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Law \ Legal

Biden Administration Suspends Possible Tariffs from Solar Anticircumvention Inquiry


On June 6, 2022, President Biden issued a declaration of emergency with respect to the availability of electricity generation capacity in the United States, and pursuant to this declaration, authorized the U.S. Secretary of Commerce to permit certain solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam to be temporarily imported without antidumping duty and countervailing duties (“AD/CVD”) in response to an ongoing anticircumvention proceeding.

As background, U.S. Department of Commerce (“Commerce”) is currently conducting an anticircumvention inquiry into whether imports from these four Southeast Asian countries are circumventing the AD/CVD orders on crystalline silicon photovoltaic (“CSPV”) cells and modules, i.e., solar cells and panels, from China.  If Commerce makes an affirmative circumvention finding, solar cells and modules manufactured in these countries may be presumed to be subject to the China CSPV AD/CVD orders.  Due to the possibility that high AD/CVD rates could then apply to these imports, many participants in the renewable energy industry were concerned that this investigation could adversely affect the U.S. solar industry, and negatively impact U.S. clean energy efforts.  Questions about the retroactive nature of any tariffs that could be imposed through this anticircumvention proceeding due to the recently modified regulations also have caused uncertainty in the industry, which in turn led several market participants to announce suspensions of U.S. solar projects.

In his declaration, President Biden found that a number of factors, including Russia’s invasion of Ukraine as well as severe climate issues, have caused an electricity emergency.  As a result, he recommended that the Secretary of Commerce consider taking appropriate action to permit solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam that are not currently subject to AD/CVD orders, to enter free of AD/CVD duties for two years after June 6, 2022 or until the emergency has been declared terminated.  Any normal customs duties applicable to these imports would still apply, as would existing AD/CVD duties on CPSV products imported from China.  Shortly thereafter, Commerce issued a statement that it would be issuing regulations to temporarily permit duty-free access to solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam as suggested by the declaration, though to date, those regulations have not yet been issued.  Commerce also noted that the circumvention inquiry would continue, and that any decision Commerce reaches when the investigation concludes would still apply once this short-term emergency period is over.

In response to this highly unusual action, the petitioner in the circumvention case, Auxin Solar, Inc. (“Auxin”), recently filed a letter with Commerce requesting all ex parte communications related to this announcement be put on the record of the circumvention proceeding.  Auxin also indicated that it believes this action is contrary to statute, suggesting that litigation may be forthcoming.

In addition to providing some temporary relief from AD/CVD duties, President Biden also announced several other initiatives geared towards developing the U.S. clean energy industry.  This included a series of proclamations authorizing the Department of Energy to use the Defense Production Act (“DPA”) to accelerate U.S. manufacturing of certain energy technologies including solar panel parts, transformers and electric grid components, heat pumps, insulation, and electrolyzers, fuel cells, and platinum group metals.  Under the DPA, the president is able to take certain financial steps to encourage the production of critical technology items.  In addition, the president directed the development of certain federal procurement tools, specifically, supply agreements that increase the speed and efficiency with which domestic electricity providers can sell products to the U.S. Government and the application of domestic content standards for federal procurement of solar systems.

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