Treasury Cash Grant Cases Move Forward

Treasury cash grant cases move forward

June 06, 2016 | By Keith Martin in Washington, DC

Treasury cash grant cases are now moving forward.

A trial in April before the US Federal Court of Claims about the basis that the US Treasury used to calculate section 1603 payments to the owners of a California wind farm could lead to a decision in the case as early as July. The case is being closely watched. The project was sold and leased back. The Treasury reduced the basis by almost 23% on grounds that part of the what the lessors paid should have been treated as basis in intangibles like going concern value. Treasury cash grants are paid only on equipment.

Thirty lawsuits have been filed against the US Treasury by companies that believe they should have been paid more money under the section 1603 program. Companies have up to six years after grants were paid to file suit.

Two of the lawsuits have been decided. The government won one and lost one. Both decisions have now been affirmed on appeal. The decision in the case won by the taxpayer – a fuel cell company called RPI Fuel Cell, LLC – was upheld in early April.

The Claims Court dismissed a case in late April that had been pending since 2012 after the lawyer for the company asked to withdraw because his client failed to respond to a request for a new engagement letter and retainer after the lawyer changed law firms. The company, Clean Fuel LLC, sued the Treasury after being denied grants on Cummins generators that it added at two existing biodiesel plants in Florida. The plants make biodiesel from waste soy, palm nuts and some waste animal fats. Clean Fuel bought them in early 2009 from the original owner and added the generators a year later to make electricity for use in the plants. Treasury appears to have denied grants on grounds that the company was asking for grants on used property.

Proceedings in the case had been on hold since June 2013 because of a pending criminal investigation against the company as well as 15 civil forfeiture proceedings filed in a federal district court in Florida. After the lawyer withdrew, the Claims Court dismissed the case “without prejudice,” meaning the company can refile.

The owner of 20 utility-scale solar projects in California asked a US appeals court in late April to look at whether the Treasury should be ordered to make full payment of grants on 15 of the projects. The solar company applied for $614.8 million in grants, but said it received only $360.5 million. The company asked a federal district court in July 2015 to order the Treasury to pay the difference. The court told the company in March that the case had to brought in the Claims Court. The company hired new counsel and is now appealing the district court decision rather than refiling the case in the Claims Court.