Home/Federal/Federal Register/2026-20178

Rule2026-20178

Unleashing American Energy and Economic Prosperity; Rural Energy for America Program (REAP)

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

October 1, 2026

Effective

October 16, 2026

Issuing agencies

Agriculture DepartmentRural Business-Cooperative Service

Abstract

The Rural Business-Cooperative Service (RBCS or the Agency), an agency of the Rural Development (RD) mission area within the U.S. Department of Agriculture (USDA) is issuing a final rule with comment period. Implementation of this action will simplify and streamline requirements and processes in the Rural Energy for America Program (REAP). Under the new REAP structure, projects must already be fully built and operational before the applicant ever applies. Applicants then apply, submitting actual energy production or savings data for the prior 12 months, alongside 12 months of pre-installation data. The Agency evaluates applications for completeness, eligibility, risk, and merit and will award grants subject to the availability of funds and criteria provided in an annual notice. This new approach changes the program to a post completion, performance validated model. All RES and EEI awards will now be based on actual documented output, energy savings, costs, and system performance. Bottlenecks leading to application processing backlogs such as the technical merit review clearance process have been removed from the Agency's purview. Multilocation projects and specific application of certain technologies are now ineligible, and the program proposes to eliminate state level competitions in favor of a single national scoring and selection process. The result is a streamlined but significantly different process intended to reduce risk to the program, simplify administration, and prioritize projects delivering verifiable results. The result of these changes, combined with the release of a planned online application portal, will significantly decrease burden for applicants by shortening application length and review times across the program.

Full Text

<html>
<head>
<title>Federal Register, Volume 91 Issue 189 (Thursday, October 1, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 189 (Thursday, October 1, 2026)]
[Rules and Regulations]
[Pages 62600-62633]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20178]

[[Page 62599]]

Vol. 91

Thursday,

No. 189

October 1, 2026

Part II

Department of Agriculture

-----------------------------------------------------------------------

Rural Business-Cooperative Service

-----------------------------------------------------------------------

7 CFR Part 4280

Unleashing American Energy and Economic Prosperity; Rural Energy for
America Program (REAP); Final Rule

Federal Register / Vol. 91, No. 189 / Thursday, October 1, 2026 /
Rules and Regulations

[[Page 62600]]

-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4280

[Docket No. RBS-26-Business-0529]
RIN 0570-AB13

Unleashing American Energy and Economic Prosperity; Rural Energy
for America Program (REAP)

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Final rule with comment period.

-----------------------------------------------------------------------

SUMMARY: The Rural Business-Cooperative Service (RBCS or the Agency),
an agency of the Rural Development (RD) mission area within the U.S.
Department of Agriculture (USDA) is issuing a final rule with comment
period. Implementation of this action will simplify and streamline
requirements and processes in the Rural Energy for America Program
(REAP). Under the new REAP structure, projects must already be fully
built and operational before the applicant ever applies. Applicants
then apply, submitting actual energy production or savings data for the
prior 12 months, alongside 12 months of pre-installation data. The
Agency evaluates applications for completeness, eligibility, risk, and
merit and will award grants subject to the availability of funds and
criteria provided in an annual notice. This new approach changes the
program to a post completion, performance validated model. All RES and
EEI awards will now be based on actual documented output, energy
savings, costs, and system performance. Bottlenecks leading to
application processing backlogs such as the technical merit review
clearance process have been removed from the Agency's purview.
Multilocation projects and specific application of certain technologies
are now ineligible, and the program proposes to eliminate state level
competitions in favor of a single national scoring and selection
process. The result is a streamlined but significantly different
process intended to reduce risk to the program, simplify
administration, and prioritize projects delivering verifiable results.
The result of these changes, combined with the release of a planned
online application portal, will significantly decrease burden for
applicants by shortening application length and review times across the
program.

DATES: Effective date: This final rule is effective October 16, 2026.
Comment date: Comments must be submitted on or before November 2,
2026.

ADDRESSES: Comments may be submitted by going to the Federal
eRulemaking Portal at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>and in the ``Search
Documents'' box, enter the Docket Number or the Regulatory Information
Number (RIN) provided above in the headings to the final rule, and
click the ``Search'' button. To submit a comment, choose the
``Comment'' button associated with the rule. Information on using
<a href="http://Regulations.gov">Regulations.gov</a>, including instructions for accessing documents,
submitting comments, and viewing the docket after the close of the
comment period, is available under the ``FAQ'' tab at the bottom of the
Home page.
All submissions received must include the Agency name and docket
number or RIN for this rulemaking. All comments received will be posted
without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal
information provided.
Other Information: Additional information about Rural Development
and its programs is available at <a href="https://www.rd.usda.gov/">https://www.rd.usda.gov/</a>.

FOR FURTHER INFORMATION CONTACT: Natalie Melton, Program Management
Division, U.S. Department of Agriculture, 1400 Independence Avenue SW,
Washington, DC 20250-3201; telephone (202) 690-1371; email:
<a href="/cdn-cgi/l/email-protection#f29c9386939e9b97dc9f979e869d9cb287819693dc959d84">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION: The information presented in this preamble
is organized as follows:

I. Authority
II. Background
III. Stakeholder Engagement
IV. Summary of Changes
A. Subpart B--Rural Energy for America Program--Grants for
Renewable Energy Systems and Energy Efficiency Improvements
B. Subpart C--Rural Energy for America Program: Grants for
Energy Audits and Renewable Energy Development Assistance
V. Executive Orders/Acts

I. Authority

The REAP program is authorized by 7 U.S.C. 8107. Procedurally, this
rule is not required to undergo notice-and-comment rulemaking because
of the exception in 5 U.S.C. 553(a)(2) for matters relating to grants.
RBCS also believes a final rule is optimal in this instance to quickly
implement the new regulations and accept applications. Still, RBCS
welcomes input from the public and has provided a comment period with
this final rule, which may help RBCS in considering any future guidance
or rulemaking on REAP.

II. Background

The 7 CFR 4280 Subpart B governs REAP and provides grants to
Agricultural Producers and Rural Small Businesses for the purpose of
purchasing and installing Renewable Energy Systems or to make Energy
Efficiency Improvements. The program also provides grants to conduct
Energy Audits and provide recommendations and information on Renewable
Energy Development Assistance. Subpart B was last updated April 27,
2021 and confirmed on February 28, 2022 primarily to remove the
provisions relating to guaranteed only loans promulgated through the
OneRD initiative, now in 7 CFR 5001.
This program reduces energy costs and consumption and helps meet
the Nation's critical energy needs; however, based on feedback received
from applicants and stakeholders during the normal course of business,
the current regulation is perceived as complicated and burdensome for
the average person or business to understand and often causes
Applicants to hire grant writers and contractors to apply and
administer funding further reducing their opportunities for economic
prosperity. The Agency is revising the program requirements and
processes to address these concerns and to support Executive Orders
14154, ``Unleashing American Energy'' and 14156, ``Declaring a National
Energy Emergency,'' through reducing high energy costs and providing a
diversified and affordable supply of energy to drive our Nation's
economic prosperity by promoting efficiencies and reducing compliance
costs. Consistent with the May 2025 USDA Farmers First Policy (<a href="https://www.usda.gov/sites/default/files/documents/farmers-first-small-family-farms-policy-agenda.pdfhttps://www.usda.gov/sites/default/files/documents/farmers-first-small-family-farms-policy-agenda.pdf">https://www.usda.gov/sites/default/files/documents/farmers-first-small-family-farms-policy-agenda.pdfhttps://www.usda.gov/sites/default/files/documents/farmers-first-small-family-farms-policy-agenda.pdf</a>) and the
National Farm Security Action Plan (<a href="https://www.usda.gov/sites/default/files/documents/farm-security-nat-sec.pdf">https://www.usda.gov/sites/default/files/documents/farm-security-nat-sec.pdf</a>), which direct USDA to
safeguard Cropland, elevate farmer interests, and disincentivize solar
development on farmland, USDA updated the REAP program based on strong
feedback from farmers, ranchers, rural businesses, and state partners,
which was received through the normal course of business in person or
through phone calls and emails. Many stakeholders raised concerns that
some large ground mount solar projects were contributing to
artificially inflated land

[[Page 62601]]

prices, displacing productive Cropland, or exceeding a business's
actual energy needs. They voiced further concerns regarding components
manufactured in foreign adversary nations that might detract from the
goals of supporting American manufacturing. The updated rule focuses
REAP support on appropriately scaled, on farm renewable energy systems,
not large or utility scale solar developments, and excludes projects
that involve prohibited components from foreign adversary nations, as
defined by 15 CFR 791.4. By limiting oversized ground mount
installations, protecting Cropland, and ensuring systems match genuine
energy use, USDA is safeguarding farmland, preventing market
distortions, and ensuring REAP funds directly benefit rural producers
and small businesses while maintaining program fairness and integrity.
This revision streamlines, simplifies, and reduces burden for the
application process. The Agency will publish a Notice of Funding
Opportunity providing additional details on application procedures,
funding priorities, and how applications will compete. REAP is a
competitive grant program. Projects compete based on score, and funding
to support all eligible applications is not guaranteed. Applicants
whose projects are not funded must re-evaluate program eligibility and,
if their project still meets the program criteria, may submit a new
application in the following application cycle.

IV. Summary of Changes to the Rule

This section presents the changes to the existing grant regulation
which includes revising subpart B into a more sequential order of
events as they occur during the application, award, and post-award
processes. Subpart B regulates grants for Renewable Energy Systems and
Energy Efficiency Improvements. This subpart has been revised to
prohibit the installation of solar and wind renewable energy systems on
Cropland, prohibit a solar photovoltaic system or wind turbine
consisting of any component made in a country named as a foreign
adversary, limit applicant eligibility to the Highest-Level Owner,
ensure alignment of the definition of Small Business with the
definition used by the Small Business Administration, and shift the end
date of the Project Period to 12 to 24 months prior to application.
Subpart C regulates grants for Energy Audits and Renewable Energy
Development Assistance. To promote clarity and reader comprehension
defined terms have been capitalized throughout the preamble and
regulatory text. Additional context and examples are outlined in the
specific preamble sections that follow.

Sec. 4280.101 Purpose

This section was updated to move grants for Energy Audits and
Renewable Energy Development Assistance out of subpart B and into
subpart C because this portion of the program operates as a separate
technical assistance program targeting a different pool of eligible
applicants that compete in a separate competitive funding competition.
The information regarding the use of up to 10 percent of the award
amount for broadband infrastructure was moved to Sec. 4280.125 because
it is related to the use of funds.

Sec. 4280.102 Organization of Subpart

This section was revised to reflect the reorganization of the
content to reflect the sequence of events as they occur during the
application, award, and post-award processes.

Sec. 4280.103 Acronyms

This section was changed from ``Definitions'' to ``Acronyms.'' This
section was added to make it easier for readers to quickly identify
frequently used acronyms.

Sec. 4280.104 Definitions (Formerly Sec. 4280.103)

This section was changed to remove language on exception authority
as it is not authorized by the program's authorizing statute.
Definitions were moved to this section to allow for the addition of the
new Acronyms section located at Sec. 4280.103. This section was
revised to be consistent with the definitions for 2 CFR part 200 at 2
CFR 200.1. Language was also added to this section to clarify that
additional defined terms can be found in applicable regulations. The
following terms are removed, revised, or added.
Administrator was removed because the term is no longer used in the
regulation.
Agency was revised to be consistent with the definition used in 7
CFR part 4284 subparts F, J, and K.
Agricultural commodity was added because it supports the revised
definition for Agricultural Producer.
Agricultural producer was revised to more closely align with the
definition used in 7 CFR part 4284 subpart J and subpart K. We have
also included a section of the definition that specifically applies to
wholly-owned Tribal entities to allow these entities to continue to be
eligible for the program in a way that accommodates the way these
entities are organized.
Ancillary infrastructure was added to clarify how this term is used
in the context of this regulation.
Annual energy production was added to clarify how the annual output
of energy produced by a Renewable Energy System should be reported.
Applicant was revised to more closely align with the definition
used in 7 CFR part 4284 subparts F, J, and K.
Battery energy storage system was added to support the
clarification of project eligibility in Sec. 4280.122.
Biofuel was removed because it is no longer used in the regulation.
Biogas was revised to include examples of acceptable Renewable
Energy Biogas projects.
Commercially available was revised to remove ambiguity and to
remove the alternative to use a domestic or foreign system that has
been certified by a recognized industry organization whose
certification standards are acceptable to the Agency.
Complete application was removed because it is not needed. The
concept of a complete application and its significance to the
application process is explained in Sec. Sec. 4280.131 and .140(a).
Costs incurred was removed because the term is no longer used in
the regulation.
Cost sharing was added to be consistent with 2 CFR part 200.
Council was relocated to the newly added Sec. 4280.204 because it
is only applicable to the Energy Audit and Renewable Energy Development
Assistance Grants.
Cropland was added to be consistent with 7 CFR 718.2.
Departmental regulations was removed because it is now addressed in
Sec. 4280.108(c).
Design/build method was removed because the term is no longer used
in the regulation.
Distribution components was added to clarify how the term is used
in the context of this regulation.
Eligible project costs was removed because uses of funds and
allowable and unallowable costs are addressed in Sec. 4280.125.
End user was added to support the revised section on conflict of
interest in Sec. 4280.106.
Energy assessment was revised to move the requirement for when the
Energy Assessment needs to be submitted to Sec. 4280.131(b)(2).
Energy audit was revised to limit the person who can conduct the
Energy Audit to an Energy Auditor and to identify acceptable standards.
Energy efficiency improvement was revised to clarify that the
Energy Efficiency Improvements must be for the Applicant's operations.

[[Page 62602]]

Equipment was added to be consistent with 2 CFR part 200.
Existing business was revised to clarify what is considered an
Existing Business. The definition no longer treats a new business and
Existing Business applying as co-Applicants as an existing business.
Farm or Ranch was added to support the revised definition of
Agricultural Producers.
Feasibility study was revised to clarify that the individual
conducting the report must have relevant knowledge, expertise, and
experience and to further clarify that the findings must be related to
the feasibility of the proposed Project or operation located at a
specific site.
Federal award was added to be consistent with 2 CFR part 200.
Financial assistance agreement was revised to clarify what is
included and which form is used.
Financial feasibility was removed because the term is no longer
used in the regulation.
For-profit organization was added to be consistent with 2 CFR part
200.
Geothermal source was added to support the Geothermal Direct
Generation System and Geothermal Electric Generation System
definitions.
Highest-level owner was added to support the revised section on
Applicant eligibility in Sec. 4280.120. Below are examples of what the
Agency considers to be Highest-Level Owners:
(1) One example is a sole proprietorship. This company is owned by
one individual and could apply as an Agricultural Producer if they are
engaged in farming or ranching as their business. Alternatively, the
company could apply as a Rural Small Business if it meets the
definition of a Small Business and is located in a Rural area.
(2) Another example is an entity owned by a group of people, such
as a family-owned LLC. This entity is owned by multiple individuals,
not by one or more entities, and would be eligible to apply if it meets
the definition of an Agricultural Producer or a Rural Small Business.
(3) A third example is an entity that owns two subsidiaries--ABC
Corp. While the entity that owns the subsidiaries is eligible to apply
as a Highest-Level Owner if it meets the definition of either
Agricultural Producer or Rural Small Business, neither of the
subsidiaries is eligible to apply as a Highest-Level Owner because they
are owned by another entity--ABC Corp.
[GRAPHIC] [TIFF OMITTED] TR01OC26.009

Hybrid is updated to the term Hybrid System.
Hydroelectric source is updated to Hydroelectric System.
Hydrogen project is updated to Hydrogen System.
Immediate family was revised to be consistent with the use of the
term in 7 CFR part 4284.
Indian Tribe was added to be consistent with 7 U.S.C. 8101(10).
Institution of Higher Education was relocated to the newly added
Sec. 4280.204 because it is only applicable to the Energy Audit and
Renewable Energy Development Assistance Grants.
Instrumentality was relocated to the newly added Sec. 4280.204
because it is only applicable to the Energy Audit and Renewable Energy
Development Assistance Grants.
Interconnection agreement was revised to clarify the definition.
Key service providers was added to clarify Project eligibility
requirements in Sec. 4280.122.
Kilowatt was added to support the definition of Rated System Size.
Kilowatt-hour was added to support the definition of Simple
Payback.
Letter of conditions was added to support the award notification
process described at Sec. 4280.151.
Local government was added to support the updated conflict of
interest policy located at Sec. 4280.106.
Matching funds was removed to be consistent with 2 CFR part 200.
The term Cost Sharing is now used to be consistent with 2 CFR part 200.
Megawatt was added to support the definition of Rated System Size.
Megawatt-hour was added to support the definition of Annual Energy
Production.
Metering agreement was added to provide examples of the most common
types of agreements. Examples of the most common metering agreements
are described below.
(1) Conventional Net Metering. The entity sends excess electricity
to the grid and receives a bill credit equivalent to the full retail
price of power; in other words, the energy rate is credited on a 1:1
basis.
(2) Net Billing. The entity sends excess electricity to the grid
and receives a bill credit equivalent to less than the full retail
price of power; in other words, the energy rate is credited on a less
than 1:1 basis. For example, the energy rate credited is the wholesale
rate of the energy.
(3) Aggregate Net Metering. The entity sends excess energy to the
grid, and that energy is used to offset the usage of other meters owned
by the entity on same property.
(4) Virtual Net Metering. The entity sends excess energy to the
grid, and that energy is used to offset the usage of other meters owned
by the entity on one or more different properties.
Off-grid system was added to support the definition of Simple
Payback.
Passive investor was removed because the term is no longer used in
the regulation.
Person was removed because it was confusing and used
inconsistently.
Power purchase agreement was revised to include the requirements
for a Power Purchase Agreement.

[[Page 62603]]

Principals was added to support the Agency's compliance with
screening for excluded parties as well as checking for duplicate
applications submitted by entities owned by the same individuals.
Project was added to clarify what is meant when the Agency uses
that term.
Project cost was added to be consistent with 2 CFR part 200.
Project period was added to reflect the timeframe during which
allowable Project Costs are incurred.
Public power entity was relocated to the newly added Sec. 4280.204
because it is only applicable to the Energy Audit and Renewable Energy
Development Assistance Grants.
Qualified consultant was removed because the term is no longer used
in the regulation. We are replacing this term with the phrase
``independent professional'' which is used in the same manner. The
Agency continues to expect that the work is completed by an individual
who possesses the necessary qualifications to do the work and that the
individual has no conflict of interest as described in section .106 of
this subpart.
Ranch was added to support the definition of Agricultural Producer.
Rated power was removed because the term is no longer used in the
regulation.
Rated system size was added to allow the Agency to identify the
eligibility system size restrictions for Hydroelectric System Projects
and to obtain more consistent information about RES sizes as part of
the application.
Real property was added to be consistent with 2 CFR part 200
Recipient was added to be consistent with 2 CFR part 200.
Refurbished was revised to clarify the definition.
Renewable Energy development assistance (REDA) was relocated to the
newly added Sec. 4280.204 because it is only applicable to the Energy
Audit and Renewable Energy Development Assistance Grants.
Renewable Energy site assessment was relocated to the newly added
Sec. 4280.204 because it is only applicable to the Energy Audit and
Renewable Energy Development Assistance Grants.
Renewable energy technical assistance was removed because the term
is no longer used in the regulation.
Resource assessment was added to clarify the requirements for the
Resource Assessment report.
Retrofitting was revised to clarify the definition and add
examples.
Rural or Rural area was revised to simplify the definition.
Rural small business was revised to clarify the definition.
Simple payback was revised to re-order RES to be first because it
is the more common application type, to adjust the calculation details
to include actual values instead of projected, and to remove the
paragraph related to new facilities for RES because those are no longer
allowable. An example to further explain that the EEI project must have
the same input and output conditions is, the calculation must include
grain drying of 50,000 bushels for the 12 months prior to installation
and grain drying of 50,000 bushels for 12 months after installation.
Small business was revised to simplify the definition by
incorporating certain definitions and standards provided by the Small
Business Administration.
Solar electric was added to clarify the requirement for the
Resource Assessment.
Solar thermal was added to clarify the requirement for the Resource
Assessment.
Steady state operating level was removed because the term is no
longer used in the regulation.
Total eligible project costs was removed because the term is no
longer used in the regulation.
Total project costs was removed and replaced with the term Project
Costs.
Underserved communities was removed because the term is no longer
used in the regulation.
Useful life was revised to clarify that it applies to the RES or
EEI.
Veteran was removed because the term is no longer used in the
regulation.
Wind energy was added to clarify the requirement for the Resource
Assessment.

