and includes as one entity all persons who

15 control, are controlled by, or are in common control

16 with, such person. Such term also includes any pred17 ecessor or successor of such a vehicle manufacturer.

18 SEC. 4. DETERMINATION OF ADDED DOMESTIC VALUE.

19 Two or more vehicle manufacturers may not include,

20 for purposes of determining their respective added domes21 tic values, the value of the same automotive product; but

22 such manufacturers may, under rules prescribed under

23 section 5(b), apportion the value of that automotive prod24 uct among them.
6

•HR 111 IH

1 SEC. 5. DOMESTIC CONTENT RATIOS FOR MODEL YEAR 1994

2 AND THEREAFTER.

3 (a) RATIOS.—In order to carry out the purpose of

4 this Act, for each model year beginning after January 1,

5 1993, the minimum domestic content ratio for a vehicle

6 manufacturer shall not be less than the higher of—

7 (1) the domestic content ratio achieved by the

8 vehicle manufacturer in model year 1994 reduced by

9 10 per centum; or

10 (2) the applicable minimum content ratio speci11 fied in the following table:

Number of motor vehicles produced by the

manufacturer and sold in the United

States during each year:

Minimum domestic content ratio:

Model Year 1994

Not over 100,000 ....................................... 0 percent.

Over 100,000 but not over 900,000 ........... The number, expressed as a percentage, determined by dividing

the number of vehicles sold by

30,000.

Over 900,000 .............................................. 30 percent.

Model Year 1995

Not over 100,000 ....................................... 0 percent.

Over 100,000 but not over 900,000 ........... The number, expressed as a percentage, determined by dividing

the number of vehicles sold by

15,000.

Over 900,000 .............................................. 60 percent.

Each Model Year After Model Year 1995

Not over 100,000 ....................................... 0 percent.

Over 100,000 but not over 900,000 ........... The number, expressed as a percentage, determined by dividing

the number of vehicles sold by

10,000.

Over 900,000 .............................................. 90 percent.

12 (b) ALLOCATION OF AUTOMOTIVE PRODUCTS AMONG

13 MANUFACTURERS.—In order to carry out the purpose of
7

•HR 111 IH

1 this Act, the Secretary shall prescribe rules or allocating

2 automotive products among vehicle manufacturers in ap3 propriate cases such as where—

4 (1) a vehicle manufacturer sells automotive

5 products manufactured by it in the United States to

6 another vehicle manufacturer;

7 (2) two or more vehicle manufacturers in joint

8 venture produce automotive products in the United

9 States; and

10 (3) a vehicle manufacturer produces motor vehi11 cles for ultimate retail sale in the United States,

12 some of which will be sold by that manufacturer and

13 some by another vehicle manufacturer.

14 SEC. 6. INFORMATION AND REPORTS.

15 (a) VEHICLE MANUFACTURERS RECORDS AND IN16 FORMATION.—Each vehicle manufacturer that produces

17 more than 100,000 motor vehicles for sale in the United

18 States during any model year after model year 1993 must

19 establish and maintain such records, and provide such in20 formation, regarding the production and sale of auto21 motive products by it as the Secretary by rule shall require

22 for purposes of carrying out sections 5(a) and 7.

23 (b) AUTHORITY TO OBTAIN INFORMATION.—

24 (1) SECRETARIAL AUTHORITY.—The authority

25 granted to the Secretary under subsection (b)(1) of
8

•HR 111 IH

1 section 505 of the Motor Vehicle Information and

2 Cost Saving Act (as in effect on the date of the en3 actment of this Act) to obtain information and data,

4 and access thereto, that is deemed advisable by the

5 Secretary for purposes of carrying out part V of that

6 Act may be used by the Secretary for purposes of

7 obtaining the information and data, and access

8 thereto, that is necessary or appropriate to carry out

9 sections 5(a) and 7.

10 (2) COURT AUTHORITY.—The authority granted

11 to the district courts of the United States under

12 subsection (b)(2) of such section 505 to enforce

13 compliance with action taken by the Secretary under

14 subsection (b)(1) of such section may be used by

15 such courts to enforce actions taken by the Sec16 retary pursuant to paragraph (1) for purposes of

17 carrying out this Act.

18 (3) DISCLOSURE OF INFORMATION AND

19 DATA.—The Secretary shall disclose any information

20 and data obtained under this subsection and sub21 section (a) to the public only in accordance with sec22 tion 552 of title 5, United States Code and any mat23 ter described in subsection (b)(4) of such section

24 shall not be disclosed to the public, except that

25 where such matter may be relevant to any adminis-
9

•HR 111 IH

1 trative or judicial proceeding to enforce this Act.

2 Such matter may be disclosed in such proceeding

3 only in a manner which would not result in competi4 tive damage or disadvantage, as determined by the

5 Secretary or a court, because of such disclosure.

6 (c) ANNUAL REPORTS.—As soon as practicable after

7 the close of each model year after January 1, 1993, the

8 Secretary shall prepare and make available to the public

9 a report setting forth the domestic content ratio achieved

10 by each vehicle manufacturer during such model year.

