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Invenergy v United States Section 1603 cash grant decisions

In these two court cases, parent company Invenergy, received cash outlays for two California projects, Bishop Hill and California Ridge. The funds were distributed, but the government later discoved that a portion of the grants were overpaid.A suit was filed by Invenergy to prohibit Treasury from taking any money back. In these final decisions, one for each project, the court ruled in favor of the Treasury. A protion of the decision(s) is provided below. The full decisions can be accessed by selecting the document icons on this page.

BACKGROUND

Under the American Recovery and Reinvestment Act of 2009 (ARRA), wind developers were entitled to take the investment tax credit (ITC) in lieu of the production tax credit (PTC) up to 30% of the capital cost of the project. ARRA also created the Section 1603 cash grant program that further permitted developers to receive the ITC as a direct cash outlay from the Department of Treasury. There were limited conditions on the grant, the main one being that the project had to be placed in service prior to the end of 2012. Not all capital costs were eligible for 1603 treatment. 

EXCERPT OF BISHOP HILL ENERGY DECISION

Plaintiff Bishop Hill Energy, LLC, filed a complaint alleging that the Department of Treasury reduced a Section 1603 cash grant improperly and that it is entitled to $12,707011 for the shortfall. Defendant contends that a sham transaction inflated the amount claimed in plaintiff’s application and subsequently filed a counterclaim to recover an overpayment of $4,380,039. We consolidated the cases and conducted trial from July 23 to July 26, 2018, in Washington, D.C.[1] 

We made the following relevant conclusions during the course of trial: (1) Section 1603 permits an applicant to include a “Development Fee”[2] as a part of a wind energy project’s cost basis; (2) Development Fees may increase the cash grant awarded by Treasury; (3) however, plaintiff did not  ubstantiate the $60 million Development Fee; and (4) plaintiff is not entitled to the claimed $12,707,011 cash grant.

CONCLUSION

We have seen no basis on which to award plaintiff an additional cash grant. Plaintiff did not quantify the development services and insufficient objective evidence to show the transaction is not a sham. Plaintiff also claims that a cash grant is due because Treasury approved full payments to other related entities. Not only is this a weak argument logically, plaintiff sued for additional money in this case and the court reviews these actions de novo. The lawsuit resulted in the discovery process that revealed the questionable origin of plaintiff’s claimed Development Fee. Therefore, plaintiff’s claim for reimbursement of an additional $12,707,011 cash grant is without merit. Plaintiff Bishop Hill’s complaint is DISMISSED; Defendant’s counterclaim is GRANTED. The Clerk of Court will enter judgment for defendant in the amount of $4,380,029. No costs. 

EXCERPT OF CALIFORNIA RIDGE WIND ENERGY DECISION

Plaintiff California Ridge Wind Energy, LLC, filed a complaint alleging that the Department of Treasury reduced a Section 1603 cash grant improperly and that it is entitled to $9,158,983 for the shortfall. Defendant contends that a sham transaction inflated the amount claimed in plaintiff’s application and subsequently filed a counterclaim to recover an overpayment of $5,635,537. We consolidated the cases and conducted trial from July 23 to July 26, 2018, in Washington, D.C.[1]

We made the following relevant conclusions during the course of trial: (1) Section 1603 permits an applicant to include a “Development Fee”[2] as a part of a wind energy project’s cost basis; (2) Development Fees may increase the cash grant awarded by Treasury; (3) however, plaintiff did not  substantiate the $60 million Development Fee; and (4) plaintiff is not entitled to the claimed $12,707,011 cash grant.

CONCLUSION

We have seen no basis on which to award plaintiff an additional cash grant. Plaintiff did not quantify the development services and insufficient objective evidence to show the transaction is not a sham. Plaintiff also claims that a cash grant is due because Treasury approved full payments to other related entities. Not only is this a weak argument logically, plaintiff sued for additional money in this case and the court reviews these actions de novo. The lawsuit resulted in the discovery process that revealed the questionable origin of plaintiff’s claimed Development Fee. Therefore, plaintiff’s claim for reimbursement of an additional $9,158,983 cash grant is without merit. Plaintiff California Ridge’s complaint is DISMISSED; Defendant’s counterclaim is GRANTED. The Clerk of Court will enter judgment for defendant in the amount of $5,635,537. No costs. 

Footnote [1] California Ridge Wind Energy, LLC v. United States, C/A 1:14-cv-00250-RHH; and Bishop Hill Energy, LLC v. United States, C/A 1:14-cv-00251-RHH. Plaintiffs California Ridge Wind Energy, LLC, and Bishop Hill Energy, LLC, are entities owned by a parent company, Invenergy Wind, LLC. The facts, with slight variations in dates and dollar amounts, the law, and the reasoning in this Opinion are the same in both cases.

Footnote [2] Cases arising under Section 1603 tend to focus on one element of the cost basis. This dispute arose over plaintiff’s calculation of a fee for development services.

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California Ridge V Us 1603

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Bishop Hill Wind V Us 1603

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Source: https://ecf.cofc.uscourts.g...

JUN 20 2019
http://www.windaction.org/posts/49957-invenergy-v-united-states-section-1603-cash-grant-decisions
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