On November 13, 2023, the US Court of Appeals for the Federal Circuit (CAFC) issued its opinion in Solar Energy Indus. Ass'n v. United States. The decision has retroactive implications for the exclusion currently extended to bifacial solar panels under the Section 201 solar safeguard regime, and underscores the power of the executive branch to adapt or modify trade policy measures already in force.
Background
In October 2020, President Trump issued Proclamation 10101, expanding the application of the Section 201 safeguard duties (in force since 2018) to bifacial solar panels, which had previously been excluded. The Proclamation also had the effect of raising the year-four safeguard duties on such imports from 15 to 18 percent.
US industry groups challenged the Proclamation at the Court of International Trade (CIT), arguing that the Proclamation improperly expanded the safeguard program beyond a "modification" allowable under the Trade Act. The CIT agreed, finding that "[n]either the statute nor the statutory scheme supports interpreting Section 204(b)(1)(B) [of the Trade Act] to permit increased restrictions on trade," and therefore the Proclamation "clearly misconstrued the reach of … the Trade Act, and thus constituted an action outside the President's delegated authority." See Solar Energy Indus. Ass'n v. United States, 553 F. Supp. 3d 1322, 1343 (Ct. Int'l Trade 2021) (emphasis added). The CAFC's November 13 opinion reversed the CIT opinion.
It is important to note that the CIT and subsequent CAFC appeals only pertain to bifacial panels that were imported into the United States between October 25, 2020 (the date of Proclamation 10101) and February 7, 2022, when President Biden extended the safeguard duties, and again excluded bifacial panels. Therefore, there is no direct forward-looking effect on the scope of Section 201 solar duties. See CAFC Decision at 10 n. 2 ("this appeal only affects bifacial panels that were imported into the U.S. after October 25, 2020 and before February 7, 2022").
The CAFC decision
In its November 13 decision, the CAFC determined that the President's power to modify safeguard duties under the Trade Act is not limited to trade-liberalizing modifications, and that trade-restrictive modifications (such as those under Proclamation 10101) are permitted. This is based in part on a reading of the statutory definition of "modification," which establishes no such limit.
In general, there is a relatively high bar for judicial review of presidential action allegedly in violation of a statute. Federal Circuit precedent allows such review only where the President "clearly misconstrued his statutory authority" and "whether the President has violated an explicit statutory mandate." The CAFC in Solar Energy Indus. Ass'n underscored this narrow inquiry: "our review of Proclamation 10101 is limited to whether the President clearly misconstrued Section 2254(b)(1)(B). Because presidential action to impose a safeguard measure, as well as the decision to modify such a measure, involves presidential action in the context of foreign affairs, our review is 'very limited.'" CAFC Decision at 14 (citation omitted).
The CAFC's relatively broad read of presidential trade policymaking authority is conceptually aligned with its recent decisions related to Section 232 duties. For example, in PrimeSource Bldg. Prods. v. United States, 59 F.4th 1255 (Fed. Cir. 2023), the Court affirmed the President's power to enlarge the scope of the 232 duties to respond to later circumstances. Similarly, in Transpacific Steel LLC v. United States, 4 F.4th 1306 (Fed. Cir. 2021), the Court upheld an increase in duty rates on certain products.
While the CAFC decision is only retroactive in effect, and has no direct bearing on the Section 201 exclusion for bifacial panels currently in place, it has the effect of further underscoring the President's authority to tweak trade actions as dictated by emerging economic/political considerations. Thus, if President Biden determined to expand the application of the solar safeguard duties to again cover bifacial panels, the CAFC opinion bolsters his ability to do so.
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