solarcity v usa - usa motion to dismiss

7/28/2019 SolarCity v USA - USA Motion to Dismiss

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No. 13-139C

(Judge Bruggink)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

SEQUOIA PACIFIC SOLAR I, LLC,

and EIGER LEASE CO, LLC

Plaintiffs,

v.

THE UNITED STATES,

Defendant.

DEFENDANTS MOTION TO DISMISS PLAINTIFFS COMPLAINT

May 29, 2013

STUART F. DELERYActing Assistant Attorney General

JEANNE E. DAVIDSON

Director

BRYANT G. SNEE

Deputy Director

KENNETH M. DINTZER

Assistant Director

Civil Division

Commercial Litigation Branch

United States Department of JusticeP.O. Box 480

Ben Franklin StationWashington, D.C. 20044

Tel.: (202) 616-0385

[email protected]

Attorneys for Defendant

Case 1:13-cv-00139-EGB Document 10 Filed 05/29/13 Page 1 of 15


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TABLE OF CONTENTS

ISSUE PRESENTED .......................................................................................................................1

INTRODUCTION ...........................................................................................................................2

STATEMENT OF FACTS ..............................................................................................................2

ARGUMENT ...................................................................................................................................3

I. This Court Should Dismiss Plaintiffs Complaint For Lack Of Subject Matter

Jurisdiction ................................................................................................................3

A. Standard Of Review .....................................................................................3

B. This Court Lacks Jurisdiction Over Plaintiffs Complaint ..........................4

1. No APA Review In This Court ........................................................4

2. Plaintiffs Allege That Treasurys Administration Of The

Section 1603 Program Violated The Agencys Statutory

Mandate And Authority ...................................................................5

a. Allegations That Treasury Exceeded its Statutory

Authority Fall Beyond This Courts Jurisdiction.................5

b. Allegations That Treasurys Guidance Conflicts WithThe Agencys Statutory Authority Are Beyond This

Courts Jurisdiction ..............................................................8

c. Allegations Regarding Nonplaintiff Injuries Fall

Beyond This Courts Jurisdiction ........................................9

3. This Court Lacks Jurisdiction To Consider PendingApplications .....................................................................................10

CONCLUSION ..............................................................................................................................11



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TABLE OF AUTHORITIES

Cases

Alder Terrace, Inc. v. United States,161 F.3d 1372 (Fed. Cir. 1998)................................................................................................... 3

Bowen v. Massachusetts,

487 U.S. 879 (1988) .................................................................................................................... 6

Carroll v. United States,

67 Fed. Cl. 82 (2005) .............................................................................................................. 6, 7

Century Exploration New Orleans, LLC v. United States,2013 WL 1174999 (Fed. Cl.) ...................................................................................................... 6

Chambers v. United States,417 F.3d 1218 (Fed. Cir. 2005)................................................................................................. 10

Crocker v. United States,

125 F.3d 1475 (Fed. Cir. 1997)................................................................................................... 4

DGR Assocs., Inc. v. United States,

690 F.3d 1335 (Fed. Cir. 2012)................................................................................................ 8-9

Lawrence v. United States,

69 Fed. Cl. 550 (2006) ................................................................................................................ 6

Lion Raisins, Inc. v. United States,416 F.3d 1356 (Fed. Cir. 2005)................................................................................................... 4

M. Snower & Co. v. United States,140 F.2d 367 (7th Cir. 1944) ...................................................................................................... 2

Martinez v. United States,333 F.3d 1295 (Fed. Cir. 2003)................................................................................................... 9

Norton v. S. Utah Wilderness Alliance,542 U.S. 55 (2004) .................................................................................................................... 10

Patton v. United States,

64 Fed. Cl. 768 (2005) ................................................................................................................ 4

Reynolds v. Army & Air Force Exch. Serv.,

846 F.2d 746 (Fed. Cir. 1988)................................................................................................. 3, 4



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Roth v. United States,

378 F.3d 1371 (Fed. Cir. 2004)................................................................................................... 4

