78220 Federal Register / Vol. 79, No. 248 / Monday, December 29, 2014 / Rules and Regulations 

DEPARTMENT OF AGRICULTURE 

Rural Business-Cooperative Service 

Rural Utilities Service 

7 CFR Part 4280 

RIN 0570–AA76 

Rural Energy for America Program 

AGENCY: Rural Business-Cooperative 

Service and Rural Utilities Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: The Rural BusinessCooperative Service (Agency) is 

publishing this final rule for the Rural 

Energy for America Program (REAP). 

This final rule modifies REAP based on 

comments received on the interim rule, 

which was published on April 14, 2011, 

and the proposed rule, which was 

published on April 12, 2013. The final 

rule establishes provisions for the grants 

and loan guarantees available for 

renewable energy systems (RES) and 

energy efficiency improvements (EEI) 

and for the grants available for energy 

audits and for renewable energy 

development assistance. 

DATES: This final rule is effective 

February 12, 2015. 

FOR FURTHER INFORMATION CONTACT: 

Kelley Oehler, Energy Branch, U.S. 

Department of Agriculture, 1400 

Independence Avenue SW., Stop 3225, 

Washington, DC 20250–3201; telephone 

(202) 720–6819. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

The Farm Security and Rural 

Investment Act of 2002 (FSRIA), 

established the renewable energy 

systems (RES) and energy efficiency 

improvements (EEI) program under Title 

IX, Section 9006, for making grants, loan 

guarantees, and direct loans to farmers 

and ranchers (agricultural producers) or 

rural small businesses to purchase 

renewable energy systems and make 

energy efficiency improvements. 

Section 9001 of the Food, 

Conservation, and Energy Act of 2008 

(2008 Farm Bill) amended Title IX of the 

FSRIA. Under the 2008 Farm Bill, 

Section 9007 of the amended FSRIA 

authorized the Agency to continue 

providing to agricultural producers and 

rural small businesses loan guarantees 

and grants for the development and 

construction of RES and EEI projects, 

but removed the ability to provide direct 

loans. The 2008 Farm Bill also 

expanded the types of RES technologies 

eligible for funding to include 

hydroelectric and ocean energy. Further, 

the 2008 Farm Bill authorizes the 

Agency to provide grants specifically for 

energy audits (EA), renewable energy 

development assistance (REDA), and 

RES feasibility studies. The 2008 Farm 

Bill also changed the name of the 

program to the Rural Energy for America 

Program (REAP). 

REAP’s authority is continued in the 

Agricultural Act of 2014 (2014 Farm 

Bill), with several specific changes: (1) 

Removing RES feasibility study grants, 

(2) removing the ability to provide 

assistance for flexible fuel pumps, 

adding councils as define in 16 U.S.C. 

3451, to be an eligible applicant for EA 

and REDA grants, and (4) creating a 

three tier application process for RES 

and EEI projects. 

REAP seeks to promote energy 

efficiency and renewable energy 

development for agricultural producers 

and rural small businesses by providing 

grants and guaranteed loans for eight 

different categories of renewable energy 

production (e.g., wind, solar, anaerobic 

digestion, hydro, and geothermal) as 

well as for EEI. 

Eligible applicants for RES and EEI 

financial assistance are agricultural 

producers and rural small businesses. 

For EA and REDA grants, eligible 

entities are units of a state tribal or local 

government; land-grant colleges and 

universities, and other institution of 

higher education; rural electric 

cooperatives; councils, as define in 16 

U.S.C. 3451; public power entities; and 

instrumentalities of a state, tribal, or 

local government. 

Purpose of the Regulatory Action 

This final rule revises 7 CFR part 

4280, subpart B to implement the 

provisions contained in the 2014 Farm 

Bill and addresses comments received 

on both the interim rule, published in 

the Federal Register on April 14, 2011, 

and the proposed rule, published in the 

Federal Register on April 12, 2013. 

Summary of the Major Changes 

For RES and EEI projects, the final 

rule implements a three-tier application 

process based on total project cost; 

reduces the technical reports 

requirements; removes pre-commercial 

technologies as eligible technologies; 

and modifies several scoring criteria for 

RES and EEI. For EA and REDA 

projects, the final rule removes the 

scoring criterion regarding contracting. 

The final rule also incorporates grant 

and guaranteed loan application 

deadline dates that allow the Agency to 

meet the statutory deadlines for funding 

the EA and REDA grants and RES and 

EEI grants of $20,000 or less. 

Costs and Benefits 

For a typical fiscal year, the Agency 

estimates that approximately 1,393 

REAP awards will be made as follows: 

487 RES awards, 884 EEI awards, and 22 

EA/REDA awards. Of the RES awards, 

the vast majority are expected to be 

associated with solar, followed by wind 

and biomass projects. The awardees are 

expected to be mostly businesses, 

including sole proprietors, with 

relatively few state, local, and tribal 

government entities. 

The Regulatory Impact Analysis (RIA) 

completed for this final rule calculates 

a net costs savings of approximately $10 

million as the result of improvements in 

the implementation of the REAP 

program. The cost savings achieved by 

the rule are attributed to the decreased 

costs estimated for the changes in 

program implementation. In addition 

the reduction in burden meets the 

reporting requirements of the 

retrospective review report which 

provided a specific percentage 

reduction in application burden, 

specifically the time it takes to complete 

the narrative portion of the application, 

which was reduced from 40 hours in the 

baseline, down to 20 hours in the final 

rule, a 50 percent reduction. 

Executive Order 12866 

This final rule has been reviewed 

under Executive Order (EO) 12866 and 

has been determined to be economically 

significant by the Office of Management 

and Budget (OMB). The EO defines a 

‘‘significant regulatory action’’ as one 

that is likely to result in a rule that may: 

(1) Have an annual effect on the 

economy of $100 million or more or 

adversely affect, in a material way, the 

economy, a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

state, local, or tribal governments or 

communities; (2) create a serious 

inconsistency or otherwise interfere 

with an action taken or planned by 

another agency; (3) materially alter the 

budgetary impact of entitlements, 

grants, user fees, or loan programs or the 

rights and obligations of recipients 

thereof; or (4) raise novel legal or policy 

issues arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in this EO. The Agency 

conducted a benefit-cost analysis to 

fulfill the requirements of EO 12866. 

Executive Order 13563 

The agency has reviewed this 

regulation pursuant to EO 13563, issued 

on January 18, 2011 (76 FR 3281, 

January 21, 2011). EO 13563 is 

supplemental to and explicitly reaffirms 


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Federal Register / Vol. 79, No. 248 / Monday, December 29, 2014 / Rules and Regulations 78221 

the principles, structures, and 

definitions governing regulatory review 

established in EO 12866. To the extent 

permitted by law, agencies are required 

by EO 13563 to: (1) Propose or adopt a 

regulation only upon a reasoned 

determination that its benefits justify its 

costs (recognizing that some benefits 

and costs are difficult to quantify); (2) 

tailor regulations to impose the least 

burden on society, consistent with 

obtaining regulatory objectives, taking 

into account, among other things, and to 

the extent practicable, the costs of 

cumulative regulations; (3) select, in 

choosing among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify 

performance objectives, rather than 

specifying the behavior or manner of 

compliance that regulated entities must 

adopt; and (5) identify and assess 

available alternatives to direct 

regulation, including providing 

economic incentives to encourage the 

desired behavior, such as user fees or 

marketable permits, or providing 

information upon which choices can be 

made by the public. 

