By: Clare Frederick and Jason Engel
According to the joint EPO-IEA report summarizing patent trends in the hydrogen economy (summarized here), technologies related to storage, distribution, and transportation of hydrogen are among the most critical challenges for large-scale deployment. Standardized infrastructure for hydrogen trade is essential to allow the market to function and flow.
Read MoreA Supplement to The H2 Handbook, United States
Risk in the hydrogen industry spans multiple areas, from feedstock and power supply to offtake and transportation. Understanding the regulatory, tax, and practical considerations of hydrogen projects, particularly green hydrogen, is essential for formulating an investment strategy for renewable hydrogen.
Read MoreOn June 6, 2022, President Biden issued a declaration of emergency and authorization for temporary extensions of time and duty-free importation of solar cells and modules from SE Asia under 19 USC 1318(a). The basis for the declaration of emergency is the need to ensure electric resource adequacy and address the unavailability of solar cells and modules that is jeopardizing new, planned solar installations.
In short, there is an emergency because the US is unable to import solar modules in sufficient quantities to ensure solar capacity additions necessary to achieve US climate and clean energy goals, ensure electricity grid resource adequacy, and help combat rising energy price.
Statutory authority. The statutory authority cited in the declaration (19 USC 1318(a)) is a catch-all provision that allows the president to authorize CBP to permit duty free entry of certain items if the president declares the existence of an emergency.
Specifically, the statute provides for “the importation free of duty of food, clothing, and medical, surgical, and other supplies for use in emergency relief work.” Expect arguments from stakeholders that solar products don’t fit within the list, but this law is about as good as gets if you want to find a way to stop the application of antidumping and/or countervailing duties (“ADCVDs”).
Here’s how this is going to work—
New Commerce regulation. Commerce likely will publish an interim final regulation – before the date of the preliminary determination in the solar circumvention proceedings – that will allow Commerce to instruct CBP to not collect duties on cells/modules from the four SE Asian countries for a period of 24 months (starting from the date of the proclamation). The new regulation will not apply to the current ADCVDs on imports of Chinese or Taiwanese solar cells/modules.
Current regulations (19 CFR Part 358) set forth the procedures for importation of supplies for use in emergency relief work free of ADCVDs, as authorized under 19 USC 1318(a). These regulations were published in 2006 (71 FR 63230 (October 30, 2006)).
Commerce will continue with the circumvention inquiries. Commerce officials put out a press release on June 6 clarifying that the agency will continue the ongoing circumvention inquiries. The release states that “whatever conclusion Commerce reaches when the [circumvention] investigation concludes will apply once this short-term emergency period [24 months] is over. In accordance with the President’s declaration, no solar cells or modules imported from Cambodia, Malaysia, Thailand, and Vietnam will be subject to new antidumping or countervailing duties during the period of the emergency. Existing duties on Chinese and Taiwanese imports of solar cells and modules remain in effect.”
Commerce could still go negative at the prelim or final. Commerce is proceeding with the circumvention inquiries related to imports of cells/modules from the four SE Asian countries. Commerce’s preliminary determination is due no later than August 29, 2022; Commerce’s final determination is due by January 26, 2023. Commerce could still issue a negative determination at the prelim or final stage of the circumvention inquiries.
What happens if Commerce goes affirmative? If Commerce goes affirmative, per its regulations it must direct CBP to suspend liquidation and require a cash deposit of estimated duties. Pursuant to the emergency declaration and new regulation, Commerce would have the authority to not follow its regulations. In other words, Commerce would instruct CBP to not suspend liquidation or collect cash deposits for imports of solar cells/modules from the four SE Asian countries.
What could go wrong with this plan? Possible risk is that an interested party to the circumvention inquiries (such as the domestic manufacturer that requested the inquiries) will sue on the new regulation and/or Commerce’s application of the current regulation (19 CFR Part 358), arguing duty free treatment of solar cells/modules is beyond the scope of products covered under the statute (19 USC 1318(a)). The litigation could take at least a couple years to play out.
