Notice2024-10504
Notice of Issuance of Final Determination Concerning Battery-Electric Semi-Trucks
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 14, 2024
Issuing agencies
Homeland Security DepartmentU.S. Customs and Border Protection
Abstract
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.
Full Text
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<title>Federal Register, Volume 89 Issue 94 (Tuesday, May 14, 2024)</title>
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[Federal Register Volume 89, Number 94 (Tuesday, May 14, 2024)]
[Notices]
[Pages 41971-41973]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-10504]
[[Page 41971]]
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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.
[[Page 41972]]
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
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</html>Indexed from Federal Register on May 14, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.