Scarseth v. United States,

52 Fed. Cl. 458 (2002) .............................................................................................................. 10

Schweiger Const. Co., Inc. v. United States,

49 Fed. Cl. 188 (2001) .............................................................................................................. 10

Suburban Mortg. Assocs., Inc. v. U.S. Dep't of Hous. & Urban Dev.,

480 F.3d 1116 (Fed. Cir. 2007)............................................................................................... 4, 8

U.S. Ass'n of Imps. of Textiles & Apparel v. U.S. Dep't of Commerce,

413 F.3d 1344 (Fed. Cir. 2005)................................................................................................. 10

U.S. Home Corp. v. United States,

92 Fed. Cl. 401 (2010) ................................................................................................................ 4

United States v. Mitchell,463 U.S. 206 (1983) .................................................................................................................... 6

Statutes

28 U.S.C. 1331 ............................................................................................................................. 6

28 U.S.C. 1491(a)(1) (2006) ........................................................................................................ 6

5 U.S.C. 702 ................................................................................................................................. 7

5 U.S.C. 704 ............................................................................................................................... 10

5 U.S.C. 701-706 (1994) ........................................................................................................ 4, 6

American Recovery and Reinvestment Tax Act of 2009 ............................................................... 1



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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

SEQUOIA PACIFIC SOLAR I, LLC, )

and EIGER LEASE CO, LLC )

)

Plaintiffs, ))

v. ) No. 13-139C

) (Judge Bruggink)

THE UNITED STATES, )

)

Defendant. )

DEFENDANTS MOTION TO DISMISS PLAINTIFFS COMPLAINT

Pursuant to Rule 12(b)(1) of the Rules of the United States Court of Federal Claims

("RCFC"), the United States, defendant, respectfully requests that the Court dismiss plaintiffs

complaint in its entirety because this Court lacks subject matter jurisdiction to consider

plaintiffs claims. In support of our motion, we rely upon the complaint and the following

memorandum of law.

ISSUE PRESENTED

1. The Court of Federal Claims does not have the general, Federal question

jurisdiction necessary to review an agencys actions and decisions. Plaintiffs allege that the

United States Department of the Treasury (Treasury) has improperly administered Section 1603

of the American Recovery and Reinvestment Tax Act of 2009 (ARRTA), thereby violating the

agencys statutory mandate and exceeding the agencys statutory authority. Because the

plaintiffs ask the Court to review Treasurys administration of a Federal program, the Court

should dismiss the complaint for lack of jurisdiction.



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INTRODUCTION

Plaintiffs, Sequoia Pacific Solar I, LLC, and Eiger Lease Co, LLC, sue the United States

pursuant to Section 1603 of ARRTA, a program that Congress designed to subsidize certain

energy projects.

Plaintiffs allege that Treasury violated its statutory mandate, exceeded its statutory

authority, and issued guidance inconsistent with the ARRTA. Plaintiffs seek monetary damages

for themselves, but also allege injuries to nonparties and anticipate future injuries arising from

applications still pending before the agency. The complaints extensive allegations are irrelevant

to a claim for increased payments under Section 1603; indeed, the majority of the complaint

attacks Treasurys administration of ARRTA.

Taken as a whole, plaintiffs complaint asks this Court to review an agencys

administration of a Federal program. The Court should dismiss the complaint because the

review being sought exceeds this Courts jurisdiction.

STATEMENT OF FACTS

Plaintiffs allege the following facts: 1

Sequoia Pacific and Eiger are companies that finance, develop, own, and lease solar

energy projects. Compl. at 9-11. Plaintiffs submitted applications to Treasury pursuant to

Section 1603 of ARRTA. Id. at 53-54. Under Section 1603, the Government reimbursed a

portion of the expense of the designated energy projects. Id. at 28-30.

Sequoia Pacific submitted Section 1603 applications for 115 residential and 31

commercial solar energy projects. Id. at 53. In each application, Sequoia asserted a cost basis

associated with the projects purchase price, and confirmed these cost bases by appraisals.

