SUNEDISON, INC., Plaintiff, v. UNITED STATES, Defendant.
Consol. Court No. 15-00066
United States Court of International Trade
June 14, 2016
Slip Op. 16-59
1. This action is consolidated with Kyocera Solar, Inc. v. United States, Ct. No. 15-00081. Order, July 1, 2015, ECF No. 21, at 14; Order, Apr. 28, 2016, ECF No. 64.
J. Kevin Horgan and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of Washington, DC, for Plaintiffs Kyocera Solar, Inc. and Kyocera Mexicana S.A. de C.V.
Joshua E. Kurland and Agatha Koprowski, Trial Attorneys, 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 Scott D. McBride, Senior Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.
Timothy C. Brightbill and Usha Neelakantan, Wiley Rein LLP, of Washington, DC, for Defendant-Intervenor SolarWorld Americas, Inc.
OPINION and ORDER
Pogue, Senior Judge:
This consolidated action arises from the final affirmative determination made by the U.S. Department of Commerce (“Com-
The court has jurisdiction pursuant to
As explained below, Commerce‘s final scope definition is remanded for consistency with, and based on the same reasoning as, related proceedings concerning solar panels from the People‘s Republic of China (“China” or “PRC“).5 Essentially, Commerce‘s final scope determination, in both cases, treated solar panels differently depending on their country of assembly, and failed to consider or discuss either the proportion of production necessary to determine a solar panel‘s country of origin or the reasonableness of applying 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.
After a statement of the background, arguments presented, and standard of review, the Plaintiffs’ challenges to Commerce‘s final scope determination are discussed below.
BACKGROUND
Relevant background leading to this case is summarized in the court‘s prior opinion.6 Briefly, the Solar II PRC opinion addressed Commerce‘s scope determinаtions in related proceedings concerning solar panels from China that are assembled from cells manufactured outside of China,7 including specifically cells that were manufactured in Taiwan (the “Solar II PRC” proceedings).8 Commerce‘s final scope definition here (in the “Solar II Taiwan” proceedings) covers all solar cells manufactured in Taiwan that are assembled into panels anywhere in the world, except those covered by the Solar II PRC proceedings because they are assembled into panels in China.9 Both cases concern the rules of
Solar panels assembled from solar cells made in the PRC were also, and initially, the subject of separate proceedings (the “Solar I PRC” proceedings). The Solar I PRC proceedings resulted in antidumping and countervailing duty orders covering all solar cells manufactured in China, whether or not and regardless of where in the world such cells are assembled into solar panels prior to exportation to the United States.10
In the Solar I PRC proceedings, Commerce determined that “solar module assembly does not substantially transform solar cells such that it changes the country-of-origin.”11 Accordingly, Commerce concluded that “where solar cell production occurs in a different country from solar module assembly, the country-of-ori-
gin of the solar modules/panels is the country in which the solar cell was produced [and not the country of panel assembly].”12
Following the imposition of the Solar I PRC orders, however, domestic producer SolarWorld Americas Incorporated (“SolarWorld“) (now Defendant-Intervenor in this action) petitioned Commerce to initiate additional proceedings. SolarWorld alleged, inter alia, that after the Solar I PRC orders were imposed, exports of solar panels to the United States from China shifted from panels assembled from cells that were also made in China, to panels assembled from cells “completed or partially manufactured in Taiwan or other countries (i.e., cells manufactured in Taiwan from Taiwanese inputs, or cells manufactured in Taiwan or other countries from Chinese inputs, including wafers).”13
Commerce agreed that this “measurable shift in trade flows ... resulted in increased imports of non-subject modules produced in China.”14 In response, Commerce initiated (1) antidumping and coun-
Plaintiffs here17 are U.S. importers and a foreign producer of solar panels containing solar cells manufactured in Taiwan.18 Plaintiffs now challenge Commerce‘s final determination regarding the scope of the Solar II Taiwan proceedings. Specifically, the Plaintiffs make the following argu-
duty-free, to the U.S. market.’ ... The Petition claimed that Taiwanese cell and module imports increased by 85 percent, in large part as a rеsult of this alleged loophole.“) (quoting and citing, respectively, Solar II Pet., [ECF Nos. 53-1 & 54-1 at Tab 1], at 4, 6); id. at 21 (“[F]ollowing the implementation of the [Solar I PRC] AD and CVD orders ... there has been a measurable shift in trade flows that has resulted in increased imports of non-subject modules produced in China.“) (citing Solar II Pet., [ECF Nos. 53-1 & 54-1 at Tab 1], at 3, 5-6, 21, 34, 37, 53).
ments regarding Commerce‘s final scope determination in the Solar II Taiwan investigation.
