ALJDEC

01-12300-AFR · Office of Alternative Fuel Recovery · 2001-08-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 20, 2001. APPEARANCES: Appellant was represented by Kate Forbes, its Controller, and Mark Carman, its salesperson. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ The Appellant appealed from a decision by the Office of Alternative Fuel Recovery to deny its Alternative Fuel Loss Reimbursement Application. Evidence and testimony was presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT

1. The Appellant, Electric Transportation Engineering Corporation (“ETEC”), is an Arizona corporation. It was incorporated in 1996 to develop and install charging infrastructure for electric vehicles. 2. Donald B. Karner is the president of ETEC. 3. ETEC is the seller of the EVCharger, an electric vehicle charger. 4. ETEC markets its EVCharger by arranging for investors to form limited liability corporations, who would then purchase the EVCharger from ETEC. 5. AZ Chargers #1, L.L.C., was set up as the first step in the business of purchasing the EVCharger from ETEC and managing the asset. 6. The Offering Memorandum for AZ Chargers #1, L.L.C., admitted into evidence as Exhibit 5, was used to create an L.L.C. to purchase an EVCharger from ETEC. 7. Page 5 of the Offering Memorandum lists the following risk factors, among others, for the prospective investor:

“The recent alternative fuel laws of Arizona have created large incentives for alternative fuel vehicles and refueling and recharging facilities. The essence of this AZ Chargers #1 L.L.C. proposal is to take advantage of those tax deduction and tax credits of the new Arizona laws…Although the laws as written should be adequate for the term of this project, there can be no assurance that the laws will not be changed or that public opinion will demand different priorities. There can be no assurance that the present alternative fuel programs will remain intact.

8. When ETEC marketed its EVCharger it did so in reliance on the State of Arizona’s then-existing alternative fuel vehicle subsidy program. This program offered grants or tax credits to persons who purchased or leased an alternative fuel vehicle, converted a vehicle to operate on alternative fuel, or who purchased, installed or constructed a vehicle refueling apparatus or an alternative fuel delivery system. See Laws 2000, Ch. 405. 9. The Arizona Legislature modified the parameters of the alternative fuel vehicle program with the passage of SB 1004. 10. ETEC filed an Alternative Fuel Loss Reimbursement Application with the Office of Alternative Fuel Recovery. The amount of ETEC’s application was $49,839.00, which is broken down as follows:

a) $34,190.00 in total labor costs for two individuals ( its president, Donald B. Karner and salesperson, Mark Carmen) covering the period from September 15, 2000 through October 30, 2000. b) $1,000.00 for legal costs. c) $13,440.00 in accounting costs. d) $1,209.00 in marketing costs.

ETEC contends that it is entitled to reimbursement of that total sum under the alternative fuel subsidy program. 11. By letter dated May 14, 2001, Michael Murphy of the Office of Alternative Fuel Recovery informed ETEC that its claim was denied because it did not appear that its costs were covered by Senate Bill 1004. 12. By letter dated June 12, 2001, ETEC requested an administrative hearing on the denial of its reimbursement application.

CONCLUSIONS OF LAW

In this proceeding, ETEC bears the burden to prove, by a preponderance of the evidence, that the Office of Alternative Fuel Recovery improperly denied its application for alternative fuel loss reimbursement. Arizona Administrative Code (“A.A.C.”) Rule R2-19-119. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). SB 1004 sets forth the law governing ETEC’s claim for reimbursement. Section 31 of SB 1004 provides, in relevant part: A. A person is eligible to present a claim for reimbursement to the department of administration if the person might have been eligible for a tax credit under section 43-1086, 43- 1086.01, 43-1086.02, 43-1174, 43-1174.01 or 43-1174.02, Arizona Revised Statutes, before the applicable section was amended by this act but does not meet the requirements imposed by this act and both of the following apply:

1. The person canceled a contract or purchase order to purchase or lease a vehicle or to convert a vehicle to operate on alternative fuel, or to purchase, install, or construct a vehicle refueling apparatus or an alternative fuel delivery system.

2. The person suffered actual monetary loss directly related to the purchase or lease of a vehicle, to the conversion of a vehicle to operate on alternative fuel or to the purchase, installation or construction of a vehicle refueling apparatus or an alternative fuel delivery system.

Section 32 of SB 1004 provides for the following reimbursable monetary losses: A. Only the following actual monetary losses directly related to the purchase or lease of a vehicle or to the conversion of a vehicle to operate on alternative fuel shall be reimbursed by the state:

1. Any forfeited down payment or deposit paid by the claimant to a motor vehicle dealer or a conversion company, or both.

2. The fair market value of a vehicle traded to a motor vehicle dealer in lieu of a down payment or deposit.

3. Any financial penalty imposed by a motor vehicle dealer, conversion company or lender because of cancellation of a contract, if the original terms of the contract signed on the date of the purchase or order require that such a penalty be paid.

B. The following actual monetary losses directly related to the purchase, installation or construction of a vehicle refueling apparatus or an alternative fuel delivery system shall be reimbursed:

1. Any forfeited down payment or deposit paid for equipment or installation, or both, of the vehicle refueling apparatus or an alternative fuel delivery system.

2. The cost of a vehicle refueling apparatus or alternative fuel delivery system equipment if purchased but not installed, if the apparatus or equipment is transferred to this state.

3. Any financial penalty imposed by an installer of a vehicle refueling apparatus or alternative fuel delivery system because of the cancellation of contract, if the original terms of the contract signed on the date of the installation agreement require that such a penalty be paid.

ETEC did not establish that its claim for reimbursement for its costs for labor, legal services or marketing service fell within any of the categories of reimbursable costs established under SB 1004, Section 32(A) and (B). Therefore, ETEC did not establish that it was entitled to reimbursement for those costs. Because ETEC did not establish that its claim was eligible for reimbursement under SB 1004, it did not establish that the Office of Alternative Fuel Recovery improperly denied its application for alternative fuel loss reimbursement. The evidence of record supports the dismissal of the appeal in this matter.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the appeal in this matter be dismissed and that the prior denial of ETEC’s reimbursement application by the Office of Alternative Done this day, September 7, 2001

______________________________________ Brian Brendan Tully Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2001, to:

Department of Administration Office of Alternative Fuel Recovery J. Elliott Hibbs, Director ATTN: Michael Murphy 1700 W. Washington, Suite 103 Phoenix, AZ 85007

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826