Sec. 4280.105 [Reserved]

This section is now reserved. The information on review or appeal
rights is now located in Sec. 4280.152, Notification of unsuccessful
Applicants.

Sec. 4280.10 Conflict of Interest

This section is updated to strengthen and clarify the relationships
and transactions that are subject to the conflict of interest policy
and to include requirements identified in 2 CFR parts 200 and 400.
Examples of relationships and transactions that can involve a COI
include, but are not limited, to the following.
(1) Relationships. For purposes of this subpart, relationships
among the following entities can involve a COI:
(i) Applicant, their parent, affiliate, or subsidiary companies,
and their employees, consultants, and contractors;
(ii) End Users and their employees, consultants, and contractors;
(iii) System installers;
(iv) Developers; and
(v) All service providers, including Key Service Providers (for
example Energy Auditors, Energy Assessors).
(2) Transactions. For the purposes of this subpart, all
transactions must be arm's length transactions. An arm's length
transaction is a transaction in which the involved parties act
independently and have no relationship to each other. The concept of an
arm's length transaction allows the market to ensure that both parties
are acting in their own self-interest and are not subject to any
pressure or duress from the other party. The following transactions can
involve a COI:
(i) Advances or reimbursements of Federal Award funds;
(ii) Cost Sharing;
(iii) Procurement contracts;
(iv) Offtake agreement (i.e. agreement between the Applicant and
whatever entity is taking the energy generated, e.g. End User);
(v) Site lease agreements, with the exception of agreements between
the Highest-Level Owner and its wholly-owned subsidiary for the purpose
of carrying out the RES or EEI;
(vi) Financing, with the exception of financing obtained through
another entity wholly-owned owned by the Applicant;
(vii) Feasibility studies; and
(viii) Grant writing.
(3) Examples. Below are examples of relationships or transactions
that the Agency considers to be conflicts of interest.
(i) An affiliated entity of the Applicant wants to install the
system while taking profit.
(ii) The ownership of Applicant and the End User include one or
more of the same individuals.
(iii) The RES developer conducts the Feasibility Study.
(iv) The RES developer writes the application.
(v) The RES developer provides financing, even through another
entity owned by the developer.
(vi) The RES developer installs the system.
(vii) The RES developer purchases the tax credits.
(viii) The RES developer is an End User or an owner of the End User
of the power.

Sec. 4280.108 Compliance With Other Laws and Regulations

This section is renamed and updated to clarify all levels of
regulations that are applicable to this program, including Federal,
Departmental, and Agency levels. The reference to 7 CFR

[[Page 62604]]

1901.204 was removed because that regulation is no longer available.

Sec. 4280.109 [Reserved]

This section is now reserved. The Applicant eligibility information
formerly located in this section is moved under Sec. 4280.120.

Sec. 4280.110 [Reserved]

This section is now reserved. The satisfactory performance
information formerly located in this section is moved to Sec.
4280.140. Information on application submission is moved to Sec.
4280.133. Information on application limits is moved to Sec. 4280.122.
Information on application modification is removed because it is no
longer permitted. Information on incomplete applications is moved to
Sec. 4280.140. Information on application withdrawal is now located
under Sec. 4280.141. Information on the technical report is removed.
Information on the time limit for the use of award funds is moved to
Sec. 4280.122. Information on extensions is removed and is covered in
the Financial Assistance Agreement. Information on return of funds to
the Agency is removed and is covered in the Financial Assistance
Agreement.

Sec. 4280.111 [Reserved]

This section is now reserved. Information on eligibility
notification for eligible applications is removed. The Agency will no
longer notify Applicants at the eligibility determination stage of
application processing due to resource limitations. Information on
eligibility notification for ineligible Applicants and applications is
now located under Sec. 4280.152. Information about notification of
funding determinations is moved to Sec. Sec. 4280.151-.152.

Sec. 4280.112 [Reserved]

This section is now reserved. Information on Applicant eligibility
is now located under Sec. 4280.120.

Sec. 4280.113 [Reserved]

This section is now reserved. Information on project eligibility is
now located under Sec. 4280.122.

Sec. 4280.114 [Reserved]

This section is now reserved. Information on ineligible projects is
now located under Sec. 4280.122.

Sec. 4280.115 [Reserved]

This section is now reserved. Information on minimum and maximum
awards is moved to Sec. 4280.122. Information on maximum grant
assistance is removed. Applicants are restricted to submitting one
application per funding cycle. Information on matching funds (now
called cost sharing) is now located under Sec. 4280.122. Information
on eligible project costs (now called allowable use of funds) is moved
to Sec. 4280.125. Information on ineligible project costs (now called
unallowable use of funds) is now located under Sec. 4280.125.
Information on award amount considerations is removed because it is
duplicative. The Agency's application and award processes are moved to
Sec. Sec. 4280.140 and .150.

Sec. 4280.116 [Reserved]

This section is now reserved. Information on application submission
is now located at Sec. 4280.133. Information on application content is
moved to Sec. 4280.131. Information on evaluation of applications is
now located at Sec. 4280.140.

Sec. 4280.117 [Reserved]

This section is now reserved. Information on technical merit is
incorporated into project eligibility under Sec. 4280.122 and
application processing under Sec. 4280.140.

Sec. 4280.118 [Reserved]

This section is now reserved. Information on application
requirements for applications with Project Cost of $200,000 or greater
is now located under Sec. 4280.131.

Sec. 4280.119 [Reserved]

This section is now reserved. Information on application
requirements for applications with a Project Cost of more than $80,000
and less than $200,000 is moved to Sec. 4280.131.

Sec. 4280.120 Applicant Eligibility

This section is changed from ``Grant applications for RES and EEI
projects with total project costs of $80,000 or less'' to ``Applicant
Eligibility.'' Information on application requirements for applications
with a Project Cost of $80,000 or less is located under Sec. 4280.131.
Notable changes include:
i. The Agency clarified the requirement for which entities are
eligible to apply for funds. Agricultural Producers and Rural Small
Businesses remain eligible to apply, but they must be considered
Highest Level Owners, meaning no other entity owns or controls the
Applicant entity. This clarification was made to ensure that certain
entities do not obtain a disproportionate share of available funds and
to streamline the Agency's eligibility determination process.
ii. Rural Small Business Applicants must be considered small
businesses by the Small Business Administration (SBA). Relying on SBA's
process and expertise ensures consistent and accurate implementation
and reduces the Agency's burden when determining whether Applicants
applying as Rural Small Businesses are eligible.
iii. All Applicants must be an Existing Business at the time of
application. This allows the Agency to perform a risk evaluation on all
Applicants as required by 2 CFR 200.206. A ratio of current assets to
current liabilities of at least 1:1 is required for the Applicant to be
eligible.
iv. Applicants are only eligible for one award per Federal Fiscal
Year. This ensures that entities do not obtain a disproportionate share
of available funds and streamlines the Agency's eligibility
determination process. For example, if John Smith and Jane Doe own ABC
Corporation, the Agency will only make one award to ABC Corporation. No
additional awards to ABC Corporation or to entities owned by John Smith
and Jane Doe, including sole proprietorships, will be approved in a
given FFY.
v. Applicants with any foreign investment or ownership will be
evaluated by the Agency pursuant to applicable law. This aligns with
Executive Order 14315, dated July 7, 2025, on ``Ending Market
Distorting Subsidies for Unreliable, Foreign Controlled Energy
Sources''.
vi. Applicants deriving any income from gambling activities are no
longer eligible to apply. State authorized lottery proceeds and net
revenues generated from gaming by a Tribe pursuant to Tribal law or the
Indian Gaming Regulatory Act, 25 U.S.C. 2107 et seq., conducted in part
for the purpose of raising funds for the approved Project continue to
be excluded from this restriction after Agency review.

Sec. 4280.121 [Reserved]

This section is now reserved. Information on scoring applications
is moved to Sec. 4280.140.

Sec. 4280.122 Project Eligibility

This section is changed from ``Selecting RES and EEI grant
applications for award'' to ``Project Eligibility.'' Information on
selecting applications for an award is located under Sec. 4280.150.
This section now includes the former ``Technical Merit'' requirements
identified in former Sec. 4280.117 as well as Appendices A, B, and C.
These requirements were treated as eligibility requirements by the

[[Page 62605]]

Agency, so adding them to this section clarifies the Agency's
consideration of this information. Notable changes include:
i. The project must be completed between 12 to 24 months prior to
the date of application. With the exception that for the first
application window following the release of the updated regulation the
Project Period end date may be between 12 and 36 months prior to
submission of the application.
ii. The Applicant must also provide 12 months of actual energy
production or energy savings as part of the application. This change is
being implemented for several reasons:
a. Based on how the program has been implemented and utilized in
the past, the Agency is aware that many applicants felt the need to
begin their Projects as soon as they received notice that a complete
application had been received by the Agency. But they were often
confused about what charges were allowable to charge to the award, and
this confusion resulted in a significant disallowance of costs and
unexpected expenses to the applicants. By shifting the Project Period,
applicants can now complete their Projects at a time that is best for
their business and have a better- defined Project Period for
determining cost allowability.
b. The Agency also determined that many previous applications were
proposing Projects for systems that were significantly oversized for
their business due to the financial incentive of receiving a grant. By
shifting the Project Period to occur prior to application, the Agency
is incentivizing right-sized systems that meet the needs of the
applicant's business, while allowing for some growth, and are viable
and sustainable both from a financial perspective and from an energy
generation or energy savings perspective. We recognize that there is
some uncertainty about whether an applicant will receive an award, but
we expect that uncertainty to be a factor in the applicant's decision-
making process about purchasing an RES or completing EEI. Because of
the increase in focus on viability and sustainability, we expect any
awards will contribute significantly to the health of the businesses
that receive them and allow better future cash flow and expansion.
c. This change also ensures that the Agency receives actual data
regarding the energy produced and/or saved for the Project. This actual
data allows us to more accurately evaluate the merit of the Projects
and to demonstrate program performance.
d. The Agency understands that there may be concerns from
applicants about how to finance their Projects when the grant funding
is expected after the Project is completed. To address those concerns,
the Agency is making it clear that the REAP Guaranteed Loan Program, as
implemented through 7 CFR 5001, is available to support potential
applicants with up-front costs of the RES or EEI.
e. The Agency also understands the concerns expressed by recent
applicants to the REAP RES EEI Program after a Stakeholder Announcement
was issued on March 31, 2026 that discontinued processing pending
applications. Structuring the program so that the Project Period occurs
prior to the application date allows any applicants with pending
applications to be able to resubmit applications, provided they meet
the requirements of the program.
iii. The site must be owned or controlled via lease at least 12
months prior to the Project period. The regulation outlines items
required in lease agreements. This change is made to align with the
above requirement for when the Project must be completed.
iv. Wind and solar systems on Cropland cannot be retrofitted using
REAP funds. This change is made as part of Executive Order 14315,
``Ending Market Distorting Subsidies for Unreliable, Foreign Controlled
Energy Sources.''
v. The provision to allow Energy Efficiency Improvements for new
building construction was removed to streamline program administration.
vi. The language on Key Service Provider qualifications and
conflict of interest was clarified.
vii. Combined heat and power projects (CHP) using steam instead of
Renewable Biomass must apply as an EEI project. This change was made to
clarify how CHP Projects must apply.
viii. The minimum award amount for both RES and EEI is now $1,500,
versus two thresholds for RES and EEI grant applications. This change
was made to ensure consistency between RES and EEI applications.
ix. Rural area eligibility was amended so the project must be
located in a rural area. This change was made to ensure funds are
directed to rural areas.
x. Reference to environmental requirements were updated to refer to
updated USDA regulations at 7 CFR 1b.
xi. The provision allowing shared meters with residences was
removed. This change streamlines application processing and helps
ensure that energy is not used for residential purposes.
xii. The provisions regarding eligible and noneligible residential
use was clarified. Only community solar subscription programs, nursing
homes and assisted living facilities, and for-profit hotels that meet
the requirements noted in the regulation are eligible.
xiii. To facilitate the best use of government dollars, Simple
Payback must be equal or less than the Useful Life of the project
assets in order for the project to be eligible.
xiv. Energy storage systems including Battery Energy Storage
Systems are limited to a capacity of 120% of the average energy use of
the Applicant for the 12 months prior to the installation of the RES
with energy storage system or completion of the EEI. This change was
made to encourage installation of right-size systems.
xv. To streamline project completion and to ensure that each
application represents one singular project, applications to install a
RES or an EEI at more than one location are no longer eligible. The
rationale is that it is more efficient in terms of application burden
for both applicants and the agency. This efficiency can be seen in the
way project eligibility must be demonstrated and assessed. An applicant
with a multi-location project would have to provide eligibility
information for each location and then the Agency would have to assess
the eligibility for each location. One example is that the applicant
must provide 12 months pre-installation and 12 months post-installation
of utility bills for all locations. By restricting to one location, we
remove the burden for the applicant and the agency in reviewing
multiple locations worth of 2 years of utility bills. Another example
is that a project with multiple locations would have to wait until the
RES or EEI is installed at all locations prior to applying. Different
locations may have different timelines and that could impact the
overall eligibility for the program.
xvi. To carry out the Secretary's Small Family Farms Agenda and in
response to feedback obtained during the normal course of business from
applicants and stakeholders, (1) ground mount solar photovoltaic and
wind turbines installed on certified Cropland, as defined by the Farm
Service Agency in 7 CFR 718.2, are not eligible; (2) solar photovoltaic
and wind systems that cannot document commensurate historical energy
usage are not eligible; and (3) solar photovoltaic and wind systems,
both ground mount and roof mount, consisting of any component made in a
country named as a foreign adversary are not eligible. Note that the
Agency has identified an exception for Projects completed prior to the
publication of the regulation to allow for potential applicants to
transition to

[[Page 62606]]

components made in countries not named as foreign adversaries.
xvii. To streamline program administration, flexible fuel pumps,
electric vehicles, electric vehicle chargers and charging stations are
identified as not eligible.
xviii. To preserve grant funds for projects that best fit the
statutory purposes of REAP, the following projects are not eligible for
REAP grant funds: (1) projects that include only moving Renewable
Energy from one point to another, for example Biogas pipelines; (2)
Retrofitting of an existing Renewable Energy System to add an energy
storage system; (3) stand-alone energy storage system projects.
xix. Regarding the eligibility of mobile systems, EEI projects to a
vehicle and RES projects that are not directly mounted on a vehicle
used to carry the Applicant's business operations are ineligible for
assistance. Examples of mobile systems that are not eligible are solar
panels and battery storage systems mounted on a trailer. This change
was made to clarify the eligibility of Projects involving mobile
systems. Examples of eligible mobile systems include, but are not
limited to, installing a solar panel on a food truck used by the
applicant to conduct business operations--such as powering the truck's
refrigeration system--or in alignment with Executive Order 14276,
improving the energy efficiency of a reverse osmosis system on a
fisherman's boat.
xx. The prohibition against systems that include a mechanism for
dispending energy at retail was moved from the definition section to
the section discussing eligibility to make the information easier to
find. Examples of dispensing energy at retail that are not eligible
includes electric vehicle chargers or charging stations and flexible
fuel pumps.
xxi. The regulation clarifies that distribution-only Projects are
ineligible. This information was previously discussed in the
definitions section regarding Renewable Energy Systems and was moved to
make the information easier to find. Examples of distribution-only
projects that are not eligible include Biogas pipelines.

Sec. 4280.123 Reserved Funds Eligibility

This section is changed from ``Awarding and administering RES and
EEI grants'' to ``Reserved funds eligibility.'' Information on award
notification is located under Sec. 4280.151.

Sec. 4280.124 Reserved

Information on servicing (now called monitoring) awards that is
specific to the Agency is now located under Sec. 4280.161. Other
information is located in 2 CFR part 200. Information on reporting
requirements is moved to Sec. 4280.160.

Sec. 4280.125 Use of Funds (Formerly Sec. .115(c) and (d))

This section is changed from ``Construction planning and performing
development'' to ``Use of funds.'' Information on maximum open and free
competition is now located under Sec. 4280.122. Information on
compliance with the Equal Employment Opportunity Act is now located
under Sec. 4280.122. Information on surety requirements is removed
because it is no longer needed. Information on grantees accomplishing
work is removed because it is no longer allowable based on the revised
conflict of interest policy in Sec. 4280.106. Information on forms
used is removed because it is no longer needed. Information on
technical services is located under Sec. 4280.122. Information on
design policies is located under Sec. 4280.122. This section now
includes allowable and unallowable uses of funds. This section
clarifies and expands the identification of allowable and unallowable
uses of funds.

Sec. 4280.131 Application Requirements (Formerly Sec. Sec.
4280.116(b), .117, .118, .119, .120)

This section streamlines the requirements for an application. The
statute requires three tiers of applications based on the cost of the
activity funded by this subpart, and all application requirements are
now located in this section. The Agency clarified the requirements and
categorized them by the type of eligibility requirement (i.e. applicant
or project) that the applicant must address. The requirements have also
been updated to reflect the current eligibility for the program and to
address the shift in project completion date. Formerly, information was
requested based on project estimates and expectations. Now, information
is requested based on actual project performance. Notable changes
include:
i. The technical merit provisions of the regulation, including the
appendices, have been streamlined given application volume. Specific
technical questions will be incorporated into the application process.
Projects will also be completed and operational prior to application
filing, thus reducing the risk that the Project might not be completed
and the Agency will have dedicated funding to a Project that is never
operational. The Agency will also require certifications described in
this section prior to payout.
ii. Former section 4280.125 Construction planning and performing
development has been removed from the regulation given that projects
will be complete prior to applying to the Agency. Applicants will be
advised to follow provisions noted in 2 CFR 200 regarding procurement
contracts, etc.
The applicant should consult with all applicable local, Tribal,
state and/or Federal agencies to understand its legal, regulatory, and
permitting obligations and liabilities. This includes consulting with
applicable entities to ensure compliance with requirements for
threatened and endangered species and cultural resources.
i. A change to application requirements that all Applicants must
provide business level financial statements. Project with total
projects costs of $200,000 or greater must also include two years of
pro-forma financial data.
ii. Added requirement for Applicants to identify the name and
percentage of foreign ownership to ensure the Agency can properly
evaluate Applicants.
iii. Added requirement to identify country of origin for solar
photovoltaic and wind turbine projects. This requirement applies to all
system components. For example, if the system is a solar photovoltaic,
the system components include the panel manufacturer, inverter
manufacturer, racking manufacturer, and monitoring software.

