United States Department of TransportationInterpretation ID: 12262.jeg
Mayer, Brown & Platt
2000 Pennsylvania Avenue, N.W.
Washington, DC 20006-1882
Dear Ms. Jones:
This responds to your letter requesting an interpretation of 49 CFR Part 583, Automobile Parts Content Labeling. You noted that the regulation specifies that the U.S./Canadian content of components is defaulted to zero when outside suppliers fail to respond to a manufacturer's or allied supplier's request for content information. You requested clarification concerning how a manufacturer should treat the value and content of such defaulted components for purposes of determining the "major foreign sources of passenger motor vehicle equipment."
More specifically, you suggested two alternative general rules regarding the treatment of defaulted components:
- A review of the regulation prescribing the manner of determining the "major foreign sources" suggests at least two ways that this question could be answered. . . .
- One possibility is that the value of the defaulted components would be excluded entirely from the "major foreign source" calculation, since the origin of the defaulted components is undocumented and therefore not reasonably assumed to be either foreign or non-foreign for purposes of Line Two of the label.
- Another possibility is that the value of the defaulted components would be included in the total value computation under 583.7(d)(1), but excluded from any country-specific value calculation under 583.7(d)(2).
- One possibility is that the value of the defaulted components would be excluded entirely from the "major foreign source" calculation, since the origin of the defaulted components is undocumented and therefore not reasonably assumed to be either foreign or non-foreign for purposes of Line Two of the label.
As discussed below, it is difficult to provide generalizations that apply in all instances. We disagree with the first of the
two suggested rules. We agree with the first portion of the second suggested rule, but not necessarily with the second portion of that rule.
Section 583.7 specifies the procedure for determining major foreign sources of passenger motor vehicle equipment. One of the steps in that procedure, set forth at 583.7(d)(1), reads as follows:
- Adding up the total value of all of the passenger motor vehicle equipment (regardless of country of origin) expected to be installed in that carline during the next model year.
While the U.S./Canadian content of components is defaulted to zero when suppliers fail to respond to a manufacturer's or allied supplier's request for content information (583.6(c)(5)(1)), the components do not cease to be passenger motor vehicle equipment. Therefore, the value of those components is included as part of the "total value of all of the passenger motor vehicle equipment" expected to be installed in a carline, as you suggest in the first portion of your second suggested rule. I also note that 583.7(d)(1) makes it clear that all such equipment is included "regardless of country of origin."
The second portion of your second suggested rule provides that the value of defaulted components would be excluded from any country-specific value calculation under 583.7(d)(2). While this would often be the case, it would not be a necessary result. While Part 583 provides that the U.S./Canadian content of components is defaulted to zero when suppliers fail to respond to a manufacturer's or allied supplier's request for content information, it does not address whether the origin could be determined to be from another country.
As we discussed in our September 15, 1995 notice, manufacturers may possess the information necessary to make origin determinations for equipment that was manufactured in countries other than the U.S. or Canada and then imported into the U.S. or Canada. See 60 FR at 47893. In such instances, manufacturers may use any available information to make determinations of zero U.S./Canadian content, country of manufacture, and purchase price, as an alternative to relying on supplier certifications.
If a manufacturer in such instances requested, but did not receive a certificate from a supplier, the manufacturer might nonetheless be able to make a determination of origin for a country other than the U.S./Canada.
If you have further questions about this subject, please call Edward Glancy of my staff at (202) 366-2992.
Sincerely,
John Womack
Acting Chief Counsel
ref:583
d:9/13/96
1. Please note that NHTSA recently made a limited, temporary amendment to this section to provide vehicle manufacturers added flexibility in making content determinations where outside suppliers have not responded to requests for content information. This added flexibility affects the application of the "default-to-zero" provision.