Comments Split on Solar Circumvention Duty Pause; Majority Support It

About quarter of the comments on how to implement an executive order on possible anti-circumvention duties on solar panel and cell imports say that the executive order is illegal or, at best, legally strained, and that Commerce cannot waive duty collections because that is contrary to its mission to protect domestic manufacturing through trade remedies.

President Joe Biden said that for the next two years, no matter what Commerce Department employees decide on an anti-circumvention case against solar imports from Southeast Asia, there will be no deposits collected on those entries, because of the climate and electricity system emergencies (see 2206060036).

An example of the opposition to his decision comes from Heliene USA, a solar panel maker in the U.S., which wrote in its submission: "The Proposed Regulations stand on dubious legal grounds, provide a pathway for China to continue damaging the U.S. market with dumped and subsidized goods, harm U.S. manufacturers, fail to apply the law fairly, and set a dangerous precedent for antidumping and countervailing duty orders generally."

Most of the submissions were made public Aug. 1 or 2.

"Even if Chinese producers are not currently circumventing the antidumping and countervailing duty orders as alleged, the Proposed Regulations, perversely, encourage them to start doing so now, by removing any prospect of punishment for such unfair and illegal trading behavior," the company added.

Auxin Solar, the company whose anti-circumvention petition led to the unprecedented action, submitted a 66-page comment that attacked the logic behind the order, saying that, given how little electricity generation comes from solar, adding to that small amount this year cannot solve the electricity reliability problems the country is facing with soaring demand from heat waves. They also questioned the assertion that the possibility of 250% retroactive deposits is delaying imports and sales.

"With respect to imports from Cambodia, Malaysia, Thailand, and Vietnam, imports from these countries have decreased modestly from 25,706,923 units in 2021 to 25,031,187 in 2022. However, there is no factual basis to assert that such a modest decrease equates to a shortage, especially when other import sources have accounted for, and made up, such decreased volume. As such, there is no shortage; indeed, imports of solar modules continue to increase," Auxin's lawyers wrote.

However, most of the comments supported the action, saying that putting a pause on duty or deposit collection, whether or not the anti-circumvention petition is found to have merit, will speed the adoption of utility-scale solar. The panels preferred in solar farms are bifacial, and not subject to the almost 15% solar safeguard.

Supporters included solar panel purchasers, such as utilities and project developers; solar panel manufacturers, who noted that there is no domestic cell production; and a nonprofit that advocates for a transition away from fossil fuels.

NextEra, a utility with solar installations in 33 states, wrote: "We know from over ten years of experience that tariffs do not incentivize domestic solar manufacturing."

Many of the supporters of the actions made the same points about what the final rule should look like: that it should confirm that the current rules of origin for solar cells and panels will continue to be in effect for the duration of the two-year emergency; that if the emergency were to end earlier, there should be a four-month delay before deposits come into effect; and that importers should have expedited liquidation, so that there's no possibility they'd have to pay duties later on entries already in the country.

Silfab USA, one of the companies making those points, said it is the second-largest panel manufacturer in the U.S., with 300 employees. It said pointedly that it makes more than five times as many panels as Auxin does, and "employs nearly nine times as many Americans." Silfab said it imports cells to assemble its panels, and that it wants to start cell production, but needs more time.

Several commenters urged Commerce to hurry with the final rule, as they worry the anti-circumvention decision could come out first.

The Solar Energy Industries Association, a trade group with 1,000 members, including installers, developers, manufacturers and importers, said the Commerce Department should find that Southeast Asian panels made with Chinese wafers are not evading AD/CVD on Chinese cells and panels, "given the Department’s long-standing views regarding the significance of the processing required to convert wafers into cells and then modules. But if the Department were to issue an affirmative preliminary determination, the immediate effects of that determination, especially any cash deposit requirement, could be extremely disruptive if the Department’s rule has not yet been finalized, notwithstanding the Department’s proposal to refund any deposits collected."

The Edison Electric Institute, which represents publicly traded utilities, added that as recently as June 15, the Commerce Department affirmed that a company producing solar cells and panels in Turkey with solar wafers from China did not have to say the panels or cells were of Chinese origin.

Several comments were from companies or trade groups with no connection to the solar industry, because they are alarmed by what they see as political interference with trade remedy laws.

Kelley Drye & Warren said, on behalf of unnamed growers and manufacturers, "Many domestic industries cannot supply the entirety of U.S. demand and the U.S. trade laws have never required that industries be able to supply all of U.S. demand to obtain relief."