CIT Rules Against USTR's Bid to Withdraw Solar Panel Tariff Exclusion for Bifacial Panels
The Court of International Trade again struck down the Trump administration's withdrawal of an exclusion from the Section 201 solar safeguard measures for bifacial solar panels, in its second opinion rejecting Trump administration's elimination of the exclusion as many days. Judge Gary Katzmann found that the Office of the U.S. Trade Representative's exclusion withdrawal was an "arbitrary and capricious agency decision" and represented a move with no statutory authority. Just a day earlier, Katzmann ruled against a presidential proclamation attempting to withdraw the bifacial panel exclusion, which came as a direct response to the CIT's preliminary injunction in the case over the USTR's move.
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President Donald Trump had originally imposed the safeguard measures against solar cells in 2018, and they were set to phase out in four years, in line with the statute. In June 2019, USTR granted an exclusion request for bifacial solar panels. Just four months later, however, USTR tried to revoke this exclusion. This led to immediate litigation from affected importers, led by Invenergy Renewables LLC, which prompted the court to issue a PI enjoining USTR from reimposing the safeguard duties on the bifacial panels. The court then found that USTR made this first withdrawal without a proper notice and comment period and without a "reasoned explanation."
This led to a second attempt from USTR at withdrawing the bifacial panel exclusion in April 2020, when USTR tried correcting the shortcomings of the first withdrawal. The court subjected this second attempt to the PI in the case's fourth opinion, finding that the government had not proven that the circumstances underlying the second withdrawal had changed enough. This prompted the president to issue a proclamation withdrawing the exclusion in an attempt to skirt the PI.
After the court's held that the presidential proclamation was sufficiently distinct from the USTR action (see 2011190020), the plaintiffs, this time led by the Solar Energy Industries Association, launched a separate challenge at CIT of the presidential proclamation. This challenge wrapped up at the trade court on Nov. 16 when Katzmann held that the proclamation ran afoul of the law in that Section 201 only allows the president to take trade liberalizing steps when adjusting the safeguard measures (see 2111160032).
Turning again to USTR withdrawal, the judge said that USTR has no statutory authority to withdraw an exclusion once granted. With regard to this statute, the court said that Section 203 limits the duration, nature and extent of the safeguard measures, clearly subjecting them to express limits and restrictions.
"Because the court concludes that Section 203 only allows the President to set safeguard duties at a high mark that then phases down, the court also concludes that the statute does not permit USTR to withdraw the grant of an exclusion where that withdrawal would result in the imposition of higher duties on the affected goods," Katzmann said. "A withdrawal of an exclusion is not a phasing down of the imposition of duties as the statute directs." The government argued that this is a mere reversion back to the original rate, but a reversion is still a duty increase even if it's not for the entire range of covered products, the judge said.
"Thus, the statute does not allow such yo-yoing of duties within a scheme that is tightly limited by Congress in terms of the substance and duration of safeguard actions that can be taken by the President," the opinion said. Further, the importers had no notice that an exclusion, once granted, would, or even could, be withdrawn, thus violating a fundamental fairness requirement of all such agency action, the judge said.
The judge then moved on to the second, and independent, reason for dropping the USTR's action: its violation of the Administrative Procedure Act. As it held preliminarily, the court said that USTR failed to both adequately respond to interested parties' comments and to explain its policy change. The court said that USTR failed to address the impact that withdrawing the exclusion would have on the solar energy industry, given already low domestic production of the bifacial panels and the "resulting need for bifacial solar imports. ... Thus, it is clear that USTR failed to respond to comments on this significant issue," the judge said.
The court also found that "USTR did not adequately address important and 'conspicuous issues' to its decision, specifically alternatives 'within the ambit of the existing policy' and reliance on the previous policy." The USTR did not even mention two of the proposed alternatives to the withdrawal, showing that the decision was "arbitrary and capricious," the judge said. "This failure is particularly marked where USTR itself requested comment on several alternatives to a complete withdrawal of the Exclusion, including narrowing the definition of bifacial solar panels excluded or otherwise altering the Exclusion."
(Invenergy Renewables LLC, et al. v. United States, Slip Op. 21-155, CIT #19-00192, dated 11/17/21, Judge Gary Katzmann. Attorneys: Amanda Berman of Crowell & Moring for plaintiff Invenergy; Matt Nicely of Akin Gump for plaintiff-intervenor Solar Energy Industries Association; Stephen Tosini for defendant U.S. government)