SolarCity sues the federal government for $8M
Before SolarCity went public last December, the California solar installer had mentioned its involvement in an internal investigation by the federal government to see whether the Treasury was properly carrying out a popular cash grant program. The investigation had raised questions about how solar companies (not just SolarCity) put a value on their projects, for which they could receive a rebate worth 30 percent of the prices they charge their customers. Did any of them cheat by inflating the numbers?
Now it appears that SolarCity was involved in a deeper skirmish with the Treasury. The company filed a lawsuit against the federal government back in February, contending that the Treasury had changed the rules for the program without proper notice, modified rules retroactively and now owes SolarCity about $8 million.
Jonathan Bass, the company’s spokesman, said via email that the lawsuit is an appeal of Treasury’s actions to change the rules. Since there is no appeal process built into the cash grant program, the company decided to file suit.
“Treasury gave guidance that failed to follow the law,” Bass said.
In the lawsuit (see PDF file below), SolarCity argued that the Treasury was not authorized by Congress to set new rules for the program, which is part of a tax code that already has its own set of rules. Treasury’s own rules have under-valued the solar installation projects, SolarCity claims. The department also changed those rules and did so retroactively to further reduce the amount of money it would pay installers for projects in California and Arizona by as much as 29 percent, the lawsuit said.
Congress created the cash grant program in 2009 as part of the stimulus package to create jobs and otherwise counter the impact of the financial crisis that broke out in late 2008. The program was enormously popular because it doled out cash instead of tax credit, which was previously how the incentive program had worked.
The cash program only applied to projects that were completed or at least started construction before the end of 2011. But the original, 30 percent tax credit, is still in place.