The Agency identified REAP as one of 

the Department’s periodic retrospective 

review of regulations under Executive 

Order 13563, and has proposed a tiered 

application approach that reduces 

applicant burden for technical reports 

and streamlines the narrative portion of 

the application. Notably, there is an 

estimated 20 percent reduction in the 

number of hours it takes to complete a 

technical report for those applications 

for projects with total project costs of 

more than $80,000 to $200,000; the 

elimination of a technical report for 

those applications for projects with total 

project costs of $80,000 or less; and a 50 

percent reduction in the number of 

hours it takes to complete the narrative 

portion of burden. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act 1995 (UMRA), Public Law 

104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on state, local, 

and tribal governments and the private 

sector. Under section 202 of the UMRA, 

Rural Development generally must 

prepare a written statement, including a 

cost-benefit analysis, for proposed and 

final rules with ‘‘Federal mandates’’ that 

may result in expenditures to state, 

local, or tribal governments, in the 

aggregate, or to the private sector of 

$100 million or more in any one year. 

When such a statement is needed for a 

rule, section 205 of the UMRA generally 

requires Rural Development to identify 

and consider a reasonable number of 

regulatory alternatives and adopt the 

least costly, more cost-effective, or least 

burdensome alternative that achieves 

the objectives of the rule. 

This final rule contains no Federal 

mandates (under the regulatory 

provisions of Title II of the UMRA) for 

state, local, and tribal governments or 

the private sector. Thus, this rule is not 

subject to the requirements of sections 

202 and 205 of the UMRA. 

Environmental Impact Statement 

REAP has been operating since 2005 

under 7 CFR part 4280, subpart B, and 

through the issuance of various Notices 

of Funds Availability (NOFA), including 

several notices issued in response to 

Title IX of the Food, Conservation, and 

Energy Act of 2008 (2008 Farm Bill). 

Under this program, the Agency 

conducts a National Environmental 

Policy Act (NEPA) review for each 

application received. To date, no 

significant environmental impacts have 

been reported, and Findings of No 

Significant Impact (FONSI) have been 

issued for each approved application. 

Taken collectively, the applications 

show no potential for significant 

adverse cumulative effects. 

This document has been reviewed in 

accordance with 7 CFR part 1940, 

subpart G, ‘‘Environmental Program.’’ 

Rural Development has determined that 

this action does not constitute a major 

Federal action significantly affecting the 

quality of the human environment, and 

in accordance with NEPA of 1969, 42 

U.S.C. 4321 et. seq., an Environmental 

Impact Statement is not required. Grant 

applications will be reviewed 

individually to determine compliance 

with NEPA. 

Executive Order 12988, Civil Justice 

Reform 

This final rule has been reviewed 

under EO 12988, Civil Justice Reform. In 

accordance with this rule: (1) All state 

and local laws and regulations that are 

in conflict with this rule will be 

preempted; (2) no retroactive effect will 

be given to this rule; and (3) 

administrative proceedings in 

accordance with the regulations of the 

Department of Agriculture’s National 

Appeals Division (7 CFR part 11) must 

be exhausted before bringing suit in 

court challenging action taken under 

this rule unless those regulations 

specifically allow bringing suit at an 

earlier time. 

Executive Order 13132, Federalism 

It has been determined, under EO 

13132, Federalism, that this final rule 

does not have sufficient federalism 

implications to warrant the preparation 

of a Federalism Assessment. The 

provisions contained in the rule will not 

have a substantial direct effect on states 

or their political subdivisions or on the 

distribution of power and 

responsibilities among the various 

government levels. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601–612) (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 or any 

other statute unless the Agency certifies 

that the rule will not have an 

economically significant impact on a 

substantial number of small entities. 

Small entities include small businesses, 

small organizations, and small 

governmental jurisdictions. 

In compliance with the RFA, Rural 

Development has determined that this 

action, while mostly affecting small 

entities, will not have a significant 

economic impact on a substantial 

number of these small entities. Rural 

Development made this determination 

based on the fact that this regulation 

only impacts those who choose to 

participate in the program. Small entity 

applicants will not be affected to a 

greater extent than large entity 

applicants. 

Executive Order 13211, Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

The regulatory impact analysis 

conducted for this final rule meets the 

requirements for EO 13211, which states 

that an agency undertaking regulatory 

actions related to energy supply, 

distribution, or use is to prepare a 

Statement of Energy Effects. This 

analysis finds that this rule will not 

have any adverse impacts on energy 

supply, distribution, or use. 

Executive Order 12372, 

Intergovernmental Review of Federal 

Programs 

This program is not subject to the 

provisions of EO 12372, which require 

intergovernmental consultation with 

state and local officials. 

Executive Order 13175, Consultation 

and Coordination With Indian Tribes 

This EO imposes requirements on 

Rural Development in the development 


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of regulatory policies that have tribal 

implications or preempt tribal laws. 

Rural Development has determined that 

this rule does not have a substantial 

direct effect on one or more Indian 

Tribe(s) or on either the relationship or 

the distribution of powers and 

responsibilities between the Federal 

Government and the Indian Tribes. 

Thus, this rule is not subject to the 

requirements of EO 13175. 

However, in implementing changes to 

the program resulting from the 2008 

Farm Bill, this program was included in 

the USDA Joint Agency Regional 

Consultations that consolidated the 

consultation efforts of 70 USDA rules 

from the 2008 Farm Bill. USDA Rural 

Development sent senior level agency 

staff to seven regional locations and 

engaged tribal leadership in each region 

to consult on a host of programmatic 

adjustments. 

Upon completion of the consultation 

process, USDA Rural Development 

analyzed the feedback and incorporated 

input from the consultation into REAP. 

For example, with the intent to increase 

tribal participation in the program, the 

definition of a small business in this 

rule includes tribal business entities 

formed as Section 17 Corporations as 

determined by the Secretary of the 

Interior or other tribal business entities 

that have similar structures and 

relationships with their tribal 

governments as determined by USDA 

Rural Development. 

Programs Affected 

REAP is listed in the Catalog of 

Federal Domestic Assistance under 

Number 10.868. 

Paperwork Reduction Act 

The information collection 

requirements contained in this final rule 

have been submitted to the Office of 

Management and Budget (OMB) for 

review and approval. 

E-Government Act Compliance 

Rural Development is committed to 

complying with the E-Government Act, 

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. The rule allows electronic 

submission of applications through 

grants.gov. The Rural Development Web 

site contains information on all of Rural 

Development’s programs, including 

regulations, fillable forms, and 

factsheets. 

I. Background 

Rural Development administers a 

multitude of programs, ranging from 

housing and community facilities to 

infrastructure and business 

development. Its mission is to increase 

economic opportunity and improve the 

quality of life in rural communities by 

providing leadership, infrastructure, 

venture capital, and technical support 

that can support rural communities, 

helping them to prosper. 

To achieve its mission, Rural 

Development provides financial support 

(including direct loans, grants, loan 

guarantees, and direct payments) and 

technical assistance to help enhance the 

quality of life and provide support for 

economic development in rural areas. 

The 2008 Farm Bill contains several 

sections under which Rural 

Development provides financial 

assistance for the production and use of 

biofuels. This authority is continued in 

the Agricultural Act of 2014 (2014 Farm 

Bill). 

In response to the Farm Security and 

Rural Investment Act of 2002 (FSRIA), 

which established the Renewable 

Energy Systems and Energy Efficiency 

Improvements Program under Title IX, 

Section 9006, the Agency promulgated a 

rule (70 FR 41264, July 18, 2005) under 

7 CFR part 4280, subpart B) a program 

for making grants, loan guarantees, and 

direct loans to farmers and ranchers 

(agricultural producers) or rural small 

businesses to purchase RES and make 

EEI. Renewable energy sources eligible 

for funding included bioenergy, 

anaerobic digesters, geothermal electric, 

direct geothermal, solar, hydrogen, and 

wind. 