1 We reserve the right to contest each factual allegation in the complaint, should the Court denyour motion. E.g., M. Snower & Co. v. United States, 140 F.2d 367, 370 (7th Cir. 1944).



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Id. Collectively, Treasury paid Sequoia Pacific $6,079,167 less than Sequoia Pacific claimed in

its applications. Id. at 53. Regarding these applications, Treasury has notified Sequoia Pacific

that the agencys decisions constituted final agency action. Id. at 55.

Eiger submitted Section 1603 applications for 2036 residential solar energy projects. Id.

at 54. In each application, Eiger asserted a cost basis associated with the projects purchase

price, and confirmed these cost bases by appraisals. Id. Collectively, Treasury paid Eiger

$1,995,241 less than Eiger claimed in its applications. Id. at 54. Regarding these applications,

Treasury has notified Eiger that the agencys decisions constituted final agency action. Id. at

55.

Sequoia Pacific and Eiger allege that they received some Section 1603 payments later

than 60 days after they submitted their applications. Id. at 48. Both plaintiffs have additional,

pending Section 1603 applications. Id. at 56.

ARGUMENT

I. This Court Should Dismiss Plaintiffs Complaint For Lack Of Subject Matter

Jurisdiction________________________________________________________

Because the complaint asks the Court to review Treasurys administration of the Section

1603 program, Comp. at 37, the Court should dismiss the complaint for lack of jurisdiction.

RCFC 12(b)(1).

A. Standard Of Review

Plaintiffs bear the burden of establishing subject matter jurisdiction,Alder Terrace, Inc.

v. United States, 161 F.3d 1372, 1377 (Fed. Cir. 1998), and must do so by a preponderance of the

evidence. See Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988).

In resolving a motion to dismiss for lack of subject matter jurisdiction, this Court

presumes all undisputed, factual allegations to be true and applies all reasonable inferences to



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favor the plaintiffs. Reynolds, 846 F.2d at 747. The relevant issue in a motion to dismiss under

RCFC 12(b)(1) "is not whether a plaintiff will ultimately prevail but whether the claimant is

entitled to offer evidence to support the claims." U.S. Home Corp. v. United States, 92 Fed. Cl.

401, 406 (2010) (quotingPatton v. UnitedStates, 64 Fed. Cl. 768, 773 (2005)).

B. This Court Lacks Jurisdiction Over Plaintiffs Complaint

The Court should conclude that it does not have jurisdiction to consider plaintiffs claims,

as they seek Administrative Procedures Act ("APA")-like review of Treasurys administration of

the Section 1603 program. See 5 U.S.C. 701-706 (1994).2

1. No APA Review In This Court

It is routinely acknowledged that this Court lacks jurisdiction to review agency decisions

or actions. See Suburban Mortg. Assocs., Inc. v. U.S. Dept of Hous. & Urban Dev., 480 F.3d

1116, 1122 (Fed. Cir. 2007). Of course, no APA review is available in the Court of Federal

Claims. Lion Raisins, Inc. v. United States, 416 F.3d 1356, 1370 n.11 (Fed. Cir. 2005)

(citations omitted). Specifically, this Court lacks the general federal question jurisdiction of the

district courts, which would allow it to review the agencys actions and to grant relief pursuant to

the Administrative Procedure Act[.] Crocker v. United States, 125 F.3d 1475, 1476 (Fed. Cir.

1997). Moreover, the Court of Federal Claims does not possess general equity jurisdiction where

no independent basis for jurisdiction exists. Roth v. United States, 378 F.3d 1371, 1384 (Fed.

Cir. 2004).

2 We do not concede that plaintiffs have properly pled an APA claim, or any other claim, uponwhich relief can be granted, and we reserve our right to challenge any such claims, here or in anyother forums.



