Changzhou Trina Solar Energy Co. v. United States

• Decision Date: 30 December 2016
• Docket Number: Consol. Court No. 15–00068,Slip Op. 16–121
• Citation: 195 F.Supp.3d 1334
• Parties: CHANGZHOU TRINA SOLAR ENERGY CO., LTD. et al., Plaintiffs and Consolidated Plaintiff, and Yingli Green Energy Americas, Inc. et al., Plaintiff–Intervenors, v. UNITED STATES, Defendant, and SolarWorld Americas, Inc., Defendant–Intervenor and Consolidated Defendant–Intervenors.
• Court: U.S. Court of International Trade

195 F.Supp.3d 1334

CHANGZHOU TRINA SOLAR ENERGY CO., LTD. et al., Plaintiffs and Consolidated Plaintiff,andYingli Green Energy Americas, Inc. et al., Plaintiff–Intervenors,

v. UNITED STATES, Defendant,andSolarWorld Americas, Inc., Defendant–Intervenor and Consolidated Defendant–Intervenors.

Slip Op. 16–121

Consol. Court No. 15–00068

United States Court of International Trade.

December 30, 2016

Mark P. Lunn and Eugene Degnan , Dentons US LLP, of Washington, DC, for Changzhou Trina Solar Energy Co., Ltd. and Trina Solar (Changzhou) Science & Technology Co., Ltd.

Neil R. Ellis , Richard L.A. Weiner , Brenda Ann Jacobs , and Rajib Pal , Sidley Austin LLP, of Washington, DC, for Yingli Green Energy Holding Co., Ltd., Yingli Green Energy Americas, Inc., and Canadian Solar Inc.

Timothy C. Brightbill and Laura El–Sabaawi , Wiley Rein LLP, of Washington, DC, for SolarWorld Americas, Inc.

Justin Reinhart Miller , Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, NY, argued for the Defendant. On the brief were Melissa Marion Devine , Trial Attorney, Benjamin C. Mizer , Principal Deputy Assistant Attorney General, Jeanne E. Davidson , Director, and Reginald T. Blades, Jr. , Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC. Of counsel was Shelby Mitchell Anderson , Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

OPINION AND ORDER

Kelly, Judge:

This consolidated action arises from the final affirmative determination made by the U.S. Department of Commerce ("Commerce" or "DOC") in its countervailing duty ("CVD") investigation of certain solar panels from the People's Republic of China ("PRC" or "China").¹ See Certain Crystalline Silicon Photovoltaic Products from the [PRC], 79 Fed. Reg. 76,962 (Dep't Commerce Dec. 23, 2014) (final affirmative countervailing duty determination) ("Final Determination") and accompanying Issues & Decision Mem., C–570–011, Investigation, PD 388, bar code 3247469–01 (Dec. 15, 2014) ("Final Decision Memo"). Before the court are motions for judgment on the agency record. Specifically, Plaintiffs Changzhou Trina Solar Energy Co., Ltd., Trina Solar (Changzhou) Science & Technology Co., Ltd., Yingli Green Energy Holding Co., Ltd., Yingli Green Energy Americas, Inc., and Canadian Solar Inc. (collectively "Trina Solar" or "the Respondents") challenge Commerce's determinations to include certain grants or programs of the Government of China ("GOC") as countervailable subsidies in the calculation of Respondents' CVD cash deposit rates, and its application of adverse facts available² ("AFA").³ See Pl.'s Mem. of L. in Supp. of Mot. for J. on the Agency R., Jan. 19, 2016, ECF No. 51 ("Trina Solar's Br."); Mot. of Pl.–Intervenors Yingli Green Energy Holding Co., Ltd. & Yingli Green Energy Americas, Inc. for J. on the Agency R. 2, Jan. 19, 2016, ECF No. 44 (adopting the arguments presented in Trina Solar's Br.); Mot. of Consol. Pl.–Intervenor Canadian Solar Inc. for J. on the Agency R. 2, Jan. 19, 2016, ECF No. 45 (same). In addition, Plaintiff SolarWorld Americas, Inc. ("SolarWorld"), the domestic industry petitioner, challenges the reasonableness of Commerce's use of certain benchmark prices, as well as Commerce's decision not to investigate SolarWorld's allegations regarding Respondents' creditworthiness. SolarWorld's Mot. for J. on the Agency R., Jan. 20, 2016, ECF Nos. 52 (conf. version) & 53 (pub. version) ("SolarWorld's Br.").

