Court Opinion

ID: 9455108
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:11:32.947137+00
Date Added: 2024-06-11T17:34:27.790440
License: Public Domain

COLLINS, Judge
(dissenting).
I respectfully dissent from the opinion of Judge Nichols on two grounds. First, I do not agree with the court’s interpretation of either Regulation 1, section (3) (i), or Revised Regulation 1, section 4(j), as clarified by Interpretation sections (b) (1) and (b) (2). Regulation 1, section (3) (i), does not require the filing of a scope amendment where the description or cost of a facility, that has already been certified, materially varies from the actual description or cost of the facility when it is completed. Instead, the filing of such an amendment is merely permissive with the taxpayer. When the taxpayer elects to file an amendment, a copy will be forwarded to the Commissioner of Internal Revenue, provided the description or cost is within the scope of the original certification. In addition, it is stated in section (3) (h) that a Necessity Certificate constitutes conclusive evidence of certification that the facilities' described therein are necessary in the interest of national defense to the extent *408certified, and that the accuracy of the cost of a facility is not being certified but rather must be established by the taxpayer, himself, to the satisfaction of the Commissioner of Internal Revenue. When these two sections are read in conjunction with each other, it appears to be evident that the purpose of allowing an amendment is simply to aid the taxpayer in establishing the changed description or increased cost before the Internal Revenue Commissioner. Furthermore, section (3) (h) expressly states that once a facility is properly certified as being necessary in the interest of national defense, then this determination is conclusive upon the certifying authority to the extent certified. Since I believe that certification is directed mainly to facilities and not cost, once an item is certified to a specific percent, then the full cost of that item is certified to that percent and not just the percent of the original estimate. In the instant case, the item “preparing site” was certified to the extent of 85 percent of cost and not just to the extent of 85 percent of $1,200,000, which was merely an estimate to which the plaintiff should not be eternally bound. Based on section (3) (h) .this 85 percent certification is conclusive upon the certifying authority, thus precluding it from taking the sort of action which was taken in this case, when the plaintiff was denied his full 85 percent of cost. Under this court’s interpretation of Regulation 1, section (3) (i), the taxpayer is obliged to obtain recertification anytime there is a changed condition. I do not feel that this interpretation is correct either from a strictly literal approach or from a practical point of view.
The court’s reading of Revised Regulation 1, section 4(j), as clarified by Interpretation sections (b) (1) and (b) (2), is likewise subject to attack. In my opinion, the term “facility” as used in (b) (1) and (b) (2) was not meant to apply to each of .the various items listed in the original request for certification composing the entire emergency project. Indeed, as I read (b) (1) and (b) (2), they were intended to apply to the facility as a whole, which in the present case would be the battery of coke ovens. Under this interpretation, the increase in the size of the land would not be “so material a variation as to put in question the identity of the facility.” Consequently, section (b) (1) would be applicable to this case since the facility (.the coke ovens) would still be the same despite the increase of actual costs over estimated costs. In addition, this interpretation of sections (b) (1) and (b) (2) lends support .to my earlier interpretation of Regulation 1, section (3) (i), in that under neither section is the taxpayer required to file an amendment in all cases where there is a change in description or cost.
I conclude, therefore, that plaintiff was no.t required to file a scope amendment regardless of whether Regulation 1, section (3) (i), or Revised Regulation 1, section 4(j), is held to apply. It was, therefore, improper for the certifying authority to deny plaintiff its full cost of “preparing site” as the result of plaintiff’s filing of a scope amendment, which was simply a precautionary move.
It is indeed interesting to note that the record reveals that the certifying authority in this case refused to certify plaintiff’s full cost of preparing site because it considered site preparation, in effect, to be the equivalent of the cost of land. If this is true, it is an absurd reason because the preparation of site has nothing to do with the cost of land. Since the authority relied on Revised Regulation 1, section 4(k), for its authority in making this decision, it must show fraud, misrepresentation, or sufficient cause. Certainly, there is no indication at all of fraud or misrepresentation, and I cannot agree that connecting site preparation with cost of land is a sufficient or even a correct reason for an amendment.
The second ground for my dissent is that I do not agree with the court’s resolution of the estoppel question. Since one of the bases for the court’s disposition of plaintiff’s estoppel argument is *409its earlier interpretation of Regulation 1, section (3) (i), and Interpretation (b) (1), neither of which I concur with, I likewise cannot now agree with the court’s treatment of this particular issue. Based on Regulation 1, sections (3) (h) and (3) (i), the plaintiff had every reason to feel certain that the full cost (up to 85 percent) of its facility, including the item “preparing site,” was being certified. Furthermore, I am unable to comprehend the court’s reliance on Regulation 1, section 3(j), and Revised Regulation 1, section 4(k), in light of the fact that there was nothing to indicate to plaintiff that the certifying authority would have good cause to amend its certificate. Consequently, plaintiff’s reliance on the validity of its certificate was well founded. Since there was this reasonable reliance by plaintiff and since plaintiff was thereby detrimentally affected by the inexcusable delay of the certifying authority, I feel that defendant should be estopped from asserting the validity of the decision of the DP A not to certify the full cost of the preparing site item.
For the reasons stated in this dissent, plaintiff’s motion for summary judgment should be granted, and defendant’s motion for summary judgment denied.