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2. Plaintiffs Allege That Treasurys Administration Of The Section

1603 Program Violated The Agencys Statutory Mandate And

Authority_______________________________________________

Congress established the Section 1603 program to provide payments for renewable

energy projects. Compl. at 2. Plaintiffs contend, however, that Treasury has improperly

administered the program. Compl. at 3-5, 31-38. Plaintiffs first (and only) count asserts

Violations of Section 1603, violations of Treasurys statutory mandate, and violations of the

agencys statutory authority. Compl. at Claim for Relief. Because the Court does not have

jurisdiction to review Treasurys administration of the Section 1603 program, the Court should

dismiss the complaint under RCOFC 12(b)(1).

A review of the plaintiffs allegations demonstrates that they ask the Court, improperly,

to review Treasurys administration of the Section 1603 program.

a. Allegations That Treasury Exceeded Its Statutory Authority

Fall Beyond This Courts Jurisdiction___________________

First, plaintiffs allege that Treasurys administration of the Section 1603 program violates

the agencys statutory mandate:

In Section 1603, Congress did not create a new administrative program.Congress did not set forth new criteria for the receipt of payments.Congress did not authorize rulemaking. Instead, Congress mandated thatTreasury make payments -promptly -based on well-known tax conceptsthat applied to ITCs under Internal Revenue Code Section 48. Treasurydid not apply those rules. Treasury instead established its own, differentrules (called "Guidance") for determining the amount the United StatesGovernment would pay for Section 1603 cash grants. Treasury had noauthority to promulgate or to enforce those rules, which in any event

were contrary to the plain language of Section 1603.

Compl. at 4 (emphasis added).

An allegation that an agency has exceeded its statutory mandate in administering that

agencys programs falls beyond the scope of this Courts review authority. To the extent this



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claim seeks judicial review of an agency action. . . it is not within this Court's jurisdiction. This

court has no general federal question jurisdiction, see 28 U.S.C. 1331, nor the right generally

to review final agency action under the Administrative Procedure Act (APA), 5 U.S.C. 701-

706. Lawrence v. United States, 69 Fed. Cl. 550, 554 (2006) (quoting Carroll v. United States,

67 Fed. Cl. 82, 86 (2005)). 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. See Century Exploration New Orleans, LLC

v. United States, 2013 WL 1174999, 22 (Fed. Cl.) (citing Bowen v. Massachusetts, 487 U.S. 879,

891 n.16 (1988)).

Of course, under the Tucker Act, if a money mandating statute exists, the Court may

properly determine if a plaintiff is entitled to a Government payment that has not been

forthcoming. 28 U.S.C. 1491(a)(1) (2006); United States v. Mitchell, 463 U.S. 206, 212

(1983). In such a case, the Courts determination would turn on a plaintiffs eligibility for the

payment sought. Absent express, statutory authorization, however, the Court does not have

jurisdiction to review whether a Federal agency has exceeded its authority. Sequoia Pacific and

Eiger ask the Court to review whether Treasury had authority to promulgate or to enforce

rules, which were, allegedly, contrary to the plain language of Section 1603. Compl. at 4.

The Court should dismiss such a request for lack of jurisdiction, because no express statutory

grant of jurisdiction exists.

The plaintiffs allegations reflect their confusion as to the Courts jurisdictional limits.

Rather than assert a claim for compensation under Section 1603, the complaint challenges

Treasurys administration of the entire Section 1603 program:

36. Consistent with Section 1603 and established practice, solar energydevelopers such as SolarCity and sophisticated investors, assisted by



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skilled advisors, engaged in carefully negotiated transactions, resulting inagreements for the sale of specific solar energy assets as to which Section1603 applications were submitted. Where applicable, those applicationsrecited the purchase price that the parties had negotiated, and were furthersupported by an independent appraisal, prepared by an expert, certified

appraiser, which applied various valuation techniques for assessing the fairmarket value of the solar energy facility.

37 Instead of administering the Section 1603 program as Congress intended,Treasury improperly changed the rules, reduced grant payments, andundermined the economic assumptions under which industry participantsobtained financing and installed renewable energy facilities.