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012), and 19 U.S.C. § 1516a(a).⁴ "The court shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law ...." 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Governmental Programs and Grants In Addition to Those Alleged In the Petition

First, the Respondents challenge Commerce's decision to include in the calculation of Trina Solar's rate certain subsidies that were not alleged in SolarWorld's petition to initiate this proceeding, but that Commerce examined on its own initiative. Trina Solar's Br. 9–24. These additional subsidies fall into two categories: (i) forty governmental assistance programs that were examined in the related CVD investigation of solar cells from the PRC⁵ (the "Solar I PRC programs"), see Final Decision Memo at 84–85,⁶ and (ii) twenty-eight additional governmental grants and a tax deduction that were discovered in the course of the agency's verification procedure in China (the "verification grants and tax deduction"), see Final Decision Memo at 86–88. Respondents challenge Commerce's determinations with respect to both the Solar I PRC programs and the verification grants and tax deduction. Trina Solar's Br. 9–24. Specifically, Trina Solar argues that (1) Commerce improperly determined to investigate the Solar I PRC programs and the verification grants and tax deduction in this proceeding, Trina Solar's Br. 9–19; (2) in the alternative, that Commerce's use of AFA, pursuant to 19 U.S.C. § 1677e(b), with respect to the Solar I PRC programs and verification grants and tax deduction was contrary to law, see oo/id. at 16–17, 20–23; (3) in another alternative, that Commerce's application of 19 U.S.C. § 1677e(b) to conclude that all of the Solar I PRC programs, verification grants, and tax deduction were countervailable subsidies was not supported by substantial evidence, see id. at 15, 19–20, 21, 22–23; and (4) in the final alternative, that Commerce's selection of AFA rates for the verification grants and tax deduction was unexplained and arbitrary, see id. at 23–24. The court sustains Commerce's inclusion of both categories of subsidies, as well as its decision to apply AFA, but remands to Commerce its use of AFA to determine the countervailability of the Solar I PRC programs and the additional grants and tax deduction found during verification.⁷

A. Investigation of the Solar I PRC Programs and the Additional Grants and Tax Deduction Found at Verification

The statute provides two separate bases for Commerce's investigative authority in CVD proceedings. Commerce must investigate "whether the elements necessary for the imposition of a [countervailing] duty under [19 U.S.C. § 1671(a) ] exist" when the agency receives a timely petition alleging all necessary elements and providing supporting evidence reasonably available to the petitioner. 19 U.S.C. §§ 1671a(a), 1671a(b)(1). Commerce may also investigate any "practice which appears to be a countervailable subsidy [of the subject merchandise]" that is "discover[ed]" in the course of a CVD proceeding, id. at § 1677d(1), if the agency "concludes that sufficient time remains before the scheduled date for the final determination." 19 C.F.R. § 351.311(b) (2014). Moreover, the statute provides a broad directive to Commerce to investigate whenever the agency deems that a formal investigation is warranted. 19 U.S.C. § 1671a(a).

Here, Commerce determined to investigate both the Solar I PRC programs and the additional grants and tax deduction found at verification as discovered apparent subsidies, pursuant to 19 U.S.C. § 1677d. Final Decision Memo at 16–19, 85; Decision Mem. for Prelim. Affirmative [CVD] Determination, Certain Crystalline Photovoltaic Products from the [PRC], C–570–011, Investigation at 24, PD 267, bar code 3206936–01 (June 2, 2014) (adopted in 79 Fed. Reg. 33,174 (Dep't Commerce June 10, 2014) (preliminary determination)) ("Prelim. Decision Memo"). Trina Solar claims that the agency's actions "unlawfully circumvented the initiation requirements," Trina Solar's Br. 14; see also id. at 9 ("Because these ‘discovered grants' were not alleged in the petition giving rise to the instant investigation ..., Commerce's final determination that these [programs] were countervailable is contrary to [law]."); id. at 9–10 (discussing statutory requirements for Commerce's CVD investigation of petition-based allegations) (relying on 19 U.S.C. §§ 1671a(b)(1) & (c) ), but both the statute, 19 U.S.C. § 1677d, and Commerce's regulations, 19 C.F.R. § 351.311, specifically contemplate Commerce's independent investigation of discovered practices.⁸

At oral argument, counsel for Trina Solar clarified that the Respondents are not challenging Commerce's authority to investigate governmental assistance beyond the allegations made in the petition, but are arguing that Commerce improperly invoked 19 U.S.C. § 1677d here to examine the Solar I PRC programs and the verification grants and tax deduction. See Oral Arg. Tr. 3–6, Sept. 22, 2016, ECF No. 93 ("Oral Arg. Tr."). Specifically, Trina Solar argues that 19 U.S.C. § 1677d is "not applicable" to the Solar I PRC programs, because these programs "were not discovered in the course of this proceeding, but rather were found in [the Solar I PRC proceeding]." Trina Solar's Br. 13; see Oral Arg. Tr. 12. With respect to the additional grants and tax deduction found at verification, Trina Solar argues that Commerce unlawfully failed to make the prerequisite threshold determination that these grants " ‘appear[ed’] to be [ ] countervailable subsid[ies]," 19 U.S.C. § 1677d, before including them in this proceeding. Trina Solar's Br. 16; see Oral Arg. Tr. 6–7.

1. 19 U.S.C. § 1677d and the Solar I PRC Programs

Section 1677d contains no limiting language as to how the agency is to "discover" the apparent subsidies in the course of a proceeding before including them in its investigation. See 19 U.S.C. § 1677d. Here, because the Solar I PRC CVD proceeding is intimately related with this Solar II PRC CVD proceeding, see SunPower Corp. v. United States, 40 CIT ––––, Slip Op. 16–56, 179 F.Supp.3d 1286 (June 8, 2016), at Background Sections I & II, Commerce reasonably determined the Solar I PRC programs to be sufficiently related to...