If the plaintiff were to prevail (and assuming an affirmative final regarding circumvention), suspension of liquidation and estimated duty payments would kick in. It is unclear whether suspension/duty payments would be retroactive (ie, to date of affirmative preliminary determination) or prospective (eg, from the effective date of the final court decision). The latter seems more likely.
The bottom line. Implementation of the Declaration should provide a two year window during which developers and other solar system providers should be able to import panels from Cambodia, Malaysia, Thailand and Vietnam without the risk of retroactive tariffs.
Relevant documents
By: Ruta Skučas, Kimberly Frank, and Maeve Tibbetts
Originally posted on Law360 on January 3, 2022
2021 was a pivotal year for the Federal Energy Regulatory Commission‘s Office of Enforcement. Under the direction of Chairman Richard Glick, the office gained a new director, Janel Burdick, added threats to infrastructure as a new priority, and increased its pace of opening and closing investigations and reaching settlements.
Most significantly, Glick asserted at the presentation of the 2021 enforcement report that “the cop is back on the street,” and that he intends to ensure “vigorous oversight and enforcement” of jurisdictional markets.
Increased Investigations Under Chairman Glick
During the commission’s November 2020 open meeting, when the Office of Enforcement presented its 2020 annual report, then-Commissioner Glick criticized the commission’s enforcement efforts, which he perceived as lacking. In 2020, the commission opened only six new investigations, and reached three settlements totaling $553,376.
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U.S. Public Policy and Law Alert
By: David J. Raphael, Sandra E. Safro, Cliff L. Rothenstein, Dean Brower
On 19 January 2021, the eve of inauguration for the Biden Administration, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) struck down the Affordable Clean Energy Rule (ACE Rule). Issued under the Trump Administration’s Environmental Protection Agency (EPA), the ACE Rule repealed and replaced the formerly enacted Clean Power Plan (CPP) and sought to establish a more narrowly defined framework for the regulation of power plant greenhouse gas (GHG) emissions. As a premise for the ACE Rule, the Trump EPA argued that Section 111 of the Clean Air Act (CAA), codified at 42 U.S.C. § 7411, contains clear and unambiguous language limiting the EPA’s emission reduction measures to improvements “at” and “to” existing GHG emissions sources. However, the D.C. Circuit held that the CAA does not require the EPA to confine its GHG regulation in this way and, in fact, that the Trump EPA’s interpretation under the ACE Rule constituted a “fundamental misconstruction” of the statute. The D.C. Circuit also found that the ACE Rule’s extended compliance deadline requirements were arbitrary and capricious insofar as they relaxed the schedules for federal action and state compliance under Section 7411(d). The D.C. Circuit’s decision clears the way for the Biden EPA to establish a new regulatory framework for power plant GHG emissions.
By: Elizabeth C. Crouse, Aaron 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.
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There is a lot of buzz around clean technology, distributed energy resources (DERs), microgrids, and other technological innovations in renewable energy and clean transport industries. As these innovations develop, energy markets will undergo substantial changes to which consumers and industry participants alike will need to adapt and leverage. Every other week, K&L Gates’ The Energizer will highlight emerging issues or stories relating to the use of DERs, energy storage, emerging technologies, hydrogen, and other innovations driving the energy industry forward.
IN THIS ISSUE:
By: David Wochner, Sandra Safro, Jennifer Bruneau Abbey, and Michael O’Neill
Members of our global Hydrogen team discuss three issues that need resolving around blending hydrogen gas into the natural gas stream, which could allow the U.S. energy industry to leverage existing natural gas pipelines and increase renewable energy output.
Hydrogen is on the rise as a major energy source and has the potential to play a significant role in reducing carbon emissions and slowing climate change. Like other sources of energy, commercial-scale hydrogen will require clear, informed, and transparent regulatory regimes at the local, national, and international levels. These regimes will need to balance hydrogen’s unique features and a desire to build out a robust hydrogen infrastructure that facilitates the penetration of hydrogen as a major global energy source.
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