Category: The Americas

White House Chooses Exclusion of Silica-Based Products Produced Using Forced Labor, Impacting Solar PVs
D.C. Circuit Affirms That Offshore Wind Lease Does Not Trigger NEPA Review
We Have ESG Down to the Letter
What a Clean Future Means For Maritime
Case Notes: Brazos Electric’s Bankruptcy Filing
Washington State Legislature Considers First of Its Kind State-Level Natural Gas Ban
Distinguished Speaker Series with FERC Commissioner Neil Chatterjee
The Service’s CO-Balancing Act: Final Carbon Capture Credit Regulations Target Broad Taxpayer Implementation and Administrability
The Sun Also Rises: Congress Votes to Stimulate the Renewable Energy, Efficiency, Carbon Capture, and Storage Industries


By: Stacy J. Ettinger


On September 29, 2021, Commerce determined to delay a decision on initiation in the solar circumvention inquiries. Commerce instead asked the US solar manufacturers – A-SMACC (the so-called American Solar Manufacturers Against Chinese Circumvention) – for additional information. In particular, Commerce requested additional information related to why the A-SMACC companies have requested anonymity in the circumvention proceeding. Commerce also requested information regarding the A-SMACC companies’ ties to business interests in China or Southeast Asian countries.

At the request of A-SMACC,  Commerce extended the deadline for A-SMACC’s response to the additional questions until October 13. Commerce regulations permit other interested parties to file comments on A-SMACC’s response within seven days.

Commerce has indicated it will make its decision on initiation within 45 days of A-SMACC filing its response to Commerce’s questions. Assuming A-SMACC files on October 13, Commerce’s decision on initiation would be due on or by November 27. If Commerce initiates on November 27, the final results of the full investigation would be due on or by September 23, 2022.

Note that the new Commerce initiation deadline is just past the date the US International Trade Commission is expected to make its decision on the solar safeguard/201 extension (November 24, 2021).

Senate letter. On September 29 (around the time Commerce was initially set to issue its initiation determinations) twelve Senators sent a letter to the Commerce Secretary Raimondo expressing concerns regarding the anonymous petitions alleging illegal trade activity filed with the Department that would have “a devastating impact on the US solar industry and American solar jobs.” The Senators urged Commerce to “carefully assess the validity” of the petitions.

Background. On August 16, US solar manufacturers (the so-called American Solar Manufacturers Against Chinese Circumvention) requested that Commerce launch a circumvention inquiry on imports of solar products produced in Chinese-owned factories in Malaysia, Vietnam and Thailand. If Commerce initiates on November 27, the final results of the full investigation would be due around by September 23, 2022.

A wide range of interested parties have filed comments on A-SMACC’s initial anti-circumvention inquiry request. The parties have raised factual and legal issues related to whether A-SMACC’s inquiry provides sufficient justification for initiation. The parties have also made economic and policy arguments regarding the negative impact if Commerce were to initiate.

In particular, the interested parties argue that initiation of the circumvention inquiry would disrupt solar imports as companies park panels/modules offshore. They also argue that initiation would  undermine the Biden Administration’s push for expansion of US solar installation and capacity. In addition, nearly 200 companies involved in the solar industry, along with solar industry groups, have warned that imposition of tariffs on imported panels/modules from Malaysia, Vietnam and Thailand would devastate the industry and threaten US jobs.

The circumvention action is tied to the AD/CVD orders on Chinese CSPV cells. The petitioners in the circumvention case are arguing that imports of solar panels/modules produced in Chinese-owned factories in Malaysia, Vietnam and Thailand, with Chinese wafers and other Chinese components, should be subject to current antidumping and countervailing duty orders on Chinese cells/modules.

Commerce (or CBP) could act to make the circumvention findings retroactive, which means there is the potential that importers could be on the hook for payment of additional duties on previous imports.