Section 9001 of the 2008 Farm Bill 

amended Title IX of the FSRIA. Under 

the 2008 Farm Bill and Section 9007 of 

the amended FSRIA, the Agency is 

authorized to continue providing to 

agricultural producers and rural small 

businesses loan guarantees and grants 

for the development and construction of 

RES and EEI projects. In addition to the 

current set of renewable energy projects 

eligible for funding, the 2008 Farm Bill 

expanded the program to include two 

new renewable energy technologies: 

hydroelectric and ocean energy. Further, 

the 2008 Farm Bill authorized the 

Agency to provide grants specifically for 

energy audits, renewable energy 

development assistance, and feasibility 

studies. This expanded program is 

referred to as REAP, which continues 

the Agency’s assistance for the adoption 

of both RES and EEI through Federal 

Government loan guarantees and grants. 

During the promulgation of this final 

rule, the 2014 Farm Bill was enacted 

and repealed the RES feasibility study 

component of REAP. This change has 

been incorporated into this final rule. In 

addition, the 2014 Farm Bill report 

language removed the ability to provide 

assistance for flexible fuel pumps, and 

the Bill added a provision to allow a 

council to be an eligible applicant for 

energy audit and renewable energy 

development assistance. Both of these 

changes have also been incorporated 

into this final rule. All comments 

regarding RES feasibility study grants 

and flexible fuel pumps will not be 

summarized or addressed. All 

references in the final rule to RES 

feasibility study grants and flexible fuel 

pumps have been removed. 

After the 2008 Farm Bill, the Agency 

issued a series of Federal Register 

notices implementing the provisions in 

the 2008 Farm Bill for RES feasibility 

studies, energy audits, and renewable 

energy development assistance. For 

energy audits and renewable energy 

development assistance, these notices 

were published on March 11, 2009 (74 

FR 10533), and May 27, 2010 (75 FR 

29706). 

On April 14, 2011 (76 FR 21110), the 

Agency published an interim final rule 

that established a consolidated REAP 

program by including each part of the 

program in a single subpart. Because the 

majority of the interim final rule was 

based on existing provisions that were 

at that time being implemented through 

the existing subpart for RES and EEI (7 

CFR part 4280, subpart B) and the 

notices identified above, the Agency 

published the REAP regulation as an 

interim final rule, with the opportunity 

to comment. 

On April 12, 2013 (78 FR 22044), the 

Agency published a proposed rule for 

REAP, which proposed a number of 

changes to the interim final rule. 

The Agency requested comments on 

both the interim final rule and the 

proposed rule. All of the comments 

received are summarized in Section III 

of this preamble. Most of the proposed 

rule’s provisions have been carried 

forward into subpart B of this final rule, 

although there have been several 

significant changes. A summary of 

major changes to the proposed rule are 

summarized below in Section II of this 

preamble. 

II. Summary of Changes to the 

Proposed Rule 

This section presents the major 

changes to the REAP April 12, 2013, 

proposed rule. Most of the changes were 

the result of the Agency’s consideration 

of public comments on the proposed 

rule. As indicated above, the Agency is 

also making changes to the rule due to 


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statutory changes resulting from the 

enactment of the 2014 Farm Bill. Other 

changes, however, are being made even 

though the Agency did not receive 

comments on those provisions. The 

Agency is making these other changes as 

a result of the recent revocation of the 

USDA’s 1971 Statement of Policy titled 

‘‘Public Participation in Rulemaking,’’ 

FR Doc. 2013–25321. This revocation 

restores to USDA the discretion to use 

notice-and-comment rulemaking 

procedures when appropriate. Rather 

than making these other changes in a 

separate rulemaking, the Agency has 

elected to include them in this final 

rule. Unless otherwise indicated, rule 

citations refer to those in the final rule. 

A. Definitions (§ 4280.103) 

The following definition was added to 

the final rule: 

Council. The definition was added 

because the 2014 Farm Bill allows a 

council, as define in 16 U.S.C. 3451, to 

be an eligible applicant for energy audit 

and renewable energy development 

assistance grants. 

The following definitions were 

revised from what was published in the 

proposed rule: 

Agricultural Producer. Clarified that 

the 50 percent of gross income must 

come from the products that are grown 

or raised. 

Annual Receipts. Directly 

incorporates the definition found in 

Small Business Administration 

regulations. 

Anaerobic Digester Project. Clarifies 

that the digester uses animal waste. 

Commercially Available. The Agency 

added a second part to the definition 

such that a Renewable Energy System 

would be considered ‘‘commercially 

available’’ if the system has been 

certified by a recognized industry 

organization whose certification 

standards are acceptable to the Agency. 

In addition, the Agency clarified the 

definition to make clear that the 

provisions are applied equally to 

domestic and foreign systems. 

Complete Application. Revised 

definition to encompass that an 

application must be complete enough 

for the Agency to determine technical 

merit, which is similar process to the 

existing rules methodology to determine 

technical merit. 

Departmental Regulations. Removed 7 

CFR part 3021, because the cross 

reference is no longer valid. 

Eligible Project Costs. Reference REAP 

by name, instead of general term 

‘‘program.’’ 

Energy Assessment. Added language 

to the definition for projects with total 

project costs of $80,000 or less that an 

individual or entity can conduct energy 

assessments and does not require the 

individual or entity to be 

‘‘independent.’’ 

Feasibility Study. The term business 

was replaced with business operation, 

to clarify that it was not just a 

requirement for businesses but Ag 

producers as well. 

Instrumentality. Removed the 

examples since the 2014 Farm Bill now 

includes a council as an eligible 

applicant. 

Matching Funds. This definition was 

revised to clarify that matching funds 

are the additional funds required to 

complete the project that are required by 

7 U.S.C. 8107, which are 75 percent of 

eligible project costs for grants and 25 

percent of eligible project costs for 

guaranteed loans. Other funds provided 

that are in excess of the funds required 

by statute are not considered matching 

funds. 

Refurbished. This definition was 

revised to add the requirement that 

refurbishment must take place in a 

‘‘commercial’’ facility and that the 

refurbished equipment must come with 

a warranty that is approved by the 

Agency or its designee. 

Retrofitting. The Agency made the 

definition more general by removing 

reference to renewable energy system 

and added a requirement that the 

retrofit does not affect the original 

warranty, if the warranty is still in 

existence. 

Renewable Energy System. The 

definition is being modified in 7 CFR, 

part 4280 because the 2014 Farm Bill 

added the definition of ‘‘renewable 

energy systems’’ to the statute. The 

statutory definition of a ‘‘renewable 

energy system’’ is a system that 

produces a usable energy from a 

renewable energy source and may 

include distribution components 

necessary to move energy produced by 

such system to initial point of sale, but 

may not include a mechanism for 

dispensing energy at retail. 

Simple Payback. A number of changes 

were made to this definition. 

1. Replaced net income with earnings 

before interest, taxes, depreciation and 

amortization (EBITDA), which is 

financing measure of operating cash 

flow, based on data from the income 

statement. 

2. Removed all tax credits, carbon 

credits, renewable energy credits, from 

the calculation. 

3. Based on eligible project costs 

rather than total project costs. 

4. For EEI projects and RES systems 

that reduce onsite energy use, 

calculation of historical energy used 

prior to the project implementation can 

now be calculated on a 12, 24, 36, 48, 

or 60 month basis at the applicant’s 

discretion, versus the proposed rule 

which required applicants to use a 36 

months. 

5. For projects that reduce energy use, 

added ‘‘or replace’’ to identify that 

projects that replace energy will use this 

method to determine simple payback 

and removed the ability to include 

revenue from byproducts produced by 

the energy system. Also those RES 

project that replace over 100 percent of 

the energy used by the applicant will 

use the actual average price paid for the 

energy replaced, and the projected 

revenue received from energy sold in a 

typical year. 

Small Business. Added an additional 

option to qualify as a small business 

using average net income and net worth, 

and reorganized the definition. 

The following definitions were in the 

proposed rule but were removed from 

the final rule: 

Blended Liquid Transportation Fuel. 

