On October 1, the federal government entered a shutdown after negotiations between Democrats and Republicans broke down. The parties could not agree on what to include in a continuing resolution (CR) to temporarily keep the government open while negotiating a full-year government funding agreement. The longest shutdown, in 2018–2019, lasted 35 days, and it is difficult to forecast how long this one may last.
In the near term, public equity and debt markets do not appear substantially shaken by the shutdown, which may change if the shutdown lingers or triggers other significant economic harm. Clean energy project developers and corporate tax credit buyers have questions regarding how the shutdown will impact their deals and projects. Crux anticipates that most Internal Revenue Service (IRS) functions should continue normally (at least for a shutdown of two weeks or less) and will be monitoring the issue closely.
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The corporate extended tax filing deadline is October 15 (for calendar-year tax filers). Companies seeking to utilize transferable tax credits to meet their 2024 tax liabilities will need to include a pre-filing registration number on their tax returns. While most companies with 2024 tax credits already have their pre-filing registration number, some are still waiting for the portal administered by the IRS to award these numbers.
Our expectation from the IRS’ shutdown plan is that the agency will continue to be funded by appropriations from the Inflation Reduction Act of 2022 (IRA), and we anticipate that the portal will continue operating. We will closely monitor this issue — IRS operations could be further impacted if the shutdown extends beyond two weeks.
The IRS was broadly expected to issue guidance to aid implementation of the FEOC rules in the coming weeks. While the agency’s shutdown plan indicates that it will continue to operate, guidance may be hung up while the government shutdown continues. It is possible staff that are furloughed and occupied by shutdown-related activities at other agencies — including the Office of Management and Budget (OMB), which reviews most guidance before publication — may delay the release of guidance.
Companies or projects with live permitting decisions before federal agencies such as the US Department of Energy (DOE) or the Department of the Interior may be delayed in receiving those decisions. In particular, projects that have been awarded the §48C advanced qualifying clean energy project awards may be delayed in receiving notice from the DOE as to their project milestones. Full permitting activity may not resume until the shutdown concludes.
Until funding is restored, agencies operate under shutdown contingency plans. Programs can continue operating if they retain funding, either through multiyear or “no-year” appropriations, like some accounts within the DOE, or if they are funded outside the annual appropriations process (including mandatory spending such as Social Security or through reconciliation bills).
During a shutdown, activities funded by annual appropriations pause unless designated “essential.” Essential functions are ones that maintain public safety, protect property, or have specific legal obligations. For example, law enforcement, the military, medical care, air traffic control, and power production and distribution are all deemed essential. Employees carrying out these functions continue to work without pay. Others are furloughed until funding resumes. Traditionally, the whole government reopens at once, but it is possible that Congress will open some agencies earlier than others.
The shutdown plans for the Department of the Treasury (Treasury), Interior, US Army Corps of Engineers (USACE), DOE, Environmental Protection Agency (EPA), and the Federal Energy Regulatory Commission (FERC) are posted on their individual websites. However, it’s possible these become difficult to implement — baseline staffing levels at most agencies are significantly lower than at the beginning of the year, and it is unclear how proposed reductions in force (RIFs) will impact these plans. Additionally, as of October 1, the DOE’s posted plan has not been updated since December 2024, so there could be additional changes.
This makes it difficult to predict exactly how agencies will operate during this shutdown, though activities such as permitting, rulemaking, and grantmaking will likely see impacts and delays. The following summaries of what we currently expect are based on several departments’ operating plans for previous shutdowns:
Activities during the shutdown are subject to inherent uncertainties, and the longer a shutdown lasts, the greater the likelihood of services being impacted. We will continue to monitor these situations as circumstances evolve.
Past shutdowns have lasted as long as 35 days. Energy-related functions most at risk include permitting, rulemaking, and grantmaking across Treasury, Interior, USACE, DOE, EPA, and FERC. These functions could be further impacted by proposed RIFs during the shutdown.
We will continue to monitor:
We will continue to keep our partners informed throughout the remainder of the shutdown, including through regular client memos. If you are interested in gaining access to these memos, get in touch to join the Crux platform.
Disclaimer
This post is for informational purposes only and should not be construed as tax, legal, policy, or accounting advice. Crux does not provide tax, legal, or policy advice. You should consult with your own tax, legal, policy, and accounting advisors before engaging in any transaction or strategy discussed herein.
