SECTION 5. GENERAL

ALLOCATION PROCESS AND METHODOLOGY

a. Allocation methods . New CREBs volume cap under § 54C will be allocated in accordance with this section 5.

(i) Allocation methodology for public power providers . Up to one-third of the total volume cap will be allocated to qualified projects owned by public power providers using the pro-rata allocation method. Except as otherwise provided in this section 5, the IRS will allocate an amount of New CREBs volume cap for projects to be owned by public power providers in an amount equal to the amount requested in the Application. If the aggregate amount of volume cap requested for all qualified projects to be owned by public power providers exceeds

the actual amount of volume cap available for allocation to such projects, the amount of volume cap allocated to a project for a public power provider will bear the same proportion to the available volume cap allocated to public power providers as the amount of volume cap requested for that project bears to the total amount of volume cap requested for all projects to be owned by public power providers.

(ii) Allocation methodology for gov- ernmental bodies and cooperative electric companies . Up to one-third of the total volume cap will be allocated to qualified projects owned by governmental bodies and up to an additional one-third of the total volume cap will be allocated to qualified projects owned by cooperative electric companies. Except as otherwise provided in this section 5, the IRS will allocate an amount of New CREBs volume cap for projects to be owned by governmental bodies and cooperative electric companies in an amount equal to the amount requested in the Application on a first-come, first-served basis by order of submission date (as defined in section 4.a. of this Notice).

b. Limit on allocation to any one Ap- plicant for projects to be owned by gov- ernmental bodies or cooperative electric companies . No qualified owner (including any entities that are members of the same controlled group within the meaning of § 1.150–1(e)) that is a governmental body or cooperative electric company will receive an aggregate allocation of volume cap under this Notice to exceed the published Volume Cap Limit (taking into account all allocations under this Notice that have not reverted to the IRS) in effect for the period that includes the submission date. The published Volume Cap Limit for any period is the greater of: (1) 20 percent of the amount of available volume cap for projects to be owned by governmental bodies or cooperative electric companies, as applicable, as of the first day of such period (determined based on information available to the IRS, including allocation data and reports of bonds issued); or (2) $40 million. The IRS will update the Volume Cap Limit and the available amounts approximately every sixty days until the applicable volume cap is fully allocated. The IRS plans to publish these updates on the IRS website at http://www.irs.gov/

Tax-Exempt-Bonds or at such other location as the IRS may provide in future administrative guidance. An Application will be treated as complete only if the amount of volume cap requested is within the applicable Volume Cap Limit and the Application otherwise meets the requirements of this Notice.

c. Insufficient available volume cap . The rules set forth in this section 5.c. apply if an Applicant requests volume cap in an amount that is within the published Volume Cap Limit under section 5.b. above but that exceeds the amount of volume cap that is then available for allocation on the submission date (based on application activity since the most recent publication of the Volume Cap Limit and information then available to the IRS).

(i) Governmental bodies and coopera- tive electric companies . If an Application for volume cap for a project to be owned by a governmental body or cooperative electric company requests more volume cap than is available on the Application submission date for such category of qualified owner, then the Applicant will have the opportunity to receive an allocation of volume cap up to the available volume cap. Further, if two or more Applications for the same category of qualified owner have the same submission date and allocation of the requested amounts would cause the available volume cap to be exceeded, then each such Applicant will have the opportunity to receive a portion of the available volume cap in the proportion that each amount requested has to the sum of the amounts requested. In any circumstance in which available volume cap is in an amount less than the amount requested, the IRS will notify the Applicant and the Applicant will have 30 days from the date the IRS contacts the Applicant to notify the IRS (at the address specified in section 3.02.d. of this Notice) of its decision to either (1) immediately accept the allocation in the lesser amount, or (2) delay the allocation for up to 90 days from the submission date to determine if additional volume cap might become available. If the Applicant decides to accept an allocation in a lesser amount, the Applicant will notify the IRS by submitting a notice to the IRS in substantially the same form as attached to this Notice as Appendix C. If the Applicant decides to delay

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receiving its allocation, the Applicant will notify the IRS by submitting notice in substantially the same form as attached to this Notice as Appendix D. If the Applicant decides to delay receiving its allocation and the full amount requested does not become available before the end of the period designated by the Applicant, after such period the IRS will notify the Applicant of the amount it can allocate to the Applicant. The Applicant will have 30 days from the date the IRS notifies the Applicant of such available amount to accept the lesser amount by submitting a notice to the IRS in substantially the same form as attached to this Notice as Appendix C. If the Applicant decides not to accept the lesser amount, the Application will be treated as withdrawn.

