Auxin Challenges Solar Tariff Moratorium

Auxin Challenges Solar Tariff Moratorium

January 14, 2024 | By Stefan Reisinger in Washington, DC and Keith Martin in Washington, DC

Some US solar developers may have to add new contingent liabilities to their balance sheets on account of a lawsuit filed by two US manufacturers in a federal court just before New Year's Eve.

Additional import duties could have to be paid on some solar panels imported as far back as April 2022 if the manufacturers prevail in court.

Auxin Solar, a solar panel manufacturer, and Concept Clean Energy, a US semiconductor manufacturer, filed a lawsuit in the US Court of International Trade on December 29 challenging a Biden administration moratorium on collection of anti-dumping and countervailing duties on Chinese-branded solar modules and cells imported from Malaysia, Thailand, Vietnam and Cambodia.

The moratorium applies to modules and cells imported through June 6, 2024. It has been in place since June 2022.

The complaint is attached here.

The companies are also asking the court to issue a preliminary injunction quickly ordering Customs to suspend liquidation of imported crystalline silicon photovoltaic (CSPV) modules and cells until the case is decided.

When importers first import goods, they pay only estimated duties. The "liquidation" date, which is usually about 314 days after the date of entry, is when Customs considers the duty amount final. Once an entry is liquidated, it becomes much more difficult for Customs to try to recover additional duties from the importer.

A suspension of liquidation would be significant because many importers imported modules and cells the last two years assuming the moratorium meant they are not subject to anti-dumping and countervailing duties. By suspending the liquidation of those entries, the government would be leaving the door open to imposing duties on modules and cells that have already cleared Customs.

Auxin and Concept Clean Energy are contesting both the final decision by the US Department of Commerce (87 Fed. Reg. at 56,868) on September 16, 2023 not to collect duties through June 6, 2024, as well as Presidential Proclamation 10414 that was the underlying authority for the moratorium. (For more details on the moratorium, see "Solar Anti-Circumvention Moratorium.") 

The companies suggest that the moratorium created a “lawless” cell and module marketplace, saturated by an ongoing wave of low-cost modules that otherwise should have been subject to import duties after Commerce found Chinese solar panels were being routed through the four countries to circumvent high-level import duties that would have had to be paid on the panels had they been imported directly from China.

Auxin and Concept Clean Energy asked the court in a 70-page motion (attached here) in mid-January for some immediate relief while the court considers the merits of the case.  

The motion, for a preliminary injunction, asked the court immediately to suspend liquidation of all unliquidated entries of CSPV cells and modules completed in Cambodia, Malaysia, Thailand and Vietnam using parts and components produced in China by companies other than those that Commerce found not to be circumventing that entered the US on or after April 1, 2022. Commerce found four companies were not circumventing China-level duties: Jinko Solar Technology Sdn. Bhd., Jinko Solar (Malaysia) Sdn. Bhd., Hanwha Q CELLS Malaysia Sdn. Bhd. and Boviet Solar Technology Co., Ltd. (For more details, see "Anti-Circumvention Duties and Solar Panels."

The two companies said they face irreparable harm without a preliminary injunction because even if their challenge is ultimately successful, cells and modules imported under the moratorium will have been liquidated and final.

They also want the government to identify which CSPV cells and modules completed in Cambodia, Malaysia, Thailand and Vietnam using parts and components produced in China by companies other than those that Commerce found not to be circumventing entered the US between April 1 and December 22, 2022 on a duty-free basis.

They ask alternatively for the court to allow for "reliquidation" of entries brought in during the moratorium and for the court to direct Commerce to start collecting data necessary for such a reliquidation and potential collection of cash deposits.

The Biden administration has indicated that it opposes the motion, but has not yet filed a response.

Whether the court grants an injunction will be an early sign whether it thinks the two manufacturers are likely to prevail on the merits.

It is not entirely clear why Auxin and Concept Clean Energy waited so long to file the lawsuit. There has been some industry speculation that the administration may be planning to extend the moratorium, but there have not been any tangible signs of such a plan. Aside from trying to head off any extension, the parties may be trying to deter a rush to import modules and cells before the current June 6, 2024 moratorium expires.