On March 1, 2013, President Obama signed the sequestration order (“Sequestration”), reducing the budgetary resources for each non-exempt Federal budget account by an amount calculated by the Office of Management and Budget (“OMB”). The U.S. Department of the Treasury announced on March 4, 2013, that, as a result of Sequestration, cash grants for specified energy property in lieu of tax credits (“Grants”), made under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009, as amended, will be reduced by 8.7 percent, with the result that affected Grants will be equal to 27.39 percent of eligible basis. The affected Grants are those which the Treasury awards in a “Section 1603 Award Letter” dated on or after March 1, 2013 and on or before September 30, 2013, which is the end of the 2013 fiscal year. If Congress does not repeal or amend Sequestration, any Grants awarded in the 2014 fiscal year also will be reduced by the Sequestration rate established by OMB for 2014. Sequestration does not impact the availability of investment tax credits or production tax credits in respect of eligible property. Accordingly, Grant applicants may want to evaluate the potential benefit of such credits in comparison to the reduced Grant award.