Section 201 Statute Allows President to Revoke Tariff Exclusion, US Tells Federal Circuit

An argument from apellees, including the Solar Energy Industries Association, in a Federal Circuit case that the safeguard statute implicitly limits the president to make "trade-liberalizing" measures relies on a "strained reading of the statutory contest," by placing undue emphasis on the fact that section 2254(b)(1)(B) lets the president find that the domestic industry "has made" a positive adjustment to import competition, the U.S. argued in an Oct. 17 reply brief at the U.S. Court of Appeals for the Federal Circuit. This position "relies on an illusory distinction between complete and ongoing adjustment," the brief said (Solar Energy Industries Association v. United States, Fed. Cir. #22-1392).

The plaintiff-appellees originally launched the case at CIT to challenge the withdrawal of the exclusion for bifacial solar panels from the Section 201 safeguard duties on imported crystalline silicon photovoltaic solar panels. Section 204 of the Trade Act of 1974 says the president can, on his or her own authority, "reduce, modify, or terminate" previous safeguard duties after finding the industry has made a "positive adjustment to import competition."

The case hinged on the definition of "modify," with the plaintiffs successfully arguing to CIT that it encompasses only trade liberalizing action and the government pushing for a broader definition. The plaintiffs said it defies "logic and congressional intent" to bolster trade restrictions when the domestic industry has made a "positive adjustment." The trade court agreed, ruling that interpreting the statute to include both trade liberalizing and trade restricting modifications would run counter to the "detailed statutory scheme" (see 2111160032).

The U.S. appealed the decision to the Federal Circuit, filing its opening brief in May (see 2205120060). In it, DOJ said that, despite the focus on the statutory scheme, the trade court's interpretation of the law conflicts with "many aspects of the safeguard statute" that show that Congress did not restrict the president's ability to make limited adjustments to a safeguard measure. SEIA argued in reply that the case rests on the definition of "modification," and that Congress intentionally predicated the "modification" of a safeguard on a finding that the domestic industry "has a made a positive adjustment to import competition" (see 2207070073).

This claim, as CIT noted, falls back on a false distinction between complete and ongoing adjustment, the U.S. said in reply. The language of the statute is "sufficiently broad to include circumstances in which a domestic industry 'has made' progress, but further adjustment remains necessary," the brief said. The U.S. argued that Congress did not intend to restrict the use of the law to cases where the domestic industry's adjustment is complete.

"It is illogical to conclude that Congress foreclosed the President from addressing an after-the-fact exclusion that was undermining the safeguard measure. In providing the President authority to 'modify' (not just 'reduce' or 'terminate') a safeguard measure, Congress authorized the President to deal with the range of issues arising during the measure’s term," the brief said. Further, the appellees' claims would make the word "modify" superfluous, given that any action taken under the guise of modifying the safeguards could easily also fit under the terms "reduce" or "terminate."

The appellees' interpretation also cuts against the statute's "evident purpose," which is to take all needed action to facilitate the domestic industry's efforts to adjust to import competition while generating greater benefits than costs, the U.S. said. There stands no "explicit statutory mandate" that the president violated, and this "narrative should not trump Congress's silence," the government argued.

The U.S. also railed against the appellees' responses over the statute's structure, purpose and history to argue that the statutory provisions cited by SEIA do not limit the meaning of "modification" in Section 2254(b)(1)(A). Under this section, the appellees said pointed to more limited actions the president can take when a safeguard measure is not working to argue that a similar limitation applies to the broader set of actions the president can take. "This makes no sense," the U.S. quipped in reply. "The contrast between these sections supports the understanding that Congress in section 2254(b)(1)(B) gave the President flexibility to address the range of issues that may arise if a safeguard is succeeding."

The government responded to the appellees' alternative and procedural arguments, which claim that the domestic industry petition and the proclamation itself were “procedurally defective” and thus should be tossed. The appellees said the petition was sent illegally since it did not request relief on the grounds that the domestic industry has made a positive adjustment to import competition. These “hyper-grammatical arguments” give no reason to toss the president's proclamation revoking the tariff exclusion, the U.S. argued. “The President alone determines whether 'the domestic industry has made a positive adjustment to import competition' after receiving the petition, as SEIA concedes.”