By declining to accept review of the case, the Arizona Supreme Court has let stand two lower-court rulings that say several plaintiffs seeking damages over the state’s alternative-fuels subsidy program should seek administrative remedies to their claims.

The state’s high court did not issue an opinion on the matter, but instead in conference declined to accept a petition for review of the case. The decision was noted in the Supreme Court’s minutes from March 16. The minutes were made public on March 17.

Eleven individuals filed suit in 2001 alleging breach of contract and violation of equal protection under the law when the state created, then canceled, a program to subsidize purchases of motor vehicles that could run on electricity, natural gas or propane.

Promoters of the program said it would help reduce air pollution caused by gasoline-burning vehicles, although the program never required participants to use only the alternative fuels. Conversions could be done on vehicles that would allow the driver to switch between gasoline and an alternative fuel.

The program was launched in early 2000. Officials soon decided the cost of the program could easily exceed by 70 times the $10 million cost that the state had expected, because the legislation put no cap on the amount the state would be required to credit to motorists who bought converted vehicles. State officials found instances where credits were being given on vehicles for 50 per cent to nearly 100 per cent of the purchase price.

Law Rewritten In 2000

The law was rewritten late in 2000, and has since cost the state approximately $150 million in credits. But the state also has spent more than $1 million defending itself against legal claims from vehicle dealerships that said they were stuck with the pricier converted vehicles when the subsidy program was scaled back.

Maricopa County Superior Court Judge Cathy Holt ruled in 2002 that Tempe lawyer Timothy Moulton and 10 other individuals couldn’t bring their breach-of-contract suit against the state because they had failed to exhaust the administrative remedies available to them. In August 2003, a three-judge panel of the Arizona Court of Appeals unanimously upheld Judge Holt’s ruling. Mr. Moulton and the other plaintiffs said they bought or put deposits on converted vehicles then lost money when the state did not reimburse them for the conversions or deposits.

Mark Dangerfield, an attorney with the Phoenix firm of Gallagher & Kennedy who represented the state, said on March 18 he has not been informed whether Mr. Moulton and the other plaintiffs will now make a claim through the Arizona Department of Revenue. —