US Says Commerce Reasonably Read Trade Act to Allow for Duty Pause on SE Asian Solar Cells

The Commerce Department reasonably interpreted the Trade Act of 1930 to pause antidumping and countervailing duties on solar cells and modules from four Southeast Asian countries, the government told the Court of International Trade on Oct. 29. Responding to U.S. solar cell maker Auxin Solar and solar module designer Concept Clean Energy, the U.S. said the two companies' arguments belie "Congress' broad delegation of rulemaking authority" to respond to an emergency found by the president (Auxin Solar v. United States, CIT # 23-00274).

The government argued that Congress gave Commerce broad enough discretion to find that solar cells and modules used to fix a supply chain emergency qualify as "other supplies for use in emergency relief work" under the meaning of the applicable statute, 19 U.S.C. 1318.

This statute "expressly" allowed the president to waive duties for "other supplies" that can be used in emergency relief work. In establishing this authority, Congress "did not limit what type of emergencies might be declared by the President or what 'other supplies' might be used for the work to relieve them," the U.S. said.

President Joe Biden called for the duty pause after finding there to be an emergency regarding the availability of electricity generation capacity to meet consumer demand. The statute lists five types of goods eligible for duty-free treatment that can be imported to address a declared emergency: "food, clothing, and medical, surgical, and other supplies." Auxin and Concept Clean Energy argued that the only term that could encompass solar cells is "other" but even this term doesn't fit since it should refer to other medical supplies (see 2407230042).

The U.S. deemed this approach "illogical," arguing that the plain meaning of "other supplies" includes "any materials dispensed to fill a need that are different from the 'medical' supplies and 'surgical' supplies already mentioned." The "need is to relieve an emergency declared by the President," the brief said.

The plaintiffs' "crabbed reading" of the statute "rests on the illogical premise that Congress broadly authorized the President to declare emergencies, but narrowly limited the President’s ability to respond to those emergencies," the brief said. To avoid this result, "the best reading of section 1318 is that Congress’ broad reference to 'other supplies' was intended to encompass any supplies (other than medical and surgical supplies) that are needed to respond to a particular emergency," the government argued.

The president's emergency, which he had the authority to declare, can't be addressed with imports of food, clothing, medical supplies or surgical supplies, leaving only "other supplies," the government said. As a result, Commerce engaged in "reasoned decisionmaking" when it found that this statutory term encompasses solar cells, the brief said, noting that the standard of review is only whether the agency's interpretation of the law was reasonable as recently established by the Supreme Court in Loper Bright Enterprises v. Raimondo.

Auxin and Concept Clean Energy also took issue with the timing of the duty pause. Biden's proclamation allowed for duty-free import of solar cells and modules until two years after the date of the proclamation, yet Commerce granted duty-free treatment for goods entered before and after the signing of the proclamation, the companies said. No authority allowed the agency to "invalidate congressional intent to close circumventing loopholes," Auxin and Concept Clean Energy argued.

In response, the U.S. said Commerce reasonably said that pre-proclamation entries that remained unliquidated during the emergency could be for use in the emergency relief efforts. Due to the "retrospective sytem of duty assessment," failing to apply the duty suspension to imports made before the end of the emergency period could have led to AD/CVD being imposed on the same imports during the declared emergency period.

The government added that Commerce reasonably said entries made during the emergency could be for use in emergency relief work even if the solar cells could be used during a discrete amount of time after the emergency terminated. This "short-term utilization requirement was implemented to discourage stockpiling," the brief said.

Lastly, the U.S. countered claims from Auxin and Concept Clean Energy that they needed a permanent injunction on the duty pause, arguing that the companies failed to show they would suffer irreparable harm. As of the day the brief was submitted, the emergency has terminated, all the relevant shipments have entered the U.S. and CBP has started collecting cash deposits on the relevant entries again.

"Plaintiffs will neither pay duties nor receive payment of any duties based on the outcome of this lawsuit. Plaintiffs waited more than 15 months after Commerce issued the Duty Suspension Rule before filing suit," the brief said.