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W.E. Partners II, LLC v. United States

ELR Citation: 45 ELR 20011
Nos. 13-54, (Fed. Cl., 01/12/2015)

The Court of Federal Claims held that a company that funded construction of an open-loop biomass facility to provide steam for a chicken rendering plant's electricity needs is entitled to reimbursement costs under the American Recovery and Reinvestment Act (ARAR), but only for costs associated with the portion of the facility necessary to produce electricity. ARAR §1603 provides for reimbursement of a portion of the costs incurred for a facility using open-loop biomass to produce electricity. The company argued it was entitled to a percentage of the total cost of the biomass facility, including its thermal energy capacity, whereas the U.S. government argued the company was only entitled to a percentage of the costs necessary to produce electricity. In this case, only one of the three boilers installed at the biomass facility was necessary to provide sufficient electricity for the plant. The court agreed with the government. If read without context or reference to agency guidance, the language of the statute might suggest that reimbursement based on total cost is mandatory whenever a facility uses open-loop biomass to generate electricity. But when read in conjunction with the applicable IRS guidance, §1603 only requires reimbursement for the portion of the cost that is fairly allocable to the production of electricity.