Sunpower Corp. v. United States
| Decision Date | 08 June 2016 |
| Docket Number | Consol. Court No. 15-000671,Slip Op. 16-56 |
| Citation | 179 F.Supp.3d 1286 |
| Parties | Sunpower Corp., Plaintiff, v. United States, Defendant. |
| Court | U.S. Court of International Trade |
John M. Gurley , Diana Dimitriuc Quaia , and Tina Termei , Arent Fox LLP, of Washington, DC, for Canadian Solar Inc., Changzhou Trina Solar Energy Co., Ltd., China Sunergy (Nanjing) Co., Ltd., Chint Solar (Zhejiang) Co., Ltd., LDK Solar Hi-Tech (Nanchang) Co., Ltd., Perlight Solar Co., Ltd., ReneSola Jiangsu Ltd., Shanghai JA Solar Technology Co., Ltd., Shenzhen Sacred Industry Co., Ltd., Shenzhen Sungold Solar Co., Ltd., Sumec Hardware & Tools Co., Ltd., Sunny Apex Development Ltd., Wuhan FYY Technology Co., Ltd., Wuxi Suntech Power Co., Ltd., Zhongli Talesun Solar Co., Ltd., and Znshine PV-Tech Co., Ltd.
Craig A. Lewis , Samantha Clark Sewall , and Wesley Verne Carrington , Hogan Lovells US LLP, of Washington, DC, for Shanghai BYD Co., Ltd. and BYD (Shangluo) Industrial Co., Ltd. Daniel J. Gerkin and Jerome J. Zaucha , K & L Gates LLP, of Washington, DC, for SunPower Corporation.
Gregory S. McCue , Steptoe & Johnson LLP, of Washington, DC, for Suniva, Inc.
Neil R. Ellis , Sidley Austin LLP, of Washington, DC, for Yingli Green Energy Holding Co., Ltd. and Yingli Green Energy Americas, Inc.
Melissa M. Devine , Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for the Defendant. Also on the brief were Benjamin C. Mizer , Principal Deputy Assistant Attorney General, Jeanne E. Davidson , Director, and Reginald T. Blades, Jr. , Assistant Director. Of counsel was Rebecca Cantu , Senior Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.
Timothy C. Brightbill and Laura El-Sabaawi , Wiley Rein LLP, of Washington, DC, for Defendant-Intervenor SolarWorld Americas, Inc.
Donald C. Pogue
This consolidated action arises from the final affirmative determinations made by the U.S. Department of Commerce (“Commerce”) in its antidumping and countervailing duty (“AD” and “CVD,” respectively) investigations of solar panels from the People's Republic of China (“PRC” or “China”).2 Before the court are motions for judgment on the agency record, challenging Commerce's final determinations regarding the scope of these proceedings.3
The court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012)
,4 and 28 U.S.C. § 1581(c) (2012).
As explained below, Commerce's final scope determinations departed from the agency's prior rule for determining national origin for solar panels without adequate consideration or discussion of the continuing relevance, if any, of Commerce's prior factual finding that the assembly of imported solar cells into panels is insufficient to change the product's country-of-origin from the country of cell-production to the country of panel-assembly. In addition, Commerce's final scope determinations did not consider or explain an important aspect of the national origin determination, specifically the reasonableness of applying AD/CVD duties to the entire value of solar panels assembled in the PRC when only a small percentage of the cost of production actually occurs there. Therefore, Commerce's final scope determinations for these proceedings are remanded for reconsideration.
After a statement of the relevant background, the Plaintiffs' arguments, and the standard of review, the claims presented are discussed below.
The production process for solar panels complicates Commerce's national origin determination. Solar panels (also commonly referred to as solar modules or laminates) are assembled from solar cells, which use crystalline silicon to convert sunlight into electricity.5 Importantly, the complete solar panel production process consists of multiple steps, each of which may occur in different plants or locations,6 and potentially in different countries. First, polysilicon is refined, then it is formed into ingots, which are sliced into wafers; the wafers are then converted to cells, which are finally assembled into solar panels.7
Solar panels from the PRC were also subject to investigation in prior proceedings, resulting in separate AD and CVD orders (hereinafter referred to as the “Solar I PRC” proceedings).8 The Solar I PRC proceedings covered solar cells produced in China, including cells assembled into panels, regardless of whether or where such panel assembly occurred.9 The proceedings at issue here (hereinafter referred to as the “Solar II PRC” proceedings) cover all solar panels assembled in China, regardless of where their constituent cells were produced, except those panels already covered by the Solar I PRC proceedings (i.e., panels assembled in China from cells that were also made in China).10 Relevant background with regard to each of these proceedings is provided below.