PARTIES’ ARGUMENTS
(I) Commerce‘s late modification of the Solar II Taiwan scope substantially deprived interested parties—including Kyocera, a Mexican assembler of Taiwanese solar cells into panels exported to the United States—of due process.19
(II) Commerce unlawfully expanded the scope of Solar II Taiwan, after the close of factual submissions, to include merchandise that had been excluded from Commerce‘s unfair pricing analysis (as well as the International Trade Commission‘s injury analysis) throughout the investigations.20
the scope of the International Trade Commission‘s injury investigation ....“) (quoting Kyocera‘s administrative case brief below).
transformation test to determine the scope of antidumping duty orders ....”25
(IV) Commerce‘s final Solar II Taiwan scоpe determination unlawfully departed from prior practice without sufficient explanation.26
(V) Commerce‘s conclusion that, with the exception of Taiwanese cells assembled into solar panels in China, all panels assembled from Taiwanese cells are subject to the Solar II Taiwan proceedings as products of Taiwan, regardless of where they are assembled, is not supported by substantial evidence.27 Specifically, Commerce‘s determination that Taiwanese solar cells are not substantially transformed when assembled into panels in Mexico is unreasonable in light of the evidentiary record.28
(VI) Commerce unreasonably determined to apply antidumping duties on the full value of the panels into which Taiwanese solar cells are incorporated, rather than solely the value of the cells themselves.29
(VII) Commerce unreasonably excluded from its final dumping analysis third-country sales that the mandatory respondents
Following a statement of the applicable standard of review, each group of arguments is addressed in turn below.
STANDARD OF REVIEW
The court will sustain Commerce‘s antidumping determinations if they are supported by substantial evidence and are otherwise in accordance with law.31 Substantial evidence refers to “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion,”32 considering any relevant evidence that fairly detracts from the reasonableness of the agency‘s determination.33 The substantial evidence standard of review can be roughly translated to mean “is the
determination unreasonable?”34 The agency must “examine the relevant data and articulate a satisfactory explanation for its action,”35 including “a ‘rational connection between the facts found and the choice made.’ ”36
“[A]n agency determination that is arbitrary is ipso facto unreasonable,”37 and a determination is arbitrary when it fails to “consider an important aspect of the problem,”38 or “treat[s] similar situations in dissimilar ways.”39
Where the statutory language is sufficiently broad to permit a range of policy choices, the agency may change course from its prior practice and adopt a new approach within its statutory authority,40 but it must explain how the new policy is consistent with the continued relevance
has discretion to change its policies and practices as long as they are reasonable and consistent with their statutory mandate and may adapt its views and practices to the particular circumstances at hand, so long as the agency‘s decisions are explained and supported by substantial evidence on the record.“) (quotation and alteration marks and citation omitted).
past, any more than it can ignore inconvenient facts when it writes on a blank slate“).
DISCUSSION
I. Remand on Other Grounds Makes Reaching Due Process Arguments Unnecessary.
Because remand of Commerce‘s final Solar II Taiwan scope determinations is warranted on other grounds,44 and because the parties will therefore have ample opportunity to address the scope issues on remand, Plaintiffs’ due process challenges to the final scope determination are moot. The court therefore offers no opinion in this regard.
In addition, Kyocera‘s claim that, as a third-country assembler of Taiwanese solar cells into panels, it was deprived of its “right to participate in the investigation as a respondent and submit information demonstrating that it was not dumping solar products”45 is entwined with the scope determinations remanded here and in Solar II PRC.46 Accordingly, this matter will be clarified once the issues remanded here are resolved, and the scope of these proceedings is finalized.