Sec. 4280.133 Submission Requirements (Formerly Sec. 4280.122)

This section provides specific information on the submission
period, the submission address, submission format, and number of
applications. This information was previously supplied in an annual
notice because the former section in the regulation was vague. The
Agency will publish annual application windows. REAP restricts
applicants to one application per federal fiscal year. For example, if
John Smith and Jane Doe own ABC Corporation, the Agency will only
accept one application from ABC Corporation. No additional applications
from ABC Corporation or from entities owned by John Smith or Jane Doe
would be accepted, including sole proprietorships. The program
previously restricted applicants to one RES application and one EEI
application per federal fiscal year. This restriction is implemented to
ensure better distribution of funding due to the historical
oversubscription of the program.

[[Page 62607]]

Sec. 4280.137 [Reserved]

The combined loan and grant and guaranteed loan funding
requirements formerly included in this section are no longer needed. An
applicant may separately apply for and separately receive a REAP
guaranteed loan under 7 CFR 5001 and a REAP grant under this subpart
for the same project. The 75% maximum REAP grant and guaranteed loan
funding limit is noted in Sec. 4280.122(b). REAP guaranteed loans will
follow provisions outlined in 7 CFR 5001.

Sec. 4280.140 Application Processing (Formerly Sec. Sec. 4280.116(c)
and .121)

This section combines all of the application evaluation information
in one section. It also adds eligibility evaluation and the agency's
risk evaluation process, which is required by 2 CFR 200.206. The merit
evaluation criteria, also called scoring criteria, have been revised to
better reflect the goals of the program, to remove duplication, and to
streamline the evaluation process. An example of standard rounding
practices used for scoring includes, if points are to be rounded to the
nearest hundredth, 57.567 will be rounded to 57.57; if points are
rounded to the nearest tenth, 91.44 will be rounded to 91.4; if points
are rounded to the nearest integer, 7.6 will be rounded to 8.

Sec. 4280.141 Application Withdrawal

This is a new section that explains how an Applicant can withdraw
an application from consideration. The language is consistent with
other Agency programs.

Sec. 4280.149 [Reserved]

The Applicant eligibility information formerly included in this
section has moved to 7 CFR part 4280 Subpart C.

Sec. 4280.150 Award Selection. (Formerly Sec. 4280.122)

The Project eligibility information formerly included in this
section is moved to 7 CFR4280 Subpart C. This section now includes
information on how the Agency will select applications for an award. We
have streamlined the process to simplify it and reduce burden. There
are no longer multiple State and national competitions. There is one
competition for applications of $20,000 or less and one national
competition that includes unsuccessful applications for the $20,000 or
less reserved funds and all other applications. To accommodate the lack
of State competitions, the Agency will select the top two highest
scoring applications in each State, provided those applications meet or
exceed the minimum score established, and then fund applications in
rank order until funds are expended or the minimum score is reached.

Sec. 4280.151 Notification of Successful Applicants (Formerly Sec.
4280.123)

The ineligible projects information formerly included in this
section is moved to 7 CFR 4280 Subpart C. This section now includes
information on how Applicants will be notified if their application is
selected for an award. This information has been streamlined and
reduces burden. The insurance coverage in former section 4280.123(b) is
no longer required. The matching funds information required in former
section 4280.123(d) is now part of the application process under the
new section 4280.131(a)(2)(O). The SAM registration information in
former section 4280.123(e) is now under the new section
4280.131(a)(1)(C). The Power Purchase Agreement required under former
section 4280.123(h) is now under the new section 4280.131(2)(C).

Sec. 4280.152 Notification of Unsuccessful Applicants (Formerly Sec.
4280.111(b))

The grant funding for Energy Audit and information formerly
included in this section is moved to 7 CFR part 4280 Subpart C. This
section now includes only information on how unsuccessful Applicants
will be notified.

Sec. 4280.153 Award Approval (Formerly Sec. 4280.123(f) and (g))

The information formerly included in this section is moved to 7 CFR
4280 Subpart C. This section now includes information only on how an
award is approved. This section clarifies that an award is approved
only upon a fully executed Form RD 4280-2 and explains that the Agency
will continue processing existing applications with a 1940-1 agreement
signed by the Applicant and the Agency before the effective date of
this regulation.

Sec. 4280.154-.159 [Reserved]

Sec. 4280.160 Reporting Requirements (Formerly Sec. 4280.124(i))

This section streamlines and updates the financial and performance
reporting requirements. Semi-annual reports, a final Project
development report, and Form RD 4280-3D ``Annual Outcome Project
Performance Certification'' are no longer required because the Project
must be completed at the time of application. Twelve (12) months of
actual energy generation or energy savings data will be provided at
time of application versus the two or three years of annual outcome
reports currently required. An Equipment report is added to the section
to clarify the requirements for Equipment reporting.

Sec. 4280.161 Monitoring Awards (Formerly Sec. 4280.124(h))

This section updates the description of how awards will be
monitored. The language in this section has been streamlined because
topics such as inspections, programmatic changes, prior approvals,
disposition of property, financial management, audits, payment,
monitoring, and close-out are addressed in 2 CFR 200 and supplemented
by the Financial Assistance Agreement. Including more detailed language
in this section would be duplicative.

Sec. 4280.162 Transfer of Obligations (Formerly Sec. 4280.124(c))

This new section addresses transfers of obligations, which was
previously covered in Sec. 4280.124(c). The previous version of the
regulation allowed an award or an obligation, to be transferred to a
new entity, provided certain conditions were met. However, because the
Projects must already be complete at the time of application, there is
no reason for a transfer of obligation under this revision.

Appendix A to Subpart B of Part 4280--Technical Reports for Energy
Efficiency Improvement (EEI) Projects

This appendix has been removed as specific technical questions will
be incorporated into Sec. 4280.131. Also, Projects must be complete
and operational prior to application filing thus reducing technical
risk.

Appendix B to Subpart B of Part 4280--Technical Reports for Renewable
Energy System (RES) Projects With Total Project Costs of Less Than
$200,000, But More Than $80,000

Appendix C to Subpart B of Part 4280--Technical Reports for Renewable
Energy System (RES) Projects With Total Project Costs of $200,000 and
Greater

[[Page 62608]]

Appendix D to Subpart B of Part 4280--Contents of Feasibility Study

This appendix has been removed and Sec. Sec. 4280.131(b) Project
Eligibility, technical sustainability, has been updated to reflect in
detail the items required in a Feasibility study.

B. Subpart C--Energy Audit and Renewable Energy Development Assistance
Grants

This subpart was created for the purpose of separating the program
requirements for the Energy Audit and Renewable Energy Development
Assistance Grants from the program requirements for the Renewable
Energy Systems and Energy Efficiency Improvement Grants. Those
requirements were formerly identified in Sec. Sec. 4280.149-.159 and
are now located in the following sections. Applicant eligibility
(formerly Sec. 4280.149) is located in section 4280.220. Project
Eligibility and Ineligible Projects (formerly Sec. Sec. 4280.150 and
.151) are located in section 4280.222. The maximum grant amount
(formerly Sec. 4280.152(a) is located in section 4280.220. Eligible
and ineligible Project Costs (formerly Sec. 4280.152(b) and (c)) are
located in section 4280.225. Application requirements (formerly Sec.
4280.153) are located in section 4280.231. Evaluation and scoring of
applications (formerly Sec. Sec. 4280.154 and .155) are located in
section 4280.240. Award selection (formerly Sec. 4280.156) is located
in 4280.250. Notification of successful Applicants and monitoring
(formerly Sec. Sec. 4280.158 and .159) are located in sections
4280.251, 4280.253, and 4280.261.
Sec. 4280.201 Purpose
This section was added to clearly state the purpose of the Energy
Audit and Renewable Energy Development Assistance program.
Sec. 4280.202 Organization of Subpart
This section was added to reflect the content in the sequence in
which it occurs during the application, award, and post-award
processes.
Sec. 4280.203 Acronyms
This section was added to make it easier for readers to quickly
identify frequently used acronyms.
Sec. 4280.204 Definitions
This section was added to be consistent with the way 2 CFR part 200
defines terms. See also the definitions from 7 CFR 4280.104 to
streamline this subpart and to ensure consistency with the Renewable
Energy Systems and Energy Efficiency Improvements Grant Program.
Council was removed from 7 CFR 4280.104 because it is not being
used in subpart B of this part. The definition was also and revised to
be consistent with 16 U.S.C. 3451.
Institution of Higher Education (IHE) was removed from 7 CFR
4280.104 and revised to be consistent with 2 CFR 200.1.
Key personnel was added to support the section on conflict of
interest in Sec. 4280.206 and to clarify Project eligibility
requirements in Sec. 4280.222.
Nonprofit organization was added to be consistent with 2 CFR part
200.
Public power entity was removed from 7 CFR 4280.104 and revised to
be consistent with 16 U.S.C. 824q(a)(4)
Renewable Energy development assistance was removed from 7 CFR
4280.104 and revised to clarify the types of assistance to be funded by
the program, including site-specific Feasibility Studies.
Renewable Energy site assessment was removed from 7 CFR 4280.104
and revised to ensure inclusion of key areas to be assessed.
Ultimate beneficiary was added to support the section on conflict
of interest in Sec. 4280.206 and to clarify Ultimate Beneficiary
eligibility requirements in Sec. 4280.221.
Sec. Sec. 4280.205 [Reserved]
Sec. 4280.206 Conflict of interest (Formerly Sec. 4280.106)
This section is updated to clarify with program related examples
which relationships and transactions are subject to the conflict of
interest policy as well as to include requirements identified in 2 CFR
parts 200 and 400. Examples of relationships and transactions that can
involve a COI include, but are not limited, to the following.
(1) Relationships. For the purposes of this subpart, relationships
among the following entities can involve a COI.
(i) Applicant. Applicant and its parent companies, affiliates,
subsidiaries, employees, consultants, contractors, and Immediate Family
members of any individual owners of the preceding entities;
(ii) Recipient. Recipient and its parent companies, affiliates,
subsidiaries, employees, consultants, contractors, and Immediate Family
members of any individual owners of the preceding entities;
(iii) Ultimate Beneficiary. Ultimate Beneficiary and its parent
companies, affiliates, subsidiaries, employees, consultants,
contractors, and Immediate Family members of any individual owners of
the preceding entities;
(iv) End Users. End Users and their parent companies, affiliates,
subsidiaries, employees, consultants, contractors, and Immediate Family
members of any individual owners of the preceding entities;
(v) System installers. System installers and their parent
companies, affiliates, subsidiaries, employees, consultants,
contractors, and Immediate Family members of any individual owners of
the preceding entities;
(vi) Service providers. Service providers, and their parent
companies, affiliates, subsidiaries, employees, consultants,
contractors, and Immediate Family members of any individual owners of
the preceding entities;
(2) Transactions. For the purposes of this subpart, all
transactions must be a transaction in which the involved parties act
independently and have no relationship to each other such that the
transaction allows the market to ensure both parties in the deal are
acting in their own self-interest and are not subject to any pressure
or duress from the other party. Transactions that can involve a COI
include, but are not limited to:
(i) Advances and reimbursements of Federal Award funds;
(ii) Cost Sharing;
(iii) Procurement contracts;
(iv) Agreements between the Ultimate Beneficiary and another
entity, including, but not limited to, Power Purchase Agreements, off-
take agreements, and lease agreements;
(v) Financing and other Project investments;
(vi) Feasibility Studies; and
(vii) Grant writing.
Sec. 4280.207 [Reserved]
Sec. 4280.208 Compliance With Other Laws and Regulations.
This section is added to clarify all levels of regulations that are
applicable to this program, including Federal, Departmental, and Agency
levels.
Sec. Sec. 4280.209-.219 [Reserved]
Sec. 4280.220 Applicant Eligibility (Formerly Sec. 4280.149)
This section is updated to alert Applicants with any percentage of
foreign investment or ownership that the Agency will evaluate the
entity's eligibility based on applicable law. This change was
implemented in alignment with Executive Order 14315, dated July 7,
2025, on ``Ending Market Distorting Subsidies For Unreliable, Foreign
Controlled Energy Sources''. We also revised the number of awards for
which

[[Page 62609]]

an Applicant is only eligible from one for EA and one for REDA to one
award per Federal Fiscal Year. This change allows funds to be
distributed among more entities.
Sec. 4280.221 Ultimate Beneficiary Eligibility
This section is added to clarify the eligibility requirements for
Ultimate beneficiaries.
Sec. 4280.222 Project Eligibility (Formerly Sec. Sec. 4280.150, .151,
.152)
This section updates the Project eligibility information by
providing clarity on Project eligibility. The Agency clarifies that
unrecovered indirect costs cannot be used for Cost Sharing and
conducting Feasibility Studies that are statewide or not site-specific
is not an eligible Project. It also clarifies the Agency's policy on
how it will handle unallowable costs in the proposed budget.
Sec. Sec. 4280.223-.224 [Reserved]
Sec. 4280.225 Use of Funds (Formerly Sec. 4280.152)
This section is revised to use the terms allowable and unallowable
use of funds instead of eligible and ineligible Project Costs, to be
consistent with terms used in 2 CFR 200. This section clarifies and
expands the identification of allowable and unallowable uses of funds
to address questions and concerns that have been identified in previous
funding cycles. Unallowable uses include: promotional items, raffles,
and more than 10 percent of Project Costs for outreach and marketing.
Sec. Sec. Section 4280.226-.229 [Reserved]
Sec. 4280.230 Notifications
This section is added to clarify the process that the Agency will
use to notify the public about the amount of funding available, future
requirements not addressed by the regulation, and other requirements
that may be subject to change, based on the language in that section.
Sec. 4280.231 Application requirements (Formerly Sec. 4280.153)
This section is updated to present the requirements in two distinct
categories: Applicant eligibility and Project eligibility. Added
requirements to explain how the Applicant meets one of the eligible
entity types. Added requirement for written commitments from ultimate
beneficiaries to support scoring edits. Provided greater detail
regarding items to include in the budget. Requires submission of
documents to evaluate quality of EA or REDA work products performed by
Applicants for both eligibility and scoring purposes. Revised the
number of applications that can be submitted to one application for
either EA or REDA.
Sec. 4280.232 [Reserved]
Sec. 4280.233 Submission Requirements (Formerly Sec. 4280.153)
This section provides specific information on the submission
period, the submission address, submission format and number of
applications. This information was previously supplied in an annual
notice because the former section in the regulation was vague.
Additionally, all applications must be submitted via <a href="http://grants.gov">grants.gov</a>.
Sec. Sec. 4280.234-.239 [Reserved]
Sec. 4280.240 Application Processing (Formerly Sec. Sec. 4280.154 and
.155)
This section combines all of the application evaluation information
in one section. It also adds completeness, eligibility evaluation and
the Agency's risk evaluation process, which is required by 2 CFR
200.206.
The risk evaluation process will evaluate financial and performance
risk. The Applicant must have current ratio of at least 1:1 and must
not have more than 2 performance deficiencies in order to be eligible.
The merit evaluation criteria, also called scoring criteria, have
been revised to better reflect the goals of the program, to remove
duplication, and to streamline the evaluation process. The criteria are
amended to focus on the quality of work products provided by Applicants
and to provide clarity on how points will be awarded within each
criteria. The Agency also removed points for award recognition because
they did not add value to the merit evaluation process. An example of
how the agency will round the percentage of cost share when scoring
includes, 10.45 percent will be rounded to 10.5 percent, whereas 25.44
percent will be rounded to 25.4 percent.
Sec. 4280.241 Application Withdrawal
This section was added to explain how an Applicant can withdraw an
application from consideration. The language is consistent with other
Agency programs.
Sec. Sec. 4280.242-.249 [Reserved]
Sec. 4280.250 Award Selection (Formerly Sec. 4280.156)
This section includes information on how the Agency will select
applications for an award. We have streamlined the process to simplify
it and reduce burden while preserving geographic distribution of
awards. The Agency will select the top two highest scoring applications
in each State, provided those applications meet or exceed the minimum
score established in this section, and then fund applications in rank
order until funds are expended or the minimum score is reached.
Sec. 4280.251 Notification of Successful Applicants
This section clarifies how Applicants will be notified if their
application is selected for an award.
Sec. 4280.252 Notification of Unsuccessful Applicants (Formerly Sec.
4280.156(d))
This section clarifies how unsuccessful Applicants will be notified.
Sec. 4280.253 Award Approval (Formerly Sec. Sec. 4280.123, .158,
.159)
This section clarifies the award approval process.
Sec. Sec. 4280.254-.259 [Reserved]
Sec. 4280.260 Reporting Requirements (Formerly Sec. 4280.159)
This section includes information on required financial status and
performance reports. The outcome Project performance report has been
removed and replaced with a requirement for Recipients to submit all
written work products to the Agency. The information on disbursements
has been removed and will be incorporated into the Financial Assistance
Agreement.
Sec. 4280.261 Monitoring Awards (Formerly Sec. 4280.159)
This section clarifies who will monitor the awards and identifies
potential reasons for suspension or termination of an award.
Sec. Sec. 4280.262-.298 [Reserved]
Sec. 4280.299 OMB Control Number
This section identifies the information collection approved to
collect the reporting and recordkeeping requirements in this subpart,
in accordance with the Paperwork Act of 1995.

V. Executive Orders/Acts

Executive Order 12372--Intergovernmental Consultation

These grants are not subject to the provisions of Executive Order
12372. The projects will be installed prior to application and
therefore consultation is not required.

Executive Order 12866 and 13563

This rule has been determined to be significant under section 3(f)
of

[[Page 62610]]

Executive Order 12866 (Regulatory Planning and Review) and was reviewed
by the Office of Management and Budget. Executive Order 13563
emphasizes the importance of quantifying both costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility. In
accordance with Executive Order 12866, an Economic Impact Analysis was
completed, outlining the costs and benefits of implementing this
program in rural America. The complete analysis is available from
<a href="http://Regulations.gov">Regulations.gov</a> by searching for the Docket number.

Executive Order 14192, Unleashing Prosperity Through Deregulation

Executive Order 14192, titled ``Unleashing Prosperity Through
Deregulation,'' requires that an agency, unless prohibited by law,
identify at least ten existing regulations to be repealed when the
agency publicly proposes for notice and comment or otherwise
promulgates a new regulation with total costs greater than zero.
Executive Order 14192 further requires that new incremental costs
associated with new regulations shall, to the extent permitted by law,
be offset by the elimination of existing costs associated with at least
ten prior regulations. This final rule is considered a deregulatory
action under Executive Order 14192.

Executive Order 12988--Civil Justice Reform

This rule has been reviewed under Executive Order 12988. In
accordance with this rule: (1) unless otherwise specifically provided,
all State and local laws that conflict with this rule will be
preempted; (2) no retroactive effect will be given to this rule except
as specifically prescribed in the rule; and (3) administrative
proceedings of the National Appeals Division of the Department of
Agriculture (7 CFR part 11) must be exhausted before bringing suit in
court that challenges action taken under this rule.

Executive Order 13132--Federalism

The policies contained in this rule do not have any substantial
direct effect on States, on the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on State and Local
Governments. Therefore, consultation with the States is not required.

Executive Order 13175--Consultation and Coordination With Indian Tribal
Governments

This interim rule has been reviewed in accordance with the
requirements of Executive Order 13175, Consultation and Coordination
with Indian Tribal Governments. Executive Order 13175 requires Federal
agencies to consult and coordinate with Tribes on a government-to-
government basis on policies that have Tribal implications, including
regulations, legislative comments or proposed legislation, and other
policy statements or actions that have substantial direct effects on
one or more Indian Tribes, on the relationship between the Federal
government and Indian Tribes or on the distribution of power and
responsibilities between the Federal government and Indian Tribes.
Consultation is also required for any regulation that preempts Tribal
law or that imposes substantial direct compliance costs on Indian
Tribal governments and that is not required by statute.
The Agency has determined that this rule does not, to our
knowledge, have Tribal implications that require Tribal consultation
under Executive Order 13175. If a Tribe requests consultation, RBCS
will work with the Office of Tribal Relations to ensure meaningful
consultation is provided to help inform where changes, additions and
modifications could be incorporated if they are not expressly mandated
by Congress.