In the Solar I PRC proceedings, Petitioner SolarWorld Americas, Inc. (“SolarWorld”)—Defendant-Intervenor in this action—initially sought investigations and orders covering, as subject merchandise from the PRC: 1) all solar cells produced in China, regardless of whether or where they were assembled into panels; and also 2) all solar panels assembled in China, regardless of where the constituent cells were produced.11 But Commerce decided that this scope proposal would have impermissibly required the agency to simultaneously establish that China is the country-of-origin both for the cells produced in China but assembled into panels elsewhere, as well as for the cells produced outside of China but assembled into panels in China.12 To Commerce, this proposal would have required two conflicting origin rules for the same class of products.13 Commerce therefore decided, in Solar I PRC, that either constituent cell-production or ultimate panel-assembly must determine the country-of-origin.14 Accordingly, Commerce concluded that an AD/CVD order on merchandise from China may cover either cells produced in China, regardless of where they are subsequently assembled into panels, or panels assembled in China, regardless of the origin of the cells, but not both.15
To choose between these alternatives, Commerce employed its usual “substantial transformation” test to determine the country-of-origin for merchandise that is manufactured in multiple countries.16 Specifically, Commerce analyzed whether solar panel assembly constitutes a substantial transformation of the solar cells included in the panel, sufficient for the final product to be considered to originate in the country of panel assembly.17 Based on this analysis, Commerce determined that “solar module assembly does not substantially transform solar cells such that it changes the country-of-origin.”18 Accordingly, Commerce concluded that “where solar cell production occurs in a different country from solar module assembly, the country-of-origin of the solar modules/panels is the country in which the solar cell was produced [and not the country of panel assembly].”19
Thus, in response to SolarWorld's Solar I PRC scope request, Commerce decided that the scope of the Solar I PRC proceedings would include Chinese cells assembled into panels in third countries, but exclude panels assembled in China from third-country cells.20 The agency suggested that to the extent that SolarWorld continued to allege additional injury from products left unaddressed by this product coverage, SolarWorld could petition for additional orders to cover the merchandise excluded from Solar I PRC as not of Chinese origin.21
Following up on this suggestion, SolarWorld filed the Solar II petition discussed below.22
SolarWorld's Solar II petition, and Commerce's final Solar II determinations, state that they aim to address (1) production shifts that occurred after imposition of the Solar I PRC orders; and (2) unfair subsidization by the Chinese Government of the panel assembly process for panels assembled in China from non-Chinese cells.23 Specifically, “following the implementation of the orders in Solar I [PRC], numerous Chinese companies began to contract with Taiwanese cell producers to manufacture cells for the purpose of exporting those cells to China for use in the production of panels, modules and laminates, and then to export those panels, modules and laminates to the United States.”24 As a factual matter, no party challenges this shift of production or its negative effect on the reach of the Solar I PRC AD/CVD orders.25
Accordingly, SolarWorld petitioned for, and Commerce initiated, separate AD and CVD investigations to cover (1) panels assembled in China from non-Chinese cells (Solar II PRC); and (2) cells and panels from Taiwan (“Solar II Taiwan”).26
Initially, in its preliminary determination in Solar II PRC, Commerce accepted SolarWorld's proposal that, in addition to the solar panels that were already covered as Chinese merchandise under Solar I PRC—because they were assembled in China from cells that were also produced in China—panels assembled in China from cells not made in China—but made using ingots, wafers, or partially completed cells that were made in China—should also be covered as ‘solar panels from China’ under the new Solar II PRC proceedings.27
Subsequently, however, Commerce proposed to modify the scope of the Solar II PRC proceedings to include all solar panels assembled in China, regardless of the source of their constituent parts.28 After considering interested parties' comments regarding this revised scope proposal, Commerce ultimately concluded, over numerous parties' objections, that the scope of the Solar II PRC proceedings would cover all solar panels assembled in China, regardless of cell-origin, excluding only those panels that are already covered by the scope of the parallel Solar I PRC proceedings.29
Because Solar I PRC covers all panels assembled in...
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