On October 15th, the Bush USDA issued a new, proposed permanent rule for grant programs in REAP that would likely take effect in 2010 and would make significant changes to the program.

Comments on the proposed rules were due on December 15th. ELPC submitted comments with 21 other organizations interested in the continued success of this key farm energy program. You can download those comments here (PDF format).

Part of the proposal would shift the program to be under the same umbrella as similar USDA programs. Other changes would restrict program eligibility in favor of loan guarantees at the expense of grants and continue to exclude agricultural producers who are not located in rural areas. A powerpoint summary of the proposed rules is available here: Summary of USDA’s REAP Grant Program Proposed Rule (PDF format).

A summary of the comments from ELPC and our allies follow.

Common Grant Platform

ELPC is opposed to using a common grant platform for all USDA programs. The proposed system is confusing for the applicant, does not increase efficiency and may actually hinder efficiency. Instead of consolidation, USDA should concentrate on simplification and web delivery of services.

Loan Guarantee Requirement

ELPC strongly opposes USDA’s proposal to limit eligibility for grants of more than $50,000 to projects that cannot otherwise secure a loan guarantee for the project. This provision effectively caps grants at $50,000 and hardens the USDA preference for loan guarantees – a policy that has clearly been rejected by the public and ought to be removed rather than reinforced. It will likely result in a large amount of unused REAP funding since there is such low demand for loan guarantees.

Rural Area Requirement

USDA’s proposal continues to limit REAP eligibility to agricultural  producers in rural areas. There is no justification for this exclusion. The 2008 Farm Bill deliberately changed the eligibility for REAP from “farmers, ranchers and rural small businesses” to “agricultural producers and rural small businesses” in order to be more inclusive. Therefore, agricultural producers, such as greenhouses, that are not located in rural areas should be eligible for REAP.

Funding Notifications

Notifications of funding availability (NOFAs) should be widely and  aggressively publicized. Also, NOFAs should be issued within 30 days of the beginning of the fiscal year and should not be delayed if an exact funding amount is not known at the time of the release due to delays in the Congressional appropriations process. Information on the priority categories for applications should also be released much sooner than the proposed 30 days in advance of the first ranking or application date.

Pre-Applications

The USDA process for dealing with pre-applications should be better defined in the rules. The process should include:

• A specific time to submit pre-applications up to a reasonable deadline (perhaps March 15).
• Specific pre-application requirements.
• A deadline for USDA to respond to pre-applicants (perhaps within 30 days).

Application Process

The USDA website should be the main source for project application information.

Additionally, the USDA should not follow through with its proposal to pre-screen applications for “feasibility.” This initial screening is not in statute and gives USDA too much discretion to discard applications before they are scored on their full merits.

Ranking Applications

In addition to a number of criteria that are used to create a score that allows USDA to rank applications, the Department has proposed adding 2 more criteria to use in determining a grant award after this score has been calculated. ELPC opposes both criteria. Those 2 criteria include:

• The size of the request relative to the available grant funds. ELPC opposes this criterion because it could distort the ranking process by giving smaller projects an advantage over higher-ranking larger projects if less money is available.
• The availability of other funds to finance  the project. ELPC also opposes this addition. USDA is already planning to include financial need in the scoring criteria and project feasibility – another scoring criteria – is also likely to include whether funding beyond a REAP grant is available. Projects should not be rejected for a grant under REAP simply because other funding options may be available.

Other Comments:

• Rules should spell out standards for feasibility studies.
• Grant applications should be accepted on a rolling basis.
• USDA should set specific standards for a simplified application process.
• Administrator categories should be eliminated or points awarded for them reduced from 10 to 5.