Assistance Listing Number (Formally Known as the Catalog of Federal
Domestic Assistance)

The Assistance Listing Number assigned to the Rural Energy for
America Program is 10.868. The Assistance Listings are available at
<a href="https://sam.gov/">https://sam.gov/</a>.

Civil Rights Impact Analysis

Rural Development has reviewed this rule in accordance with USDA
Regulation 4300-4, Civil Rights Impact Analysis, to identify any major
civil rights impacts the rule might have on program participants on the
basis of age, race, color, national origin, sex, disability, marital or
familial status. Based on the review and analysis of the rule and all
available data, issuance of this Interim Rule is not likely to
negatively impact low and moderate-income populations, minority
populations, women, Indian Tribes or persons with disability, by virtue
of their age, race, color, national origin, sex, disability, or marital
or familial status. No major civil rights impact is likely to result
from this interim rule.

Congressional Review Act

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this final
rule as not a major rule, as defined by 5 U.S.C. 804(2).

E-Government Act Compliance

Rural Development is committed to the E-Government Act, which
requires Government agencies in general to provide the public the
option of submitting information or transacting business electronically
to the maximum extent possible and to promote the use of the internet
and other information technologies to provide increased opportunities
for citizen access to Government information and services, and for
other purposes.

National Environmental Policy Act

In accordance with the National Environmental Policy Act of 1969,
Public Law 91-190, this final rule has been reviewed in accordance with
7 CFR part 1b (``National Environmental Policy Act''). The Agency has
determined that i) this action meets the criteria established in 7 CFR
1b.4(c)(31) and ii) no extraordinary circumstances exist. Therefore,
the Agency has determined that the action does not have a significant
effect on the human environment, and therefore neither an Environmental
Assessment nor an Environmental Impact Statement is required.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 the Rural
Business-Cooperative Service (RBCS or Agency), an agency within the
United States Department of Agriculture (USDA), Rural Development (RD),
announces its intention to request a revision to a currently approved
information collection package for Rural Energy for America (REAP)
program. The Agency invites comments on this information collection for
which it intends to request approval from the Office of Management and
Budget (OMB).

DATES: Comments on this notice must be received by November 30, 2026
to be assured of consideration.

FOR FURTHER INFORMATION CONTACT: Lauren Cusick, RD Innovation Center--
Regulations Management Division, U.S. Department of Agriculture, 1400
Independence Avenue SW, Washington, DC 20250, Telephone: 202-720-1414,
email: <a href="/cdn-cgi/l/email-protection#db97baaea9beb5f598aea8b2b8b09baea8bfbaf5bcb4ad">[email&#160;protected]</a>.

[[Page 62611]]

SUPPLEMENTARY INFORMATION: The OMB regulation (5 CFR part 1320)
implementing provisions of the Paperwork Reduction Act of 1995 (Pub. L.
104-13) requires that interested members of the public and affected
agencies have an opportunity to comment on information collection and
recordkeeping activities (see 5 CFR 1320.8(d)). This notice identifies
an information collection that the Agency is submitting to OMB for
extension.
Comments are invited on (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the Agency, including whether the information will have practical
utility; (b) the accuracy of the Agency's estimate of the burden of the
proposed collection of information including the validity of the
methodology and assumptions used; (c) ways to enhance the quality,
utility and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on those who are
to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology.
Comments may be submitted electronically by the Federal eRulemaking
Portal, <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>. In the ``Search for dockets and
documents on agency actions'' box enter the Docket No. RBS-26-Business-
0529 and click the ``Search'' button. From the search results, click on
or locate the document title: ``Notice of Extension of a Currently
Approved Information Collection'' and select the ``Comment'' button.
Before inputting comments, commenters may review the ``Commenter's
Checklist'' (optional). To submit a comment: Insert comments under the
``Comment'' title, click ``Browse'' to attach files (if available),
input email address, select box to opt to receive email confirmation of
submission and tracking (optional), select the box ``I'm not a robot,''
and then select ``Submit Comment.'' Information on using
<a href="http://Regulations.gov">Regulations.gov</a>, including instructions for accessing documents,
submitting comments, and viewing the docket after the close of the
comment period, is available through the site's ``FAQ'' link. All
comments will be available for public inspection online at the Federal
eRulemaking Portal (<a href="http://www.regulations.gov">www.regulations.gov</a>).
A federal agency may not conduct or sponsor, and a person is not
required to respond to, nor shall a person be subject to a penalty for
failure to comply with a collection of information subject to the
requirements of the Paperwork Reduction Act unless that collection of
information displays a currently valid OMB Control Number. Data
furnished by the applicants will be used to determine eligibility for
program benefits. Furnishing the data is voluntary; however, failure to
provide data could result in program benefits being withheld or denied.
Title: Rural Energy for America (REAP) program.
OMB Control Number: 0570-0067.
Type of Request: Revision of a currently approved information
collection.
Abstract: The primary purpose of REAP is to provide guaranteed loan
financing and grant funding to agricultural producers and rural small
businesses for renewable energy systems (RES) or to make energy
efficiency improvements (EEI). RES and EEI projects will be scored and
awarded in accordance with 7 CFR 4280.140. The REAP program also offers
grant funding to assist agricultural producers and rural small
businesses to conduct energy audits (EA) and provide recommendations
and information on renewable energy development assistance (REDA). EA
and REDA projects will be scored and awarded in accordance with 7 CFR
4280.240.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 1.34 hours per response.
Respondents: Nonprofit corporations and institutions of higher
education.
Estimated Number of Respondents: 2,977.
Estimated Number of Responses per Respondent: 37.64.
Estimated Number of Responses: 112,073.
Estimated Total Annual Burden on Respondents: 150,883 hours.
Copies of this information collection can be obtained from Kimble
Brown, RD Innovation Center--Regulations Management Division,
Telephone: 202-720-6780, email: <a href="/cdn-cgi/l/email-protection#e9a280848b858cc7ab9b869e87a99c9a8d88c78e869f">[email&#160;protected]</a>.
All responses to this notice will be summarized and included in the
request for OMB approval. All comments will also become a matter of
public record.

Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601-602) (RFA) generally
requires an agency to prepare a regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act (``APA'') or any other statute. The
Administrative Procedures Act exempts from notice and comment
requirements rules ``relating to agency management or personnel or to
public property, loans, grants, benefits, or contracts'' (5 U.S.C.
553(a)(2)), so therefore an analysis has not been prepared for this
rule.

Severability

It is USDA's intention that the provisions of this rule shall
operate independently of each other. In the event that this rule or any
portion of this rule is ultimately declared invalid or stayed as to a
particular provision, it is USDA's intent that the rule nonetheless be
severable and remain valid with respect to those provisions not
affected by a declaration of invalidity or stayed. USDA concludes it
would separately adopt all of the provisions contained in this final
rule.

USDA Non-Discrimination Statement

In accordance with Federal civil rights laws and USDA civil rights
regulations and policies, the USDA, its Mission Areas, agencies, staff
offices, employees, and institutions participating in or administering
USDA programs are prohibited from discriminating based on race, color,
national origin, religion, sex, disability, age, marital status,
family/parental status, income derived from a public assistance
program, political beliefs, or reprisal or retaliation for prior civil
rights activity, in any program or activity conducted or funded by USDA
(not all bases apply to all programs). Remedies and complaint filing
deadlines vary by program or incident.
Persons with disabilities who require alternative means of
communication to obtain program information (e.g., Braille, large
print, audiotape, American Sign Language, etc.) should contact the
State or local Agency that administers the program or contact USDA
through the Telecommunications Relay Service at 711 (voice and TTY).
Program information may be made available in languages other than
English.
To file a program discrimination complaint, a complainant should
complete a Form AD-3027, USDA Program Discrimination Complaint Form,
which can be obtained online at <a href="https://www.usda.gov/sites/default/files/documents/ad-3027.pdf">https://www.usda.gov/sites/default/files/documents/ad-3027.pdf</a> and at any USDA office or write a letter
addressed to USDA and provide in the letter all of the information
requested in the form. To request a copy of the complaint form, call
(866) 632-9992. Submit your completed form or letter to USDA by:
a. Mail: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW, Mail Stop
9410, Washington, DC 20250-9410; or

[[Page 62612]]

b. Fax: (202) 690-7442; or
c. Email: <a href="/cdn-cgi/l/email-protection#afdfddc0c8ddcec281c6c1dbcec4caefdadccbce81c8c0d9">[email&#160;protected]</a>.
USDA is an equal opportunity provider, employer, and lender.

List of Subjects in 7 CFR Part 4280

Business and industry, Energy, Grant programs--business, Loan
programs--business, Rural areas.

Accordingly, for the reasons set forth in the preamble, the Agency
amends 7 CFR part 4280 as follows:

PART 4280--LOANS AND GRANTS

0
1. The authority citation for part 4280 is revised to read as follows:

Authority: 7 U.S.C. 1989(a), 5 U.S.C. 301, 7 U.S.C. 8107, 7
U.S.C. 2008s.

0
2. Revise and republish subpart B to read as follows:

Subpart B--Rural Energy for America Program--Grants for Renewable
Energy Systems and Energy Efficiency Improvements

Sec.
4280.101 Purpose.
4280.102 Organization of subpart.
4280.103 Acronyms.
4280.104 Definitions.
4280.105 [Reserved]
4280.106 Conflict of interest.
4280.107 [Reserved]
4280.108 Compliance with other laws and regulations.
4280.109-4280.119 [Reserved]
4280.120 Applicant eligibility.
4280.121 [Reserved]
4280.122 Project eligibility.
4280.123 Reserved funds eligibility.
4280.124 [Reserved]
4280.125 Use of funds.
4280.126-4280.130 [Reserved]
4280.131 Application requirements.
4280.132 [Reserved]
4280.133 Submission requirements.
4280.134-4280.139 [Reserved]
4280.140 Application processing.
4280.141 Application withdrawal.
4280.142-4280.149 [Reserved]
4280.150 Award selection.
4280.151 Notification of successful applicants.
4280.152 Notification of unsuccessful Applicants.
4280.153 Award approval.
4280.154-4280.159 [Reserved]
4280.160 Reporting requirements.
4280.161 Monitoring awards.
4280.162 Transfer of obligations.
4280.163-4284.198 [Reserved]
4280.199 OMB control number.

Sec. 4280.101 Purpose.

This subpart contains the procedures and requirements for providing
financial assistance under the Rural Energy for America Program (REAP)
through grants to purchase and install a Renewable Energy System (RES)
or make Energy Efficiency Improvements (EEI).

Sec. 4280.102 Organization of subpart.

The information in this subpart is organized into six main topics.
(a) General information. Sections 4280.101 through 4280.119 discuss
the purpose of the program, definitions, conflict of interest, and
compliance with other laws and regulations.
(b) Eligibility information. Sections 4280.120 through 4280.129
discuss the eligibility requirements for the program. These sections
include information on Applicant eligibility, Project eligibility, and
the use of funds. See Sec. 4280.122 for information about award
amounts, Project Period, and Cost Sharing requirements.
(c) Application requirements information. Sections 4280.131 through
4280.139 discuss the requirements for submitting an application. These
sections include information on what forms and other information are
required for a complete application as well as the format of the
application, the application submission deadline, and how to submit the
application.
(d) Application processing information. Sections 4280.140 through
4280.149 discuss how the Agency processes applications. These sections
include information on how applications are reviewed for eligibility,
how applications are evaluated for merit, and how an Applicant can
withdraw an application from consideration.
(e) Award information. Sections 4280.150 through 4280.159 discuss
how the Agency makes awards. These sections include information about
how applications are selected for funding, how Applicants are notified
whether their applications have been selected for funding, how
Applicants can resolve disputes regarding funding selections, and the
requirements for an Applicant to accept an award and be approved as a
Recipient of an award.
(f) Post-award information. Sections 4280.160 through 4280.161
discuss the reporting requirements for Recipients as well as monitoring
procedures that the Agency will use.
(g) Other. (1) Sections 4280.162 through 4280.198 are reserved.
(2) Section 4280.199 includes the Office of Management and Budget
(OMB) control number for reporting and recordkeeping requirements under
this subpart.

Sec. 4280.103 Acronyms.

(a) BESS Battery Energy Storage System.
(b) BTU British Thermal Unit.
(c) CFR Code of Federal Regulations.
(d) COI Conflict of Interest.
(e) CSP Concentrated Solar Power.
(f) EA Energy Audit.
(g) EEI Energy Efficiency Improvement.
(h) EV Electric Vehicle.
(i) FAA Financial Assistance Agreement.
(j) FFY Federal Fiscal Year.
(k) kW Kilowatts.
(l) kWh Kilowatt-Hours.
(m) LCFS Low Carbon Fuel Standard.
(n) LOC Letter of Conditions.
(o) MW Megawatts.
(p) MWh Megawatt-Hours.
(q) PV Photovoltaic.
(r) RES Renewable Energy System.
(s) RIN Renewable Identification Number (as issued under the
Renewable Fuels Standard Program).
(t) SAM System for Award Management.
(u) UEI Unique Entity Identifier.
(v) U.S.C. United States Code.
(w) USDA United States Department of Agriculture.

Sec. 4280.104 Definitions.

These are the definitions for terms used in this subpart. All
defined terms used in this subpart are capitalized.
Agency means the Rural Business-Cooperative Service, an agency of
the United States Department of Agriculture, or a successor agency.
Agricultural commodity means an unprocessed product of Farms,
Ranches, nurseries forests, and natural and man-made bodies of water
that the Agricultural Producer has cultivated, raised, or harvested
with legal access rights. Agricultural Commodities include plant and
animal products and their by-products, such as crops, forestry
products, hydroponics, nursery stock, aquaculture, meat, on-Farm
generated manure, and fish and seafood products. Agricultural
Commodities do not include animals raised or sold as pets, such as
cats, dogs, and ferrets.
Agricultural producer means a For-Profit Organization that produces
or has the legal right to harvest an Agricultural Commodity and meets
one of the following ownership structures:
(1) A tribal corporation or other business entity wholly owned by
an Indian Tribe. The tribal corporation or business is wholly owned by
an Indian Tribe. The tribal corporation or business must participate in
or oversee the day-to-day labor and/or management and field operations,
whereby 50 percent or greater of their gross income is derived from the
agricultural operations based on the most recent complete calendar
year.

[[Page 62613]]

(2) 100 percent ownership by an individual or an individual and
their Immediate Family. The organization is 100 percent owned and
operated by an individual or by an individual and their Immediate
Family. All owners must participate in the day-to-day labor,
management, and/or field operations of the organization. The majority-
owner of the organization must derive at least 50 percent of their
income from the agricultural operations. The income is based on the
most recent complete calendar year. In the case of ownership by an
individual and their spouse, the individual and their spouse are
considered as one owner for the purpose of determining majority
ownership.
Anaerobic digester means a Renewable Energy System that uses animal
waste or other Renewable Biomass and may include other organic
substrates to produce digestate and Biogas that may be sold in a
gaseous or compressed liquid state or used to produce thermal or
electrical energy.
Ancillary infrastructure means the supplementary components and
systems that support a Renewable Energy System, such as energy storage
that does not generate or save energy.
Annual energy production means the measured annual output of energy
produced by a Renewable Energy System as measured by a meter at the
common point of electrical coupling (e.g., an inverter). It is
typically reported using kWh or MWH as units of energy measurement. For
example, 21,900 kWh/year will be produced by the solar photovoltaic
system.
Applicant means the legal entity submitting an application to
participate in the competition for program funding.
Battery energy storage system (BESS) means a device that uses
rechargeable batteries to store electrical energy for later use.
Bioenergy project means a Renewable Energy System that produces
fuel, Biogas, thermal energy, or electric power from a Renewable
Biomass source only.
Biogas means gaseous fuel (including landfill and sewage waste
treatment gas) derived from the degradation and decomposition of
Renewable Biomass. Feedstock segregation is not a requirement given the
Biogas is derived only from the degradation and decomposition of
Renewable Biomass. Examples of acceptable Renewable Energy Biogas
Projects may include: production of Biogas for conversion to
electricity or heat; production of Biogas to pipeline quality renewable
natural gas; production of Biogas to compressed natural gas used as a
non-retail transportation or other fuel; or an upstream system that
distributes existing Biogas to its initial point of sale.
Byproduct means an incidental or secondary product, regardless of
whether it has a readily identifiable commercial use or value,
generated under normal operations of the proposed Project that can be
reasonably measured and monitored.
Commercially available means a domestic or foreign Renewable Energy
System or Energy Efficiency Improvement, and their components, that
meets all the following requirements:
(1) Has both a proven and reliable operating history and proven
performance data for at least one year specific to the operation and
use, including the specific feedstock used and specific process used to
create or save energy. The history and data must be obtained from
another source than the Applicant's use of the RES or EEI for the
Project.
(2) Is based on established design and installation procedures and
practices and is replicable.
(3) Has professional service providers, trades, large construction
Equipment providers, and laborers who are familiar with installation
procedures and practices.
(4) Has proprietary and balance of system Equipment and spare parts
that are readily available.
(5) Has service that is readily available to properly maintain and
operate the system.
(6) Has an existing established warranty that is valid in the
United States for major parts and labor.
Cost sharing has the meaning located at 2 CFR 200.1.
Cropland has the meaning located at 7 CFR 718.2.
Distribution components mean the physical and operational
infrastructure necessary to convey the following:
(1) Energy produced by a Renewable Energy System from its point of
generation to the initial point of sale; or
(2) Inputs or feedstocks to a Renewable Energy System. This
includes Equipment and systems that utilize Renewable Energy for
upstream applications, regardless of ownership by an entity other than
the original energy producer.
End user means a consumer that uses or purchases the proposed
energy to be generated or saved.
Energy assessment means a report conducted and signed by an Energy
Auditor or Energy Assessor that assesses energy use, cost, and
efficiency by analyzing energy bills and surveying the target building
and/or Equipment.
Energy assessor means an independent professional who has at least
three years of experience and completed at least five Energy
Assessments or Energy Audits on similar type Projects and who adheres
to generally recognized engineering principles and practices.
Energy audit (EA) means a comprehensive report prepared and signed
by an Energy Auditor. It documents current energy usage; recommended
potential improvements (typically called energy conservation measures)
and their costs; energy savings from these improvements; dollars saved
per year; and Simple Payback. The methodology of the Energy Audit must
meet professional and industry standards such as the standards set
forth in the American Society of Heating, Refrigeration and Air-
Conditioning Engineers (ASHREA) Level II Energy Survey; American
National Standards Institute (ANSI); or American Society of
Agricultural and Biological Engineers (ASABE) S162 Standard for
performing on-Farm Energy Audits.
Energy auditor means an independent professional that meets one of
the following criteria:
(1) An Energy Auditor certified by the Association of Energy
Engineers;
(2) An energy manager certified by the Association of Energy
Engineers;
(3) A licensed professional engineer in the State in which the
audit is conducted who has at least one year of experience and who has
completed at least two similar Energy Audits; or
(4) An individual with a four-year engineering or architectural
degree who has at least three years of experience and who has completed
at least five similar Energy Audits.
Energy efficiency improvement (EEI) means improvements to an
existing building or systems and/or improvements or replacement of
Equipment, owned by the Applicant, that reduces energy consumption on
an annual basis for the Agricultural Producer's or Rural Small
Business' operations.
Equipment has the meaning located at 2 CFR 200.1.
Existing business means a business that has been producing and
delivering goods or providing services for at least one full year. The
following will be treated as Existing Business provided there is not a
significant change in operations of the Existing Business: Mergers by
an Existing Business with a new or Existing Business, a change in
business name.
Farm or Ranch means any place from which $1,000 or more of
Agricultural