II. Commerce‘s Final Solar II Taiwan Scope Modification‘s Effect On the Databases Used Throughout the Investigation
Plaintiffs next argue that Commerce‘s final Solаr II Taiwan scope determination unlawfully altered the sales databases relied on throughout the investigation, resulting in incongruence between the sales used to determine dumping liability and those ultimately covered by the order.47 Because this claim also implicates the specific agency decisions that are remanded
III. Commerce‘s Final Solar II Taiwan Scope Determination Was Not Contrary to Explicit Statutory and Regulatory Requirements.
Next, Plaintiffs argue that Commerce‘s final Solar II Taiwan scope determination was contrary to one or more statutory/regulatory provisions.49 Each argument is addressed in turn.
A. 19 U.S.C. § 1673
SunEdison argues that Commerce impermissibly “assigned to [the statutory phrase] ‘a class or kind of foreign merchandise’ different and inconsistent meanings for the same merchandise—modules containing Taiwanese-origin cells—depending on where the module assembly took place.”50
But as explained in the Solar II PRC opiniоn, it is well-established that the scope of an antidumping order is defined by two separate inquiries—(1) is the product within the relevant class/kind of merchandise? and (2) did the product originate in the country covered by the order?51 Here, the relevant class/kind of merchandise is solar cells, whether or not assembled into panels.52 The essence of the parties’ dispute concerns the second inquiry—Commerce‘s rule for determining whether a given product within this class/kind of
tion that Commerce totally abandoned long after verifications of those responses were completed ....“); id. at n.14 (noting that in Solar II PRC Commerce had emphasized that its final scope modification ” ‘result[ed] in no change to the [mandatory respondents‘] reported database[s]’ “) (quoting Issues & Decision Mem., Certain Crystalline Silicon Photovoltaic Products from the [PRC], A-570-010, Investigation (Dec. 15, 2014) (adopted in 79 Fed. Reg. 76,970 (Dep‘t Commerce Dec. 23, 2014) (final determination of sales at less than fair value)) (“Solar II PRC AD I&D Mem.“) cmt. 1 at 19); Kyocera‘s Br., ECF Nos. 29 & 30; at 7 (quoting Kyocera‘s administrative case brief below (“[Commerce‘s scope modification changed the scope from that] used in [Commercе]‘s selection of mandatory respondents [and] the International Trade Commission‘s injury investigation, which has undertaken no analysis of the impact of third-country solar modules on the domestic industry.“)); but see Solar II ITC Final Determination, supra note 7, at 7 (“The [International Trade] Commission recognized early in these [Solar II PRC and Solar II Taiwan] investigations that changes in the scopes were likely and took steps to ensure that it collected the information that would allow it to fulfill its statutory obligations. In the questionnaires issued in the final phase of these investigations, the Commission asked U.S. producers and importers to segregate their import data into sixteen categories, which were designed to provide the Commission with flexibility to adjust the data to conform to different possible scope definitions. The manner in which the Commission collected the data in these investigations permitted the agency and the parties to consider and evaluate the implications of various possible scope definitions to the Commission‘s analysis.“) (citations omitted).
B. 19 U.S.C. § 1677b(a) & 1677(16)(A)-(C)
SunEdison also argues that, because “[t]he statute defines the term ‘country’ as limited to a single country for purposes of antidumping proceedings,”54 it therefore “compels a uniform test to determine when the foreign like product is ‘produced in the same country’ as subject merchandise, because multiple tests arbitrarily create a mismatch between the universes [i.e., respective scopes] of subject merchandise and the foreign like product.”55 Because this claim is related to one of the grounds for remand, both here and in Solar II PRC,56 the court will defer its adjudication of this issue until the agency has had an opportunity to reconsider on remand.
