(January 6, 2015) With the release of the final rule, the USDA has overhauled the Rural Energy for American Program (REAP). The core program remains unchanged but a number of significant modifications should clarify and simplify the program. Following are key changes from the final rule, as provided by the USDA:

• Outlines a three tier application structure for REAP based on total project costs. Application requirements under all three tiers have been streamlined to reduce the time required to prepare applications, with application complexity decreasing with decreasing project costs:
  • total project  costs of $80,000 or less,
  • total project costs more than $80,000 but less than $200,000, or
  • total project costs of $200,000 and greater.
• Determination of “technical merit” has been simplified and is now part of the eligibility criteria rather than the scoring criteria. So the question has been reduced to “Pass/Fail,” to increase efficiency in application preparation and processing.
• Grant applications of $20,000 or less will compete in 5 competitions. (Congress required that 20% of funding should be used for small grants of $20,000 or less.)

• Eligibility for precommercial technologies has been removed. Only commercially available technologies are considered eligible.

• The definition of commercially available technologies now applies to certification standards that are acceptable to the Agency from a recognized industry organization such as the Small Wind Certification Council.

• Refurbished equipment is still allowed but must be refurbished in a “commercial facility” and must come with a warranty approved by USDA.

• Establishes permanent annual grant deadlines of April 30^th and October 31^st for renewable energy system and energy efficiency applications for state-level competitions for small grants ($20,000 and less).  These deadlines will no longer be dependent up on the annual notice, but there will be other deadlines for other program elements.

• Establishes a grant deadline of January 30^th for Energy Audit and Renewable Energy Development Assistance Grants (EA/REDA), or 45 days after publication of the funding notice. These awards must be made by April 1.
  • Resource Conservation Districts (RC&D) councils have been added as eligible applicants for EA/REDA.
• The “small business” definition has been broadened to be more in line with regulations from the Small Business Administration (SBA), specifically the 7A and the SBA 504 programs, as found in 13 CFR 121.301(a) and (b).
  • The definition will allow applicants to use either net income and/or net worth in determining business size.
• Following changes in the 2014 Farm Bill, the following projects are no longer eligible to receive REAP grant or loan guarantee funding:
  • Stand-alone feasibility studies. Eligible costs for feasibility studies can still be covered as part of a constructed project.
  • Flexible fuel pumps or any other technology for dispensing energy at retail.
•  Application scoring criteria were changed in a number of ways and is described in the rule in §4280.120. Total possible points are now 100. This section is complex and applicants should review the rule for further details.
  •  Environmental benefits are now a total of five points, based upon addressing resource conservation (e.g., water, soil, forest), public health and the environment (e.g., compliance with EPA’s renewable fuel standard(s), greenhouse gases).
  • Energy generated, replaced, or saved is worth 25 points. Changes include evaluating projects by BTU saved or generated per dollar of REAP grant.
  • Commitment of funds is worth a total of 20 points, based upon the percentage of funds that have a written commitment.
  • Size of Agricultural Producer or Rural Small Business is worth a total of 10 points, based a sliding scale of the actual size compared to the maximum allowable size.
  • Previous grantees and borrowers allows a maximum of 15 points for those who have not previously received a REAP award and declining based upon when the previous award was received.
  • Simple payback calculations allow a maximum of 15 points.
  • State Director and Administrator priority points provide a maximum of 10 points for factors such as technological and geographic diversity, economically distressed areas or policy priorities.

• The USDA had previously required two meters for renewable electricity generation projects where a residence would be closely associated with a meter serving the agricultural operation. They have relaxed this requirement, to some extent, by allowing applicants to certify that 51% or more of the power generated will be used by the agricultural operation or rural small business. Alternatively, the applicant can certify that any excess power will be sold back to the grid and not used for residential purposes. See § 4280.113(e) for more information.