Transpacific Decision Debated in Case Over Solar Panel Tariff Exemption Withdrawal

In dueling briefs filed to the Court of International Trade in a case over the president's decision to reverse a safeguard exemption on bifacial solar panels, the Department of Justice and plaintiffs led by the Solar Energy Industries Association argued over whether a recent U.S. Court of Appeals for the Federal Circuit opinion is relevant to their case. The decision, Transpacific Steel LLC et al. v. U.S., found that the president could hike Section 232 national security tariffs beyond time limits imposed by the statute (see 2107130059). DOJ in its brief said that the decision lends itself to ruling in the government's favor in the case of the solar panels. SEIA said that the decision has "little relevance" to its case since the decision deals with "an entirely different statute," in its letter (Solar Energy Industries Association et al. v. United States, CIT #29-03941).

The lawsuit was initially filed after the plaintiffs sought to reverse an October presidential proclamation reimposing solar safeguard duties on bifacial panels and upping the safeguard tariffs on all imported solar cells (see 2105100032). The complaint cites a failure by the president to receive a petition from a majority of representatives of the domestic industry and conduct a cost benefit analysis of the economic and social costs before further corrective action could be taken.

SEIA said that while the Transpacific case held that the president cleared the few hurdles set up under Section 232, the ruling is irrelevant to their procedural challenges under a different statute. "The content and structure of Section 232 and Section 201 differ dramatically," the letter said, referring to the statute governing safeguards. "Most importantly, Section 232 contains no provision explicitly limiting the President’s authority to modify an existing national security measure ... whereas Section 204(b) expressly outlines the limited circumstances in which the President may reduce, modify, or terminate an existing safeguard measure."

In fact, the Federal Circuit decision actually lays out the path for CIT to follow in adjudicating the case, SEIA said, in that the court should "exhaust all tools of statutory construction in its analysis". As backed by the appellate court's analytic framework used in the Transpacific case, the court must use all the tools at its disposal, including all the interpretations of the text of Sections 201, 203 and 204 on safeguards, legislative history and application in practice, the plaintiffs said. "These tools must lead the Court to the inevitable conclusion that Sections 201, 203, and 204 did not allow President Trump to make the changes to the safeguard measures at [issue] in this case as promulgated in Proclamation 10101," the letter said.

The statutory requirements are also different under the safeguard statute than Section 232 in that the safeguard statute requires that tariffs be phased down over the course of action, not up, the letter said. Section 232 has a history of presidents hiking tariffs in line with their plans. "Because the President must phase down safeguard duties over the course of the measure, 19 U.S.C. § 2253(a)(4), (e)(5), no President has increased or reimposed tariffs under Section 204(b)(1)(B), 19 U.S.C. § 2254(b)(1)(B) -- a point Defendants conceded at the hearing," the letter said.

The government defense focused on the finding of the Federal Circuit that the meaning of the word "action" in a Section 232 context allows the president to adopt a continuing course of action with adjustments over time. But the meaning of "action" in Section 232 is "simply not relevant here," plaintiffs said. "Although Sections 201, 203, and 204 contain the word 'action,' the Court must interpret 'action' in Sections 201, 203, and 204 in the context of the numerous restrictions that Congress imposed on safeguard actions in those statutes, not an entirely different statute [Section 232] that the Federal Circuit interpreted in Transpacific."

DOJ, on the other hand, tried to capitalize on its win in the Transpacific case by arguing that the decision is applicable to the solar panel tariff exemption withdrawal proceedings. For instance, the government defense said that Section 203's time constraints, as is the case with Section 232, are merely directory. "Here, the statutory language is functionally indistinguishable from section 232," the brief said. "Transpacific and the protective purpose of section 201 dispose of any contention that section 203’s time limitations preclude later action."

The Transpacific case also found a presumption of effectiveness to cover the interpretation of the president's authority, DOJ argued. The appellate court rejected the argument that the president's continuing authority in modifying tariffs is limited to removing them, the defense said. The decision said that, “to prevent the President from increasing the impositions ... after the initial plan announcement would be to impede the President’s ability to be effective in solving the specific problem found by the Secretary." Making this same argument, DOJ said that "given that the cause of the serious injury found by the ITC -- increased imports -- continued with respect to bifacial products and compounded the serious injury suffered by the domestic industry, Proclamation 10101 effectively served the purpose of facilitating efforts by the domestic industry to make a positive adjustment to import competition."