[[Page 62614]]

Commodities were raised and sold or would have been raised and sold
during the previous year, but for an event beyond the control of the
farmer or rancher. It does not include ``hobby farms,'' where less than
50 percent of the gross income of the majority owner is derived from
its operation. In the case of ownership by an individual and their
spouse, the individual and their spouse are considered as one owner for
the purpose of determining majority ownership.
Feasibility study means a report, conducted by an independent
professional possessing relevant knowledge, expertise, and experience,
that includes an opinion or finding evaluating the economic, market,
technical, financial, and management feasibility of a proposed Project
or operation located at a specific site in terms of its expectation for
success.
Federal award has the meaning located at 2 CFR 200.1.
Federal fiscal year means the 12-month period beginning October 1
of each year and ending on September 30 of the following year; it is
designated by the calendar year in which it ends.
Financial assistance agreement (FAA) means an agreement between the
Agency and the Recipient setting forth the terms and conditions under
which the Federal Award will be administered. The FAA is executed using
Form RD 4280-2.
For-profit organization has the meaning located at 2 CFR 200.1.
Geothermal direct generation system means a Renewable Energy System
that uses thermal energy directly from Geothermal Sources.
Geothermal electric generation system means a Renewable Energy
System that uses thermal energy from a Geothermal Source to produce
electricity.
Geothermal source means the earth's natural underground heat
reservoir.
Highest-level owner means the entity applying does not have any
other entity that owns or controls it.
Hybrid system means a combination of two or more Renewable Energy
technologies that are incorporated into a unified system to support a
single Project.
Hydroelectric system means a Renewable Energy System producing
electricity using various sources of moving water including, but not
limited to, diverted run-of-river water, in-stream run-of-river water,
and in-conduit water.
Hydrogen system means a Renewable Energy System that produces
hydrogen derived from a Renewable Biomass or water using wind, solar,
ocean (including tidal, wave, current, and thermal), geothermal, or
hydroelectric sources as an energy transport medium in the production
of mechanical or electric power or thermal energy.
Immediate family means individuals who are closely related by
blood, marriage, or adoption, or live within the same household, such
as a spouse, domestic partner, parent, child, sibling, aunt, uncle,
grandparent, grandchild, niece, or nephew.
Indian Tribe has the meaning located at 25 U.S.C. 5304.
Inspector means an independent professional who has at least three
years of experience and has completed at least five inspections on
similar type Projects.
Interconnection agreement means a contract containing the terms and
conditions governing the interconnection and parallel operation of the
electric generation Equipment and the End User or the Biogas production
system and gas pipeline.
Key service providers means developers, general contractors,
project managers, subcontractors, electricians, plumbers, foundation
and framing crews, HVAC technicians, professional engineers,
consultants, Energy Auditors, or any other qualified professional who
provides services to the Project. They must be licensed to do work in
the State of Project, if licensing is applicable.
Kilowatt (kW) means a metric unit of power that measures the rate
of energy consumption. It is equal to 1,000 watts, which is equivalent
to 1.34 horsepower.
Kilowatt-hour (kWh) means a measure of energy used to quantify how
much electricity is consumed or produced within a one-hour period. It
is equivalent to one Kilowatt of power used continually for one hour.
Letter of conditions (LOC) means the letter that the Agency issues
to an entity whose application is selected for funding. The letter
outlines all the conditions of the award that must be met before the
award can be approved.
Local Government means a legally established governing body that
manages public administration and services within a defined local area,
including but not limited to a county, municipality, city, town,
township, local public authority, school district, special district,
intrastate district, council of governments, or any agency or
Instrumentality of such entities.
Megawatt (MW) means a unit of power equal to 1,000,000 watts. It is
commonly used to measure the power output of large power plants, wind
turbines, solar farms, and other large-scale power generation
Equipment.
Megawatt-hour (MWh) means a measure of energy used to quantify how
much electricity is consumed or produced within a one-hour period. One
Megawatt-hour is equivalent to one Megawatt of power used continually
for one hour.
Metering agreement means the agreement between an entity and the
utility company regarding how energy will be valued or credited to the
entity
Ocean energy means energy created by use of various types of moving
water in the ocean and other large bodies of water (e.g., Great Lakes)
including, but not limited to, tidal, wave, current, and thermal
changes.
Off-grid system means a self-sustaining energy system that operates
independently of private or publicly-managed utilities.
Period of performance has the meaning located at 2 CFR 200.1.
Project period means the timeframe during which allowable Project
costs are incurred. It is based on the development, design, and
installation of the RES or EEI and must be no more than 24 months. The
Project Period ends no later than 30 days after the RES or EEI is
installed and the end date must be between 12 and 24 months prior to
the submission of an application. With the exception that for the first
application window following the release of the updated regulation the
Project Period end date may be between 12 and 36 months prior to
submission of the application.
Power purchase agreement means the terms and conditions governing
the sale and transportation of power produced by the Applicant to a
third party. It must include energy quantity, connection point, and
revenue to be paid by buyer to seller.
Principals means the following:
(1) Individuals or Indian Tribe who own the Applicant;
(2) Individuals who are responsible for handling Federal funds
associated with the Project; and
(3) Individuals who are responsible for overseeing the Project (for
example, the Executive Director, or individual who has signature
authority for the Applicant).
Project means all of the allowable activities to be funded by the
Federal Award and Cost Share.
Project cost has the meaning located at 2 CFR 200.1.
Ranch has the meaning located under Farm in this section.
Rated system size means the maximum output of power, usually in
Kilowatts or Megawatts as units of energy measurement, that a generator
or energy resource is designed to produce under specific conditions as
specified by the manufacturer of the Renewable Energy System. For
example, a 10 kW

[[Page 62615]]

solar photovoltaic system has a rated size of 10 kW.
Real property has the meaning located at 2 CFR 200.1.
Recipient has the meaning located at 2 CFR 200.1.
Refurbished means a piece of Equipment or RES that has been brought
into a commercial facility, has been thoroughly inspected, had worn
parts replaced, and has a warranty that is approved by the Agency.
Renewable biomass means:
(1) Materials, pre-commercial thinnings, or invasive species from
National Forest System land or public lands (as defined in section 104
of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702))
that:
(i) Are Byproducts of preventive treatments that are removed to
reduce hazardous fuels; to reduce or contain disease or insect
infestation; or to restore ecosystem health;
(ii) Would not otherwise be used for higher-value products; and
(iii) Are harvested in accordance with applicable law and land
management plans and the requirements for old-growth maintenance,
restoration, and management direction of paragraphs (2), (3), and (4)
of subsection (e) of section 102 of the Healthy Forests Restoration Act
of 2003 (16 U.S.C. 6512) and large-tree retention of subsection (f) of
section 102; or
(2) Any organic matter that is available on a renewable or
recurring basis from non-Federal land or land belonging to an Indian or
Indian Tribe that is held in trust by the United States or subject to a
restriction against alienation imposed by the United States, including
the following items:
(i) Renewable plant material (including feed grains; other
agricultural commodities; other plants and trees; and algae); and
(ii) Waste material including crop residue; other vegetative waste
material (including wood waste and wood residues); animal waste and
Byproducts (including fats, oils, greases, and manure); and food waste
and yard waste.
Renewable energy means energy derived from--
(1) A wind, solar, Renewable Biomass, ocean (including tidal, wave,
current, and thermal), geothermal or hydroelectric source; or
(2) Hydrogen derived from Renewable Biomass or water using an
energy source described in paragraph (1) in this definition.
Renewable energy system (RES) means a system that produces usable
energy from a Renewable Energy source and:
(1) May include Distribution Components necessary to move energy
produced by such a system to initial point of sale; and
(2) May include other components and Ancillary Infrastructure of
such system, such as a storage system.
(3) Does not include a mechanism for dispensing energy at retail.
(4) Is divided into four subcategories under this subpart:
(i) Energy replacement systems are those that replace 120 percent
or less of the annual energy use prior to installation of the RES,
where annual energy use is calculated using the 12 months prior to
installation.
(ii) Energy generation systems are those that produce energy in
excess of 120 percent of annual energy use prior to installation of the
RES, where annual energy use is calculated using the 12 months prior to
installation.
(iii) Retrofitting an existing RES.
(iv) Distribution Components and Ancillary Infrastructure as part
of an RES.
Resource assessment means a report that describes the quality and
availability of the renewable resource and the amount of Renewable
Energy generated through the deployment of the proposed system.
Retrofitting means adding Equipment or processes to or altering or
enhancing an existing Renewable Energy System to improve production,
efficiency, or financial viability or for the replacement of existing
components with components that improve the original design. Activities
that are considered operations and maintenance of existing assets to
ensure they function properly and safely are not Retrofitting. Examples
of Retrofitting include, but are not limited to:
(1) Installing a feedstock pre-treater on an existing biodiesel
production plant;
(2) Installing a steam turbine at an ethanol plant; or
(3) Taking an existing wind turbine and installing newly designed
blades to enhance energy production;
Rural or Rural area means any area of a State not in a city or town
that has a population of more than 50,000 inhabitants, not in the
urbanized area contiguous and adjacent to a city or town that has a
population of more than 50,000 inhabitants, and excluding certain
populations pursuant to 7 U.S.C. 1991(a)(13)(H) and (I). For
information on ``string exclusions'' and ``rural in character''
determinations, please consult the Agency website.
Rural small business. A Small Business that is located in a Rural
area.
Simple payback means a calculation assessing the financial
feasibility of the RES or EEI. See below for how to calculate it based
on Project type.
(1) RES Simple Payback = (Project Cost) / (dollar value of energy
units replaced, credited, sold, or used and fair market value of
Byproducts as applicable in a typical year).
(i) The value of energy replaced will be calculated based on the
Applicant's historical energy consumption with actual average price
paid for the energy replaced, as documented by 12 consecutive months of
utility bills prior to the installation of the system. For the average
price paid, the following charges must be excluded: fixed meter charge,
demand charges, subsidy charges, and sales tax. In the case of Off-Grid
Systems, the historical energy consumption must be documented through a
written statement from the utility company that services the Project
location that identifies the average price per kW hour for the 12-month
period prior to installation.
(ii) The value of energy credited or sold will be calculated based
on the amount of energy units to be credited or sold at the actual rate
per unit, as documented in utility net metering or crediting policies
and/or a Power Purchase Agreement.
(iii) The value of Byproducts produced by and used in the project
or related enterprises must be documented at the fair market value to
be received for the Byproducts in a typical year.
(iv) The calculation does not include any one-time benefits such
as, but not limited to, construction and investment-related benefits,
nor credits which do not provide annual income to the project, such as
tax credits.
(2) EEI Simple Payback = (Project Cost) / (dollar value of energy
saved).
(i) Energy saved will be determined by subtracting the actual
energy consumed from the historical energy consumed and converting the
result to a monetary value using a constant value or price of energy.
(A) Actual energy used in the original building and/or Equipment,
as applicable, prior to the EEI Project, must be based on the actual
average annual total energy used in British thermal units (BTU) over
the most recent 12, 24, 36, 48, or 60 consecutive months of operation,
as documented in utility bills and summarized in the Energy Audit or
Energy Assessment.
(B) Actual energy use after the EEI project has been in place for
the original building and/or Equipment, as applicable, for 12 months
post-installation of the EEI Project, to include the same input and
output conditions.

[[Page 62616]]

(C) Value or price of energy must be the actual average price paid
over the same time period used to calculate the actual energy used.
When calculating the actual average price of energy, only include
energy charges directly reduced by the unit of energy being replaced or
saved. For the average price paid, the following charges must be
excluded: fixed meter charge, demand charges, subsidy charges, and
sales tax.
(ii) The EEI projects Simple Payback calculation does not allow
Applicants to monetize EEI benefits other than the dollar amount of the
energy savings the Agricultural Producer or Rural Small Business
realizes as a result of the improvement.
Small business means a business entity organized for profit that is
independently owned and operated and that meets the definition of
``business concern'' located at 13 CFR 121.105 and meets the criteria
located at 13 CFR 121.301(b) and (f) and meets the size threshold
established by 13 CFR 121.201.
Solar electric means the conversion of energy from sunlight into
electricity either directly using photovoltaics (PV) or indirectly
using concentrated solar power (CSP).
Solar thermal means converting sunlight into heat for use in
industry.
State means any of the 50 States of the United States, the
Commonwealth of Puerto Rico, the District of Columbia, the U.S. Virgin
Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana
Islands, the Republic of Palau, the Federated States of Micronesia, and
the Republic of the Marshall Islands.
Used Equipment means any Equipment that has been used and is
provided in an ``as is'' condition.
Useful life means estimated durations of utility placed on the RES
or EEI. Useful life estimations terminate at the point when assets are
expected to become obsolete, require major repairs, or cease to deliver
economical results. The Agency determines the useful life of the RES or
EEI based on the technology type and system components.
Wind energy means a Renewable Energy System that harnesses the
power of the wind to generate electricity.

Sec. 4280.105 [Reserved]

Sec. 4280.106 Conflict of interest.

No conflict of interest will be allowed.
(a) Description. A conflict of interest (COI) occurs when an
individual or entity has a competing personal, professional, or
financial interest that may make it difficult for the individual or
entity to act impartially
(b) Recipient conflicts of interest. Recipients must comply with 2
CFR 400.2, regarding written disclosure, employee and organizational
conflicts of interest, and internal controls.
(c) Assistance to employees, relatives, and associates. The Agency
will process any requests for financial assistance under this subpart
in accordance with 7 CFR part 1900, subpart D.
(d) Member/delegate clause. No member of or delegate to Congress
shall receive any share or part of the financial assistance awarded
through this subpart or any benefit that may arise therefrom; provided,
however, that this provision shall not be construed to bar, as a
contractor under the Federal Award, a publicly held corporation whose
ownership might include a member of Congress.

Sec. 4280.107 [Reserved]

Sec. 4280.108 Compliance with other laws and regulations.

Applicants and Recipients must comply with all applicable laws and
regulations.

Sec. Sec. 4280.109-4280.119 [Reserved]

Sec. 4280.120 Applicant eligibility.

Applicants must meet the following requirements to be eligible for
financial assistance through this program.
(a) Eligible entities. Entities are eligible for assistance through
this program if all the following requirements are met:
(1) System for Award Management (SAM) registration and Unique
Entity Identifier (UEI). Applicants and Recipients must be registered
in SAM. This registration must remain current, accurate, and complete
at the time of application, while the application is under
consideration for funding, and while a Recipient has an active Federal
Award. This registration includes obtaining a UEI, or its successor,
and completing the process for ``All Awards'' through <a href="http://SAM.gov">SAM.gov</a>. When
registering in <a href="http://SAM.gov">SAM.gov</a>, all Applicants must select the All Awards
option.
(2) Small Business Administration (SBA) profile. An Applicant
applying as a Rural Small Business must establish and maintain an
active SBA profile within <a href="http://SAM.gov">SAM.gov</a> and be identified as a Small Business
through the Small Business Search feature, or its successor.
(3) Legal authority. Each Applicant must have the legal authority
necessary to apply for and carry out the purpose of the Federal Award.
(4) Entity type. The Applicant must be organized or incorporated
under State. Tribal, or Federal law and must meet the definition of an
Agricultural Producer or Rural Small Business at the time of
application.
(5) Existing Business. The Applicant must be an Existing Business
at least 12 months prior to the start of the Project Period.
(6) Ownership and control. The Applicant must be the Highest-Level
Owner or wholly owned by an Indian Tribe. All Applicants must own the
RES or EEI that is the subject of the Project and own or control the
site for the Project. This ownership must be in place at least 12
months prior to the Project Period for the Project through the time of
application and continue until the final payment is disbursed for the
Project.
(7) Financial capability. The Applicant is financially sustainable
and can maintain the Project into the future.
(i) Current ratio. The balance sheet from the Applicant's most
recent fiscal year must show a current ratio of at least 1:1, which
means that its current liabilities do not exceed its current assets.
(ii) Cash flow. The cash flow statement for the Applicant's most
recent fiscal year must show a positive cash flow.
(iii) Revenue. The Applicant must have available at the time of
application satisfactory sources of revenue in an amount sufficient to
provide for the operation, management, maintenance, and any debt
service of the Project for the Useful Life of the Project. In addition,
the Applicant must control the revenues and expenses of the Project,
including revenues and expenses related to operation and maintenance.
(8) Number of awards. No more than one award from each Highest-
Level Owner and entities owned by its individual owners or each
corporation/business wholly owned by an Indian Tribe will be approved
each Federal Fiscal Year. Notwithstanding corporations/businesses
wholly owned by Indian tribes, the Highest Level Owners individually
are eligible for only one award per FFY and may not apply to the
program using a different entity owned in whole or in part.
(b) Ineligible entities. Entities are ineligible for assistance
from all programs listed in this subpart if any of the following
occurs:
(1) Outstanding judgment. An outstanding judgment has been obtained
against the entity by the United States in a Federal Court (other than
in the United States Tax Court). The entity is ineligible for
assistance until the judgment is paid in full or otherwise satisfied.
Funds from this program may not be used to satisfy the judgment.

[[Page 62617]]

(2) Federal income tax delinquency. The entity is delinquent on the
payment of Federal income taxes.
(3) Federal debt delinquency. The entity is delinquent on Federal
debt.
(4) Debarment or suspension. The entity is debarred or suspended or
is otherwise excluded from or ineligible for participation in Federal
assistance programs.
(5) Felony criminal violation. The entity has been convicted of a
felony criminal violation under any Federal law within the past 24
months.
(6) Unpaid Federal tax liability. The entity has any unpaid Federal
tax liability that has been assessed, for which all judicial and
administrative remedies have been exhausted or have lapsed, and that is
not being paid in a timely manner pursuant to an agreement with the
authority responsible for collecting the tax liability, unless a
Federal agency has considered suspension or debarment of the
organization and has made a determination that this further action is
not necessary to protect the interests of the Government.
(7) Individual. The entity is an individual.
(8) Active Federal Award. The entity has an active award through
this program for which the Project Period is not scheduled to end until
after September 30 of the year in which the application is submitted.
(9) Foreign ownership. If the entity has foreign investment or
ownership, the Agency will evaluate the entity's ability to participate
in the Rural Energy for America Program consistent with applicable law.
Entities that are headquartered in countries determined to be foreign
adversaries as defined by 15 CFR 791.4, are not eligible to participate
in the program.
(10) Business operations. Entities that derive income from one or
more of the following activities:
(i) Gambling activity. Business operations deriving income from
gambling activity. Gambling activities include any lease income from
space or machines used for gambling activities. State or authorized
lottery proceeds and net revenues generated from gaming by a Tribe
pursuant to Tribal law or the Indian Gaming Regulatory Act, 25 U.S.C.
2107 et seq., conducted in part for the purpose of raising funds for
the approved Project are excluded.
(ii) Sexual activities. Business operations deriving income from
activities of a sexual nature.
(iii) Racing activities. Business operations deriving income from
racetracks or facilities for conducting either professional or amateur
races of animals, or by professional or amateur drivers or jockeys, or
any other type of racing.
(iv) Illegal activities. Business operations deriving income from
activities prohibited by local, state, Tribal, or federal law.

Sec. 4280.121 [Reserved]

Sec. 4280.122 Project eligibility.

