Oh, The Humanity

Hydrogen fuel cells are likely to play a significant role in powering the future. We are on the cusp of seeing passenger cars powered by fuel cells. Fuel cells are used in spacecraft and in more mundane setting like the devices that spray air fresheners in public washrooms. The nature of a fuel cell was also front and center in the recent U.S. Court of International Trade decision in Rubbermaid Commercial Products, LLC v. United States, which involved air fresheners and a similar device that squirts cleaners into public toilets.

Here is a little science that will help explain the legal issue. Keep in mind that water is two hydrogen atoms bound to a single oxygen atom. A fuel cell consists of zinc and water with a cathode and an anode. The cathode is a negatively charged electrode, which attracts positively charged particles. The anode is positively charged and attracts negatively charged electrons. In the fuel cell, the zinc and water are chemically reacting with the oxygen in the water oxidizing the zinc to produce zinc oxide, which has the formula ZnO. Junior chemists will note that when the zinc and oxygen bond, hydrogen is left to its own devices. In other words, free hydrogen gas is the byproduct of the production of zinc oxide.

The physicists among us will recognize an additional byproduct. There are two free electrons liberated in the process of making ZnO. The negatively charged electrons in the water solution are attracted to the anode. The anode and cathode are connected by a conductor, allowing the electrons to flow back to the water where the reaction produces hydroxyl ions and hydrogen.

Source: Wikipedia

So, the fuel cell is two things. In part, it is a chemical reactor in which zinc is oxidized to produce hydrogen and zinc oxide. It is also an electrical circuit that captures and channels free electrons produced in the chemical process. Fuel cells are a useful technology for both reasons. Hydrogen is a clean burning fuel that can run internal combustion engines. Of course, history shows that filling lighter-than-air vehicles with hydrogen is not the best idea. The bonus product of electricity is valuable for innumerable other uses large and small. And, this process is completely free of burning hydrocarbons. Water is the principal fuel with hydrogen or electricity as the byproduct, depending on your design.

 This is all relevant to the Rubbermaid case, which had to determine whether the fuel cell powered dispensers are classifiable in Heading 8543 as electrical machines or apparatus or in 8424 as mechanical appliances. This is a question because the dispensers are effectively pumps that are powered by not the electricity generated in the fuel cell but by the physical pressure of hydrogen gas. When the pressure hits a pre-determined level, it is strong enough to force some of the liquid out of the storage chamber. That is an entirely mechanical process, but it depends on electrical action as a motivator. Furthermore, the frequency of dispersing the liquid depends on how an electrical resistor is adjusted. When more electricity flows into the solution (as opposed to being dissipated in the resistor), the reaction is faster and liquid is dispensed more frequently.

The Explanatory Notes to the Harmonized system help differentiate between Chapters 84 and 85 by explaining that Chapter 84 covers machinery and mechanical apparatus while Chapter 85 covers electrical goods. [Side note from Larry: Why are computers in 8471? Is it because they used to be hand-cranked adding machines?] The Notes also provide that machinery not more specifically provided for in Chapter 85 are classified in Chapter 84, even if electric.

The distinction between 84 and 85 is, however, hardly clear. In an effort to cut to the chase, I will say only that after a thorough analysis of the Explanatory Notes, the Court of International Trade concluded that devices that depend on the properties or effects of electricity to operate will be classified in Chapter 85 unless they are described specifically in Chapter 84. [Like computers, for example.]

So, the first question is whether these items are covered by a specific heading of  Chapter 84, which would then preclude their classification in Chapter 85. As I said, these are analogous to a pump but are more similar to a mechanical appliance for dispersing or spraying liquids of Heading 8424. In this case, they do not spray. Rather, they release drops of fluid. Rubbermaid contended that this is dispersing. The court disagreed and found that dispersing requires a jet, spray or dispersion of fluid. Releasing a drip is, on the other hand, "dispensing." So, these are not described by 8424.

That means the Chapter 84 and Chapter 85 basket provisions are what remain in contention. Thus, the next question is whether these devices are "mechanical appliances" for purposes of Chapter 84. To be mechanical, the device must incorporate moving parts to perform work. Here, the hydrogen gas displaces the fluid and performs work in the technical sense. But, the hydrogen gas is generated by the electro-chemical action of the fuel cell. Consequently, the Court found the fuel cell to be the "predominant factor" in evaluating the whole device. The other moving parts are incidental and the device is not a "mechanical appliance."

That leads to the question whether the devices rely on the property or effects of electricity to operate. If so, Chapter 85 will prevail. As described above, these devices contain an electrical circuit between the anode and cathode that drives the production of hydrogen gas, which dispenses fluid. According to Rubbermaid, this is not sufficiently "electric" to be classified in Chapter 85. Rubbermaid pointed out hat the devices operate without an external power source and that the sole function of the fuel cell is to make hydrogen gas, not electricity. The free electrons are incidental to the hydrogen gas. For its part, the government points out that the production of hydrogen gas depends on the electrons to reduce the water.

According to the Court, "electricity" is a broad concept that does not require that electrons enter or leave the system. Rather, it is the action of the physical properties of electrons. Here, the hydrogen gas is released due to the action of electrons on the water. The fuel cells, therefore, are electrical in nature. This is consistent with the use of an electrical resistor to control the frequency of dispensing liquid. The fact that controlling the flow of electricity determines the useful life of the fluid cartridge further indicates the electrical nature of the devices.

After all that thorough analysis, the Court concluded that the air freshener and toilet cleaner are electrical machines because they depend on the effects of electricity. They have no specific classification in Chapter 84. As a result, Customs and Border Protection properly classified then in 8543.90.88.

Three down and my battery is dying. Hot tip for chess parents out there: get to the tournament venue early enough to secure a seat near a power outlet.


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