CIT Hears Oral Argument on Propriety of Retroactive Relief in Solar Cell Duty Pause Suit

Auxin launched its suit in January 2024, claiming Section 1581(i) jurisdiction to challenge the duty pause, which was issued after a proclamation from President Joe Biden calling for the action due to the emergency of "electricity generation capacity" (see 2401030071). While the U.S. and the intervening importers and exporters said remedy was available under Section 1581(c), Reif said jurisdiction was proper under Section 1581(i) (see 2405100053).

Litigation proceeded on whether the Commerce Department properly read trade laws to pause the AD/CVD, which would have been issued under anti-circumvention proceedings, and if any relief, should the court choose to grant it, would be applied retroactively.

Oral argument opened with DOJ attorney Doug Edelschick apprising the court of the state of liquidation of the affected entries. In total, CBP identified a total of 44,000 entries made without AD/CVD cash deposits that are potentially subject to the duty suspension rule, Edelschick said. Of those, around 9,000 were automatically liquidated without confirmation as to whether they qualified for the duty pause, and CBP is in the process of demanding payment for the avoided duties under Section 1592(d).

Of the remaining entries, around 14,600 also were found not to qualify for the rule, leaving around 20,400 entries potentially at issue in the case, 10,800 of which pre-date the lawsuit. Liquidation of these entries has been suspended, leaving the question of relief to be whether liquidation should be ordered for these entries, Edelschick said, noting that the question of re-liquidation is not at issue, since there haven't been entries that have coverage under the rule "that we know of."

On the question of whether the trade court should issue an injunction, much of the argument centered on whether Auxin waited too long to file suit, presumably indicating that the company won't suffer irreparable harm without an injunction. Edelschick said the company waited 15 months after Biden's proclamation was issued to file suit and didn't even "mention irreparable harm" in its opening brief.

In response, Thomas Beline, counsel for Auxin, said there was "no unreasonable delay," since Auxin didn't have standing yet to sue, since the proclamation wasn't effective until the Commerce Department issued its final determination in the anti-circumvention proceedings finding circumvention. If the agency "found no circumvention at some point in the foreseeable future," if Auxin ran to court, the government and importers would have argued that the rule "doesn't apply to anything" and that the company was in court too early.

Edelschick said this "is not correct," since Auxin's case is a Section 1581(i) case challenging the rule itself. The DOJ attorney said Auxin's case should have been filed "no later than December 2022" when Commerce started applying the rule by not collecting cash deposits on any entries under the preliminary circumvention determinations. Beline said this argument wouldn't fly in any other trade cases.

"Equity demands vigilance," Edelschick countered, noting that the plaintiffs waited "arguably 15 months" and "definitely 12 months" after the preliminary determination in the circumvention proceeding before coming to court. "If they didn't even have sufficient harm for Article Three standing purposes, as they're arguing here now, then, how in the world do they have irreparable harm during the period prior to the lawsuit?" Edelshick said. "It just doesn't add up."

Matt Nicely, counsel for the Solar Energy Industries Association, said this case is about "retroactivity," emphasizing solar cell importers' reliance on Biden's proclamation. Importers were actively "encouraged" to enter as many solar cells as they could during the duty-pause period and thus would face massive prejudice if they were subject to 250% AD/CVD after relying on these guarantees.

Reif appeared slightly skeptical of this claim, repeatedly asking Nicely and the other attorneys for solar cell importers if they warned their clients about the potential for the proclamation to be overturned. "Surely, you didn't" tell your clients they have "no exposure" to AD/CVD, the judge said. "There was no reason to think that at the time," Nicely responded.

Reif continued to press the government and import-intervenors on this point, noting that the importers don't rely on the AD/CVD rates issued in preliminary determinations, since they are frequently subject to challenge. "There's uncertainty here," the judge said in response to the parties' reliance arguments. In response, Daniel Witkowski, also counsel for SEIA, said if that's true, then no one can legitimately rely on any rule issued by the federal government.

The judge said he doesn't "see it that way" and that he doesn't agree with Witkowski's point. Edelschick's defense of this point fared no better, with the DOJ attorney arguing that Auxin wants the government "to have its cake and eat it too, because the government induced all of this merchandise to come into the country to solve a problem, a policy issue that was determined by the President, that was solved, and now the plaintiffs want us to collect the money as well." Reif again said he doesn't see it that way.

Discussion of duty exposure led the litigants to discuss the fact that the importers who would be subject to the AD/CVD rates should Reif side with the plaintiffs never had the chance to challenge these underlying rates in the AD/CVD reviews due to the duty pause. Beline said there was the possibility for review, noting that Jonathan Stoel, counsel for importers led by Canadian Solar (USA), even requested for review, since Auxin filed suit a few days before the deadline to request review.

Reif sarcastically lauded Beline's "magnanimous" act. In response to Beline's defense, Witkowski said filing for review would have been pointless, since there were no suspended entries "at the time these review requests would have been made."

Regarding the prospect of retroactive relief, the defendants appeared to agree that if the judge were to order such relief, it should be limited to Jan. 1, 2024, since the only review for which the importers could still request review is the 2024 CVD review on Chinese solar cells. Stoel said there shouldn't be any retroactive relief, but "if that were to happen, it should be limited to that circumstance."

In addition, the parties discussed their competing statutory interpretation arguments, though the litigants largely agreed to let their briefs speak for themselves. However, Edelschick said that "canons of construction help us when there are ambiguities in a statute, but when Congress itself has provided clear guidance of what it meant, there's no need to resort to those tools. You don't need a hammer if you're trying to unscrew a screw."