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Sunpreme Inc. v. United States

United States Court of Appeals, Federal Circuit

January 7, 2020

SUNPREME INC., Plaintiff-Appellant
v.
UNITED STATES, SOLARWORLD AMERICAS, INC., Defendants-Cross-Appellants

          Appeals from the United States Court of International Trade in No. 1:16-cv-00171-CRK, Judge Claire R. Kelly.

          John M. Gurley, Arent Fox, LLP, Washington, DC, for plaintiff-appellant. Also represented by Diana Dimitriuc Quaia, Nancy Noonan.

          Justin Reinhart Miller, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice, New York, NY, for defendant-cross-appellant United States. Also represented by Reginald Thomas Blades, Jr., Jeanne Davidson, Joseph H. Hunt, Washington, DC; Mercedes Morno, United States Department of Commerce, Washington, DC.

          Timothy C. Brightbill, Wiley Rein, LLP, Washington, DC, for defendant-cross-appellant SolarWorld Americas, Inc. Also represented by Tessa V. Capeloto, Laura El-Sabaawi, Usha Neelakantan, Maureen E. Thorson.

          Before Prost, Chief Judge, Newman, Lourie, Dyk, Moore, O'Malley, Reyna, Taranto, Chen, Hughes, and Stoll, Circuit Judges. [*]

          Newman, Lourie, Dyk, Moore, O'Malley, Reyna, Taranto, Chen, Hughes, and Stoll, join.

          OPINION

          Prost, Chief Judge.

         Sunpreme Inc. appeals from the final decision of the United States Court of International Trade in favor of the United States and SolarWorld Americas, Inc., concluding that Sunpreme's solar modules are covered by the scope of antidumping and countervailing duty orders on U.S. imports of certain solar cells from the People's Republic of China. The United States and SolarWorld cross-appeal from the same decision, which also concluded that the United States Department of Commerce ("Commerce") could not instruct United States Customs and Border Protection ("Customs") to continue suspending liquidation of Sunpreme's solar modules entered or withdrawn from warehouse for consumption before the scope inquiry was initiated.

         A unanimous panel of this court previously affirmed the portion of the Court of International Trade's decision upholding Commerce's scope ruling. Sunpreme Inc. v. United States, 924 F.3d 1198, 1212 (Fed. Cir. 2019) ("Panel Opinion"). A majority of that panel, addressing the cross-appeal brought by the United States and SolarWorld, also affirmed the Court of International Trade's conclusion that Commerce's instructions to continue suspending liquidation of goods entered or withdrawn prior to the scope inquiry were unlawful. Id. at 1215.

         The United States petitioned for en banc rehearing of its cross-appeal. We now grant that petition to resolve whether it is within Customs's authority to preliminarily suspend liquidation of goods based on an ambiguous antidumping or countervailing duty order, such that the suspension may be continued following a scope inquiry by Commerce. We conclude that it is.

         Because we find that Commerce's instructions regarding continued suspension of liquidation were lawful and not reliant on ultra vires acts of Customs, we grant rehearing en banc limited to that issue, vacate the original panel opinion, and reverse that portion of the Court of International Trade's decision. Commerce's instructions are reinstated in full.

         Although the original panel opinion is vacated due to our en banc consideration of the United States's cross-appeal, we reinstate the remaining portions of the panel opinion, including the affirmance of the Court of International Trade's conclusion that Commerce's final scope ruling is supported by substantial evidence. For the sake of completeness, the undisturbed portions of the panel opinion are reproduced below.[1]

         Background

         I

         Solar modules convert sunlight into electricity. Many solar modules are composed of crystalline silicon photovoltaic ("CSPV") cells. Those modules contain crystalline silicon wafers that are processed in the presence of other chemicals so that one portion of the wafer has a negative charge (i.e., an n-type layer with excess electrons) and another portion has a positive charge (i.e., a p-type layer with excess electron holes). The existence of the positive and negative layers in a single wafer creates what is known in the industry as a "p/n junction." J.A. 325, 466, 546, 2719. A built-in electric field is created at and around the site of the p/n junction due to the electric charge differential. When sunlight strikes a CSPV cell, the light energy is absorbed, free electrons in the n-type layer attempt to unite with holes in the p-type layer at and around the p/n junction, and the resulting energy generated by the mobilized electrons is translated into usable electricity.