The definition was required to define 

flexible fuel pumps and the 2014 Farm 

Bill report language repealed the ability 

of the REAP to provide assistance for 

flexible fuel pumps, therefore the 

Agency is removing the definition. 

Energy Analysis. As a result of this 

deletion, conforming changes were 

made throughout rule. 

Flexible fuel pump. The 2014 Farm 

Bill report language repealed the ability 

of the REAP to provide assistance for 

flexible fuel pumps, therefore the 

Agency is removing the definition. 

B. General Applicant, Application, and 

Funding Provisions (§ 4280.110) 

The Agency clarified that a grant 

application for EA and REDA can be 

submitted at any time. 

C. Notifications (§ 4280.111) 

The final rule clarifies that once an 

application is determined to be 

ineligible no further processing of the 

application will occur. The Agency also 

relabeled paragraph (c) to ‘‘Funding 

Determination’’ rather than ‘‘Disposition 

of applications.’’ 

D. Project Eligibility (§ 4280.113) 

The Agency added a provision to 

identify conditions under which a 

subsequent EEI, that improves or 

replaces an EEI project previously 

funded under REAP, is eligible for 

funding. 

Based on comments, for agricultural 

producers with operations in non-rural 

areas, the Agency removed the italicized 

text in the following: ‘‘the application 

can only be for renewable energy 

systems or energy efficiency 


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improvements on integral components 

of or that are directly related to the 

operation . . .’’ so that it now reads: 

‘‘the application can only be for RES or 

EEI on components that are directly 

related to and their use and purpose is 

limited to the agricultural production 

operation . . .’’ (see § 4280.113(d)). This 

same change was also made for project 

eligibility for Energy Audits grants, 

Renewable Energy Development 

Assistance grants, and RES/EEI 

guaranteed loans. 

The Agency added provisions 

identifying how a renewable energy 

system project, in which a residence is 

closely associated with and shares an 

energy metering device with the rural 

small business or agricultural operation, 

would be eligible for funding (see 

§ 4280.113(e)). 

E. RES and EEI Grant Funding 

(§ 4280.114) 

In determining items that qualify as 

an eligible project cost, the Agency 

removed the phrase ‘‘integral 

component’’ so that an item is an 

eligible project cost if it is ‘‘directly 

related to and its use and purpose is 

limited to the RES or EEI.’’ (see 

§ 4280.114(c)). 

The Agency also identified that a 

second meter will be considered eligible 

project costs for those applicants whose 

projects involve residences (see 

§ 4280.114(c)(6)). 

Lastly, the Agency revised ineligible 

project costs (§ 4280.114(d)) in the 

proposed rule by rephrasing 

‘‘guaranteeing of lease payments’’ to 

‘‘lease payments’’ and removing 

reference to ‘‘guaranteeing loans made 

by other Federal agencies’’ which is not 

applicable to RES and EEI grants, but 

only to RES and EEI guaranteed loans. 

F. Determination of Technical Merit 

(§ 4280.116) 

Under the final rule, the process and 

criteria that the Agency will use in 

determining whether a project has 

technical merit has been established in 

a new section (see § 4280.116). 

G. Grant applications for RES and EEI 

Projects (§ 4280.117, § 4280.118, 

§ 4280.119) 

The Agency clarified the time frames 

associated with determining if the 

applicant meets the definition of Rural 

Small Business for Annual receipts and 

number of employees, and with 

determining if the applicant meets the 

definition of Agricultural Producer for 

gross income (Annual receipts). This 

change applies to all three tiers of grant 

applications and to guaranteed loan 

applications. 

The Agency removed references to 

Form AD 2106, but included language 

in the application that requests 

applicant to provide ethnicity, race, and 

gender information. This information is 

optional and is not required for a 

Complete Application. This change was 

also made to the energy audit and 

renewable energy development 

assistance grants. 

The Agency added provisions to 

technical reports that were not in the 

proposed rule to describe how the 

technology meets Commercially 

Available definition, and to include 

simple payback calculations for the 

project. 

The Agency added language to the 

final rule to indicate what 

documentation is required to receive 

points for commitment of funds. This 

same change was also made for Energy 

Audits grants and Renewable Energy 

Development Assistance grants. 

H. Scoring RES and EEI Grant 

Applications (§ 4280.120) 

Environmental benefits criterion was 

modified to detail how points are 

awarded if an applicant can document 

a positive effect on any of the three 

impact areas: Resource conservation, 

public health, and the environment. 

The Agency modified the second 

score criterion, ‘‘Quantity of energy 

generated or saved per REAP dollar 

requested,’’ by reducing the points 

allocated to 10 points. Due to this point 

reduction, the Agency has added back 

the scoring criterion from the existing 

rule ‘‘Energy replaced, saved, or 

generated’’ and allocated a maximum of 

15 points to this criterion. 

‘‘Quantity of energy generated or 

saved per REAP dollar requested’’ was 

further modified to use energy generated 

or saved over a 12 month period rather 

than 36 months that was required in the 

proposed rule, and the project will need 

to achieve 50,000 BTUs per REAP dollar 

requested rather than 25,000 to receive 

maximum point under this criterion. 

Size of agricultural producer or rural 

small business was clarified to indicate 

that the calculation is made on the size 

of the applicant’s agricultural operation 

or business concern as applicable. This 

change conforms to language used in 

Small Business Administration (SBA) 

regulations for small business 

determination. 

The Agency has revised the 

‘‘readiness’’ criterion (now referred to as 

‘‘Commitment of Funds’’) to reflect a 

sliding scale for those applications that 

can show commitment of more than 50 

percent matching funds and other 

funds. 

Previous grantees and borrowers 

criterion was revised to increase points 

for applicants who have not received 

previous assistance. 

Simple payback was revised to 

increase the maximum number of years 

for RES project payback by 5 years, 

raising it from 20 to 25. 

Under the State Director and 

Administrator priority points, the 

Agency added three new categories for 

consideration in awarding points: (1) 

The applicant is a member of an 

unserved or under-served population, 

(2) furthers a Presidential initiative or a 

Secretary of Agriculture priority, and (3) 

the proposed project is located in an 

impoverished area, has experienced 

long-term population decline, or loss of 

employment. . . . 

I. Selecting RES and EEI Grant 

Applications for Award (§ 4280.121) 

Competition cycles for REAP 

applications were modified such that all 

RES/EEI grant applications, regardless 

of the amount of funding requested 

(which includes $20,000 or less), will 

compete in up to two competition 

cycles. RES/EEI grant applications 

requesting $20,000 or less will compete 

an additional three times for the $20,000 

or less set aside, for a total of up to 5 

competitions. Guaranteed loan-only 

applications will compete periodically, 

provided that the Agency receives a 

sufficient number of applications in 

order to maintain a competitive awards 

process. 

All competitions dates may be 

modified by a Federal Register Notice 

(see § 4280.121 for RES/EEI grants). 

The Agency clarified that an 

application received after the 

application submittal deadline can be 

considered for funding in the 

subsequent fiscal year if the applicant 

remains interested in the grant. This 

same change was also made for Energy 

Audits grants and Renewable Energy 

Development Assistance grants. 

The Agency relabeled paragraph (e) 

from ‘‘Disposition of ranked 

applications not funded’’ to ‘‘Handling 

of Ranked Applications Not Funded.’’ 

J. Awarding and Administering RES and 

EEI Grants (§ 4280.122) 

A change was made to indicate that 

commitments for matching funds and 

other funds are needed prior to closing 

the grant. 

K. Servicing RES and EEI Grants 

(§ 4280.123) 

Under programmatic changes the 

Agency revised the provision that 

requires prior approval (paragraph 

(b)(1)) to reflect that prior approval is 


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not required in cases where there is a 

decrease in project cost that does not 

have any negative affect on the longterm viability of the project. In these 

cases review and approval will be 

required prior to disbursement. 

For transfer of ownership, the Agency 

added a requirement that the project is 

also operational. 