Projects must meet the following requirements to be eligible for
financial assistance through this subpart.
(a) Eligible Projects. Eligible Projects must meet all of the
following requirements. Failure to meet one or more of these
requirements means the application is not eligible for funding.
(1) Project purpose. The Project must be for an RES or an EEI that
has been completed between 12 and 24 months prior to the date of
application.
(i) RES Projects. All RES Projects must be for one of the following
purposes:
(A) The purchase of a new RES;
(B) The purchase of a Refurbished RES; or
(C) The Retrofitting of an existing RES.
(ii) EEI Projects. All EEI Projects must use less energy on an
annual basis than the original building or equipment being improved or
replaced as demonstrated in an Energy Assessment or Energy Audit, as
applicable. Combined heat and power Projects using steam instead of
Renewable Biomass must apply as an EEI Project. The purpose of the
Project must include one of the following:
(A) Energy Efficiency Improvements. The Project completed EEI to
existing buildings or Equipment.
(B) Efficiency improvements. The Project completed EEI to an
existing RES.
(C) Replacement of previously funded Project. The EEI Project
replaced the same specific EEI Equipment that previously received funds
under this subpart at or after the end of the Useful Life, as specified
in the FAA, provided the EEI is more energy efficient than the
previously funded improvement.
(2) Amount requested. Both RES and EEI Projects have minimum and
maximum amounts for the Federal Award that can be requested and
approved.
(i) Minimum request. The minimum request for a grant application is
$1,500. If an application includes unallowable expenses that when
removed, reduce the amount that can be awarded below the minimum
amount, the Project is not eligible for funding.
(ii) Maximum request. The maximum request for a RES grant
application is $500,000 and the maximum request for an EEI grant
application is $250,000.
(3) Cost Sharing. Cost Sharing is required for at least 75 percent
of the Project Cost. For example, if the Project Cost is $1,000,000,
Cost Sharing must be at least $750,000. Cost Sharing funds must be
available for use during the Project Period, and they must be for
allowable expenses.
(4) Rural area. The Project must be located in a Rural area,
including those areas determined as ``string exclusions'' or ``rural in
character.''
(5) Allowable use of funds. All Project Costs, regardless of
source, must be used for allowable purposes. See Sec. 4280.125 for
additional information.
(6) Project Period. The Project Period begins when the first
allowable Project Cost is incurred for the Project. It is based on the
development, design, and installation of the RES or EEI and must be no
more than 24 months. The Project Period ends no later than 30 days
after the RES or EEI is installed and the end date must be between 12
and 24 months prior to the submission of an application. With the
exception that for the first application window following the release
of the updated regulation the Project Period end date may be between 12
and 36 months prior to submission of the application. For EEI Projects,
the Project Period would typically start with the development of the
Energy Assessment or Energy Audit. For RES Projects, the Project Period
would typically start with the development of the Resource Assessment
but could also start with the installation of the RES for smaller-scale
systems.
(7) Commercially Available technology. The Project must utilize
Commercially Available technology.
(8) Technical sustainability. The Project must demonstrate that it
is technically feasible and sustainable based on the information
provided in the application. The Agency will assess resource
availability, feedstock agreements, off-take agreements, operations and
maintenance agreements, third-party certifications for the next year
after application. The RES or EEI system must operate and perform over
the project's Useful Life in a reliable, safe, and cost-effective
manner. EEI Projects must demonstrate this information through an
Energy Audit or an Energy Assessment, as appropriate. RES Projects must
demonstrate this information through a Resource Assessment or a
Feasibility Study, as described in paragraphs (a)(8)(i) and (ii) of
this section.
(i) Resource Assessment. A Resource Assessment is a report that
describes the quality and availability of the renewable resource and
the amount of Renewable Energy generated through the

[[Page 62618]]

deployment of the proposed system. All of the following must be
described in the report for each source of Renewable Energy:
(A) Source of energy. The report must identify the source of
Renewable Energy to be used for the Project.
(B) Type of technology. The report must identify the type of
technology that will be used for the RES Project: Biomass, Bioenergy,
Geothermal Direct Generation, Geothermal Electric Generation, Hydrogen,
Hydroelectric, Ocean Energy, Solar, or Wind Energy. The Applicant must
also identify whether there are storage components in the system.
(C) Energy output. The report must identify the type of energy
output that the system produces (for example, liquid transportation
fuel-ethanol, biodiesel, renewable diesel, Biogas, renewable natural
gas, Biogas to electricity, wood pellets, wood briquettes).
(D) Byproducts. The report must indicate whether or not the system
produces Byproducts. If it does, the Applicant must identify the
Byproduct(s) and the amount produced during the 12 months immediately
following installation of the RES.
(E) Storage system. The report must identify whether or not a
storage system is included in the Project, and if it is, what type
(e.g., BESS). The Applicant must clearly state the use cases for the
battery (e.g., peak shaving, load shifting, resilience) and how this
use benefits the Applicant and/or off taker. The Applicant must provide
the dispatch curves for the storage system for the 12 months
immediately following installation. Curves must support use case of the
RES with energy storage.
(F) Use of energy. The report must identify how the energy is used
in the Project.
(1) Interconnection. Indicate whether the RES is interconnected.
(2) End User. Indicate who the End User is. Does the Project
include Distribution Components and/or Ancillary Infrastructure? Is the
energy produced dispensed at retail?
(3) Metering Agreement. Indicate if there is a Metering Agreement,
and what type (e.g. conventional net metering, net billing, aggregate
net metering, virtual net metering).
(G) Sale of energy. The report must provide the following
information about how the energy produced or saved was used.
(1) Percentage. Indicate the percentage of energy that was sold.
(2) Quantity. Indicate the quantity of energy that was sold for
energy output and/or Byproducts and whether there are credits that are
applicable, such as LCFS/RIN. If yes, what is the amount?
(3) Price. Indicate the price per unit of energy output and/or
Byproducts that was paid. Are there LCRS/RIN credits that are
applicable? If yes, what is the amount?
(4) Buyer. Indicate the name of the entity buying the energy.
(5) Type of agreement. Indicate the type of agreement for the sale
of energy (e.g. Power Purchase Agreement, energy sales agreement,
energy service agreement, off-take agreement, and/or delivery
agreement)? The report must provide the following information:
(i) Purchasing energy output. Indicate whether there is an
agreement for purchasing energy output. If yes, what is the name of the
counter party (i.e. purchaser)?
(ii) Byproducts. Indicate if there Byproducts. If yes, is there an
agreement to purchase the Byproduct? If yes, what is the name of the
counter party (i.e. purchaser)?
(H) Additional information. The Resource Assessment must include
the additional information described below based on energy source and
technology.
(1) Wind. The Resource Assessment must provide the following
information for Wind Energy Projects:
(i) Source. Indicate the source of the wind data.
(ii) Conditions and assumptions. Describe the conditions of the
wind monitoring when collected at the site or the assumptions made when
applying nearby wind data to the site.
(2) Solar. The Resource Assessment must provide the following
information for Solar Projects:
(i) Source. Indicate the source of the solar data.
(ii) Type of system. Indicate whether the system is Solar Electric
or Solar Thermal.
(iii) Assumptions. Describe the assumptions made.
(3) Bioenergy/Biomass Project. The Resource Assessment must provide
the following information for Bioenergy and Biomass Projects:
(i) Renewable Biomass resource. Indicate the type, quantity,
quality, and seasonality of the Renewable Biomass resource, including
harvest and storage, where applicable.
(ii) Shipping and receiving. Where applicable, indicate shipping or
receiving method and required infrastructure for shipping.
(iii) Process method. Indicate the process method: dry-mill, wet-
mill, screw-press, chemical, or other.
(iv) Woody biomass. Document that any and all woody biomass
feedstock from National Forest System land or public lands was not be
used as a higher value wood-based product.
(v) Feedstock. Provide the following information for the feedstock
for the RES: the substrates used as digester inputs, including animal
wastes or other Renewable Biomass in terms of type, quantity,
seasonality, and frequency of collection; any special handling of
feedstock that may be necessary; the process for determining the
feedstock resource; the annual feedstock requirement of the system in
pounds, tons, metric tons, cords of wood, or other; any seasonality
considerations for the feedstock; the annual amount of feedstock
required by the system will be secured; the term of the feedstock
agreement; the renewal options for the feedstock agreement; and who
controls the option to renew the feedstock agreement.
(4) Geothermal Electric Generation. The Resource Assessment must
provide the following information for Geothermal Electric Generation
Systems:
(i) Ground-source. Indicate whether the system is a ground-source
heat pump.
(ii) Quality of the resource. Indicate the quality of the
geothermal resource, including temperature, flow, and sustainability
and what conversion system is to be installed.
(iii) Special handling. Describe any special handling of cooled
geothermal waters that may be necessary.
(iv) Resource determination. Describe the process for determining
the geothermal resource, including measurement setup for the collection
of the geothermal resource data.
(5) Geothermal Direct Generation. The Resource Assessment must
provide the following information for Geothermal Direct Generation
Systems:
(i) Quality of resource. Indicate the quality of the geothermal
resource, including temperature, flow, and sustainability and what
direct use system is to be installed.
(ii) Special handling. Describe any special handling of cooled
geothermal waters that may be necessary.
(iii) Resource determination. Describe the process for determining
the geothermal resource, including measurement setup for the collection
of the geothermal resource data.
(6) Biogas. The Resource Assessment must include the following
information for Biogas Projects:
(i) Capture and treatment. Identify the method of gas capture and
treatment: landfill, food waste, sewage waste treatment, or other.
(ii) Feedstock information. Provide the following information for
the

[[Page 62619]]

feedstock for the RES: the substrates used as digester inputs,
including animal wastes or other Renewable Biomass in terms of type,
quantity, seasonality, and frequency of collection; any special
handling of feedstock that may be necessary; the process for
determining the feedstock resource; the annual feedstock requirement of
the system in pounds, tons, metric tons, cords of wood, or other; any
seasonality considerations for the feedstock; how the annual amount of
feedstock required by the system will be secured; the term of the
feedstock agreement; the renewal options for the feedstock agreement;
and who controls the option to renew the feedstock agreement.
(7) Anaerobic Digester. The Resource Assessment must include the
following information for Anaerobic Digester Projects:
(i) Type of system. Indicate whether the system is one of
following: complete mix, plug-flow, attached film, covered lagoon, or
other.
(ii) Feedstock information. Provide the following information for
the feedstock for the RES: the substrates used as digester inputs,
including animal wastes or other Renewable Biomass in terms of type,
quantity, seasonality, and frequency of collection; any special
handling of feedstock that may be necessary; the process for
determining the feedstock resource; the annual feedstock requirement of
the system in pounds, tons, metric tons, cords of wood, or other; any
seasonality considerations for the feedstock; how the annual amount of
feedstock required by the system will be secured; the term of the
feedstock agreement; the renewal options for the feedstock agreement;
and who controls the option to renew the feedstock agreement.
(iii) Gas production estimates. Provide either tabular values or
laboratory analysis of representative samples that include
biodegradability studies to produce gas production estimates for the
project on daily, monthly, and seasonal basis.
(iv) Type of operation. Identify the type of operation (e.g.,
dairy, swine, layer, etc.), along with breed, herd population size and
demographics.
(v) Waste collection. Identify the method and the frequency of
waste collection.
(vi) System developer. Identify the system developer.
(vii) Digester design assumptions. Describe the digester design
assumptions such as the number and type of animals, the bedding type
and estimated annual quantity used, the manure and wastewater volumes.
(viii) Treatment of digester effluent. Describe the treatment of
digester effluent (e.g., none, solids separation by screening, etc.
with details including use or method of disposal).
(8) Hydrogen Project. The Resource Assessment must include the
following information for Hydrogen Systems.
(i) Resource information. Indicate the type, quantity, quality, and
seasonality of the Renewable Biomass resource.
(ii) Renewable resource. For solar, wind, or Geothermal Sources of
energy used to generate hydrogen, indicate the renewable resource where
the Hydrogen System was installed. Local resource maps may be used as
an acceptable preliminary source of renewable resource data.
(9) Hydroelectric/Ocean Energy Projects. The Resource Assessment
must include the following information for Hydroelectric System and
Ocean Energy Projects.
(i) Quality of the resource. Indicate the quality of the resource,
including temperature (if applicable), flow, and sustainability of the
resource.
(ii) Resource evaluation. Describe the resource evaluation process,
including the date and duration of the evaluation process.
(iii) Measurement setup. Describe the specifications of the
measurement setup.
(iv) Proximity. Describe the proximity of the resource to the
proposed site.
(10) Storage components. For Projects that include storage
components, the Resource Assessment must provide the following
information related to the type of technology, as described in
paragraphs (a)(8)(i)(A)(1) through (9) of this section.
(i) Storage system specifications. Describe the storage system
specifications.
(ii) Integration of the system. Describe how the storage system is
integrated with the RES, including application, size, lifetime,
response time, capital and maintenance costs associated with the
operation.
(iii) Distribution of the stored resource(s). Describe the
distribution of the stored resource(s).
(ii) Feasibility Study. A Feasibility Study is a report, conducted
by an independent professional possessing relevant knowledge,
expertise, and experience, that includes an opinion or finding
evaluating the economic, market, technical, financial, and management
feasibility of a proposed Project or operation located at a specific
site in terms of its expectation for success. It must include the
following content:
(A) Economic analysis. The economic analysis is a cost-benefit
analysis. It includes all of the following information:
(1) Minimum amount of inputs (e.g. labor, infrastructure,
utilities, renewable resources, and feedstocks) to operate
successfully;
(2) Contracts in place and contracts to be negotiated, including
terms and renewals;
(3) Environmental risks;
(4) Cost of Project relative to the increase in revenues or
benefits provided; and
(5) Overall economic impact of Project, including new markets
created and economic development.
(B) Market analysis. The market analysis is an analysis of the
current and future market potential, competition, sales or service
estimations, including current and prospective buyers and End Users.
The market analysis includes all of the following information:
(1) Competition;
(2) Type of Project: service, product, or commodity based;
(3) Target market, including new versus established;
(4) End User analysis, including captive versus competitive;
(5) By-product revenue streams; and
(6) Industry risk.
(C) Technical analysis. The technical analysis is an analysis of
the reliability of the technology to be used and/or the analysis of the
delivery of goods or services, including transportation, business
location, and the need for technology, materials, and labor. It
includes all of the following information:
(1) Commercial availability;
(2) Product and process success record and duplication of results;
(3) Experience of the service providers;
(4) Infrastructure, including roads, rail, and airports;
(5) Need for local transportation;
(6) Labor market;
(7) Availability of materials;
(8) Use, age, and reliability of technology; and
(9) Construction risk.
(D) Financial analysis. The financial analysis is an analysis of
the operation to achieve sufficient income, credit, and cashflow to
financially sustain the Project over the long term and meet all debt
obligations. It includes all of the following information:
(1) Commercial or Project underwriting;
(2) Management's assumptions;
(3) Accounting policies;
(4) Source of repayment;
(5) Dependency on other entities;

[[Page 62620]]

(6) Equity contribution;
(7) Market demand forecast;
(8) Peer industry comparison;
(9) Cost-accounting system;
(10) Availability of short-term credit;
(11) Adequacy of raw materials and supplies; and
(12) Sensitivity analysis.
(E) Management analysis. The management analysis is an analysis of
the legal structure of the business or operation and the ownership,
governance, and management. It includes all of the following
information:
(1) History of the business or organization;
(2) Professional and educational background;
(3) Experience;
(4) Skills; and
(5) Qualifications necessary to implement the Project.
(F) Recommendation. The recommendation of the independent
professional(s) conducting the Feasibility Study must be included.
(G) Qualifications. The qualifications of the consultant(s)
conducting the Feasibility Study must be included.
(9) Qualified Key Service Providers. All Key Service Providers must
be qualified. In particular, the entity installing the RES or EEI must
be licensed in the State where installation will occur and have
previously installed at least three RES or EEI similar to what is
proposed in the application. Individuals or entities who have a
conflict of interest are not considered qualified Key Service
Providers. (See Sec. 4280.106 for more information on conflict of
interest.)
(10) Key Service Provider selection. All Key Service Providers must
be selected using procurement procedures that comply with 2 CFR 200.318
through 200.327.
(11) Completion certificate. The Applicant must certify that the
design, engineering, testing, and monitoring is sufficient for the
Project's intended purpose. For larger-scale Projects, more complex
Projects, or with a Project Cost of $200,000 or more, the Agency
requires a completion certificate completed by a professional engineer
licensed in the State where the Project was completed as a condition of
an award.
(12) Environmental requirements. Environmental review documentation
must comply with the requirements in 7 CFR part 1b.
(13) Architectural barriers. All facilities intended for or
accessible to the public or in which physically handicapped individuals
may be employed must comply with the Architectural Barriers Act of 1968
(42 U.S.C. 4151 et seq.) as implemented by 41 CFR 101-196, section 504
of the Rehabilitation Act of 1973 (42 U.S.C. 1474 et seq.) as
implemented by 7 CFR parts 15 and 15b, and Titles II and III of the
Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.).
(14) Seismic safety. All new structures, fully or partially
enclosed, used or intended for sheltering individuals or property will
be designed with appropriate seismic safety provisions in compliance
with applicable local, state, Tribal, and federal law, such as the
Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701 et seq.) and
Executive Order 13717, ``Establishing a Federal Earthquake Risk
Management Standard.''
(15) Bioenergy. For Bioenergy Projects, woody biomass feedstock
from National Forest System land or public lands cannot be used as a
higher value wood-based product.
(16) Dedicated metering. The Project must have a dedicated
meter(s). For example, if an Applicant has one meter that covers its
Rural Small Business and its residence, the Applicant must install a
separate meter that is dedicated to the Rural Small Business to allow
the energy generated to be measured.
(17) Residential use exceptions. Only the following uses of energy
related to residential use are eligible for the program.
(i) Providing energy through a community solar subscription program
where the End Users do not own the assets;
(ii) Providing energy for nursing homes and assisted living
facilities that provide full-time 24 hours a day, seven days a week,
licensed medical care for residents; and
(iii) Providing energy for for-profit hotels that provide short-
term housing (30 days or less).
(18) Simple Payback Period. The Simple Payback Period must be equal
to or less than the Agency approved Useful Life of the RES or EEI.
(19) Energy Storage Systems including BESS. For RES Projects with
an associated energy storage system, the total Annual Energy Production
of the RES is limited to a capacity of 120 percent of the annual energy
consumption of the Applicant for the 12 months prior to project
installation or the maximum production allowable by the interconnected
utility, which shall not exceed 120 percent of annual energy
consumption. The size of the energy storage system must not exceed 100
percent of the size of the RES with which it is paired.
(20) Permits and codes. The completed Project comply with all
applicable local, State, Tribal, and Federal codes and all required
permits must be obtained.
(b) Ineligible projects. Projects that include one or more of the
following are ineligible for assistance under this subpart:
(1) Amount requested. The application requests less than the
minimum or more than the maximum award amount.
(2) Research and development. The Project includes research and
development, as defined in 2 CFR 200.1, or trials, demonstration units,
and pilot projects.
(3) Technology. The Project involves technology (including the
system, improvements, process, and components) that is not Commercially
Available.
(4) Residential. The Project includes residential RES or EEI,
including, but not limited to, primary residences, such as apartments,
single-family homes, and residences attached to businesses, in-home
businesses, farm labor housing, apartment complexes, bed and
breakfasts, and vacation rentals by owner (e.g. VRBOs, Airbnbs),
regardless of whether the owner lives on-site or not.
(5) Use of energy. The energy is used for residential purposes,
except for the following uses:
(i) Providing energy through a community solar subscription program
where the End Users do not own the assets;
(ii) Providing energy for nursing homes and assisted living
facilities that provide full-time 24 hours a day, seven days a week,
licensed medical care for residents; and
(iii) Providing energy for for-profit hotels that provide short-
term housing (30 days or less).
(6) Co-firing with non-Renewable Energy sources. RES Projects that
use dual fuel sources where at least one source is not renewable. Non-
Renewable Energy sources include, but are not limited to the following:
fossil fuels, natural gas, petroleum-based products, materials such as
coal, and other non-renewable fuels, oils, and chemicals, tires and
plastic.
(7) RES Retrofitting Projects. The Project retrofits an existing
ground mount solar or wind RES or any solar or wind RES on Cropland.
(8) EEI replacement Projects. The Project replaces the same
specific EEI Equipment that had previously received funds under this
subpart prior to the end of the Useful Life, as specified in the FAA,
even if it is more energy