On October 8, USTR published notice that it will consider requests to reinstate previously-granted China 301 tariff exclusions. The catch is: (1) only previously-granted exclusions that were subsequently extended through the end of 2020 are up for consideration; and (2) the reinstated exclusions would only apply to merchandise entered into the US on or after October 12, 2021 (the date USTR opens the public docket for filing reinstatement requests).

USTR intends to evaluate the possible reinstatement of each exclusion on a case-by-case basis. The public docket opens on October 12, 2021. The deadline for filing comments is December 1, 2021. Parties seeking to comment on more than one exclusion must submit a separate comment for each exclusion.

USTR has provided a list of the 549 previously-extended product exclusions up for consideration, on its website.[1] In addition, comments need to be filed using the form provided by USTR on its website.[2] The form contains specific requests for information regarding the company, many of which will look familiar from the original exclusion and exclusion extension process.   

A key factor in USTR’s evaluation will be whether the particular product remains available only from China. USTR is requesting that commenters address the following issues—

  • Whether the particular product and/or a comparable product is available from sources in the United States and/or in third countries.
  • Any changes in the global supply chain since September 2018 with respect to the particular product or any other relevant industry developments.
  • The efforts, if any, the importers or US purchasers have undertaken since September 2018 to source the product from the United States or third countries.
  • Domestic capacity for producing the product in the United States.

In addition, USTR will consider—

  • Whether or not reinstating the exclusion will impact or result in severe economic harm to the commenter or other US interests, including the impact on small businesses, employment,  manufacturing output, and critical supply chains in the United States, and
  • The overall impact of the exclusions on the goal of obtaining the elimination of China’s acts, policies, and practices covered in the section 301 investigation.

Exclusion track record. From 2018 to 2020, US stakeholders submitted about 53,000 exclusion requests to USTR for specific products covered by the section 301 China tariffs. A US Government Accountability Office report found that the agency denied 46,000 of those requests (87 percent) while approving about 2,200. Of the approvals, just 549 saw their tariff breaks extended – and it is these 549 previously-extended product exclusions that are up for consideration and possible reinstatement.

[1] 301 China Request for Comments/Annex of Previously Extended Exclusions for Website.pdf.

[2] 301 China Request for Comments/Facsimile of Data Requested.pdf.

White House Chooses Exclusion of Silica-Based Products Produced Using Forced Labor, Impacting Solar PVs

By: Stacy J. Ettinger, Amy L. Groff, William D. Semins, Caitlin C. Blanche, Coleman Wombwell, Elizabeth C. Crouse

Today, the White House announced that Customs and Border Protection (CBP) has issued a withhold release order (the Order) on products manufactured using silica-based products produced by Hoshine Silicon Industry Co., Ltd., and its subsidiaries (“Hoshine”), which are purportedly the world’s largest metallurgical-grade silicon producers. Hoshine has been linked to forced labor in the Xinjiang province of the People’s Republic of China (the PRC). The Order covers silica-based products and materials or goods derived from or produced using those silica-based products. Thus, CBP may use the Order to seize or exclude a variety of products, including solar photovoltaic panels.

D.C. Circuit Affirms That Offshore Wind Lease Does Not Trigger NEPA Review

By: J. Timothy HobbsAnkur K. TohanRobert M. SmithDavid L. WochnerNatalie J. Reid

The Bureau of Ocean Energy Management (BOEM) does not need to conduct full environmental reviews under the National Environmental Policy Act (NEPA) when granting an offshore wind farm lease, the D.C. Circuit Court of Appeals has affirmed. The decision followed a lawsuit by commercial fishing organizations and seaside municipalities who claimed that BOEM violated NEPA and the Outer Continental Shelf Lands Act (OCSLA) when it auctioned an offshore lease to Equinor (formerly Statoil) without performing an environmental review of the anticipated windfarm project. The decision puts to rest the question of whether a mere lease sale may trigger extensive environmental review under NEPA, potentially streamlining the initial lease acquisition process, but also requiring the investment of significant funds before developers have cleared environmental review.