C. 19 U.S.C. § 1677j(b) & 19 C.F.R. § 351.225(h)
Next, Kyocera argues that Commerce‘s decision—to include, within the scope of this order on merchandise from Taiwan, all Taiwanese solar cells that are assembled into panels in Taiwan or in other countries (except those that are assembled into panels in China)—should be evaluated under
As Kyocera acknowledges, however, these provisions apply to circumstances where an order with a defined scope is already in effect,58 whereas here Commerce was defining the scope of an order prior to its imposition. Although Kyocera argues that this distinction is immaterial,59
D. Congress Did Not Bind Commerce To Always Use The Substantial Transformation Test To Establish the Origin of Products Manufactured in Multiple Countries.
Finally, Congress did not require Commerce to continue to use its substantial transformation test60 when determining the origin of (and hence the appropriate foreign market for calculating the comparison normal values for) merchandise manufactured in multiple countries.61 Because the plain language of the antidumping statute does not unambiguously prescribe any specific approach to origin determinations, Commerce may exercise reasonable discretion in selecting a reasonable method for such determinations.62 Thus even if SunEdison were correct that, by revisiting the antidumping law without explicitly rejecting Commerce‘s prior use of the substantial transformation test to determine the origin of products made in multiple countries, Congress ratified the agency‘s use of this test,63 it does not follow that the agency is therefore required to always exercise its discretion in the same way. That Congress did not reject the agency‘s particular exercise of discretion is not equivalent to a requirement that the agency must always exercise its discretion using the same method.64
Next, SunEdison argues that Commerce‘s final Solar II Taiwan scope determination unlawfully departed from prior practice without sufficient explanation.65 Both here in Solar II Taiwan and in Solar II PRC, Commerce established two different origin rules for solar panels, depending on where they are assembled.66 As this Court has already ruled with regard to the Solar II PRC proceedings, in doing so, Commerce did not provide sufficient explanation for (1) departing from the agency‘s prior practice of establishing a single consistent origin rule for all products within a single class or kind of merchandise; (2) treating similarly-situated products differently; and (3) departing from the agency‘s prior practiсe of calculating the foreign like product‘s normal value in the market where the majority of production of the subject merchandise took place.67
Because the final Solar II Taiwan scope incorporates the Solar II PRC exception for solar panels assembled in China—which exempts all such panels from the otherwise generally-applicable rule that the origin of solar panels is determined by the origin of their constituent cells68—these same concerns are also implicated here.69 Accordingly, Commerce‘s final So-
V. Commerce‘s Determination that Solar Cells Are Not Substantially Transformed When Assembled Into Panels Is Supported by Substantial Evidence.
Next, Plaintiff Kyocera argues that the Taiwanese cells used to assemble Kyocera‘s solar panels in Mexico are substantially transformed in Mexico, such that they cannot be assessed antidumping liability as products of Taiwan.71
Here, as in Solar I PRC, Cоmmerce employed the substantial transformation test that is the agency‘s “usual starting point” when deciding which country‘s foreign market should provide the basis for the antidumping liability of products produced in multiple countries.72 Using this test, Commerce found that (1) solar cells and panels are within the same class or kind of merchandise; (2) solar panel assem-
products were exempted from antidumping/countervailing duty liability (for whatever political reasons), but rather that some products within the class or kind of merchandise are treated using a different rule than that which is otherwise generally applicable to products within that overall class/kind. Softwood Lumber from Canada is not an example of a case where the agency has established two different national origin rules for products within the same class or kind of merchandise.
