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Customs freezes solar shipment in forced-labor crackdown

Animated illustration of a siren flashing on top of a shipping container.

Illustration: Aïda Amer/Axios

U.S. solar developers, offtakers and shippers got a rough wake-up call this week when U.S. Customs and Border Protection detained a large shipment of material from a Tier 1 solar supplier.

Why it matters: The detention from a highly regarded Tier 1 supplier signals no one will escape scrutiny under the the Uyghur Forced Labor Prevention Act, which took effect last week.

  • It's sent shockwaves through a sector already roiled by supply chain disruptions, the Commerce Department's anti-dumping investigation, inflation, and labor shortages.

Driving the news: The investment bank Roth Capital Partners sent a note this week warning of "a new UFLPA detention of a large Tier 1" shipment of quartzite, the raw material for making polysilicon.

  • Details are scarce: CBP is typically cagey about such detentions, industry analysts tell Axios.
  • “Don’t have data yet on specific cases; needing to find out from the field,” a CBP spokesperson says.
  • The action would mark the first known detention under the UFLPA, analysts say.

Catch up fast: The law was signed by President Biden in December with near-unanimous support from Congress.

  • It declares that any materials, sourced in any way, from Xinjiang Province in China are assumed to be made with forced labor, unless importers can prove otherwise with "clear and convincing evidence."
  • The measure expands on so-called "Withhold Release Orders" issued by CBP last June. It's unclear just how many shipments CBP detained under those orders, but an analyst tells Axios that they amounted to "at least 140 MW" of material.

The intrigue: Homeland Security, CBP's parent agency, had previously issued an "Entity List" of companies that it said had produced goods with forced labor. It didn't include any Tier 1 suppliers — meaning this supplier wasn't on the list.

  • "That’s why this whole notification of this seizure has caused such impact," Sylvia Leyva Martinez, a senior research analyst at Wood Mackenzie, tells Axios.
  • In short: "All shipments are going to be evaluated to see if they contain any traces of forced labor," Levya Martinez says.

What's happening now: A lot of uncertainty.

  • With scant details from CBP, industry players are scrambling to figure out what exactly happened, why the shipment was detained, who's impacted — and even that the detention occurred at all.
  • One common theory: CBP is stepping up enforcement by simply demanding more paperwork.
  • "One thing that they could do, to make this a bigger crackdown, would be to ask for more substantial documentation," Christian Roselund, a senior policy analyst at Clean Energy Associates, tells Axios.

What's next: "More delays and uncertainty," Keith Martin, U.S. co-head of projects at Norton Rose Fulbright, tells Axios.

  • Under the Withhold Release Orders, shipments were detained as long as eight months. Under the UFLPA, importers have just 30 days to challenge the detention.
  • That could be a big problem, Nick Baker, senior director in the export controls practice at FTI Consulting, tells Axios: "Most importers are not in a position to provide that information, let alone within the 30-day timeline.”
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