Biomass Corporation Sues Federal Gov’t for $47 Million
- by Jacob Fischler, April 9, 2015, Law 360
[[{"type":"media","view_mode":"media_large","fid":"462","attributes":{"alt":"department of the treasury","class":"media-image","height":"222","style":"width: 227px; height: 222px; margin: 3px 10px; float: left;","width":"227"}}]]MeadWestvaco Virginia Corp. slapped the federal government with a $47 million suit in the Court of Federal Claims on Thursday, alleging the U.S. Department of Treasury underpaid the company for the construction of a biomass energy generator.
Under Section 1603 of the American Recovery and Reinvestment Act, the government was obligated to pay 30 percent of the qualified cost to MeadWestvaco of building an open-loop biomass energy facility at its Covington, Virginia, paper mill in 2013, or about $85.9 million, the company says.
But the government paid only about $38.9 million. Most of the power produced at the facility was sold to Virginia Electric & Power Co., but the government made the reduction on the grounds that the company was reusing some of the excess low-pressure steam from the biomass facility to heat the facility itself and the nearby paper mill, the company says.
MeadWestvaco argues it was actually being more efficient in its use of the low-pressure steam and said the government’s logic was completely off-base.
“The government's determination is so erroneous and uninformed that it is entitled to no deference and should be discarded completely,” the complaint says.
Because Section 1603 is a money-mandating statute, qualifying projects automatically earn reimbursement of 30 percent of their costs for the necessary parts of the projects, MeadWestvaco says. The total cost to the company of building the biomass facility was $291 million, with $286 million used on qualifying portions.