For both RES and EEI reports, the 

Agency clarified that jobs reported, if 

any, are a direct result of the REAP 

funded project. 

For EEI reports, the Agency removed 

reference to 36 months and refers to the 

time period as reported in the energy 

assessment or energy audit. 

L. Construction Planning and 

Performing Development (§ 4280.124) 

The Agency rephrased ‘‘unnecessary 

experience and bonding requirements’’ 

in the proposed rule to read 

‘‘unnecessary experience or excessive 

bonding requirements’’ to better reflect 

Agency intent (see § 4280.124(a)(1)). 

The final rule clarifies that any 

exception requested for surety must be 

in writing and will require Agency 

funding be disbursed after project is 

operational (see § 4280.124(a)(3)(v)). 

The final rule eliminates the cross 

reference in the proposed rule to 7 CFR 

1780.74 regarding contracts awarded 

prior to application and brought the 

applicable requirements into this 

section (see § 4280.124 (g)). 

M. Guaranteed Loan Funding 

(§ 4280.129) 

The Agency added provisions to 

allow refinancing in the final rule under 

certain conditions. The final rule also 

clarifies that eligible project costs 

include buildings and equipment 

acquisition when an existing renewable 

energy system is being financed with 

guaranteed loan funds. 

N. Scoring RES and EEI Guaranteed 

Loan-Only Applications (§ 4280.135) 

The final rule incorporates a periodic 

competition for guaranteed loan-only 

applications, provided that the Agency 

receives a sufficient number of 

applications in order to maintain a 

competitive awards process. 

The final rule clarifies that all 

guaranteed loan-only applications that 

do not meet the minimum score will be 

competed in a National competition at 

end of the fiscal year. 

The Agency removed reference to 

Form AD 2106, but included language 

in the application that requests 

applicant to provide ethnicity, race, and 

gender information. This information is 

optional and is not required for a 

Complete Application. 

O. Application and Documentation 

(§ 4280.137) 

The final rule corrects the reference in 

paragraph (b)(2)(v) from ‘‘the applicant 

must submit an estimated appraisal’’ to 

‘‘the lender must submit an estimated 

appraisal.’’ 

P. Selecting RES and EEI Guaranteed 

Loan-Only Applications for Award 

(§ 4280.139) 

The Agency changed quarterly 

competitions to periodic competitions 

in the final rule in order to improve 

access to capital and indicated that the 

final National competition would be the 

first business day of September. All 

competitions dates may be modified by 

a Federal Register Notice (see 

§ 4280.139 for RES/EEI guaranteed 

loans). 

The final rule relabels paragraph (c) 

from ‘‘Disposition of ranked 

applications not funded’’ to ‘‘Handling 

of Ranked Applications Not Funded.’’ 

Q. Technical Reports for Energy 

Efficiency Improvement Projects 

(Appendix A to Part 4280) 

The final rule requires energy audit or 

energy assessment to use actual energy 

consumed for the building and 

equipment being evaluated for 12, 24, 

36, 48, or 60 months at the applicant’s 

discretion, versus all applicants being 

required to use 36 months. The 

technical report was also modified to 

require information for simple payback 

calculations to be submitted. Lastly, the 

Agency added requirements for an 

individual or entity to perform 

assessments if total project cost is 

$80,000 or less. 

R. Technical Reports for Renewable 

Energy System (RES) Projects With Total 

Project Costs of Less Than $200,000, but 

More Than $80,000 (Appendix B to Part 

4280) 

The Agency clarified what needs to be 

included in ‘‘Project description’’ and 

‘‘Resource assessment.’’ The required 

information for simple payback 

calculations was clarified. 

III. Summary of Comments and 

Responses 

The current REAP program was 

implemented through the interim final 

rule which was published in the 

Federal Register on April 14, 2011 (76 

FR 21110), with a 60-day comment 

period that ended June 13, 2011. The 

proposed rule was published in the 

Federal Register on April 12, 2013 (78 

FR 22044), with a 60-day comment 

period that ended June 11, 2013. 

Comments on the interim final rule 

were received from 32 commenters and 

comments on the proposed rule were 

received from 37 commenters. 

Combined, these commenters provided 

approximately 150 similar comments. 

Commenters included biorefinery 

owner/operators, community 

development groups, industry and trade 

associations, investment banking 

institutions, Rural Development 

personnel, and individuals. As a result 

of some of the comments, the Agency 

made changes in the rule. The Agency 

sincerely appreciates the time and effort 

of all commenters. 

Responses to the comments on both 

the interim final rule and the proposed 

rule are discussed below. Comments 

made in response to requested 

comments found in the proposed rule 

are presented first, followed by 

comments on the interim final rule and 

the proposed rule grouped by category 

and rule section. 

Requested Comments—a. Application 

Threshold for Projects With Total 

Project Costs of No More Than $200,000 

Comment: One commenter stated that 

larger thresholds skew to favor larger 

projects. According to the commenter, 

most agricultural producers that the 

commenter works with in southern 

Oregon are working on solar projects 

that are much less expensive, generally 

involving 5 kilowatt (kW), which can 

now be installed for less than $5/watt, 

for cattle water or power production for 

remote locations. The commenter 

recommended that the threshold be 

reduced to $100,000 or less. 

Response: The proposed rule contains 

two thresholds—$200,000 and $80,000. 

The commenter recommended a 

threshold of $100,000. The $80,000 

threshold is sufficient to address the 

commenter’s concern. 

Requested Comments—b. Less 

Documentation for Applications for 

Projects With Total Project Costs of No 

More Than $80,000 

Comment: Numerous commenters 

agreed with the Agency’s decision to 

create a third category for projects 

totaling less than $80,000. The 

commenters stated that the current 

application for small projects is 

burdensome at 40 to 50 pages in length, 

and dissuades farmers and rural small 

businesses interested in small wind 

technologies from applying to the 

program. The commenters suggested 

developing a template that meets all the 

statutory requirements and one 

commenter submitted an alternative 

application for consideration. Many of 

the commenters endorsed the proposal 

to simplify the application process for 

projects in the $80,000 to $200,000 tier, 


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as it would presumably increase small 

wind energy participation in the REAP 

program. 

One commenter, in contrast, did not 

support the three-tiered grant 

application system, stating that threetiers lead to additional complexity for 

applicants and Agency staff. This 

commenter recommended that the 

Agency use a two-tiered system, 

incorporating the simplified application 

process outlined for projects under 

$80,000 for all projects $200,000 or less. 

Response: The Agency thanks the 

commenters supporting the proposed 

three-tier application system. While the 

Agency agrees with the one commenter 

that a two-tier system would be simpler, 

the Agency finds that a three-tier system 

achieves a better balance in the 

information being requested to account 

for the differences in the level of 

technologies; that a two-tier system 

would either result in obtaining more 

information than is necessary for the 

smallest projects or not obtaining 

enough information on the larger 

projects. 

With regard to the suggestion by one 

commenter to develop a template for 

applications for $80,000 or less, the 

Agency agrees that this would be useful 

and intends to pursue the development 

of such a template. 

Requested Comments—c. Definition of 

Small Business 

The Agency received comments on 

the definition of small business in both 

the interim final rule and the proposed 

rule. Both sets of comments are 

addressed below. 

Comment: In commenting on the 

interim final rule, a number of 

commenters were concerned that the 

restrictions in the SBA standards for 

defining a small business were unduly 

limiting retailers, especially those with 

multiple facilities, from participating in 

REAP. The commenters were seeking, in 

general, either to eliminate the use of 

SBA size standard for determining 

REAP eligibility or to apply the SBA 

size standard at the individual business 

concern level rather than at the entire 

entity level, which includes accounting 

for affiliates. 

