918 F.3d 909
Fed. Cir.2019Background
- Commerce issued countervailing and antidumping orders (Solar II China) covering crystalline silicon photovoltaic cells and modules assembled in China, using a country-of-assembly test rather than the prior "substantial transformation" test.
- Earlier investigations (Solar I China; Solar I Taiwan) had used the substantial transformation test and treated the solar cell as the origin-conferring component.
- Petitioners (led by SolarWorld) alleged Chinese producers shifted supply chains to source non-Chinese cells and assemble panels in China to evade the earlier orders. Record evidence included public statements and trade-flow data.
- The Court of International Trade remanded, finding Commerce had departed from prior practice without adequate explanation; Commerce then issued a remand determination explaining why a different country-of-origin test was justified for Solar II China.
- On appeal, producers/exporters from China challenged Commerce’s use of the country-of-assembly test as an unexplained departure and argued Commerce lacked substantial evidence of evasive shifts in trade flows.
- The Federal Circuit affirmed: it held Commerce gave a reasoned explanation for departing from prior practice and that substantial evidence supports Commerce’s findings of supply-chain shifts and the resulting scope decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce permissibly departed from the substantial transformation test when defining country of origin | Commerce departed without a reasoned explanation and thus acted arbitrarily | Commerce reasonably explained the departure: the proceeding-specific scope, injury traced to panels assembled in China, and need to remedy evasive conduct | Commerce provided a reasoned explanation; departure was permissible |
| Whether substantial evidence supports Commerce’s finding that Chinese industry shifted supply chains to evade earlier orders | Findings rest on mere allegations and are not supported by substantial evidence | Record includes public admissions, trade-flow data, and company responses showing increased sourcing of non-Chinese cells and panels assembled in China | Substantial evidence supports Commerce’s finding of supply-chain shifts and evasion concerns |
| Whether Commerce improperly applied different country-of-origin rules to the same class/kind of merchandise | Commerce created inconsistent rules for the same products | Commerce argued each proceeding defines a proceeding-specific class/kind and Solar II China covered a different injuring set of imports | Held that class/kind determinations are proceeding-specific; Commerce did not apply inconsistent rules to the same class/kind |
| Whether alternative remedies (new petitions, anti-circumvention statute) were adequate so Commerce could not change its test | Petitioning or anti-circumvention procedures would address circumvention instead of changing origin test | Those remedies are slower or inapplicable pre-order; defining scope in the investigation was reasonable to prevent further injury | Held Commerce reasonably sized scope here; alternatives did not make its decision arbitrary |
Key Cases Cited
- Bell Supply Co. v. United States, 888 F.3d 1222 (Fed. Cir.) (discusses origin-conferring component and country-of-origin analysis)
- Global Commodity Grp. LLC v. United States, 709 F.3d 1134 (Fed. Cir.) (Commerce may define scope to account for physical product and country of origin)
- Bestfoods v. United States, 165 F.3d 1371 (Fed. Cir.) (explains substantial transformation test)
- Mitsubishi Elec. Corp. v. United States, 898 F.2d 1577 (Fed. Cir.) (agency must fashion scope to effectuate statute and violation found)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (explains arbitrary-and-capricious standard for agency changes)
- FCC v. Fox Television Stations, Inc., 556 U.S. 502 (explains when agencies must reasonably explain departures from prior policy)
- SunPower Corp. v. United States, 253 F. Supp. 3d 1275 (Ct. Int'l Trade) (CIT remand decision addressing Commerce’s original Solar II China scope determination)
- NTN Bearing Corp. of Am. v. United States, 997 F.2d 1453 (Fed. Cir.) (supports practical discretion to include injuring imports within scope)