38 Administration of the Section 1603 program was delegated to Treasury'sOffice of the Fiscal Assistant Secretary. That Office has no expertise orexperience in making proper cost basis determinations, and upon

information and belief, had not previously been made responsible foradministering any program comparable to the Section 1603 cash grantprogram. Rather, according to its website description, that Office "helpsformulate policy systems for the collection, disbursement, managementand security of public monies in the United States and abroad, and relatedgovernment-wide accounting and reporting for those funds." Seehttp://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Fiscal-Service.aspx.

Compl. at pages 14-15.

Notably, these paragraphs do not mention the plaintiffs or the alleged harm. Certainly,

the allegations are not tied to any pleadings that would be necessary under a money-mandating

statute. Instead, plaintiffs assertions address Treasurys alleged errors in administering the

ARRTA program. The APA authorizes suit by a party who is adversely affected or aggrieved

by agency action within the meaning of a relevant statute[.] 5 U.S.C. 702. Plaintiffs contend

that Treasury abused its discretion in administering the Section 1603 program; this APA-like

claim falls outside the court's jurisdiction. See Carroll v. United Sates, 67 Fed. Cl. 82, 86

(2005).



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b. Allegations That Treasurys Guidance Conflicts With The

Agencys Statutory Authority Are Beyond This Courts

Jurisdiction________________________________________

The complaint also challenges Treasurys general authority to administer the program by

providing guidance regarding cost-basis determinations. The complaint alleges:

39 Section 1603 did not grant Treasury authority to promulgate rules orregulations related to the administration of the cash grant program, andcertainly not rules or regulations for determining "cost basis," becauseCongress dictated that ITC definitions would govern. Treasurynonetheless did issue such rules and regulations, most problematically inthe form of so-called "guidance" for the determination of cost basis:"Evaluating Cost Basis for Solar Photovoltaic Property" ("Cost BasisEvaluation Process Guidance") available at http://www.treasury.gov/ini

tiatives/ recovery/Documents!N%20Evaluating_Cost_Basis_for_Solar_PV_Properties%20f inal.pdf.

40. Treasury's "Cost Basis Evaluation Process Guidance" is not consistentwith the ITC program that it is supposed to mimic. Among other defects,all of which resulted in lower cash grants than those to which applicantswere entitled, and which undermined the legitimate expectations uponwhich financing for solar energy facilities had been obtained:

Compl. at page 15-16.

Thus, plaintiffs argue that Treasury issued guidance that was both unauthorized and

inconsistent with Section 1603. Again, these paragraphs do not discuss the plaintiffs or their

interactions with Treasury; instead, Sequoia Pacific and Eiger contend that Treasurys

administration of this ARRTA program has affected all applicants. Indeed, plaintiffs argue that

Treasurys actions have undermined the entire program: This uncertainty surrounding the cash

grant program made it less likely that entities would be willing to invest in solar energy projects,

the direct opposite of what Congress intended. Compl. at 45.

Allegations such as these are not within this Courts authority to review. See Suburban

Mortg. Assocs., 480 F.3d at 1122. Certainly, this Court does not have the authority to invalidate

an executive branch agencys policies. See, e.g., DGR Assocs., Inc. v. United States, 690 F.3d



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1335, 1341 (Fed. Cir. 2012)(addressing challenges to an agencys regulations). This Court,

moreover, does not have jurisdiction to consider let alone resolve plaintiffs challenges to

Treasurys authority to administer the Section 1603 program. See also Martinez v. United States,

333 F.3d 1295, 1313 (Fed. Cir. 2003) (en banc) (the Court of Federal Claims lacks APA

jurisdiction.).

c. Allegations Regarding Nonplaintiff Injuries Fall Beyond This

Courts Jurisdiction___________________________________

Plaintiffs alleged injuries to nonparties also are beyond this Courts jurisdiction.