Four commenters stated that an 

obstacle to using REAP that hits at the 

heart of rural America are the SBA size 

requirements. These requirements are 

based on average annual profits and/or 

number of employees, which prevent 

interested businesses from using this 

program. One commenter stated 

numerous farm cooperatives are unable 

to take advantage of REAP because they 

are owned by a parent company, have 

subsidiaries or affiliates at other 

locations, and do not qualify for the 

program because they come under the 

umbrella of a much larger entity, 

exceeding SBA eligibility requirements. 

The commenter encouraged USDA to 

allow these types of businesses to be 

judged as a stand-alone company when 

determining their eligibility based on 

SBA standards. 

Another commenter urged the Agency 

to use an alternate consideration for 

small business that would allow a 

broader interpretation of the term 

‘‘small business’’ by allowing each site 

to be treated as its own entity rather 

than requiring small business status to 

be determined at the entire-entity level. 

According to the commenter, multi-site 

locations rarely qualify as a small 

business. 

Response: The Agency has 

determined that defining ‘‘small 

business’’ in accordance with how the 

SBA defines ‘‘small business’’ is not 

only reasonable, but helps provide 

consistency within the Federal 

Government. That being said, even SBA 

has several definitions for ‘‘small 

business’’ depending on the specific 

SBA program. In evaluating the various 

SBA programs, the Agency has decided 

to use the small business sized 

standards used by the SBA financial 

assistance programs, commonly referred 

to as the 7A and the SBA 504 programs, 

as found in 13 CFR 121.301(a) and (b). 

As noted in the comment, 

commenters were seeking, in general, 

either to remove the cap or to apply the 

cap at the individual business concern 

level rather than at the entire entity 

level, which includes accounting for 

affiliates. The Agency disagrees with 

both suggestions, primarily because the 

Agency has determined that it would be 

inappropriate to adjust how a business 

is determined to be a small business 

relative to the restrictions found in these 

SBA definitions; that is, the Agency 

defers to SBA’s expertise and years of 

experience in the specific metrics to use 

to define a ‘‘small business.’’ 

Further, with regard specifically to 

the recommendation to apply the 

income limitation to the individual 

business concern only, the Agency is 

concerned that either change would 

open the door for huge companies to 

obtain assistance by forming a 

secondary company that could apply for 

and receive REAP assistance. These 

companies would have resources not 

available to other small businesses and 

potentially have an unfair advantage 

when putting together an application for 

assistance. 

With regard to removing the income 

limitation altogether, the statutory 

authority for the program requires the 

Agency to consider the applicant’s small 

business status as an eligibility criterion 

and the Agency cannot do otherwise. 

Thus, the Agency has not adopted this 

suggestion in the final rule. 

Comment: In commenting on the 

interim final rule, two commenters 

recommended revising the definition of 

small business to follow an Agency 

guideline or the broad guideline used by 

SBA, which only looks at net income 

and/or net worth, or some other 

standard guideline. According to the 

commenters, the small business size 

standards for each industry are so 

different that it makes it difficult to 

determine eligibility. Both commenters 

stated that, if there were one or two 

numbers to review in every case, it 

would be much easier and the Agency 

would be able to help more businesses. 

Response: For the reasons stated in 

the responses to the previous two 

comments, the Agency has decided to 

use the small business sized standards 

used by the SBA financial assistance 

programs, commonly referred to as the 

7A and the SBA 504 programs, as found 

in 13 CFR 121.301(a) and (b). 

With regard to the suggestion to look 

at net income and/or net worth in 

determining the size of the applicant, 

the Agency agrees that this is 

appropriate. By incorporating reference 

to 13 CFR 121.301(b), the Agency is 

adding the tangible net worth and 

average net income of the business 

concern and its affiliates as an 

alternative set of metrics for 

determining whether the applicant is a 

small business. 

Comment: One commenter suggested 

removing the limit on the size of the 

applicant all together given the intent of 

the program is to encourage energy 

savings and generation of renewable 

energy. According to the commenter, 

the SBA size standards are one of the 

most burdensome and inconsistent areas 

within REAP, particularly the 

determination of parent subsidiary and 

affiliate status and aggregation of this 

income has been a challenge. The 

commenter recommended that 

consideration be given to continue using 

SBA size standards thresholds as a cap 

for each business type, but not 

necessarily using the same process for 

defining the threshold. 

As an alternative, the commenter 

recommended using only the income of 

the applicant entity when determining 

eligibility. The commenter also asked 

whether the small business component 

could be addressed only in scoring 

rather than in eligibility determination. 

The commenter pointed that by doing 

this it would open up the eligibility to 

any for profit business and would 


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simplify the application process (e.g., no 

need to provide previous year’s tax 

returns or look up North American 

Industry Classification System (NAICS) 

code). 

Response: While the Agency 

acknowledges the potential benefits of 

the commenter’s suggestion to remove 

the size restriction on the applicant, as 

noted in a previous response, the 

statutory authority for the program 

requires the Agency to consider the 

applicant’s small business status as an 

eligibility criterion and the Agency 

cannot do otherwise. 

In addition, the Agency does not agree 

with the commenter’s alternative to use 

only the applicant’s income for the 

reasons cited in a previous response and 

therefore has not adopted the 

commenter’s suggestion in the final 

rule. 

Finally, because it is a statutory 

requirement that a business applicant be 

a ‘‘small business,’’ the Agency cannot 

accommodate the commenter’s 

suggestion to address the size of the 

business as a scoring criterion only. The 

Agency notes that the final rule, as 

found in the proposed rule, does award 

points based on business size relative to 

the SBA small business size standards. 

Requested Comments—d. Maximum 

Grant Size for Renewable Energy System 

Feasibility Studies 

The Agency received comments 

regarding the appropriate size for 

feasibility study grants, however the 

2014 Farm Bill repealed the ability of 

REAP to make grants for feasibility 

studies, therefore the Agency will not 

summarize or address those comments. 

Requested Comments—e. Using Average 

Annual Gallons of Renewable Fuel To 

Award Points for Flexible Fuel Pumps 

The Agency received comments 

regarding the average annual gallons of 

renewable fuel for flexible fuel pumps, 

however the 2014 Farm Bill repealed 

the ability of the REAP to provide 

assistance for flexible fuel pumps, 

therefore the Agency will not 

summarize or address those comments. 

Requested Comments—f. Using a 

Minimum 25 Percent Tangible Balance 

Sheet Equity in Lieu of Cash Equity 

Requirement 

Comment: Two commenters 

expressed opposition to replacing the 

current cash equity requirement with a 

minimum of 25 percent tangible balance 

sheet equity (or a maximum debt-totangible net worth ratio of 3:1). 

According to one commenter, the 

term ‘‘net tangible balance sheet 

equity,’’ which is used in the Business 

and Industry Guaranteed Loan (B&I) 

program, is not a typical lender used 

term and calculating this figure is 

confusing and does not provide any real 

useful information to the lender or the 

Agency. The present REAP rule allows 

the fair market value of equity to be 

used in the calculation of the equity 

requirements. If farmers are going to use 

REAP, they are going to meet the equity 

requirement by using current assets and 

their values as opposed to cash 

injection. The term ‘‘land rich and cash 

poor’’ applies to most farming 

operations at this time. On-farm 

renewable energy project applications 

will be reduced to miniscule amounts if 

we use the B&I equity requirement. If 

the future of the REAP program is the 

guaranteed loan, then the Agency 

should not be making it more difficult 

to potential applicants to meet the REAP 

requirements and that is precisely what 

such a change would do. 

