Changzhou Trina Solar Energy Co., Ltd. v. United States ITC
879 F.3d 1377 (Fed. Cir. 2018)
Authored by John Nakoneczny
Statement of Facts: Changzhou Trina Solar Energy Co., Ltd. and Yingli Green Energy Holding Company, Ltd. are manufacturers of crystalline silicon photovoltaic cells, modules, laminates, and panels (CSPV products). Trina Solar (U.S.), Inc. and Yingli Green Energy Americas, Inc. imported these solar energy products into the United States. On October 19, 2011, SolarWorld Americas, Inc. petitioned the U.S. Department of Commerce seeking the imposition of antidumping duties under 19 U.S.C. §§ 1673–1673h, and of countervailing duties under 19 U.S.C. §§ 1671–1671h against the respective CSVP products, known as the subject imports.
Procedural History: The U.S. Department of Commerce (“Commerce”) found that the subject imports were being sold in the United States at less than fair value and were being unfairly subsidized by the Chinese Government. In turn, per statute, the International Trade Commission (“ITC”) then evaluated the relevant industry conditions and determined that “an industry in the United States [was] materially injured by reason of” the subject imports. Crystalline Silicon Photo-voltaic Cells and Modules from China, Inv. Nos. 701-TA-481 and 731-TA-1190), USITC Pub. 4360, at 3 (Nov. 2012) (Final) (ITC Final Decision). The Chinese manufacturers and the U.S. importers–collectively, the “Chinese Respondents”–appealed the ITC’s determination to the United States Court of International Trade. The Chinese Respondents argued that the ITC failed to properly find a causal connection between the unfairly priced or foreign government-subsidized subject imports and the domestic CSVP industry’s weakened state–a causal relationship identified as an industry being “materially injured by reason of” the imports. Changzhou Trina Solar Energy Co., Ltd. v. U.S. Int’l Trade Comm’n, 100 F. Supp. 3d 1314, 1331–32, 1349 (Ct. Int’l Trade 2015). The Court of International Trade rejected the challenge, sustaining the ITC’s determination. The Chinese Respondents timely appealed to the United States Court of Appeals for the Federal Circuit.
Questions Presented: First, what causal relationship must the International Trade Commission find to meet the “by reason of” standard for imposing duties on imports, as provided by the statutory language of 19 U.S.C. §§ 1673d(b)(1), 1671d(b)(1)? Second, did the International Trade Commission adequately address the causal relationship between the subject imports and a material injury to the domestic industry?
Holdings: First, the “by reason of” standard requires the finding of, at a minimum, a but-for causal relationship. The methodology of how the standard is applied by the International Trade Commission may vary based on the factual circumstances from case to case, but the standard itself will remain the same. Second, the Federal Circuit affirmed the International Trade Commission’s determination that the domestic industry was materially injured but-for the subject imports.
Reasoning: 19 U.S.C. §§ 1673d(b)(1), 1671d(b)(1) require that final determinations about the dumping of imports or the providing of countervailable subsidies by foreign governments, respectively, find a material injury to the relevant domestic industry “by reason of” a subject import. The Federal Circuit surveyed the case law regarding the meaning of this statutory phrase and found that it has a settled ordinary meaning. As recently as 2014, the Supreme Court of the United States acknowledged that the phrase requires, at a minimum, but-for causation. See Burrage v. United States, 134 S. Ct. 881, 889 (2014). At the Court of Appeals levels, several courts have recognized the Supreme Court’s interpretation that the phrase requires, at a minimum, but-for causation. The Federal Circuit acknowledged that Congress may use legal terms in novel ways; but, it is a common principle that when Congress uses a legal term without indication of an alternative meaning, then the well-settled common law meaning is presumed. See Sekhar v. United States, 133 S. Ct. 2720, 2724 (2013). Finally, the Federal Circuit noted that its own precedents regarding the “by reason of” standard in the context of import-dumping cases requires a but-for causal connection. See e.g., Mittal Steel Point Lisas Ltd. v. United States, 542 F.3d 867, 876 (Fed. Cir. 2008) (holding that the standard “requires the finder of fact to ask whether conditions would have been different for the domestic industry in the absence of dumping”).
The Federal Circuit recognized that how the but-for standard applies may vary with the facts. Pointing to its previous decision in Swiff-Train Co. v. United States, the court reiterated that “the [Federal Circuit] does not require the use of any particular model or methodology.” 793 F.3d 1355, 1361 (Fed. Cir. 2015). As the factual circumstances change from case to case, the International Trade Commission may choose to use a variety of approaches in determining whether the standard is met. Nonetheless, applying different methods of explanation to different sets of facts does not mean that a different standard is applied. The substance of the ITC’s analysis, rather than its formulation, is what determines whether the ITC has adequately answered the question of but for causation.
The Chinese Respondents argued that the ITC failed to adequately address the question of but-for causation between the subject imports and a material injury to the domestic industry, because it insufficiently accounted for certain facts about the marketplace during the period of investigation – January 2009 to June 2012. Specifically, the Chinese Respondents argued that the domestic industry would have been materially as badly off regardless of the unfairly priced and subsidized subject imports because of (1) the pressure CSVP sellers faced to lower prices in order to compete with the price at which utility companies could buy natural gas for power generation (i.e. “grid parity”); (2) the decline of Government subsidies for solar energy products which prevented sellers from offering lower prices; and, (3) the increase in demand in the utility segment of the market, as compared to other segments. Changzhou, 879 F.3d at 1384. The Federal Circuit reviewed the ITC’s findings, noting that they rested on various types of evidence. The court held that the ITC had addressed the three facts highlighted by the Chinese Respondents, and that it found that those facts did not entirely account for the industry’s weakened state. Instead, the ITC attributed a significant portion of the industry’s state to the subject imports because of “significant underselling of the domestic like product by subject imports from China . . . [that] enabled subject importers to gain market share at the expense of the domestic industry.” Crystalline Silicon Photo-voltaic Cells and Modules from China, Inv. Nos. 701-TA-481 and 731-TA-1190), USITC Pub. 4360, at 33 (Nov. 2012) (Final) (ITC Final Decision). By accounting for the facts highlighted by the Chinese Respondents and concluding that they did not account materially for all of the domestic industry’s weakening during the period of investigation, the ITC made the required analysis to determine a but-for causal relationship. The Federal Circuit saw no reason to deem the ITC’s factual findings insufficient under the substantial-evidence test. See Administrative Procedure Act, 5 U.S.C. § 706(2)(E).