SECTION 2. BACKGROUND

Section 107(a) of the Energy Improvement and Extension Act of 2008, Division B of Pub. L. No. 110–343, 122 Stat. 3765 (2008) (“2008 Act”), added § 54C to the Code to provide for a volume cap of $800 million for New CREBs to finance qualified renewable energy facilities. Section 1111 of Title I of Division B of the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111–5, 123 Stat. 115 (2009) (“2009 Act”), amended § 54C to increase the volume cap for New CREBs by $1.6 billion to a total of $2.4 billion.

Section 54C(a) provides that a “new clean renewable energy bond” or New CREB means any bond issued as part of an issue if: (1) 100 percent of the available project proceeds of such issue are to be used for capital expenditures incurred by qualified owners, including governmental bodies, public power providers, or cooperative electric companies, for one or more qualified renewable energy facilities; (2) the bond is issued by a qualified issuer; and (3) the issuer designates such bond for purposes of § 54C.

Section 54C(c)(2) provides that the Secretary shall allocate not more than one

third of the volume cap to qualified projects to be owned by public power providers, governmental bodies, and cooperative electric companies, respectively. Section 54C(c)(3)(A) provides that with respect to public power providers, after the Secretary identifies the qualified projects of public power providers that are appropriate for receiving an allocation of the New CREBs volume cap, the Secretary shall, to the maximum extent practicable, make allocations among such projects in such manner that the amount allocated to each such project bears the same ratio to the cost of such project as the portion of the New CREBs volume cap that may be allocated to public power providers bears to the cost of all such projects. Section 54C(c)(3)(B) provides that with respect to governmental bodies and cooperative electric companies, the Secretary shall make allocations of the respective New CREBs volume cap among qualified projects of governmental bodies and cooperative electric companies in such manner as the Secretary determines appropriate.

In Notice 2009–33, the Treasury Department and the IRS solicited applications for allocations of New CREBs volume cap and set forth administrative procedures for the initial allocations of the $2.4 billion volume cap. In October 2009 and January 2010, the IRS allocated the entire volume cap designated for projects to be owned by governmental bodies and public power providers. At that time, $609,204,555 of the available $800 million in volume cap designated for projects to be owned by cooperative electric companies was allocated. In Announcement 2010–54, the IRS solicited applications for the remaining $190,795,445 in volume cap available for allocation to qualified projects to be owned by cooperative electric companies, referring to the application and allocation process and the guidance in Notice 2009–33. In March 2011, the IRS awarded the remaining volume cap under that Announcement.

Section 9(j) of Notice 2009–33 provides that allocations under that Notice must be used or relinquished no later than three years after the date of the letter issuing the allocation. Similarly, unused allocations made under Announcement

2010–54 revert back to the IRS no later than three years after the date of the letter issuing the allocation. Thus, any unused allocations under Notice 2009–33 and Announcement 2010–54 expired and reverted back to the IRS by no later than March 4, 2014.

Section 9(j) of Notice 2009–33 provides that the IRS plans to announce a process to reallocate any unallocated volume cap and any allocated volume cap that has been relinquished and has reverted to the IRS. Additionally, the Notice provides that, consistent with allocation requirements under § 54C(c)(2), any relinquished or reverted volume cap will be reallocated only for a qualified project owned or to be owned by the same category of qualified owner as the owner that originally received the relinquished or reverted allocation.

Public power providers have reported to the IRS the issuance of New CREBs in the amount of $283,434,308.65; governmental bodies have reported to the IRS the issuance of New CREBs in the amount of $202,865,036.40; and cooperative electric companies have reported to the IRS the issuance of New CREBs in the amount of $519,221,531. Based on these reports, the passage of the deadlines described above for issuing New CREBs, and other information provided to the IRS, the IRS has identified $516,565,691.35 of volume cap available for reallocation for projects to be owned by public power providers, $597,134,963.60 of volume cap available for reallocation for projects to be owned by governmental bodies, and $280,778,469 of volume cap available for reallocation for projects to be owned by cooperative electric companies.