bly does not change the nature or use of the product‘s essential component, the solar cell; and (3) solar panel assembly does not constitute substantial or sophisticated processing of the constituent solar cells.73 Accordingly, Commerce concluded thаt, “consistent with [the] determination in Solar I [PRC],” panel assembly does not substantially transform the constituent solar cells so as to change the cells’ country-of-origin.74
Kyocera argues that Commerce should have instead concluded that solar cells are substantially transformed when assembled into panels in Mexico, such that a solar panel‘s country-of-origin for antidumping purposes should be the country in which the panel is assembled, rather than the country where the constituent cells are produced.75 But Kyocera does not directly challenge the factors that Commerce has chosen to use for determining whether components produced in a country different from where they are then incorporated into a finished product are so transformed in the exporting country as to justify an
Instead of making an argument about the reasonableness of the factors of analysis that Commerce аctually employed here, Kyocera argues that Commerce should have used a different test, analogizing this case to country-of-origin analyses undertaken by different agencies in contexts unrelated to antidumping.77 But Cus-
toms’ country-of-origin determinations, made pursuant to and in furtherance of entirely different statutory authority, are inapposite to the issue presented here.78
Here, Commerce exercised its discretion to use the test that it had previously established for determining which country will be used to calculate normal values for antidumping duty assessment when products are manufactured in multiple countries.79 Kyocera neither addresses this particular analysis nor makes any specific argument
circumvention).“) (citation omitted); Stainless Steel Round Wire from Canada, 64 Fed. Reg. 17,324, 17,327 (Dep‘t Commerce Apr. 9, 1999) (notice of final determination of sales at less than fair value) (“[W]e reiterate that the disciplines of the [World Trade Organization] Agreement on Rules of Origin that are currently in effect under Article 2 of the Agreement simply do not require us to apply the country-of-origin determinations made by the Customs Sеrvice when making determinations in [antidumping] proceedings.“).
Accordingly, this case presents no basis to disturb Commerce‘s factual findings that (1) solar cells and panels are within the same class or kind of merchandise; (2) solar panel assembly does not change the nature or use of the product‘s essential component, the solar cell; and (3) solar panel assembly does not constitute substantial or sophisticated processing of the constituent solar cells.84 Nor do the parties
present a basis to disturb the agency‘s consequent conclusion that the cell is not substantially transformed in the process of panel assembly so as to change the cell‘s country-of-origin, pursuant to Commerce‘s usual substantial transformation tеst in the antidumping context.
VI. Assessment of Antidumping Duties Based on the Full Value of Solar Panels Assembled in Third Countries from Taiwanese Cells
Plaintiffs also challenge Commerce‘s decision to apply antidumping duties to the full value of solar panels assembled in other countries from cells produced in Taiwan, rather than only the value of the constituent Taiwanese cells.85 But as explained in the Solar II PRC
re-weigh the evidence to conclude that the process of panel assembly does substantially transform the solar cells used in panel production, see Kyocera‘s Br., ECF Nos. 29 & 30, at 20-23, it is not the court‘s providence to do so. See, e.g., Jiangsu Jiasheng Photovoltaic Tech. Co. v. United States, CIT, 121 F.Supp.3d 1263, 1272 (2015); Pakfood Pub. Co. v. United States, 34 CIT 1122, 724 F.Supp.2d 1327, 1348 (2010).
But as also discussed in the Solar II PRC opinion, this policy of assessing antidumping duties on the full value of finished products was also coupled with Com-
merce‘s policy of calculating normal value using foreign like products in the country where most of the essential production of the subject merchandise took place.88 Because the statute requires a fair comparison between the U.S. export price of the subject merchandise and the normal value of the foreign like product,89 Commerce had, prior to its decisions in Solar II PRC and Solar II Taiwan, reasonably assessed antidumping duties on the full value of finished products after calculating dumping margins using foreign normal values from the same market as that where most of the actual manufacturing of the subject merchandise occurred.90
Given this policy, Commerce reasonably determined to assess antidumping duties pursuant to the Solar II Taiwan order on the full value of the solar panels produced/imported by the Plaintiffs here, because it is undisputed that at least fifty percent of the production costs of Plaintiffs’ solar panels were incurred in the production of the panels’ constituent cells in Taiwan.91
Certain Corrosion-Resistant Carbon Steel Products from Canada, 58 Fed. Reg. 37,099 (Dep‘t Commerce July 9, 1993) (final determination of sales at less than fair value), aff‘d, In the Matter of Certain Corrosion-Resistant Carbon Steel Products from Canada, USA-93-1904-03 (Binational Panel under the United States-Canada Free Trade Agreement Oct. 31, 1994)); Solar II PRC Slip Op., Slip Op. 16-56, Consol. Ct. No. 15-00067, ECF No. 98, at 32-35, 47-48.
