USDA Finalizes Changes to Rural Energy for America Program

The U.S. Department of Agriculture (USDA) has issued a final rule with a comment period that changes application and eligibility requirements for the Rural Energy for America Program (REAP).

The rule, issued through USDA Rural Development’s Rural Business Cooperative Service, is intended to streamline program administration and change how projects qualify for funding.

REAP provides guaranteed loans and grants to agricultural producers and rural small businesses for renewable energy systems and energy efficiency improvements.

Changes to REAP Requirements

Under the new rule, several changes will affect how applicants pursue REAP funding.

USDA will implement the Agriculture Secretary’s direction to disincentivize solar photovoltaic and wind energy systems on cropland.

Projects will also need to be fully constructed, operational, and demonstrating performance before an application can be submitted. Applicants will need to provide documented information on the project’s actual output, energy savings, costs, and system performance.

Multilocation projects and certain applications involving specific technologies will no longer be eligible.

USDA also plans to move to a single national competition process. The department said the change is intended to simplify administration and prioritize projects that can demonstrate verifiable results.

A planned online application portal is expected to reduce the application burden by shortening application length and review times.

“This rule cuts the red tape so that farmers and rural small businesses can spend less time and money navigating paperwork and more time investing in their operations,” said Under Secretary for Rural Development Glen R. Smith. “At the same time, we’re protecting productive American farmland from oversized solar developments and ensuring taxpayer-supported energy investments don’t put components from foreign adversaries on American farms. REAP should work for rural America, not foreign supply chains or projects that take good farmland out of production.”

Existing Applications and Funding Limits

Applications with a Form 1940-1, “Request for Obligation of Funds,” signed by both the applicant and the agency before the regulation takes effect will continue to be processed, provided the project remains consistent with applicable terms and conditions.

The rule also states that each person or entity is subject to a maximum amount of grant assistance per federal fiscal year.

Entities with common management or ownership, regardless of the percentage owned, will be considered a single entity when ownership or management is held directly or indirectly through another entity or person. Aggregate funding for those entities cannot exceed the applicable dollar limit.

USDA said annual program notices will provide the opening and closing dates for the next application window.

“The final rule from USDA will restore integrity and stability to the Rural Energy for America Program. For too long many applicants have prioritized unreliable energy sources and have not fully delivered on their stated goals, as of today that ends,” said Secretary of Agriculture Brooke L. Rollins. “President Trump is committed to an energy dominant future for America and it starts with our rural communities, USDA stands ready to deliver on this goal.”

What Producers Need to Know

Agricultural producers and rural small businesses considering REAP funding should be aware that projects will need to meet the new requirements before applying under the revised program.

USDA has not yet announced the application window dates. Those dates will be provided through the annual program notices.

More information on REAP is available through USDA Rural Development and state energy coordinators.