[[Page 62621]]

efficient than the previously funded improvement.
(9) Multiple technologies. The Project utilizes two or more
different types of RES technologies that are not incorporated into a
Hybrid System.
(10) Multiple locations. The Project installs an RES or an EEI at
more than one location.
(11) Cropland installation. The Project involves a ground mount
solar photovoltaic system or wind turbine installed on Cropland.
(12) Rated System Size. The Project involves the installation or
retrofit of a Hydroelectric System Project with a Rated System Size of
greater than 30 MW.
(13) Historical Energy Usage Documentation. The Project involves
ground mount solar photovoltaic or ground mount wind systems that
cannot document commensurate historical energy usage.
(14) Mobile system. The Project involves an RES not directly
mounted on a vehicle that is used to carry out the Applicant's full-
time business operations, or the Project involves EEI to any vehicle.
(15) Dispensing energy at retail. The Project includes a mechanism
for dispensing energy at retail are not eligible.
(16) Labor only Projects. The Project includes only labor costs and
no Equipment and materials costs for the RES or EEI.
(17) Distribution only Projects. The Project includes only moving
Renewable Energy from one point to another.
(18) Storage systems. The Project involves the following activities
related to storage systems:
(i) Retrofitting an existing RES to add an energy storage system.
Includes Battery Energy Storage Systems as well as other energy storage
systems.
(ii) Stand-alone energy storage systems. Includes Battery Energy
Storage Systems as well as other energy storage systems.
(19) Foreign components. The Project includes a solar photovoltaic
system or wind turbine consisting of any component made in a country
named as a foreign adversary as listed in 15 CFR 791.4, with the
exception that Projects that were installed prior to the publication
date of this regulation are exempt. All other completeness and
eligibility requirements identified in this subpart must be met.
(20) REAP funding limitation. The Project includes a REAP funding
request where the total amount of REAP funding (grant and guaranteed
loan) would represent more than 75% of the Project Cost.
(21) Unallowable costs. The Project budget includes more than 25
percent of costs as unallowable costs. Projects that include 25 percent
or less of unallowable costs will have the unallowable costs removed
prior to considering other eligibility factors. Unallowable costs are
identified in Sec. 4280.125(b).
(22) Conflict of interest. The Project includes any conflict of
interest. See Sec. 4280.106 for more information on conflict of
interest.

Sec. 4280.123 Reserved funds eligibility.

Applications requesting $20,000 or less in award funds are eligible
to compete for reserved funds.

Sec. 4280.124 [Reserved]

Sec. 4280.125 Use of funds.

Allowable and unallowable uses of funds are described as follows:
(a) Allowable uses of funds. The following types of activities and
expenses are allowable, provided that they are directly related to the
approved RES or EEI Project, incurred as part of the installation of
the RES or EEI, and integral to the operation of the RES or EEI.
Additional information on allowability of costs can be found at 2 CFR
part 200, subpart E, for all entity types.
(1) Purchase and installation of new or Refurbished Equipment
related to the installation and/or operation of the RES or EEI,
provided that the Project budget includes both Equipment and
installation of the system or improvements as a whole;
(2) Construction related to the installation of the RES or EEI,
Retrofitting, replacement, and improvements;
(3) Energy Assessment or Energy Audit, unless the cost was charged
in whole or in part to another Federal Award;
(4) Resource Assessment, unless the cost was charged in whole or in
part to another Federal Award;
(5) Fees for construction permits and licenses and fees required by
an Interconnection Agreement;
(6) Architectural fees;
(7) Engineering fees;
(8) Installation of a dedicated meter for an RES Project;
(9) Up to 25 percent of Project Costs for Distribution Components
and Ancillary Infrastructure for RES Projects that include Distribution
Components and Ancillary Infrastructure; and
(10) Up to 10 percent of the award amount to construct, improve, or
acquire broadband infrastructure related to the project financed,
subject to the requirements of 7 CFR part 1980, subpart M;
(b) Unallowable uses of funds. Activities and expenses related to
any of the following are unallowable:
(1) Real Property;
(2) Agricultural, lawn, and garden Equipment and power tools,
including, but not limited to: tractors, bailers, lawn mowers, weed
whipper/eaters, cultivators, skid steers, bulldozers, chain saws, and
wood splitters;
(3) Used Equipment;
(4) Equipment not wholly owned by the Recipient, for example,
utility-owned substation upgrades, overhead lines, and poles;
(5) Vehicles, including motorized, unmotorized, and electric
vehicles, and modifications that are used to improve a vehicle's
ability to propel itself (e.g., modifying an existing vehicle's engine
to run on renewable fuels or replacing an older vehicle with a new,
more efficient vehicle);
(6) Lease payments, including lease to own or capitalized leases;
(7) Feasibility studies;
(8) Monthly meter fees;
(9) Insurance;
(10) Operations and maintenance;
(11) Extended warranties;
(12) Perimeter fencing;
(13) Costs for labor completed by any individual who owns the
Applicant entity;
(14) Goods or services from an individual or entity who has a
conflict of interest with the Recipient (see Sec. 4280.106);
(15) Funds used for political or lobbying activities;
(16) Funds used to repay any Federal direct or guaranteed loans or
other Federal debt or judgment;
(17) Costs for the preparation of the grant application;
(18) Expenses not directly related to the funded Project, including
construction or Equipment (e.g., the foundation for a building where an
RES is installed, storage-only grain bins connected to drying systems,
or the roof of a building where solar panels are attached);
(19) Expenses paid for by another Federal Award;
(20) Activities that are considered unallowable by the applicable
cost principles, most of which are included in 2 CFR part 200, subpart
E; and
(21) Costs incurred outside the Project Period.

Sec. Sec. 4280.126-4280.130 [Reserved]

Sec. 4280.131 Application requirements.

This section identifies the items required for a complete
application. All

[[Page 62622]]

applications must include the following items, with the exception of
the information in paragraph (a)(14) of this section, which is
optional.
(a) Applicant eligibility. The following requirements support
Applicant eligibility.
(1) Applicant's legal name. The Applicant must provide its legal
name. This name must match what is entered in <a href="http://SAM.gov">SAM.gov</a> and what is on
the Certificate of Good Standing.
(2) Applicant's address. The Applicant must provide its primary
address. This address must match what is entered in <a href="http://SAM.gov">SAM.gov</a>.
(3) Identification numbers. The Applicant must provide its Unique
Entity Identifier from its <a href="http://SAM.gov">SAM.gov</a> registration and Social Security
number (SSN) or Taxpayer Identification Number (TIN) in order for the
Agency to assess eligibility.
(4) Incorporation date. The Applicant must provide the date it was
incorporated.
(5) Certificate of Good Standing. The Applicant must provide a
current Certificate of Good Standing from the State in which the
Applicant is incorporated or registered, or from the Bureau of Indian
Affairs or Tribe, as applicable
(6) Entity bylaws. The Applicant must provide its bylaws or
operating agreements that show its legal authority to apply for and
carry out the Project.
(7) Principals. The Applicant must provide the names and SSN or TIN
of the Principals for this Federal Award. The identification numbers
will be used to assess eligibility for the Federal Award.
(8) Applicant entity type. The Applicant must indicate whether it
is applying as an Agricultural Producer or a Rural Small Business.
(i) Agricultural Producer. If the Applicant is applying as an
Agricultural Producer, it must provide all of the following
information:
(A) Owner names. The Applicant must provide the exact legal name(s)
of all owners in the organization.
(B) Percentage of ownership. The Applicant must provide the
percentage of ownership for each owner.
(C) Participation in operations. The Applicant must indicate
whether the owners participate in the day-to-day labor, management,
and/or field operations of the Applicant.
(D) Agricultural Commodity. The Applicant must identify the primary
Agricultural Commodity produced or that the Applicant has the legal
right to harvest.
(E) Annual income. The Applicant must indicate the total annual
income of the majority-owner and the amount of annual income derived by
that majority-owner from the Applicant's operations from the most
recent tax year.
(ii) Rural Small Business. If the Applicant is applying as a Rural
Small Business, it must indicate whether the Applicant has been
designated by the Small Business Administration as a Small Business in
<a href="http://SAM.gov">SAM.gov</a>. Additionally, it must provide all of the following
information:
(A) Owner names. The Applicant must provide the exact legal name(s)
of all owners in the organization.
(B) Percentage of ownership. The Applicant must provide the
percentage of ownership for each owner.
(9) Financial statements. Applicants must provide financial
statements as described below.
(i) All applications. The Applicant must provide the following
business-level financial statements: an income statement, balance
sheet, and statement of cash flows, including all revenue streams from
the Project, debt-service of the Project, annual operations and
maintenance, investments, and incentives from the Applicant's most
recent completed fiscal year prior to the date of application. Project-
level financial statements will not be accepted.
(ii) Project Cost $200,000 and greater. In addition to the
financial statements required in the paragraph above, the Applicants
with Projects that have Project Cost of $200,000 or greater must
provide two years of pro forma financial statements for the Project,
including income statements, balance sheets, statements of cash flows,
and assumptions.
(10) Summary of REAP awards. The Applicant must describe any
current or previous awards received through the REAP program, including
both grants and guaranteed loans. The description must include the
Project Period, the amount, and a summary of the Project.
(11) Business operations. The Applicant must describe its business,
including the time period that it has been in operation and earning
revenue, the type of products or services provided, the number of
employees, who the customers are, and the sources of revenue from its
business operations, including if the operations include gambling,
sexual activities, professional or amateur racing of animals, or
illegal activities. Note that each employee is counted as one,
regardless of their status as full-time, part-time, temporary, or
seasonal. To calculate the number for the application, use the average
number of employees over the most recent 12 consecutive months.
(12) Foreign ownership. The Applicant must identify any foreign
ownership, including the name(s) of the foreign owners and the
percentage of ownership.
(13) Conflict of interest. The Applicant must identify whether or
not the Applicant or its individual owners has a known relationship or
association with an Agency or Rural Development employee. If there is a
known relationship, the Applicant must identify each Agency or Rural
Development employee with whom the Applicant has a known relationship.
The Applicant must also certify that there is no conflict of interest,
as defined in Sec. 4280.106.
(b) Project eligibility. The following requirements support Project
eligibility.
(1) Project description. The Applicant must provide a brief
description of the Project.
(2) Type of Project. The Applicant must indicate whether the
Project is an RES or an EEI Project and the purpose under Sec.
4280.122(a)(1). If the Project is an RES, the Applicant must indicate
whether it is considered to be an energy replacement or energy
generation Project (see the definition of Renewable Energy System in
this subpart for more information).
(3) Technical sustainability. For EEI Projects, the Applicant must
provide an Energy Assessment if the Project Cost is $80,000 or less;
otherwise it must provide an Energy Audit. For RES Projects, the
Applicant must provide a Resource Assessment, or the Applicant can
provide a Feasibility Study in lieu of a Resource Assessment. In
addition, the Applicant must provide the information from the Energy
Assessment, Energy Audit, Resource Assessment, or Feasibility Study, as
applicable, to allow the Agency to assess the technical sustainability
of the Project.
(4) Agreements. For Projects with a Project Cost of more than
$80,000, the Applicant must submit copies of all agreements related to
the Project, including, but not limited to, Power Purchase Agreements,
Interconnection Agreements, lease agreements, feedstock agreements,
off-take agreements, End User agreements, financing agreements, and
operations and maintenance agreements.
(5) Country of origin. For solar and Wind Energy Projects, the
Applicant must identify the country of origin for all system
components.
(6) Commercially Available technology. The Applicant must describe
how the Project meets the definition of Commercially Available
technology, as provided below.

[[Page 62623]]

(i) Operating history. The Applicant must describe the operating
history of the RES or EEI to demonstrate that the RES or EEI is proven
and reliable. The operating history must include names or examples of
other RES or EEI installed using the same type of RES or EEI technology
used in the Applicant's Project, including feedstock(s) and integrated
processes, rather than the specific operating history for the
Applicant's RES or EEI.
(ii) Performance data. The Applicant must provide performance data
for at least one year that is specific to the operation and use of the
RES or EEI. This data must be from a system other than the Applicant's.
(iii) Feedstock. If applicable, the Applicant must identify the
specific feedstock used.
(iv) Process to produce or save energy. The Applicant must describe
the specific process used to produce or save energy.
(v) Design and installation procedures. The Applicant must describe
how the RES or EEI is based on established design and installation
procedures.
(vi) Replicability. The Applicant must describe how the RES or EEI
is replicable.
(vii) Service providers. The Applicant must describe how the RES or
EEI has professional service providers, trades, large construction
Equipment providers, and laborers who are familiar with installation
procedures and practices.
(viii) Equipment availability. The Applicant must describe how the
RES or EEI has proprietary and balance of system Equipment and spare
parts that are readily available.
(ix) Service availability. The Applicant must describe how the RES
or EEI has service that is readily available to properly maintain and
operate the system.
(x) Warranty. The Applicant must describe the warranty for major
parts and labor for the RES or EEI that is valid in the United States.
(7) Key Service Providers. The Applicant must provide the following
information for all Key Service Providers.
(i) Name;
(ii) Type of service provided (for example, installation);
(iii) License type and number for the State in which the
installation occurred;
(iv) Description of qualifications, including how many similar
systems have been installed;
(v) Description of how the Key Service Provider was selected (for
example, how many bids were received and how was the decision made to
select the Key Service Provider); and
(vi) A certification that there is no conflict of interest between
the Key Service Provider and the Applicant and between the Key Service
Provider and any other Key Service Provider working on the Project.
(8) Procurement contracts. The Applicant must provide a description
for each procurement contract utilized for the Project. The description
must include--
(i) The name of contractor;
(ii) The amount of contract;
(iii) A description of work performed under the contract; and
(iv) A description of how the contractor was selected.
(9) Dedicated meter. The Applicant must certify that the Project
uses a dedicated meter.
(10) Completion certificate. The Applicant must certify that the
design, engineering, testing, and monitoring is sufficient for the
Project's intended purpose. For Projects with a Project Cost of
$200,000 or more, the Agency requires a completion certificate
completed by a professional engineer licensed in the State where the
Project was completed.
(11) Project location. The Applicant must provide the address for
the Project location.
(12) Cropland usage. The Applicant must indicate if Cropland was
used for the Project, and if so, how many acres.
(13) Size of RES. The Applicant must provide the Rated System Size
and Annual Energy Production of the RES.
(14) Project Period. The Applicant must provide the dates when
costs were incurred for the Project, i.e. the Project Period. As a
reminder, the Project Period must end between 12 and 24 months prior to
the date of application. With the exception that for the first
application window following the release of the updated regulation the
Project Period end date may be between 12 and 36 months prior to
submission of the application. For example, if the application is
submitted on August 31, 2027, then the Project Period must end no later
than August 31, 2026. With an ending date of August 31, 2026, the
Project Period must start no earlier than September 1, 2024.
(15) Budget. The Applicant must provide an itemized budget that
includes all Cost Sharing provided, Program Income, Project Cost, and
itemized Project expenses. The budget must include a listing of each
cost, with a description, expense category, amount, date incurred, date
paid, and whether the expense was paid with Cost Sharing or Federal
funds.
(16) Cost Sharing verification. The Applicant must provide
verification of Cost Sharing if the Cost Share was provided by a third
party. The Applicant must submit a commitment letter signed by an
authorized official of the third party. The letter must be specific to
the project, identify the dollar amount, and identify any applicable
rates and terms.
(17) Simple Payback. The Applicant must provide the information for
the Simple Payback calculation, including the following data:
(i) Energy amount. For RES projects, the Applicant must provide the
historical energy use in terms of quantity and unit of measurement for
the 12 consecutive months pre-installation and 12 months of energy
produced post-installation of the RES. For EEI projects, the Applicant
must submit the pre-installation energy consumption of the existing
building or system and the post-installation energy consumption of the
improved building or system as documented in the Energy Assessment or
Energy Audit.
(ii) Energy value. For RES Projects, the Applicant must submit the
dollar value of the energy produced on a per unit basis for the 12
months pre-installation and for the 12 months post-installation. For
the average dollar value, the following charges should be excluded:
fixed meter charge, demand charges, subsidy charges, and sales tax. For
EEI Projects, the Applicant must submit the dollar value of the energy
saved based on the Energy Audit, as updated 12 months post-
installation. For both RES and EEI Project Off-Grid Systems (regardless
of historical energy source), the Applicant must provide a written
statement from the utility company that services the Project location
that identifies the average price per kW hour for the 12 month period
prior to installation.
(18) Ownership of the RES or EEI. The Applicant must confirm that
it owns the RES or EEI that is the subject of the application at the
time of application. The Applicant must confirm that it intends to
maintain the ownership of the RES or EEI until the final disbursement
for the Federal Award is made. Note that the Applicant will be required
to provide copies of all invoices and payments if an award is made, and
these documents must all demonstrate that the Applicant owns the RES or
EEI.
(19) Ownership of the Project site. The Applicant must confirm that
it owns or controls (through a lease or in the case of tribal trust
land through beneficial interest)) the site where the RES or EEI is
installed for at least 12 months prior

[[Page 62624]]

to the Project Period for the Project through the time of application.
The Applicant must also confirm that it intends to maintain the
ownership or control until the final disbursement for the Federal Award
is made. If the site is owned by the Applicant, the Applicant must
provide a copy of the deed or tax assessment for the Project site. If
the site is controlled through a lease agreement or tribal trust land
through beneficial interest, a copy of the executed lease or deed must
be provided at the time of application. In particular, the lease
agreement must include the following information:
(i) Parties to the lease, where one party is the Applicant;
(ii) Start and end dates of the lease term; and
(iii) Legal description of the Project location that matches the
site footprint of the RES or EEI.
(20) Architectural barriers. The Applicant must certify that all
facilities intended for or accessible to the public or in which
physically handicapped individuals may be employed are in compliance
with the Architectural Barriers Act of 1968 (42 U.S.C. 4151 et seq.) as
implemented by 41 CFR 101-196, section 504 of the Rehabilitation Act of
1973 (42 U.S.C. 1474 et seq.) as implemented by 7 CFR parts 15 and 15b,
and Titles II and III of the Americans with Disabilities Act of 1990
(42 U.S.C. 12101 et seq.).
(21) Seismic safety. The Applicant must certify that all new
structures, fully or partially enclosed, used or intended for
sheltering individuals or property were designed with appropriate
seismic safety provisions in compliance with the Earthquake Hazards
Reduction Act of 1977 (42 U.S.C. 7701 et seq.), and Executive Order
13717, Establishing a Federal Earthquake Risk Management Standard.
(22) Applicable laws, regulations, agreements, permits, codes, and
standards. The Applicant must certify that the Project was completed in
accordance with applicable laws, regulations, agreements, permits,
codes, and standards.

Sec. 4280.132 [Reserved]

Sec. 4280.133 Submission requirements.