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What a Clean Future Means For Maritime

By: Brody GarlandCliff L. RothensteinLaurie B. PurpuroDarrell L. ConnerMark Ruge, and Elle M. Stuart

As the Biden Administration finds its stride in the first 100 days, we are starting to see movement on several of its key priorities. Chief among them: pivoting to a clean energy economy. A campaign that promised investments of up to $2 trillion in alternative energy saw progress this week, as House Democrats, led by Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ), Environment and Climate Change Subcommittee Chairman Paul Tonko (D-NY), and Energy Subcommittee Chairman Bobby Rush (D-IL), announced a down payment on those hopes with the introduction of the CLEAN Future Act. In our previous K&L Gates alert from January, our team discussed how the U.S. maritime industry should expect the issues of clean energy investment and climate resiliency to rise to the very top of the White House’s legislative agenda. This week’s rollout of the CLEAN Future Act further confirms the importance of these priorities, and the far-reaching implications of the reforms offered for the transportation and maritime sectors.

Case Notes: Brazos Electric’s Bankruptcy Filing

By: Michael B. Lubic and Sumner C. Fontaine

On 1 March 2021, Brazos Electric Power Cooperative, Inc. (“Brazos”) commenced a chapter 11 bankruptcy case in the United States Bankruptcy Court for the Southern District of Texas. Brazos is a Texas-based non-profit electric cooperative corporation that provides wholesale electricity to its members, which, in turn, provide retail electricity to Texas consumers.  Due to the freezing of essential electric generation and natural gas pipeline equipment during the historic winter storm that blanketed Texas in mid-February 2021 and the resulting spike in wholesale electricity prices, Brazos received approximately $2.1 billion in settlement charge invoices from the Electric Reliability Council of Texas (“ERCOT”).  These invoices, promptly issued during and immediately following the storm, required payment within a matter of days.  In a declaration accompanying the voluntary bankruptcy petition, Mr. Clifton Karnei, Brazos’ Executive Vice President and General Manager, described Brazos’ position following the sudden, dramatic spike in electricity costs as a “liquidity trap that [Brazos] cannot solve with its current balance sheet.” 

Brazos’ first-day pleadings explain that its financial position and need for bankruptcy protection directly result from the effects of February’s winter storm on Texas’ electricity market, specifically on the relationship between Brazos and ERCOT. ERCOT serves a clearinghouse role in one of Texas’ three main energy grids, the Texas Interconnection, which covers 213 of the 254 counties in the state, and is responsible for procuring energy on behalf of its members while also administering the reliable operation of the wholesale electricity market.  To buy and sell wholesale electricity, as Brazos does, ERCOT requires market participants to have sufficient available credit (calculated using a metric based on the participant’s credit limit plus a percentage of tangible net worth, among other factors) to support such participant’s total exposure.  The effects of February’s winter storm on the Texas power grid caused prices to spike to $9,000 per megawatt-hour. The cut-off cap was set on 16 February by ERCOT as demand soared while the state’s electricity supply declined.  For comparison, ERCOT’s monthly prices for wholesale electricity from November 2020 through January 2021 ranged between $21 to $29 per megawatt-hour.  On 16 February, and each of the succeeding three days, ERCOT made collateral calls to Brazos for hundreds of millions of dollars each day, for a total of approximately $1.5 billion in collateral calls.  Brazos filed a notice of force majeure on 25 February, informing ERCOT that it would not satisfy the invoices due to an event outside of Brazos’ reasonable control.  Brazos filed for bankruptcy protection less than one week later.

As of the petition date, Brazos estimates the total principal amount of its funded debt obligations to be approximately $2.04 billion, with $1.81 billion of such debt being secured promissory notes financed through the Federal Financing Bank.  Brazos has fully drawn its $500 million unsecured revolving facility with Bank of America, N.A. and other lenders.  Mr. Karnei states that Brazos’ goals in commencing the chapter 11 case are to preserve its ongoing business operations and propose a reorganization plan to maximize creditors’ recovery.  The first day hearing in front of Judge David Jones is scheduled for 3 March at 2:00 p.m. (EST).

