WASHINGTON, D.C. — The U.S. Department of Agriculture is tightening eligibility for a federal rural energy program, including restrictions intended to discourage solar and wind projects on cropland and a requirement that projects be operating before applicants seek assistance.
USDA’s Rural Business-Cooperative Service is issuing a final rule with a comment period that changes how the Rural Energy for America Program, or REAP, evaluates and funds projects for agricultural producers and rural small businesses.
The changes represent a shift in how federal rural energy assistance is awarded, placing greater emphasis on documented project performance and limiting support for some renewable-energy configurations.
Under the new requirements, projects must be fully constructed and operational before applying for REAP assistance. Applicants will need to document actual energy output or savings, project costs and system performance rather than seek funding based on projected results.
The rule also implements Agriculture Secretary Brooke Rollins’ directive to disincentivize solar photovoltaic and wind energy systems on cropland.
USDA Under Secretary for Rural Development Glen Smith framed the restriction as an effort to prevent taxpayer-supported energy projects from displacing productive farmland.
“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,” Smith said.
Multilocation projects and certain applications of specific technologies will also become ineligible under the revised program.
USDA is replacing its existing application structure with a single national competition, allowing projects to compete through one process and placing greater weight on verifiable performance.
The department also plans an online application portal intended to shorten applications and reduce review times. Annual program notices will establish application opening and closing dates.
The rule includes provisions limiting how much related businesses can receive. Entities sharing common ownership or management will be treated as a single entity for purposes of the maximum federal grant available during a fiscal year, regardless of the percentage owned directly or indirectly.
Projects already further along in the funding process will receive transitional treatment. Applications with a Form 1940-1, Request for Obligation of Funds, signed by both the applicant and USDA before the regulation’s effective date can continue to be processed if they otherwise comply with applicable terms and conditions.
REAP provides grants and guaranteed loans to agricultural producers and rural small businesses for energy systems and energy-efficiency improvements.
Additional program information is available at https://www.rd.usda.gov/programs-services/energy-programs.
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