11 SEC. 7. ENFORCEMENT.

12 (a) PENALTY FOR FAILURE TO MEET DOMESTIC

13 CONTENT RATIOS.—

14 (1) IN GENERAL.—In furtherance of the pur15 pose of this Act, it is unlawful for a vehicle manu16 facturer to fail to meet for any model year the appli17 cable minimum domestic content ratio required

18 under section 5(a).

19 (2) ORDER OF SECRETARY.—If the Secretary

20 finds, after notice and an opportunity for a hearing

21 in accordance with section 554 of title 5, United

22 States Code, that a vehicle manufacturer has vio23 lated paragraph (1), the Secretary shall issue an

24 order prohibiting the vehicle manufacturer from en25 tering, or having entered on its behalf, during the
10

•HR 111 IH

1 12-month period beginning on the date on which the

2 finding becomes final—

3 (A) a quantity of motor vehicles that ex4 ceeds the total quantity of motor vehicles that

5 was entered by, or on behalf of, that manufac6 turer during the model year in which such vio7 lation occurred reduced by the number of motor

8 vehicles that bears to such total quantity the

9 same percentage by which the vehicle manufac10 turer failed to meet the domestic content ratio

11 for that model year; and

12 (B) parts for motor vehicles in an aggre13 gate value (as appraised for purposes of the

14 customs laws) that exceed the total aggregate

15 appraised value of parts for motor vehicles that

16 were entered by, or on behalf of, that manufac17 turer during the model year in which such vio18 lation occurred reduced by parts of an aggre19 gate value that bear to such total aggregate

20 value the same percentage by which the vehicle

21 manufacturer failed to meet the domestic con22 tent ratio for that model year.

23 (3) ORDER CONTENT.—An order issued pursu24 ant to paragraph (2) shall specify the total number

25 of motor vehicles and the aggregate appraised value
11

•HR 111 IH

1 of parts for motor vehicles that may be entered dur2 ing the applicable 12-month period by, or on behalf

3 of, the vehicle manufacturer.

4 (4) JUDICIAL REVIEW.—Any person against

5 whom an order is issued under paragraph (2) may,

6 within 60 calendar days after the date of the order,

7 institute an action in the United States court of ap8 peals for the appropriate judicial circuit for judicial

9 review of such order in accordance with chapter 7 of

10 title 5, United States Code. The court shall have ju11 risdiction to enter a judgment affirming, modifying,

12 or setting aside in whole or in part, the order of the

13 Secretary or the court may remand the proceeding

14 to the Secretary for such further action as the court

15 may direct.

16 (b) OTHER VIOLATIONS.—

17 (1) IN GENERAL.—Any person who knowingly

18 violates any provision of this Act (other than failure

19 to meet the applicable domestic content ratio for any

20 model year) or any rule or regulation issued under

21 this Act shall be liable, after notice and opportunity

22 for a hearing, to the United States for a civil penalty

23 of not more than $10,000. Each day of a continuing

24 violation under this subsection shall constitute a sep25 arate offense.
12

•HR 111 IH

1 (2) PROCEDURES.—

2 (A) NOTICE.—Before issuing an order as3 sessing a civil penalty against any person for

4 violation of paragraph (1), the Secretary shall

5 provide to such person written notice of the

6 proposed penalty.

7 (B) ASSESSMENT.—The Secretary shall

8 promptly assess such penalty, by order, after

9 the date of the receipt of the notice under sub10 paragraph (A) of the proposed penalty.

11 (C) ACTION FOR NONPAYMENT.—If the

12 penalty has not been paid within 60 calendar

13 days after the assessment order has been made

14 under subparagraph (B), the Secretary shall in15 stitute an action in the appropriate district

16 court of the United States for an order affirm17 ing the assessment of the civil penalty. The

18 court shall have authority to review de novo the

19 law and the facts involved, and shall have juris20 diction to enter a judgment enforcing, modify21 ing, and enforcing as so modified, or setting

22 aside in whole or in part, such assessment.

23 (D) RECOVERY ACTION.—If any person

24 fails to pay an assessment of a civil penalty

25 after the appropriate district court has entered
13

•HR 111 IH

1 final judgment in favor of the Secretary under

2 subparagraph (C), the Secretary shall institute

3 an action to recover the amount of such penalty

4 in any appropriate district court of the United

5 States. In such action, the validity and appro6 priateness of such final assessment order or

7 judgment shall not be subject to review.

8 (3) COMPROMISE, ETC.—The Secretary may

9 compromise, modify, or remit, with or without condi10 tions, any penalty that is subject to imposition or

11 that has been imposed under this subsection.

12 SEC. 8. STUDY OF DISCRIMINATORY PRACTICES AFFECT13 ING DOMESTIC PRODUCTION OF MOTOR VE14 HICLE PARTS.

15 Within one year after the date of the enactment of

16 this Act, the Secretary and the Federal Trade Commission

17 shall jointly undertake an investigation, and submit to

18 Congress a written report, regarding those policies and

19 practices of vehicle manufacturers that are used to per20 suade United States motor vehicle dealers, in choosing re21 placement parts for motor vehicles, to favor foreign-made

22 parts rather than domestically produced parts. Such re23 port shall include recommended administrative or legisla24 tive action that the Secretary and the Federal Trade Com25 mission consider appropriate to assure that domestic pro-
14

•HR 111 IH

1 ducers of replacement parts are accorded fair access to

2 the United States market for such parts.

Æ