Solar Cell Importers, Exporters Urge CIT to Stay Ruling Vacating Solar Cell Duty Pause

In its motion, the association said it would suffer "significant and irreparable harm" if the decision were to stand pending its appeal of the trade court's decision, adding that it's likely to succeed before the U.S. Court of Appeals for the Federal Circuit.

The plaintiffs, U.S. solar cell producer Auxin Solar and solar module designer Concept Clean Energy, consented to the stay motion, and the government said it doesn't oppose the motion. Specifically, the association asked Judge Timothy Reif to suspend liquidation of affected entries and stay the enforcement of the judgment pending appeal. The association added that it will also ask the Federal Circuit for a stay on Oct. 2 "if needed."

Auxin filed the lawsuit following the Biden administration's declaration under Section 1318(a) of the Trade Act of 1930 of an emergency due to a lack of "electricity generation capacity" (see 2401030071). After the emergency declaration, Commerce said it wouldn't collect AD/CVD on solar cells from the four Southeast Asian countries covered by the agency's recent anti-circumvention proceedings, which found solar cells from the four countries skirted the AD/CVD orders on Chinese solar cells. The agency said it wouldn't collect cash deposits from affected importers and would liquidate the entries without AD/CVD assessed and refund any cash deposits that were collected.

The duty suspension rule took effect in November 2022 and expired in June 2024. In vacating the duty suspension rule, Reif required Commerce to begin liquidating and collecting duties on over 20,400 entries that arrived during the emergency period. The judge based this ruling on a finding that 19 USC 1318(a), which allows for the duty-free treatment of "food, clothing, and medical, surgical, and other supplies for use in emergency relief work," didn't cover solar cells.

In moving for a stay, the importers and exporters said this decision "would cause immense and irreparable economic harm." Total potential duty liability "may amount to billions of dollars" if Commerce imposes the anticipated AD/CVD rates that exceed 250%, the brief said. The "immediate monetary exposure" of this duty liability "is substantial and potentially crippling to some companies -- including those with significant U.S. operations," the association said.

The fallout won't just be economic, either, the association argued, pointing to declarations from the importers and exporters in the case demonstrating that the threatened duty liability puts the companies' "investments, employees, and associated public benefits at risk." The size of the duty bill means companies may have to borrow to avoid liquidity problems, meaning the affected companies "are likely to need to forego planned investments in U.S. manufacturing and workers, scale back or close existing facilities, and lay off U.S. employees, as the attached declarations explain," the brief said.

There's a "significant risk that companies will have to declare bankruptcy," the association said. The companies will also face other harms, including lost opportunities or relationships from projects the companies may have to turn down, reduced capital they will not be able to acquire, lowered credit ratings and high-interest payments on loans they may have to obtain, the brief said. The association said the availability of refunds won't address a host of these issues.

The association also bemoaned the "irreparable procedural harm" caused by the court's judgment, since Reif's order will lead to the liquidation of affected entries without giving the companies any chance to seek administrative review. A stay pending appeal would let the Federal Circuit determine whether the affected companies are "entitled to a review of their entries," and it would let the government figure out how to conduct such a review.

In the motion, the association also previewed what arguments it will make at the Federal Circuit, claiming that the trade court lacked jurisdiction in the case under Section 1581(i), the court's "residual" jurisdiction, since review was available under Section 1581(c) as a challenge to the circumvention proceeding.

It was the final circumvention findings and not Commerce's final duty pause rule that implemented the duty moratorium by "not suspending or collecting AD/CVD deposits on entries subject to the moratorium," thus reflecting the "true nature of the challenge at issue," the brief said. Reif said jurisdiction wasn't available under Section 1581(c), since the duty suspension rule relates to the "administration and enforcement" of Commerce's cash deposit and liquidation instructions to CBP rather than the legality of Commerce's final decisions themselves. The association said Reif "failed to recognize that" Auxin's challenge to Biden's declaration "should be made to Commerce's Final Circumvention Determinations."

Commerce decided in its circumvention findings not to direct CBP to suspend liquidation or require cash deposits of estimated duties so long as U.S. importers complied with Commerce's certification requirements. To the extent Auxin challenges the implementation of the duty moratorium, it's the circumvention decisions "that did so," the association said. Once Commerce reached its circumvention findings, Auxin could have challenged them, but instead they "waited and challenged" Commerce's duty pause rule "long after its issuance," the brief said. "This course of action is fatal to Plaintiffs’ challenge to the Final Rule because jurisdiction under Section 1581(i) is only available if a remedy is unavailable (or manifestly inadequate) under Section 1581(c)."

The association added that Auxin's suit and Reif's decision don't address the legality of the underlying authority for the duty suspension, which was Biden's proclamation. It's "undisputed" the court "left unexamined the legality" of the proclamation, "which remains effective for entries of relevant solar modules made in the period before June 6, 2024," the brief said.

While Reif said Commerce misinterpreted Section 1318(a) under the Administrative Procedure Act to find the statute didn't cover solar cells, the correct standard was whether the president clearly misconstrued the statute, the association said. “The statutory interpretation examined and found deficient by this Court came from Presidential Proclamation 10414,” not Commerce's interpretation of the law, the brief said.

The Federal Circuit also is likely to find that Reif's actual exercise of statutory interpretation was wrong, the association argued. Reif "neglected to apply the constitutionally grounded canon that 'congressional authorizations of presidential power' in the area of international trade 'should be given a broad construction and not hemmed in or cabined' because they implicate 'the President’s constitutional power to oversee the political side of foreign affairs,'" the association said.

Thus, the "best reading" of the statute is one that says "other supplies" is a "broad phrase that encompasses any items necessary 'for use in emergency relief work,' and there is no reason to cabin that phrase to the medical context," the association argued. A broad interpretation also makes more sense of the statutory context, since Congress meant for "other supplies" to be read broadly to give the president leeway in addressing emergencies, the brief said.

Lastly, the association said the trade court erred in ordering broad, retroactive relief, emphasizing the fact that the affected importers relied on the government's assurances that they could import solar cells from the four Southeast Asian countries duty-free.