Washington State Legislature Considers First of Its Kind State-Level Natural Gas Ban

By: David Benson, Buck Endemann, Elizabeth Thomas, Sandra Safro, and Benjamin Mayer

Fossil-based natural gas may be headed for a reckoning, at least in Washington State. Not long ago, natural gas was seen by many as the key “bridge fuel” necessary to transition our society away from oil and coal. Natural gas has its upsides; most significantly, it burns more efficiently and emits fewer pollutants than coal.1 Yet burning natural gas still emits greenhouse gases (GHG), including methane, a potent climate pollutant. According to EPA, methane accounts for approximately 10% of the GHG emissions in the United States.2 That is a problem for states like Washington that have called for zero carbon emissions in the power sector by 2045 and have also enacted laws aimed at reducing GHG emissions throughout other sectors.

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Distinguished Speaker Series with FERC Commissioner Neil Chatterjee

26 January 2021
3:00 p.m. – 4:00 p.m. ET

Please join K&L Gates for an open conversation with FERC Commissioner Neil Chatterjee, as we discuss energy market trends, infrastructure development, renewables, and the energy transition.

Commissioner Neil Chatterjee was nominated to the Federal Energy Regulatory Commission by President Donald J. Trump in May 2017 and confirmed by the U.S. Senate in August 2017. He served as Chairman from August 2017 to December 2017. He was again named Chairman on October 24, 2018, and served in that role through November 5, 2020.

Since joining the Commission, Chatterjee has championed strategic initiatives reflecting his firm commitment to ensuring that FERC regulations and actions reflect changes in today’s energy landscape. Additionally, Chatterjee has made energy infrastructure a top priority. 

Prior to his tenure at the Commission, Chatterjee served as an advisor to Senator Mitch McConnell (R-KY), where he played an integral role in the passage of major energy, highway and agriculture legislation. Chatterjee previously worked as a principal in government relations for the National Rural Electric Cooperative Association and as an aide to House Republican Conference Chairwoman Deborah Pryce (R-OH). He began his career in Washington, D.C., as a staff member on the House Committee on Ways and Means.

A native of Lexington, Kentucky, Chatterjee is a graduate of St. Lawrence University and the University of Cincinnati, College of Law. Chatterjee resides with his wife and three children in Virginia.

The program will be moderated by K&L Gates’ Policy & Regulatory Practice Area Leader, David Wochner, and Power Practice Group Coordinator, Elizabeth Crouse.

The Service’s CO-Balancing Act: Final Carbon Capture Credit Regulations Target Broad Taxpayer Implementation and Administrability

By: Elizabeth C. CrouseAaron C. Meyer, and Mary Burke Baker

Amid the headline-grabbing events of 6 January 2021, the U.S. Department of Treasury released final regulations under Code Section 45Q. Code Section 45Q provides for a U.S. federal income tax credit at varying rates to taxpayers that participate in various aspects of the process of sequestering carbon oxide and disposing of it in secure geologic storage, use it as a tertiary injectant in a qualified enhanced oil or natural gas recovery project, or utilize it in certain processes. 

The Sun Also Rises: Congress Votes to Stimulate the Renewable Energy, Efficiency, Carbon Capture, and Storage Industries

By: Elizabeth C. CrouseMary Burke BakerLaurie B. PurpuroElias B. Hinckley, and David P. Hattery

On 21 December 2020, the shortest day of the year in North America, the U.S. Congress passed a historic stimulus package. Among its more than 5000 pages, the bill includes important, if not quite historic, clean energy-related provisions ranging from new and extended tax incentives to government programs for research and development. Assuming the legislation becomes law, a new day for U.S. carbon capture, offshore wind, and many more renewable energy technologies may dawn.

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