Plaintiffs contend that Treasurys approach to ARRTA resulted in program payments

arriving after the statutes 60-day deadline. Compl. at 48. Plaintiffs, however, do not allege

any specific injury to themselves from this delay as would be expected under a properly-pled

claim for compensation. Instead, Sequoia Pacific and Eiger describe only injuries to a third

party: The effect of such later payments can be severe for any company, and were parti cularl y

severe for SolarCity. Indeed, over time, limited liability companies in which SolarCitywas an

investor were forced to apply for smaller grants than they were entitled, because the negative

impact of delayed payments was simply too great to bear. Compl. at 49 (emphasis added).

The complaint describes SolarCity as a Non-party. Compl. at 8.

Plaintiffs assert no jurisdictional basis for this Court to consider injuries allegedly

sustained by nonparties. Moreover, plaintiffs reference to these alleged injuries further

demonstrates that the complaint attacks Treasurys program administration, rather than

articulating a claim under Section 1603.

Accordingly, the Court should dismiss plaintiffs complaint for want of jurisdiction.



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3. This Court Lacks Jurisdiction To Consider Pending Applications

Even when the complaint refers to plaintiffs applications, the allegations are not limited

to claims before this Court. Plaintiffs assert, Both Sequoia Pacific and Eiger have still more

applications that are pending before Treasury. If Treasury reduces the bases for Plaintiffs'

remaining projects in the same way that it has past projects, Sequoia Pacific and Eiger will suffer

millions of dollars in additional damages. Compl. at 56.

No statute or rule authorizes this Court to review Treasurys actions under the Section

1603 program but even if jurisdiction existed, it would be limited to final agency action

regarding these referenced claims. See, e.g., Chambers v. United States, 417 F.3d 1218, 1225

(Fed. Cir. 2005) (The Court of Federal Claims acquires jurisdiction over claims for military

disability retirement only after an appropriate board has evaluated the service member's

entitlement); Scarseth v. United States, 52 Fed. Cl. 458, 47980 (2002) (claim not ripe until

considered by MEB, PEB, or Army Board for Correction of Military Records). Even when the

APA permits review of agency actions the agency action must be final. 5 U.S.C. 704;

Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 61-62 (2004); U.S. Ass'n of Imps. of Textiles

& Apparel v. U.S. Dep't of Commerce, 413 F.3d 1344, 134950 (Fed. Cir. 2005).

Plaintiffs allegations regarding their still-pending applications further demonstrate that

the complaints objective is not to seek unpaid monies under the program, but to have this Court

review Treasurys administration of the program in its entirety. Such a review much like a

review of pending agency actions is beyond this Courts jurisdiction.

The allegations of a complaint must be read as a whole. See Schweiger Const. Co., Inc.

v. United States, 49 Fed. Cl. 188, 203 (2001). Here, the sum of plaintiffs complaint is

unmistakable plaintiffs ask the Court to review Treasurys management of the Section 1603



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program. Plaintiffs request for damages is a small tail appended to a very large dog. Because

the requested review is beyond this Courts jurisdiction, the Court should dismiss the complaint.

CONCLUSION

Because the complaint asks the Court to determine whether Treasurys administration of

the Section 1603 program violated the agencys statutory mandate, the Court does not have

jurisdiction and the complaint should be dismissed.3

Respectfully submitted,

STUART F. DELERY

Acting Assistant Attorney General

JEANNE E. DAVIDSONDirector

s/ Bryant G. SneeBRYANT G. SNEEDeputy Director

s/ Kenneth M. DintzerKENNETH M. DINTZERAssistant DirectorCivil DivisionCommercial Litigation BranchUnited States Department of JusticeP.O. Box 480Ben Franklin StationWashington, D.C. 20044Tel.: (202) [email protected]

May 29, 2013 Attorneys for Defendant

3The United States requests that it be relieved of the obligation to engage in case managementactivities, such as early meeting of counsel and preparation of a Joint Pretrial Scheduling Report,as required by the RCFC, pending resolution of this motion. In the event the Court denies thismotion, the United States requests an enlargement of 30 days from the date of the order denyingthe motion to respond to the complaint and commence case management activities.
