CIT Blocks USTR Withdrawal of Solar Safeguard Exclusion
Some trade remedy exclusions are regulations, and the Office of the U.S. Trade Representative likely violated the Administrative Procedure Act when it revoked a solar cells safeguard exemption without first putting it up for public notice and comment, the Court of International Trade said on Dec. 5 as it approved a preliminary injunction that keeps the exemption in effect.
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Invenergy, joined by the Solar Energy Industries Association, challenged USTR’s abrupt decision in October to rescind a previously issued exclusion for bi-facial solar panels (see 1910080054). The exclusion had been announced only months earlier (see 1906120019), after USTR sought requests on what products should be excluded and responses to those requests (see 1802140036). The rescission had been set to take effect Oct. 28 before the trade court issued a temporary order delaying implementation while it considered the injunction request (see 1911120039).
The government argued that the APA isn’t applicable because USTR did not play the role of an agency, but was rather simply exercising presidential authority as authorized by the presidential proclamation setting the Section 201 safeguard duties. It also said the product exclusion decisions were “adjudications,” not rulemakings governed by the APA.
CIT disagreed, finding the APA applied to the exclusion and was subject to the law’s notice and comment requirements. First, it ruled that USTR was clearly an agency, and was acting as one when it set out an exclusion process, as delegated by the president, and made final decisions on exclusions without any final action by the president required. And importantly, the exclusion process was clearly a rulemaking, as evidenced by USTR’s decision to use the regulations.gov rulemaking portal for comments rather than a non-rulemaking docket. The exclusions also resulted in tariff schedule changes, and applied to all importers, not just the specific importers that requested the exclusions.
USTR clearly revoked the exemption without the required notice and comment process for a regulation, CIT said. The trade court also found that USTR’s decision to rescind the rulemaking was arbitrary and capricious, noting that USTR has still not explained the facts or reasoning behind its decision. Though CIT did not render a final decision, it found that, in all, Invenergy has a “fair likelihood of success” in its case that the rescission violated the APA.
The first hurdle of the four-part test for preliminary injunctions cleared, CIT also found that USTR’s decision caused irreparable harm to Invenergy that can’t be remedied if the exclusion is allowed to take effect. “The Withdrawal would become the new status quo and USTR may be less likely to consider other views,” CIT said. And on balance, Invenergy would face more harm than the government, because any harms are the direct result of the government’s failure to follow notice and comment procedures. Finally, granting the injunction would be in the public interest because it would ensure the government complies with the law, CIT said.
CIT’s attached order bars USTR from withdrawing the exclusion for the time being, as well as from making any changes to the tariff schedule to implement the exclusion. It also prohibits CBP from enforcing any withdrawal of the exclusion. CIT will now proceed to making its final decision on the legality of the withdrawal.
“Invenergy is pleased with today’s decision granting a preliminary injunction against the United States Trade Representative’s withdrawal of the bifacial solar module exclusion,” a spokesperson from the company said following the decision. “Upon our initial review, the Court has adopted nearly all of our arguments. We are reviewing the Order and preparing for the next steps in the process.”
“This is an important temporary reprieve for the bifacial module exclusion,” said Abigail Ross Hopper, president of the Solar Energy Industries Association, in a statement. “We will continue to make the case that the Section 201 tariffs are harming the U.S. industry and the American consumer and that the bifacial exclusion was a fair and reasonable solution to the problem of domestic module supply shortages. In the utility segment, for example, there is approximately only 1 GW of domestic crystalline silicon photovoltaic capacity to service nearly 10 GW of 2020 demand. Continued harsh tariffs will cut billions of dollars in private investment and put a hold on 62,000 American jobs.” Hanwha Q Cells, which took the government's side in the case, did not comment.