The other commenter stated the use of 

tangible balance sheet equity (TBSE) 

appears to be a source of confusion for 

some existing B&I lenders and 

borrowers and extending the 

requirement to REAP would only make 

this worse. The B&I program requires 

TBSE when the loan is closed. Given 

REAP closings are after projects are in 

service, a TBSE requirement could 

create significant challenges as the 

balance sheet will likely see equity 

changes (cash) used to fund the 

construction phase. The current process 

of capping projects at 75 percent and 

using cash injection into the project 

works well. Also, agricultural producers 

typically do not provide Generally 

Accepted Accounting Principles 

(GAAP)-based financials as are typical 

to business and required in the B&I 

program. This requirement would be an 

additional burden. The commenter 

pointed out that REAP loans are 

generally secured well as there is new 

equipment with no existing liens, and 

that RES projects typically have takeoff 

contracts or power purchase 

agreement’s to ensure cash flow, plus 

added security with the use of 

commercially available technology. 

Given these circumstances, the 

commenter is unsure as to what, if any, 

benefit using TBSE would bring to the 

program. Unless the current cash 

requirement is not working or the 

default rate has been unfavorable, the 

commenter recommended leaving the 

cash requirement as is. The commenter 

also noted that the cash equity 

requirement works with the 

combination grant/loan application 

where the grant is used for the cash 

injection. 

Response: The Agency agrees with the 

commenters. While a goal of the Agency 

is for REAP to be as consistent with the 

B&I program as possible, REAP’s 

agricultural producer and rural small 

business constituents are poorly served 

by the use of the term ‘‘net tangible 

balance sheet equity’’ and it will not be 

used. The final rule requires equity to be 

cash equity. 

Requested Comments—g. Options for 

Increasing Use of REAP Guaranteed 

Loans 

Comment: One commenter 

recommended that the Agency allow for 

waivers of the 20 percent personal 

guarantee when mitigation factors are in 

place in order to encourage greater use 

of REAP guaranteed loans. 

Response: The Agency proposed to 

revise REAP to follow the B&I program’s 

provisions for personal and corporate 

guarantees, except as they apply to 

passive investors. The B&I provisions 

allow the Agency to waive the 20 

percent requirement if the lender can 

document to the Agency’s satisfaction 

that collateral, equity, cash flow, and 

profitability indicate an above-average 

ability to repay the loan (7 CFR 

4279.149(a)). By doing so, the 

commenter’s recommendation has been 

addressed and the final rule maintains 

the incorporation of these B&I 

provisions. 

Comment: One commenter 

recommended removing the SBA 

threshold all together and mimic the 

B&I program eligibility. 

Response: The Agency does not agree 

with the commenter’s suggestion to 

follow the B&I program in lieu of the 

SBA threshold. The B&I program is not 

specific to small businesses. Aligning 

REAP with how the SBA defines ‘‘small 

business’’ rather than how the B&I 

program determines applicant eligibility 

is more appropriate. Further, aligning 

REAP with the B&I program would be 

statutorily inconsistent with the REAP 

requirement to provide assistance to 

small businesses. For these reasons, the 

Agency has not adopted the 

commenter’s suggestion in the final 

rule. 

Comment: One commenter 

recommended allowing refinancing of 

existing renewable energy projects, 

which is frequently inquired about. The 

commenter recommended that the 

Agency implement provisions that are 

equal to or less restrictive than those 

found in the current B&I program. 

Response: The Agency agrees with the 

commenter that allowing refinancing of 

existing projects would encourage the 

use of REAP loan guarantees and has 

added provisions to allow such 


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refinancing in the final rule. These 

provisions, however, require certain 

conditions be met. First, the existing 

project to be refinanced must be part of 

an application for a new project; that is, 

an application that proposes only to 

refinance an existing project is not 

eligible. Second, the existing project 

being refinanced must be a project that 

would otherwise be eligible under 

REAP. Third, the cost of the refinancing 

must be less than 50 percent of the 

eligible project costs of the application. 

In applying these provisions, the 

existing debt may be either current debt 

with the lender applying for the 

guarantee or debt from another lender. 

Comment: One commenter 

recommended allowing loan note 

guarantees to be issued up-front prior to 

complete system being installed and 

tested. 

Response: For the reasons discussed 

in response to directed question i below, 

the Agency is not incorporating this 

recommendation in the final rule. 

Comment: One commenter indicated 

quarterly competition is positive 

improvement from the current REAP 

program, but monthly funding cycles is 

better than quarterly. 

Response: The Agency agrees that 

shorter periods for competing 

guaranteed loan applications will 

provide the best service to those 

applying for such applications. The 

Agency, therefore, has decided to 

compete guaranteed loan-only 

applications on a periodic basis, 

provided that the Agency receives a 

sufficient number of applications in 

order to maintain a competitive awards 

process, and has included this provision 

in the final rule. 

Requested Comments—h. Frequency for 

Competing Guaranteed Loan-Only 

Applications 

Comment: One commenter stated that, 

while quarterly competitions are a 

positive proposal to the existing 

regulation, allowing projects to compete 

on a monthly basis will be more 

consistent with the B&I program. The 

commenter also stated that continuous 

funding would also mirror SBA 

programs, which lenders are familiar 

with. 

Response: As noted in the response to 

the previous comment, the Agency 

agrees that shorter periods for 

competing guaranteed loan applications 

will provide the best service to those 

applying for such applications and, 

therefore, has incorporated periodic 

competitions for guaranteed loan-only 

applications in the final rule, provided 

that the Agency receives a sufficient 

number of applications in order to 

maintain a competitive awards process. 

Requested Comments—i. Issuance of 

REAP Loan Note Guarantee Prior to 

Construction for Technologies That 

Demonstrate Lower Risk to the 

Government 

Comment: One commenter 

recommended allowing loan note 

guarantees to be issued up-front prior to 

complete system being installed and 

tested in order to encourage 

participation in the REAP loan 

guaranteed portion of the program. 

Response: The Agency agrees with the 

commenter that issuing the loan note 

guarantee up-front prior to the complete 

system being installed and tested would 

encourage participation in the program. 

However, no substantive suggestions 

were provided by the commenter on 

how risk to the program could be 

mitigated. Further, the similar B&I 

program does not issue loan note 

guarantees up-front for energy projects 

primarily because of the inherent 

increased risk with doing so. Therefore, 

the Agency has decided not to allow the 

issuing of loan guarantees up-front 

under REAP. 

Requested Comments—j. Development 

of Multi-Farm, Community Digester 

Projects Under the Rule 

Comment: One commenter stated that 

a community digester may not qualify 

given the SBA size determination 

method if all entities incomes are 

aggregated. According to the 

commenter, looking at only the income 

or projected income or employees of 

newly formed entities may allow this 

type of project to be eligible. 

The commenter also suggested that 

the Agency consider modifying the 

Administrator points to encourage 

community-based renewable or energy 

efficiency projects with justification 

being that more people will benefit with 

project funding. 

Response: The Agency agrees with the 

commenter that more community 

digesters would qualify as eligible by 

not aggregating all of the entities’ 

incomes. However, for the reasons 

stated earlier in a response concerning 

this issue, the Agency had determined 

that consistency with the application of 

SBA definitions of small business is 

important and that it is important to 

look at the financial position of all 

entities associated with a project. 

Therefore, the Agency has not revised 

the rule to incorporate the commenter’s 

suggestion. 

With regard to the commenter’s 

suggestion to modify how Administrator 

priority points are awarded, the Agency 

is not persuaded that funding a single, 

large community-based project 

necessarily benefits more people than 

funding an equivalent number of 

smaller projects. Thus, the Agency has 

not revised the rule in response to this 

suggestion. 

Requested Comments—k. 

Subcategorization of Energy Efficiency 

Improvements for Purposes of 

Determining Under-Representation 

When Awarding State Director or 

Administrator Priority Points and 

Whether Historical Data or the Current 

Pool of Applications Should Be Used in 

Determining Under-Representation. 

Comment: One commenter did not 

support subdividing EEI projects to 

award under-represented project points. 

According to the commenter, this would 

lead to more political influenced awards 

from year-to-year versus supporting the 

true goal of energy savings, which these 

projects currently promote. According 

to the commenter, penalizing projects 

types that have formerly been 

completed also penalizes the applicant 

that was not an early innovator or just 

learned about the program, but still has 

a project that achieves energy savings. 

