The U.S. Department of the Treasury has provided a bit of clarity for renewable energy developers receiving funding through the department's Section 1603 cash-grant program.
According to a recent client alert from law firm Akin Gump Strauss Hauer & Feld, the Treasury has set the sequester percentage for Section 1603 grants at 5% – lower than the standard 7.6% figure that was originally expected. The change resulted from recalculations following the passage of the American Taxpayer Relief Act of 2012 (i.e., fiscal-cliff legislation).
Although applications for the program have closed, money is still being distributed. The grants, like all budget allocations, are subject to across-the-board sequestration if Congress cannot reach a workable long-term budget agreement by March 1.
The 5% cash-grant haircut is expected to be confirmed by the Office of Management and Budget in the next few weeks. If sequestration is triggered, Section 1603 grants will not be reduced immediately. Rather, the haircut is expected to go into effect March 27 or when Congress completes the final budget authorization (whichever occurs later), Akin Gump says.
Other questions regarding sequestration – including the cutoff dates for determining which projects will be affected – have yet to be answered.