         Other solar modules are composed of thin films. Those modules contain very slim layers of semiconductor material, such as amorphous silicon, deposited on a substrate of some sort, such as glass, stainless steel, or plastic. Some of the layers are doped with chemicals that create an excess of electron-donating impurities (i.e., n-type layers), while other layers are doped with chemicals that create an excess of hole-donating impurities (i.e., p-type layers). When the n-type and p-type layers are put in contact, they form a p/n junction, and a built-in electric field is created. The imposition of an additional semiconductor substrate (i.e., intrinsic layer) between the doped thin film layers forms what is known as a "p/i/n junction." J.A. 531, 546. With respect to p/i/n junctions, the electric field extends across the entire intrinsic region.

         In 2011, SolarWorld filed a petition with Commerce and the United States International Trade Commission ("ITC") seeking the imposition of antidumping and countervailing duties on CSPV cells imported from the People's Republic of China, pursuant to §§ 701 and 731 of the Tariff Act of 1930. In 2012, following an investigation, Commerce issued antidumping and countervailing duty orders covering those imports. Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People's Republic of China: Countervailing Duty Order ("CVD Order"), 77 Fed. Reg. 73, 017 (Dec. 7, 2012); Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People's Republic of China: Amended Final Determination of Sales at Less Than Fair Value, and Antidumping Duty Order ("AD Order"), 77 Fed. Reg. 73, 018 (Dec. 7, 2012). Both orders recite the same scope, which reads in relevant part as follows:

The merchandise covered by this order is crystalline silicon photovoltaic cells, and modules, laminates, and panels, consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products, including, but not limited to, modules, laminates, panels and building integrated materials.
This order covers crystalline silicon photovoltaic cells of thickness equal to or greater than 20 micrometers, having a p/n junction formed by any means, whether or not the cell has undergone other processing, including, but not limited to, cleaning, etching, coating, and/or addition of materials (including, but not limited to, metallization and conductor patterns) to collect and forward the electricity that is generated by the cell.
Excluded from the scope of this order are thin film photovoltaic products produced from amorphous silicon (a-Si), cadmium telluride (CdTe), or copper indium gallium selenide (CIGS).

         CVD Order, 77 Fed. Reg. at 73, 017; AD Order, 77 Fed. Reg. at 73, 018-19. Commerce notified Customs of the AD and CVD Orders ("the Orders") and required cash deposits or posting of a bond equal to the appropriate rate in effect at the time of entry for covered imports.

         Sunpreme manufactures solar modules in China. Those modules contain bifacial solar cells that are composed of thin films, which are several layers of amorphous silicon less than one micron thick, deposited on both sides of a crystalline silicon wafer. Following publication of the Orders on December 2, 2012, Sunpreme entered its merchandise as entry type "01," meaning not subject to the Orders, and continued to do so without question from Customs until early 2015, when, for unknown reasons, Customs began to question whether Sunpreme's entries were covered by the Orders. Initially unsure whether the Orders covered Sunpreme's entries, Customs sought advice from one of its laboratories. On April 20, 2015, Customs notified Sunpreme that it had decided that Sunpreme's entries are covered by the Orders, thus resulting in the suspension of liquidation of Sunpreme's entries and the requirement that Sunpreme pay cash deposits in order for its shipments to be released from the port's warehouse. Although it objected to Customs' determination, Sunpreme complied.

         Meanwhile, Customs continued to question whether Sunpreme's solar modules unambiguously fell within the scope of the Orders. On June 3, 2015, Customs contacted Commerce seeking guidance on whether Sunpreme's products were covered by the Orders. Commerce answered that

a determination as to whether this product is covered by antidumping duty order A-570-979 and countervailing duty order C-570-980 [i.e., the Orders] would need to be made by the Department of Commerce in a scope ruling which can be requested by the importer or exporter.

Sunpreme Inc. v. United States ("Sunpreme I CIT"), 190 F.Supp.3d 1185, 1191-92, 1199 (Ct. Int'l Trade 2016).

