Biden Administration Pauses Solar Panel Circumvention Proceeding to Allow Domestic Industry to Develop Sufficient Supply of Solar Modules
In an unprecedented move, US President Joe Biden has decided to do the following:
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Temporarily pause the imposition of any duties or estimated duties that might result from the US Department of Commerce’s (Commerce) pending inquiry into whether crystalline silicon photovoltaic cells and modules (CSPVs) from Cambodia, Malaysia, Thailand or Vietnam (the target countries) are circumventing antidumping and countervailing duty orders on CSPVs from China; and
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Take action to increase the capability to produce CSPVs and components of CSPVs in the United States, as well as increase demand for such products.
Both aspects of the President’s announcement are discussed below.
IN DEPTH
RELIEF FROM CIRCUMVENTION INQUIRY
Invoking a “state of emergency”[1] based on “threats to the availability of sufficient electricity generation capacity,” President Biden directed the Secretary of Commerce to take appropriate action to permit the importation of certain solar cells and modules exported from the target countries “free of collection of duties and estimated duties,” including those that could be imposed as a result of the circumvention investigation.[2] This relief is in effect until 24 months after the date of the proclamation (June 6, 2024) or until the emergency declared by the President is terminated, whichever is sooner. Commerce will issue regulations to implement this duty relief.[3]
Commerce noted that the President’s decision means that CSPVs from the target countries will not be subject to any new antidumping or countervailing duties during this 24-month period. The President also expressed his commitment to the independence of the investigation carried out by Commerce, and Commerce has indicated that it intends to continue the circumvention inquiry “uninterrupted” and will apply the results of the inquiry “once this short-term emergency period is over.”[4]
Ultimately, the takeaway here is that the circumvention inquiry will continue. However, if Commerce were to reach an affirmative circumvention determination, imports of CSPVs from the target countries would not be subject to increased duties based on that decision until June 6, 2024, or whenever the President determines that the emergency is over. If Commerce were to reach a negative determination, then no duties would be imposed on imports of CSPVs from the target countries after the end of the temporary relief period.
The announcement is a much-needed reprieve to the solar industry that was experiencing canceled projects and layoffs because of the uncertainty caused by the initiation of the circumvention inquiry.
INCREASING DOMESTIC PRODUCTION CAPABILITY AND DEMAND FOR SUCH PRODUCTS
To boost US production of CSPVs, President Biden is also invoking the Defense Production Act (DPA)[5] to accelerate domestic production of CSPVs.[6] This may provide opportunities for a variety of federal incentives for CSPV production.
Additionally, the President announced that he is using the federal government’s purchasing power to help support CSPV manufacturing. His announcement noted that this will include the following:
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Master Supply Agreements for domestically manufactured solar systems to increase the speed and efficiency with which domestic clean electricity providers can sell their products to the US government; and
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So-called “Super Preferences” to apply domestic content standards for federal procurement of solar systems, including domestically manufactured solar photovoltaic components, consistent with the Buy American Act.
The pending circumvention inquiry will also presumably help spur domestic production of CSPVs as the solar industry does not want to face the same disruption wrought by the initiation of the circumvention inquiry at the end of the temporary relief period. The President stated that these moves are intended to stimulate domestic production of CSPVs, setting a goal of 15 gigawatts in increased domestic capacity by the end of his first term.
ENDNOTES
[1] 19 U.S.C. § 1318(a).
[2] White House Briefing Room, Declaration of Emergency and Authorization for Temporary Extension of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia (June 6, 2022)
[3] US Department of Commerce, Department of Commerce Statement on President Biden’s Proclamation on Solar Cells and Modules (June 6, 2022).
[4] Id.
[5] 50 U.S.C. § 4533.
[6] White House Briefing Room, Memorandum on Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended, on Solar Photovoltaic Modules and Module Components (June 6, 2022).
