Nov 15th, 2023

Trade Updates for Week of November 15, 2023

United States Court of Appeals for the Federal Circuit

Before the Court of Appeals for the Federal Circuit in Solar Energy Industries Association, et. al. v. United States, et. al., Case 22-1392 (November 13, 2023) was the government’s appeal of the Court of International Trade’s (“CIT”) prior judgment in favor of plaintiff importers. At issue was Presidential Proclamation 10101 which modified safeguard duties on solar panels which had been implemented in Proclamation 9693. Proclamation 10101 withdrew the prior safeguard exclusion on bifacial solar panels, thereby again re-imposing the duties on the bifacial panels. For the following reasons the Federal Circuit concluded Proclamation 10101 was valid and reversed the judgment of the trade court.

Section 201 of the Trade Act of 1974, codified at 19 U.S.C. § 2251, provides the President of the United States with the power to impose “safeguards” (also referred to as “safeguard measures”) that protect domestic industries from serious injury caused by imports. Once a particular safeguard is in place, Section 2254 governs efforts to change the existing measure. While subparagraph (b)(1)(B) permits the President to “reduc[e], modif[y], or terminat[e]” a safeguard when the domestic industry has made a positive adjustment to import competition, subparagraph A more narrowly describes the President’s power as extending only to a “reduction, or termination” (and not also a “modification”) of an existing safeguard where domestic industry has not made such an adjustment.

The issue in this case turned on analyzing statutory language to determine if the Proclamation 10101 was invalid. On January 23, 2018, President Trump issued Proclamation 9693, which imposed duties on imports of certain quantities of Crystalline Silicon Photovoltaic (CSPV) solar panels for a period of four years, beginning at 30% ad valorem in the safeguard’s first year and phasing down to 25%, 20%, and 15% in the ensuing years. Proclamation 9693 further delegated to the USTR authority to grant “exclusion of a particular product from the safeguard measure.” Id. at 3543. Acting under this authority, in June 2019 the USTR granted an exclusion for solar panels consisting of bifacial solar cells. This exclusion had the effect of not imposing the new tariffs on bifacial solar panels. However, just months later, in October 2019, the USTR withdrew the exclusion, re-imposing the duties on these same bifacial products.

Litigation brought by consumers, purchasers, and importers of bifacial solar panels resulted in the October 2019 withdrawal of the exclusion never becoming effective. Thereafter, in April 2020, the USTR again withdrew the exclusion, seeking thereby to impose the duties on bifacial products. After more litigation, the trade court enjoined the April 2020 withdrawal.

In March 2020, the International Trade Commission, pursuant to 19 U.S.C. § 2254(a)(4) and in response to the USTR’s request, determined that the “exclusion for imports of bifacial modules . . . is likely to have significant effects on prices and trade in both modules and cells,” having the effect of limiting the positive impact of the safeguard adopted in Proclamation 9693.

In response, the President, through the USTR, received a petition, consisting of three letters, from representatives of a majority of the bifacial solar panel domestic industry requesting, among other things, that the President (1) withdraw the bifacial exclusion and (2) slow down the rate of reduction of the safeguard duty for the remainder of the scheduled term. Then, on October 16, 2020, the President issued Proclamation 10101 which modified safeguards that had been implemented in Proclamation 9693, including by withdrawing the exclusion of bifacial solar panels, thereby again re-imposing the duties on these panels.

Plaintiffs-Appellees filed suit at the trade court challenging Proclamation 10101’s modifications to the safeguards imposed by Proclamation 9693. The trade court granted summary judgment to Appellees and set aside the modifications contained in Proclamation 10101. The trade court reasoned that Section 2254(b)(1)(B) “permits only trade-liberalizing modifications to existing safeguard measures,” yet “Proclamation 10101’s withdrawal of the exclusion of bifacial solar panels and increase of the safeguard duties on CSPV modules” were trade-restrictive. The government appealed to challenge the trade court’s holding that the President clearly misconstrued Section 2254(b)(1)(B) when he interpreted it as permitting trade-restrictive modifications to safeguard measures.

The Federal Circuit held the President did not clearly misconstrue Section 2254(b)(1)(B). Its review began by looking at the language of the statute and considered a statutory silence in whether “modify” includes trade-restrictive changes or is limited to trade-liberalizing alterations concluded that the silence favors the government’s view. Second, the Circuit Court considered that the Trade Act has its own general definition of “modification.” It provides: “[t]he term ‘modification’, as applied to any duty or other import restriction, includes the elimination of any duty or other import restriction.” Id. § 2481(6). It concluded this is an open-ended definition and does not exclude anything, including further restrictions.

In conclusion, the Federal Circuit held that because the President’s interpretation of 19 U.S.C. § 2254(b)(1)(B) as permitting trade-restricting modifications is not a clear misconstruction, and because the President did not violate the procedural requirements of the statute, Proclamation 10101 is not invalid and the trade court’s judgment should be reversed.