[Federal Register Volume 75, Number 201 (Tuesday, October 19, 2010)]
[Notices]
[Pages 64318-64320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-26314]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Fairplay 
Legacy 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 Legacy line of golf and recreational 
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 Legacy line of electric vehicles for purposes of U.S. 
Government procurement.

DATES: The final determination was issued on October 13, 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 18, 2010.

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

SUPPLEMENTARY INFORMATION: Notice is hereby given that on October 13, 
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 the Fairplay Legacy line of golf and recreational 
electric vehicles which may be offered to the U.S. Government under an 
undesignated government procurement contract. This final determination, 
in HQ H118435, 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

[[Page 64319]]

Fairplay Legacy line 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, 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: October 13, 2010.
Sandra L. Bell,
Executive Director, Regulations and Rulings, Office of International 
Trade.

Attachment

HQ H118435

October 13, 2010

CLA-2 OT:RR:CT:VS H118435 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 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 C.F.R. 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 Legacy line of golf and recreational vehicles. We note that 
as a U.S. importer and manufacturer, Fairplay is a party-at-interest 
within the meaning of 19 C.F.R. 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:

    The models of vehicles at issue are the following: Legacy Eco 
2P, Legacy Eco 2P XR, Legacy Eco 4P, Legacy Deluxe 2P, Legacy Deluxe 
XR 2P, Legacy Deluxe LTD 2P, Legacy Deluxe HP 2P, and the Legacy 
Transport.
    According to the information submitted, Fairplay imports parts 
for these 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. 
The bill of materials (BOM) submitted with the request indicates 
that, depending on the model, a vehicle may have between 
approximately 53 and 62 inputs, when items such as logos/decals, 
warranty registration cards, and labor are counted along with the 
parts. Of these, between 12 and 17 inputs are of U.S. origin or are 
performed in the U.S. Between 44.8% and 53.5% of actual 
manufacturing costs are attributed to U.S. or TAA country 
manufacturing operations.
    Assembly in the U.S. takes place at five different stations and 
takes between 11 hours (660 minutes) and 14.25 hours (855 minutes). 
The operations performed at each assembly station are described as 
follows:

Station 0: The electronic controller plate is assembled and tested. 
Approximate assembly time: 90-135 minutes.

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. Approximate assembly time: 180-240 minutes.

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. Approximate assembly time: 
90-120 minutes.

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. 
Approximate assembly time: 150-180 minutes.

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. Approximate assembly time: 150-180 
minutes.

    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 Legacy line of 
golf and recreational electric vehicles for 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. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and 
C.S.D. 90-97. For example, 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

[[Page 64320]]

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 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 
Legacy line of electric vehicles for purposes of U.S. 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 line of golf and 
recreational electric vehicles, specifically the Legacy Eco 2P, 
Legacy Eco 2P XR, Legacy Eco 4P, Legacy Deluxe 2P, Legacy Deluxe XR 
2P, Legacy Deluxe LTD 2P, Legacy Deluxe HP 2P, and the Legacy 
Transport, 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,
Sandra L. Bell, Executive Director
Regulations and Rulings
Office of International Trade

[FR Doc. 2010-26314 Filed 10-18-10; 8:45 am]
BILLING CODE 9111-14-P