Treasury Cash Grants

Treasury Cash Grants

February 02, 2013

Treasury cash grants are at issue in two more lawsuits.

W.E. Partners, LLC sued the US Treasury in the US claims court on January 22 in connection with the so-called section 1603 program under which owners of new renewable energy projects are paid 30% of the project cost by the Treasury in cash.

There are now five pending lawsuits under the program.

W.E. Partners built a small biomass-fired cogeneration facility to supply steam and electricity to a Perdue chicken rendering plant in North Carolina. The cogeneration facility cost $9 million and has the capacity to generate 495 kilowatts of electricity and 63,000 pounds per hour of steam.

The Treasury paid a grant of only $943,754 on the facility rather than the $2,711,331 the company was seeking.

The Treasury position in the past has been that the owner of a facility that uses biomass to generate both steam for industrial use and electricity is entitled to only a partial grant. The grant is a fraction of the full grant, with the fraction equal to the electricity as a percentage of total useful energy output. The legal basis for the position is unclear.

W.E. Partners argues that the steam should be ignored because all the steam passes first through the steam turbine to generate electricity before any of it is put to use by Perdue as steam.

Another developer, Nevada Controls LLC, sued the US Treasury in the US claims court on December 7.

Nevada Controls misread an email from the National Renewable Energy Laboratory, which reviews cash grant program applications under contract to the Treasury, in June 2010 to suggest that it did not have to file preliminary applications by September 30, 2012 for its remaining projects that were not yet in service.

The company submitted a preliminary grant application in early June 2010 for a small hydro project that the company said it expected to place in service the same month. Developers were obligated at the time to let the Treasury know of any remaining claims on the grant program by September 30, 2010. Projects put in service after 2010 qualified for grants only if they were under construction by December 2010.
Congress later extended these deadlines.

NREL wrote back that that there was no need to file a preliminary grant application for such a project. “Given the proximity in time between your application and the date you expect to place the property in service, a deter-mination of whether you have met the begun construction requirements would not serve any purpose and could delay a final determination with respect to your property once it is placed in service.” It asked the company to withdraw the application.

The company read the email to suggest it did not have to file preliminary applications for any of its projects.

It said it lost grants of $553,716 on four small wind turbines it placed in service in October 2012 and a small hydro project that it expects to complete in March 2013 due to the “US Treasury’s direction not to file” preliminary applications. Preliminary applications had to be filed for these projects by September 30, 2011.