The following information identifies when applications can be
submitted, where applications must be submitted, and the format of
applications.
(a) Submission period. The Agency will publish the dates for the
application period on its website.
(1) Applications requesting $20,000 or less. Applicants requesting
a grant of $20,000 or less can submit their applications during the
published application period to be considered for reserved funding.
Applications are due by 5:00 p.m. Eastern time on the published
deadline. Applications received after the deadline will not be
considered for funding in this competition. Applications not funded as
a result of this competition will be considered as part of the ``All
other applications'' competition in paragraph (a)(2) of this section
unless the application is withdrawn by the Applicant in accordance with
Sec. 4280.141.
(2) All other applications. All other applications must be
submitted during the published application period. Applications are due
by 5:00 p.m. Eastern time on the published deadline. Applications
received after the deadline will not be considered for funding.
(b) Submission process. All items required for the application must
be submitted in a single application. No attachments other than the
required items will be considered. Incomplete applications will be
rejected by the Agency during its completeness evaluation (see Sec.
4280.140 for more information). An annual notification for the program
will provide instructions on how and where to submit completed
applications for REAP funding.
(c) Number of applications. No more than one application from each
Highest-Level Owner and entities owned by its individual owners or each
corporation/business wholly owned by an Indian Tribe will be accepted
each Federal Fiscal Year. An application for a specific Project can
only be submitted one time per FFY.

Sec. Sec. 4280.134-4280.139 [Reserved]

Sec. 4280.140 Application processing.

The following information describes the way the Agency will process
applications. Applications will be evaluated for completeness,
eligibility, risk, and merit.
(a) Completeness evaluation. The Agency will review all submitted
applications for completeness. Applications must include all
information needed to assess eligibility, risk, and merit, including
all of the requirements identified in Sec. 4280.131, in order to be
further processed for eligibility, risk, and merit evaluations. The
Agency will notify Applicants who submitted incomplete applications in
accordance with Sec. 4280.152.
(b) Eligibility evaluation. The Agency will review all complete
applications to determine if they are eligible for assistance based on
the requirements in this subpart and other applicable laws and
regulations. As part of this process, the Agency will check the OMB-
designated repository of government information, and Applicants that
are excluded from Federal funding will be determined ineligible (see 2
CFR 200.206 for more information). Applications that do not meet one or
more eligibility requirements will not be further processed for risk
and merit evaluations. The Agency will notify Applicants who submitted
ineligible applications in accordance with Sec. 4280.152.
(c) Risk evaluation. The Agency will review all eligible
applications for risk based on the financial and performance factors
described in Sec. 4280.140(c)(1) and (2). Principals for the Applicant
and Project will be evaluated for risk based on paragraph (c)(3) of
this section.
(1) Financial risk evaluation. The Agency will review the
Applicant's most recent independent audit (if available) and financial
statements. The Applicant's financial solvency, internal controls, and
any audit findings will be assessed. Applicants whose ratio of current
assets to current liabilities is not at least 1:1 will be considered to
be too high of a risk to fund and will be notified that their
application cannot be funded and the Agency will issue a written
notification in accordance with Sec. 4280.152. Other types of
deficiencies or risks will be assessed on a case-by-case basis. The
Agency will consider reasonable options to mitigate identified risks.
However, for deficiencies and risks that are significant or cannot be
reasonably mitigated, the Agency will determine that the application
cannot be funded and will issue a written notification in accordance
with Sec. 4280.152.
(2) Performance risk evaluation. The Agency will review any Federal
Awards the Applicant, its affiliates, or its individual owners received
during the five years prior to the application deadline through SAM (or
its successor system), the Do Not Pay system (or its successor system),
other Federal or Departmental level award or performance systems
adopted by the Agency, and the Agency's internal financial record-
keeping systems and files. The Applicant's ability to submit required
reports and documents, complete approved tasks on time, meet approved
budget requirements, and use Project funds properly will be evaluated.
Applicants, their affiliates, and their individual owners with more
than a total of two Federal Awards with performance deficiencies will
be considered too high of a risk to be funded and will be notified in
accordance with Sec. 4280.152. Other types

[[Page 62625]]

of deficiencies or risks will be assessed on a case-by-case basis. The
Agency may consider reasonable options to mitigate identified risks.
However, for deficiencies and risks that are significant or cannot be
reasonably mitigated, the Agency will determine that the application
cannot be funded and will issue a written notification in accordance
with Sec. 4280.152.
(3) Principals. The Agency will review any available records in
SAM, DNP, other Federal or Departmental systems, and the Agency's
systems for financial risks and performance deficiencies on Federal
Awards. If the Agency determines that a Principal is an excluded party
or poses a significant risk to the performance under the proposed
Project, it will determine that the application cannot be funded and
will issue a written notification in accordance with Sec. 4280.152.
(d) Merit evaluation. The Agency will conduct a merit evaluation
for those applications that are determined eligible for the program,
unless a risk evaluation determines that the application cannot be
funded (see Sec. 4280.140(c)). The merit evaluation will be conducted
by USDA employees, who will score the application based on the criteria
below. The total points available are 90. An additional 10 points are
possible through the priority points described in paragraph (e) of this
section. Note that in cases where points and percentages must be
rounded, the standard rounding process will be applied.
(1) Impact (0-10 points). The Agency will award points as described
in paragraphs (d)(1)(i) and (ii) of this section.
(i) Number of employees (0 or 5 points). The Agency will award 5
points for Applicants that employ at least three employees, other than
the individuals who own the Applicant entity. The Agency will award
zero points for Applicants that employ less than three people.
(ii) Critical community impact (0 or 5 points). The Agency will
award 5 points for Applicants that are businesses that provide critical
community services, such as grocery stores, laundry facilities,
veterinary clinics, and medical offices. The Agency will award zero
points for Applicants that do not fit into this category.
(2) Quantity of energy to be saved or produced per award dollar
requested (0-25 points). The Agency will award points as described in
paragraphs (d)(2)(i) and (ii) of this section:
(i) EEI. The Agency will award points based on annual energy saved
per award dollar requested. The quantity of energy saved per award
dollar requested will be determined by dividing the total annual energy
saved (as converted to BTUs) by the award dollars requested. Points
will be awarded based on the annual amount of energy saved based on the
calculation in this paragraph (d)(2)(i). The points will be rounded to
the nearest hundredth and are capped at 25.

Equation 1 to Paragraph (d)(2)(i)
BTUs of energy saved per award dollar requested / 100 = points

(ii) RES. The Agency will award points based on annual energy
produced by the RES Project per award dollar requested. The quantity of
energy produced per award dollar requested will be determined by
dividing the total annual energy generated (as converted to BTUs) by
the award dollars requested. Points will be awarded based on the annual
amount of energy produced based on the calculation in this paragraph
(d)(2)(ii). The points will be rounded to the nearest hundredth and are
capped at 25.

Equation 2 to Paragraph (d)(2)(ii)
BTUs of energy generated per award dollar requested / 100 = points

(3) Percentage of energy saved or replaced (0-20 points)--(i) EEI.
The Agency will award points based on the amount of energy saved by the
Project compared to the amount of energy consumed by the Applicant at
the Project location over a 12-month period. The calculation will be
based on the Applicant's consumption of energy for the 12 months prior
to making the improvements and compared to the 12 months after making
the improvements.

Table 1 to Paragraph (d)(3)(i)
------------------------------------------------------------------------
Points
Percent of energy saved awarded
------------------------------------------------------------------------
9.4% or less................................................. 0
9.5%-19.4%................................................... 5
19.5%-34.4%.................................................. 10
34.5%-49.4%.................................................. 15
49.5% and above.............................................. 20
------------------------------------------------------------------------

(ii) RES. The Agency will award points based on the amount of
energy replaced by the Project compared to the amount of energy
consumed by the Applicant at the Project location over a 12-month
period. The calculation will be based on the Applicant's consumption of
energy for the 12 months prior to installing or Retrofitting the RES
and compared to the 12 months after installing or Retrofitting the
system.

Table 2 to Paragraph (d)(3)(ii)
------------------------------------------------------------------------
Points
Percent of energy replaced awarded
------------------------------------------------------------------------
9.4% or less................................................. 0
9.5%-24.4%................................................... 5
24.5%-49.4%.................................................. 10
49.5%-74.4%.................................................. 15
74.5%-109.4%................................................. 20
109.5% and above............................................. 0
------------------------------------------------------------------------

(4) Environmental benefits (0-5 points). The Agency will award
points based on the environmental benefits directly attributable to the
proposed Project as assessed at the Project level based on the
description in this paragraph (d)(4).
(i) EEI. The Agency will award points to EEI Projects as described
in this paragraph (d)(4)(i).
(A) Greenhouse gases (0 or 3 points). Projects that do not produce
greenhouse gases receive 3 points. All other Projects receive 0 points.
(B) Forest conservation (0 or 1 point). Projects that take into
consideration fire hazards on forest lands receive 1 point if the
consideration is effectively discussed in the application. All other
Projects receive 0 points.
(C) Water conservation (0 or 1 point). Projects that use water as
part of the EEI that demonstrate a reduced use of water receive 1
point. All other Projects receive 0 points. Examples of Projects that
could receive points are converting gravity to subsurface drip
irrigation, using less water than industry standard, cleaning up
existing surface or ground water, and stewardship practices going above
environmental regulation minimums.
(ii) RES. The Agency will award points to RES Projects as described
in this paragraph (d)(4)(ii):
(A) Greenhouse gases (0 or 3 points). Projects that do not produce
greenhouse gases receive 3 points. All other Projects receive 0 points.
(B) Forest conservation (0 or 1 point). Projects that take into
consideration fire hazards on forest lands receive 1 point if the
consideration is effectively discussed in the application. All other
Projects receive 0 points.
(C) Renewable fuel standard (0 or 1 point). Projects that comply
with EPA's renewable fuel standards receive 1 point. All other Projects
receive 0 points.
(5) Prior awards (0-15 points). The Agency will award points to
both EEI and RES Projects based on whether the Applicant has been
approved for a Federal Award under this subpart.
(i) Prior award within two years (0 points). The Applicant has been
approved for a Federal Award under

[[Page 62626]]

this subpart within the two previous Federal Fiscal Years.
(ii) No prior awards within two years (5 points). The Applicant has
not been approved for a Federal Award under this subpart within the two
previous Federal Fiscal Years.
(iii) No prior awards (15 points). The Applicant has never been
approved for a Federal Award under this subpart.
(6) Simple payback (0-15 points). The Agency will award points as
described in this paragraph (d)(6).
(i) EEI. The Agency will award points based on the Simple Payback
of the EEI.

Equation 3 to Paragraph (d)(6)(i)
Simple Payback = (Project Cost) / (dollar value of energy saved).

Table 3 to Paragraph (d)(6)(i)
------------------------------------------------------------------------
Points
Simple payback awarded
------------------------------------------------------------------------
More than 12................................................. 0
At least 8 and up to 12...................................... 5
At least 4 and up to 7....................................... 10
Less than 4.................................................. 15
------------------------------------------------------------------------

(ii) RES. The Agency will award points based on the Simple Payback
of the RES as described in this paragraph (d)(6)(ii).

Equation 4 to Paragraph (d)(6)(ii)
Simple Payback = (Project Cost) / (dollar value of energy units
replaced, credited, sold, or used and fair market value of Byproducts
as applicable in a typical year).

Table 4 to Paragraph (d)(6)(ii)
------------------------------------------------------------------------
Points
Simple payback awarded
------------------------------------------------------------------------
More than 25 years........................................... 0
At least 15 and up to 25..................................... 5
At least 10 and up to 14..................................... 10
Less than 10................................................. 15
------------------------------------------------------------------------

(e) Priority points (0-10 points). RBCS may select priorities that
are applicable to the program. These priorities will be provided on the
program website.

Sec. 4280.141 Application withdrawal.

During the period between the submission of an application and
award approval, the Applicant must notify the Agency in writing if the
Project is no longer viable or the Applicant no longer is requesting
financial assistance for the Project. When the Applicant notifies the
Agency, the selection will be withdrawn from consideration for funding.

Sec. Sec. 4280.142-4280.149 [Reserved]

Sec. 4280.150 Award selection.

Applications that have been fully processed and are determined to
be complete, eligible for funding, and are not removed from
consideration due to high risk will be evaluated based on the merit
evaluation criteria and priority criteria (see Sec. 4280.140). A grant
award is not automatically guaranteed, and an applicant may not receive
any funding. The points awarded for merit evaluation and priority
criteria will be added for each application. Applications will then be
ranked solely based on the points awarded. The Agency will select
applications for funding based on the following procedures.
(a) Applications requesting $20,000 or less. Applications
requesting $20,000 or less and submitted by the deadline identified in
Sec. 4280.133(a)(1) will be funded in rank order until the available
reserve has been expended or a minimum score of 40 points is reached.
No application is guaranteed funding.
(b) All other applications. For applications not competing for the
reserved funds for applications requesting $20,000 or less, the Agency
will first select the highest-scoring application from each State
(where Puerto Rico, the Virgin Islands, and the Western Pacific are
each considered a State) in rank order and available funds permitting,
provided that no application scores lower than 40 points. If more than
$100 million is available, the Agency will first select the top two
highest-scoring applications from each State (where Puerto Rico, the
Virgin Islands, and the Western Pacific are each considered a State) in
rank order and available funds permitting, provided that no application
scores lower than 40 points. Then applications will be funded in rank
order until available funds have been expended or a minimum score of 40
points is reached. No application is guaranteed funding.

Sec. 4280.151 Notification of successful applicants.

The following process will be used to notify Applicants whose
applications are selected for funding.
(a) Notification. The Agency will notify the Applicants whose
applications can be funded using available funds with an LOC. The LOC
will provide the conditions under which an award can be approved as
well as a copy of the terms of the award.
(b) Meeting the conditions of the Federal Award. An Applicant
receiving an LOC will have 60 calendar days to meet the conditions of
the Federal Award, unless otherwise specified in the LOC. If the
Applicant does not meet the conditions within the specified time frame,
the Agency will discontinue processing the application.
(c) Standard award terms and conditions. The standard award terms
and conditions are available on the program website.

Sec. 4280.152 Notification of unsuccessful Applicants.

Applicants whose applications are not eligible for financial
assistance through this program, who are removed from funding
consideration due to a high level of risk, or whose applications did
not score high enough to be funded will be notified as soon as
practicable. No further processing of the application will occur.

Sec. 4280.153 Award approval.

This section applies to all awards made before or after October 1,
2026. Once the Applicant has met all the conditions specified in the
LOC, the Agency will review the Federal Award for approval. The
approval will be conveyed through the execution of Form RD 4280-2,
which is the FAA, and provides all the terms of the Federal Award.
Costs must be allowable and be incurred during the approved Project
Period. Applications with a Form 1940-1 ``Request for Obligation of
Funds'' signed by the Applicant and the Agency prior to the effective
date of this regulation will continue to be processed, provided that
their project remains in line with applicable terms and conditions.
Each person or entity is subject to maximum amount of grant assistance
per Federal fiscal year. Entities that share common management or
ownership, regardless of percent owned, either directly or indirectly
through another entity or person, are considered one entity for which
aggregate funding cannot exceed the applicable dollar limit.

Sec. Sec. 4280.154-4280.159 [Reserved]

Sec. 4280.160 Reporting requirements.

Recipients are required to submit reports on financial status,
performance, and Equipment, as described below.
(a) Financial report. A final financial report is due 120 calendar
days after award approval. The report must include the submission of
the SF-425, ``Federal Financial Report,'' and any additional
information specified in Form RD 4280-2, ``Financial Assistance
Agreement.''
(b) Performance report. A final performance report is due 120
calendar days after award approval. The report must include the
information specified in Form RD 4280-2, ``Financial Assistance
Agreement.''
(c) Equipment report. Equipment reporting procedures must be in
compliance with 2 CFR 200.313 and are

[[Page 62627]]

identified in Form RD 4280-2, ``Financial Assistance Agreement.''

Sec. 4280.161 Monitoring awards.

Awards will be monitored by the Agency in accordance with
applicable laws, regulations, and policies. The Agency may terminate or
suspend the award for lack of adequate or timely progress, reporting,
documentation, or for failure to comply with Agency or award
requirements.

Sec. 4280.162 Transfer of obligations.

The Agency will not approve any transfer of obligations for this
program.

Sec. Sec. 4280.163-4284.198 [Reserved]

Sec. 4280.199 OMB control number.

The reporting and recordkeeping requirements contained in this
subpart have been approved by OMB and have been assigned OMB control
number 0570-0067 in accordance with the Paperwork Reduction Act of
1995.

0
3. Add subpart C, consisting of Sec. Sec. 4280.201 through 4280.299,
to read as follows:

Subpart C--Rural Energy for America Program: Grants for Energy
Audits and Renewable Energy Development Assistance

Sec.
4280.201 Purpose.
4280.202 Organization of subpart.
4280.203 Acronyms.
4280.204 Definitions.
4280.205 [Reserved]
4280.206 Conflict of interest.
4280.207 [Reserved]
4280.208 Compliance with other laws and regulations.
4280.209-4280.219 [Reserved]
4280.220 Applicant eligibility.
4280.221 Ultimate Beneficiary eligibility.
4280.222 Project eligibility.
4280.223-4280.224 [Reserved]
4280.225 Use of funds.
4280.226-4280.230 [Reserved]
4280.231 Application requirements.
4280.232 [Reserved]
4280.233 Submission requirements.
4280.234-4280.239 [Reserved]
4280.240 Application processing.
4280.241 Application withdrawal.
4280.242-4280.249 [Reserved]
4280.250 Award selection.
4280.251 Notification of successful Applicants.
4280.252 Notification of unsuccessful Applicants.
4280.253 Award approval.
4280.254-4280.259 [Reserved]
4280.260 Reporting requirements.
4280.261 Monitoring awards.
4280.262-4284.298 [Reserved]
4280.299 OMB control number.

Sec. 4280.201 Purpose.

This subpart contains the procedures and requirements for providing
financial assistance under the Rural Energy for America Program (REAP)
through grants to eligible entities to assist Agricultural Producers
and Rural Small Businesses to become more energy efficient and to use
Renewable Energy technologies and resources.

Sec. 4280.202 Organization of subpart.

The information in this subpart is organized into six main topics.
(a) General information. Sections 4280.201 through 4280.219 discuss
the purpose of the program, definitions, exception authority, conflict
of interest, and compliance with other laws and regulations.
(b) Eligibility information. Sections 4280.220 through 4280.229
discuss the eligibility requirements for the program. These sections
include information on Applicant eligibility, project eligibility, and
the use of funds. See Sec. 4280.222 for information about award
amounts, Period of Performance, and Cost Sharing requirements.
(c) Application requirements information. Sections 4280.230 through
4280.239 discuss the requirements for submitting an application. These
sections include information on what forms and other information are
required for a complete application as well as the format of the
application, the application submission deadline, and how to submit the
application.
(d) Application processing information. Sections 4280.240 through
4280.249 discuss how the Agency will process applications. These
sections include information on how applications will be reviewed for
eligibility, how applications will be evaluated for merit, and how an
Applicant can withdraw an application from consideration.
(e) Award information. Sections 4280.250 through 4280.259 discuss
how the Agency will make awards. These sections include information
about how applications will be selected for funding, how Applicants
will be notified whether their applications have been selected for
funding, how Applicants can resolve disputes regarding funding
selections, and the requirements for an Applicant to accept an award
and be approved as a Recipient of an award.
(f) Post-award information. Sections 4280.260 through 4280.261
discuss the reporting requirements for Recipients after

[…truncated; see source link]

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on October 1, 2026.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.