         In a separate proceeding, Sunpreme filed a complaint with the United States Court of International Trade ("CIT") under 28 U.S.C. § 1581(i), directly challenging Customs' determination that Sunpreme's solar modules are subject to the Orders. Sunpreme Inc. v. United States ("Sunpreme I PI"), 145 F.Supp.3d 1271, 1282 (Ct. Int'l Trade 2016) (opinion granting preliminary injunction). In its final decision, the CIT found it undisputed that Sunpreme's solar modules contain layers of thin film, but that Customs' laboratory tests confirmed those modules also contain crystalline silicon. Sunpreme I CIT, 190 F.Supp.3d at 1191, 1195-96. The CIT noted that, although the Orders expressly include "crystalline silicon photovoltaic cells" within their scope and expressly exclude "thin film photovoltaic products" from their scope, the Orders do not define the term thin film products. Id. at 1190, 1195, 1200. That led the CIT to characterize the scope language in the Orders as ambiguous with respect to Sunpreme's solar modules. Id. at 1203. The CIT concluded, based on our decisions in AMS Associates, Inc. v. United States, 737 F.3d 1338 (Fed. Cir. 2013), and Xerox Corp. v. United States, 289 F.3d 792 (Fed. Cir. 2002), that Customs lacked authority to interpret the scope of Commerce's ambiguous Orders, and thus Customs could not determine that Sunpreme's solar modules are subject to those duty orders. Sunpreme I CIT, 190 F.Supp.3d at 1202-04; accord Sunpreme I PI, 145 F.Supp.3d at 1283-92. We reversed on appeal because, under the circumstances presented, the CIT lacked jurisdiction under 28 U.S.C. § 1581(i) to entertain direct challenges to Customs' decision given that an alternative administrative remedy was available. See Sunpreme, Inc. v. United States ("Sunpreme I"), 892 F.3d 1186, 1192-94 (Fed. Cir. 2018) ("Section 1581(i) 'may not be invoked when jurisdiction under another subsection of § 1581 is or could have been available, unless the remedy provided under that other subsection would be manifestly inadequate.'" (quoting Int'l Custom Prods., Inc. v. United States, 467 F.3d 1324, 1327 (Fed. Cir. 2006))). That remedy was a scope ruling from Commerce interpreting the scope of the duty orders. Id.

         II

         A

         On November 16, 2015, Sunpreme petitioned Commerce for a scope ruling to determine whether its solar modules are subject to the Orders. Sunpreme contended that the Orders do not cover its solar modules because they do not contain CSPV cells, they do not have a p/n junction, and they otherwise qualify for the Orders' exclusion because they are thin film products. On December 30, 2015, Commerce initiated a formal scope inquiry.

         B

         After the scope inquiry was initiated, but before a final ruling was made, Commerce issued a scope ruling in a separate proceeding deciding that Silveo, Inc.'s Triex photovoltaic cells are subject to the Orders. Like Sunpreme's solar modules, the Triex cells also contain a crystalline silicon substrate sandwiched between layers of amorphous silicon thin films.

         Commerce's regulations at 19 C.F.R. § 351.225(k) establish its analytical path for deciding whether certain imports are covered by the scope of an antidumping or countervailing duty order. See Shenyang Yuanda Aluminum Indus. Eng'g Co. v. United States, 776 F.3d 1351, 1354 (Fed. Cir. 2015). Commerce first examines the sources listed under § 351.225(k)(1), which include "the scope language contained in the order itself, the descriptions contained in the petition, and how the scope was defined in the investigation and in the determinations issued by Commerce and the ITC." Id. Those are known as the (k)(1) sources. If those sources are not sufficient to decide the matter, then Commerce turns to examining the sources listed under § 351.225(k)(2), which include the product's physical characteristics, ultimate purchasers' expectations, the ultimate use of the product, trade channels in which the product is sold, and the manner in which the product is advertised and displayed. Id. Those are known as the (k)(2) sources.

         Commerce determined that the (k)(1) sources were not dispositive as to whether the Triex cells fell within the scope of the Orders. It said the language of the Orders was ambiguous and the other sources did not resolve whether p/i/n junctions qualify as p/n junctions or whether products containing both thin films and crystalline silicon components qualify for the thin film exclusion. Commerce correctly concluded that the hybrid Triex cells "are neither dispositively covered nor clearly excluded from the scope of the Orders." J.A. 884.

         Commerce then concluded that, based on (k)(2) sources, the Triex cells are covered by the Orders. It said the Triex cells contain a p/n junction formed by any means because "a p/i/n junction is simply a type of p/n junction" in which the electric field is extended over a wider region of the cell. J.A. 870-71 (internal quotation marks omitted). It concluded the presence of an intrinsic layer does not change the function of the p/n junction. Moreover, Commerce explained that conventional thin film cells were designed to avoid the use of crystalline silicon, and thus allowing products using crystalline silicon as an active, energy-producing component to qualify for the thin film exclusion "would result in a physical description that would easily permit circumvention of the scope of the Orders." J.A. 871-72.

         Commerce placed the Triex scope ruling on the record in the Sunpreme proceeding so that interested parties could comment on any relevant distinctions between ...


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