Global Project Finance > Tax Equity Telegraph > DOJ Moves to Dismiss SolarCity’s Cash Grant Case

DOJ Moves to Dismiss SolarCity’s Cash Grant Case

02 Jun '13

The Department of Justice (DOJ) filed a motion for the Court of Federal Claims to dismiss SolarCity’s1 case against Treasury with respect to the administration of the 1603 Cash Grant program. DOJ’s brief in support of its motion is available here.  

DOJ’s grounds for dismissal are that the Court of Federal Claims has a specific jurisdiction to hear patent and copyright cases, government contract cases and claims for payments from the federal government (including tax refund cases)2 while SolarCity alleges that Treasury’s administration of Cash Grant program violated the 1603 statute. 

Further, DOJ asserts that SolarCity is effectively seeking the court to review Treasury’s Cash Grant guidance for compliance with the Administrative Procedures Act, which is not within the jurisdiction of the Court of Federal Claims’. The Administrative Procedures Act is the federal statute that requires federal agencies to provide notice and an opportunity to comment before promulgating rules.3 Interestingly, the complaint does not actually reference the Administrative Procedure Act, probably because the plaintiffs’ counsel, Covington & Burling, was trying to avoid this jurisdictional issue.

It appears to me that if the Court of Federal Claims grants DOJ’s motion, then SolarCity will merely have to re-file the complaint. The named plaintiffs, special purpose affiliates of SolarCity, would file a shorter complaint requesting payment for the difference between the Cash Grant they applied for and the Cash Grants approved by Treasury; this is approximately $8 million in claims. Prevailing in such a case would provide a critical precedent for the rest of the renewables industry. Then SolarCity, in its own name, would file a complaint in Federal district court including allegations that Treasury’s guidance with respect to determining “basis” violates the 1603 statute and the Administrative Procedures Act, and that Treasury’s failure to process claims within 60-days violates the 1603 statute.  This procedural detour would be only a minor hindrance for this important litigation.

Here are some key excerpts from DOJ’s brief:

  • Taken as a whole, plaintiff’s complaint asks this Court to review the agency’s administration of a Federal program.  The Court should dismiss the complaint because review being sought exceeds this Court’s jurisdiction.
  • The Court should conclude that it does not have jurisdiction to consider plaintiffs’ claims, as they seek Administrative Procedures Act-like review of Treasury’s administration of the Section 1603 program … It is routinely acknowledged that this Court lacks jurisdiction to review agency decisions or actions.
  • To the extent a plaintiff seeks to challenge the reasonableness or substantive validity of the Government’s actions, the party may only pursue the case in the district courts, not in the Court of Federal Claims.
  • Absent express, statutory authorization, however, the Court does not have jurisdiction to review whether a Federal agency has exceeded its authority.  [The plaintiffs] ask the Court to review whether Treasury had “authority to promulgate or enforce” rules, which were, allegedly, “contrary to the plain language of Section 1603.”  The Court should dismiss such a request for lack of jurisdiction, because no express statutory grant or jurisdiction exists.
  • Certainly this Court does not have authority to invalidate an executive branch agency’s policies.
  • Plaintiffs’ alleged injuries to nonparties are beyond this Court’s jurisdiction.  Plaintiffs contend that Treasury’s approach … resulted in … payments arriving after the statute’s 60-day deadline.  Plaintiffs, however, do not allege any specific injury to themselves from this delay – as would be expected under a properly-pled claim for compensation.
  • Plaintiffs’ allegations regarding their still-pending applications further demonstrate that the complaint’s objective is not to seek unpaid monies under the program, but to have this Court review Treasury’s administration of the program in its entirety.  Such a review – much like a review of pending agency actions – is beyond this Court’s jurisdiction.
  • [T]he sum of the plaintiffs’ complaint is unmistakable – plaintiffs ask the Court to review Treasury’s management of the Section 1603 program.  Plaintiff’s request for damages is a small tail appended to a very large dog.  Because the requested review is beyond the Court’s jurisdiction, the Court should dismiss this complaint.

1 The named plaintiffs are actually Sequoia Pacific Solar I, LLC and Eiger Lease Co, LLC which are special purpose affiliates of SolarCity.

2 28 U.S.C. § 1491.

3  The fundamental purposes of the Administrative Procedures Act are (1) to require agencies to keep the public informed of their organization, procedures and rules; (2) to provide for public participation in the rulemaking process; (3) to establish uniform standards for the conduct of formal rulemaking and adjudication; (4) to define the scope of judicial review. Attorney General's Manual on the Administrative Procedure Act (1947).