(ii) Public power providers . If the aggregate amount of volume cap requested for all qualified projects to be owned by public power providers exceeds the actual amount of volume cap available for allocation to such projects, each Applicant will be notified by the IRS of the amount of the pro-rata allocation it would receive pursuant to section 5.a. of this Notice and given 30 days to notify the IRS (at the address specified in section 3.02.d. of this Notice) whether it will accept or decline the reduced amount. If the Applicant decides not to accept the lesser amount, the Application will be treated as withdrawn. See section 5.f. of this Notice for information on effect of withdrawals.

(iii) Supplemental certifications and in- formation for partial allocations . If the Applicant accepts an amount that is less than the amount requested in the Application, the Applicant must provide along with its decision (1) a certification in substantially the same format as the form attached to this Notice as Appendix C (A) confirming its decision to accept the allocation in the lesser amount, and (B) either (I) certifying, based on the lesser amount accepted, that the information included in the Application pursuant to section 3.02.e. of this Notice is accurate (subject to provisions of section 7.a. of this Notice relating to insubstantial deviations), or (II) submitting revised information required under section 3.02.e. of this Notice based on the lesser amount accepted and certifying that such revised information meets the requirements of this Notice, and (2) a revised plan of

financing as described in section 3.02.f. of this Notice based on the lesser amount. The IRS may require the Applicant to supplement the Application to demonstrate that the requirements of this Notice are met based on the reduced allocation.

(iv) Effect of supplemental certifica- tions on submission date . For purposes of section 4 of this Notice, the submission date for an Application for which insufficient volume cap exists will not change if the Applicant submits within 30 days of the notification from the IRS any supplemental information required under this section 5.c.

(v) Failure to notify IRS of decision . If the Applicant does not notify the IRS of its decision within the applicable time frames specified in sections 5.c.(i) and (ii) of this Notice, the Application will be treated as withdrawn.

d. Confirmation of allocation . The IRS will send Applicants letters confirming allocations of volume cap (allocation letter). An allocation of New CREB volume cap by the IRS under this Notice is not a determination that any bonds issued pursuant to the allocation are new clean renewable energy bonds under § 54C. The Service may upon examination determine that the applicable requirements of the Code, including §§ 54A, 54C, or 6431, and any applicable administrative or regulatory guidance, such as this Notice, are not met with respect to any bond issued pursuant to the volume cap allocation.

e. Expiration of allocation . Applicants have 180 days from the date of the allocation letter to issue the proposed bonds. Allocations with respect to any portion of the proposed bonds not issued during that time will be treated as forfeited and revert to the IRS and will be available for reallocation. The IRS does not expect to grant extensions to this expiration date.

f. Effect of forfeitures and withdrawals . A governmental body or a cooperative electric company that has withdrawn or is deemed to have withdrawn its Application, or that received an allocation that expired or was forfeited, may file a new Application for volume cap that meets all the requirements of this Notice, including the information described in section 3.02.j. of this Notice, and that Application will be subject to the submission provisions of section 4 and the applicable limits set forth in section 5 of this Notice in

effect on the submission date of the new Application. A public power provider that has withdrawn or is deemed to have withdrawn its Application, or that received an allocation that expired or was forfeited, may not reapply for an allocation pursuant to this Notice. See section 3.01 of this Notice for information on reallocations.

g. Notice of voluntary forfeiture . If an Applicant determines that it does not intend to use any part of its allocation of volume cap (including in circumstances in which the Applicant determines to finance the project with financing other than the proposed bonds), it must notify the IRS in writing at the address set forth in section 3.02.d. of this Notice of its intention to forfeit such part of the allocation and, when the IRS receives this notice from the Applicant, the IRS will treat that allocated amount as forfeited and reverting to the IRS. The forfeited amount will be available for reallocation.