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USCIT Ruling Permits Implementation of Trump Administration’s Bifacial Solar Tariffs

In a slip opinion issued on November 19, 2020, the United States Court of International Trade (“USCIT”) permitted the imposition of tariffs on bifacial solar panels, a victory for the Trump administration’s years-long effort to limit imports of foreign-made solar technologies.

The decision is a culmination of a series of legal battles stemming from the International Trade Commission’s (“ITC”) 2017 inquiry into the United States’ importation of solar products. The ITC was petitioned by Suniva Inc. and SolarWorld Americas, Inc., two US-based manufacturers of solar panels that had experienced significant financial distress due to foreign competition. Suniva and SolarWorld requested that the ITC commence an investigation under Section 201 of the Trade Act of 1974, a rarely used legal mechanism that, upon petition, allows the ITC to determine whether increased imports of a given product poses a “substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported article.”

The ITC found that solar imports from producers in China, subsidized by the Chinese government and sold below US-market rates, increased by 500% from 2012 to 2016 and caused prices for solar cells and modules to drop by 60% to levels that US producers could not compete with and, therefore, were a substantial cause of serious injury to the domestic solar industry. The ITC recommended that the President take action by imposing certain duties.

The ITC’s report and recommendation of protectionist remedies prompted President Trump to issue stringent tariffs on the importation of crystalline silicon photovoltaic (“CSPV”) cells, the central components of most solar panels and modules. Enacted in 2018, Presidential Proclamation 9693 established a four-year tariff schedule, starting with a 30% levy which would subsequently decrease by 5% each year and ultimately expire following the end of the four-year schedule in 2022 (the “CSPV Duties”). Following a notice and comment period and several requests by solar producers, including SunPower Corporation, LG Electronics, and Sunpreme, to exclude certain products from the CSPV Duties, U.S. Trade Representative (“USTR”) Robert Lighthizer agreed to exclude bifacial solar panels, which utilize CSPV cells to absorb light and generate electricity from both sides of the panel and are more efficient than traditional modules. The Solar Energy Industries Association, the largest solar trade association in the United States, hailed this exclusion as a major victory given the growing use of bifacial modules as a more efficient source of solar power generation. Renewable energy analysts at Wood Mackenzie determined that global usage of bifacial modules increased by over 2,500% from 2016 to 2018 and this exclusion would reduce the costs of bifacial modules and make them more attractive to solar developers.

The industry’s victory, however, was short-lived; the USTR rescinded the tariff exemption for bifacial panels only four months after granting it. Solar producers quickly sued, alleging that the withdrawal of the exclusion likely violated the procedural requirements of the Administrative Procedures Act and therefore that the USTR’s rescission was improper until the proper procedural process had been followed. Following a ruling by the court agreeing with the plaintiffs and issuing a preliminary injunction to enjoin the withdrawal while the proper rule-making process was conducted, President Trump issued a further proclamation, pursuant to Section 204 of the Trade Act of 1974 to formally bypass the injunction and reimpose the tariffs. The subsequent litigation seeking to reinstate the preliminary injunction, and thereby grant the exception for bifacial solar panels, while the rule-making process progressed, culminated in the recent ruling, by Judge Gary Katzmann, in Invenergy Renewables LLC v. United States. The ruling upheld the applicability of Proclamation 9693 to bifacial solar panels and asserted that the preliminary injunction was granted in order for an agency, the USTR, to conduct its proper rule-making process. Because the President is not an agency, and therefore not subject to the Administrative Procedures Act, his conduct pursuant to Section 204 of the Trade Act of 1974 was ruled proper and, therefore, the tariffs should remain in place and effective against producers of bifacial solar panels.

Despite the favorable ruling for the Trump administration, President-elect Joe Biden’s incoming administration has not yet indicated whether they will leave these tariffs in place. Industry advocates are hopeful that President-elect Biden’s stated commitment to clean, renewable energy and plan to drastically increase solar power production in the US will encourage the elimination of these tariffs long before the expiration of the schedule set by the Trump Administration, continuing the rapid growth in the solar industry that we have seen over the last several years.

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Garrett Galvin is an attorney at Mintz who focuses his practice on corporate and securities law, contracts, mergers and acquisitions, debt and equity financing and general corporate matters. He represents clients across the energy and sustainability, life sciences, including biotechnology and pharmaceuticals, and technology industries.