it the collection of antidumping duty deposits and assessments to the value of Taiwanese-origin [solar] cells in the module,” without disputing that the majority of a solar panel‘s production costs are incurred in the production of the constituent cells); Kyocera‘s Br., ECF Nos. 29 & 30, at 5, 8, 15-16, 25-26 (essentially same). Kyocera makes an argument regarding the value added by panel assembly as compared with the market value of the individual cells, Kyocera‘s Br., ECF Nos. 29 & 30, at 5, 16, but as Commerce has explained, the agency is concerned with where the costs of production are incurred, rather than percentages of value added, because “we are primarily concerned with where [most of] the actual manufacturing is occurring.” LNPPs from Germany, 61 Fed. Reg. at 38,168; see also Cold-Rolled Steel from Argentina, 58 Fed. Reg. at 37,065 (explaining that antidumping liability is not susceptible to subdivision using the market values of a finished product‘s constituent parts, because “[antidumping] duties are not an assessment against value,” but are rather “determined by the amount of [ultimate] price discrimination ... not by the value of the good“). In any event, even the evidence regarding the percentage of value added by panel assembly that Kyocera relies on does not dispute that a majority of the value of a solar panel resides in the constituent cells. See Kyocera‘s Br., ECF Nos. 29 & 30, at 5 (citing [Kyocera‘s] Req. for Scope Determina-
Commerce‘s Solar II PRC exception for solar panels assembled in China from non-Chinese cells (which is incorporated into the Solar II Taiwan scope94) seemingly abandons the agency‘s reasonable prior policy, and thereby removes that policy‘s explanatory power with respect to Commerce‘s decision here. In the absence of such explanation, Commerce‘s conclusory statement that antidumping duties will be assessed pursuant to Solar II Taiwan on the full value of solar panels assembled in third countries from Taiwanese cells simply because such panels “are covered by the scope of the [Solar II Taiwan] investigation, no matter the amount of processing done in the third country,”95 is by itself insufficient to address Plaintiffs’ arguments.96
tion re Solar Prods. from Mexico, Certain Crystalline Silicon Photovoltaic Products from Taiwan, A-583-853, Investigation (Sept. 15, 2014), reproduced in App. to Pl.‘s Rule 56.2 Mem. in Supp. of J. on the Agency R., ECF Nos. 34 (conf. version) & 35 (pub. Version) at App. 2, at 4).
VII. Commerce‘s Treatment of Sales of Taiwanese Cells to Third-Country Panel Assemblers For Export to the United States
Finally, SunEdison challenges Commerce‘s treatment of respondents’ “sales to third countries for which [the Taiwanese solar cell producers/exporters] ha[d] knowledge that the merchandise was ultimately destined for the United States.”97 A significant proportion of such sales, however, appear to have been sales of Taiwanese solar cells to panel assemblers in China,98 which Commerce specifically excluded as non-subject merchandise pursuant to the determinations that are remanded here and in Solar II PRC.99 The court will therefore defer its review of Com-
Cold-Rolled Steel from Argentina, 58 Fed. Reg. at 37,065); and Solar II Taiwan I&D Mem. cmt. 1 at 18 (“In determining the scope of the investigation, [Commerce] must not only address ... the products intended to be covered by the scope, but also determine the country-of-origin of the solar products at issue.“)). In the absence of the explanatory power of its prior policy, Commerce‘s explanation here appears to conflate these two separate inquiries.
Notes
merce‘s treatment of sales of Taiwanese cells to third-country panel assemblers that were reported as destined for export to the United States until the issues remanded here are resolved, and the scope of these proceedings is finalized.
CONCLUSION
For all of the foregoing reasons, the Solar II Taiwan final scope determination is remanded to Commerce for reconsideration in accordance with this opinion. Commerce shall have until August 15, 2016, to complete and file its remand results. Plaintiffs shall have until September 6, 2016, to file comments, and the agency and Defendant-Intervenor shall then have until September 20, 2016, to respond.
It is SO ORDERED.
in the end removed those transactions as ‘non-subject’ merchandise under its final scope determination[, and this eliminated many of their reported sales.“) (footnote omitted) & 49-54 (expanding this argument).