The commenter claims that the 

Agency’s credibility with renewable 

energy technology awards has been hurt 

because grant writers/vendors do not 

know from year to year if their 

applications will be competitive as 

these priority points for underrepresented technologies can be critical 

for renewable energy projects to receive 

funding. 

With regard to the second part of the 

question, the commenter stated that, 

while using historical data is preferable 

over considering the annual pool of 

applications, allowing states to award 

points to encourage growth specific to 

their state is the preferred method. 

Response: In the absence of input 

from other commenters on supporting a 

subdivision of EEI projects, the Agency 

has elected not to subdivide EEI projects 

for the purposes of determining whether 

a specific type of EEI project is underrepresented when awarding 

discretionary points. 

The Agency is not subdividing EEI 

projects for the purposes of determining 

under-represented technologies, 

therefore, the agency did not respond to 

the second part of the comment 

(historical versus pool of applications 

for the year) because it is not applicable. 

General 

Support for Program 

Comment: Two commenters 

expressed general support for the 


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program, with one commenter stating 

that these programs will help jumpstart 

economic growth in alternative sectors 

in the United States. 

Response: The Agency thanks the 

commenters for their support. 

Consolidation of Rule 

Comment: One commenter stated that 

consolidating each part of the program 

into a single subpart should be helpful 

in enhancing the REAP program’s 

effectiveness in fostering the 

development of more anaerobic 

digesters. 

Response: The Agency agrees that 

consolidating each part of the REAP 

program into a single subpart enhances 

the Agency’s effectiveness in 

implementing REAP, to the benefit of all 

eligible technologies, including 

anaerobic digesters. 

Comment: Two commenters 

expressed strong support for REAP from 

the dairy farmer perspective. One of the 

commenters stated that dairy farmers 

have a great opportunity to take 

advantage of multiple USDA programs 

to develop and construct anaerobic 

digester systems. The commenter 

appreciates the Secretary’s commitment 

to these efforts as put forth in the dairy 

sustainability Memorandum of 

Understanding signed in late 2009. For 

example, dairy farmers may be able to 

utilize Environmental Quality 

Incentives Program (EQIP) through 

USDA’s Natural Resource Conservation 

Service (NRCS) with REAP to develop 

an anaerobic digester system. The 

commenter recommended continuing to 

work to make certain these 

opportunities are developed and 

understood throughout the nation. 

The commenter also supported the 

comments submitted by the Innovation 

Center for U.S. Dairy, especially the 

Center’s recommendations for 

modifying the personal loan guarantee 

language could allow for a number of 

dairy farmers to secure the necessary 

finances to utilize REAP for anaerobic 

digester systems. 

The other commenter expressed belief 

that REAP is critical for our nation’s 

energy future and that opportunities 

abound for not only realizing the energy 

efficiencies on the farm, but also for 

dairy farmers to become producers of 

renewable energy. 

Response: The Agency thanks the 

commenters for supporting REAP. 

Agency officials collaborate closely with 

REAP applicants via its state offices 

through an array of supporting entities; 

such as the Natural Resource 

Conservation Service (NRCS), the Farm 

Service Agency (FSA), and the Forest 

Service (FS), state, and private 

stakeholders; to leverage program funds 

to their maximum impact upon national 

and departmental priorities. 

The Innovation Center for U.S. Dairy 

did not submit comments on the interim 

or proposed rule, so the Agency was 

unable to determine what the 

commenter was referring to beyond the 

comment on personal loan guarantee. 

The Agency notes that among the 

changes implemented by this rule is the 

incorporation of the personal and 

corporate guarantee requirements of the 

B&I program. 

Rebate Program 

Comment: In commenting on the 

interim final rule, one commenter stated 

that there should be a rebate program for 

micro wind and solar in order to 

facilitate greater use of the program by 

these technologies. 

Response: The statutory authority of 

REAP requires the Agency to implement 

grants and loan guarantees. As such, the 

Agency is not authorized to use rebates 

in implementing REAP. In lieu of being 

able to implement a rebate program, the 

Agency is implementing a simplified 

application process for applications for 

projects with total project costs of 

$80,000 or less where funds are 

disbursed at project completion. This 

streamlined application process 

achieves many of the burden reductions 

that could be achieved under a direct 

rebate program. 

EO 12372 Intergovernmental Review 

Comment: One commenter noted that 

the preamble to the interim final rule 

states that intergovernmental 

consultation results are not reported 

because they are ‘‘not required of this 

program.’’ The commenter stated that he 

understands that certain field offices 

insist that the U.S. Fish and Wildlife 

Service be consulted on all wind 

projects, regardless of their size, 

following a memo from Rural 

Development in Washington. According 

to the commenter, for fiscal year 2011 

this resulted in a severely compressed 

application deadline and dissuaded a 

number of qualified applicants. The 

commenter recommended that this 

situation be clarified, and that all wind 

projects of 100 kW, as a minimum, and 

under be allowed to proceed without 

such consultation. The commenter’s 

preference would be exclusion for single 

turbine projects with heights up to 200 

feet (ft). 

Response: The consultations referred 

to by the commenter are in connection 

with the NEPA and not with EO 12372, 

Intergovernmental Review. The Agency 

consultations with U.S. Fish and 

Wildlife Service regarding proposed 

project installations are not governed by 

EO 12372, but are instead governed by 

NEPA and Agency environmental 

regulations published in 7 CFR 1940, 

part G. Projects must comply with all 

environmental requirements; including 

Federal, state, and local requirements. 

All applicants must comply with the 

environmental requirements applicable 

to their project, including having the 

environmental review completed prior 

to approval of the project. Funding a 

grant or providing a loan guarantee is a 

Federal action requiring compliance 

with the NEPA. NEPA clearance must 

be done before the Agency obligates 

money, versus before application, so 

NEPA requirements should not 

significantly impact the time needed to 

submit an application. 

Demonstrated Financial Need 

Comment: Four commenters 

supported the removal of the 

demonstrated financial need 

requirement. One commenter stated that 

the need to demonstrate financial need 

was one of the most onerous 

requirements of the program and that it 

is not called for in the current statute, 

is burdensome, and a significant 

obstacle to participation on very small 

projects. The other two commenters 

stated that the requirement was 

undefined and difficult to prove. Other 

commenters stated that the change 

should remain in the final regulation. 

Response: The Agency thanks the 

commenters for their support. The final 

rule does not contain a ‘‘demonstrated 

financial need’’ requirement. Further 

Congress evidenced its intent that 

‘‘demonstrated financial need’’ not be 

shown when the 2008 Farm Bill 

removed it as a requirement for this 

program. 

Funded Technologies 

Comment: Numerous commenters 

stated the 2002 Farm Bill and 2008 

Farm Bill specifically sought to promote 

renewable energy development for 

agricultural producers and rural small 

businesses. The 2008 Farm Bill set aside 

20 percent of REAP funds for small 

business- and farm-scale renewable 

energy technologies for grants of 

$20,000 or less. The commenters believe 

that the lengthy project cycles for small 

wind, burdensome REAP paperwork, 

and application process and lower 

success rates for small wind 

applications have resulted in 

increasingly poor program participation 

rates by small wind retailers. 

During fiscal years 2009 through 

2012, the average funding success rate 

across all REAP technologies was 67 

percent, which resulted in 6,605 funded 


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projects out of 9,856 requests. Yet, 

during that same 4-year period, the 

average funding success rate for wind 

was 40 percent, which resulted in 376 

funded projects out of 942 total 

requests. The percentage of REAP 

awards between fiscal years 2009 

through 2021 for wind projects was just 

6 percent. Agency data indicate that the 

low amount funded for wind projects 

has been even lower in recent years. The 

commenters suggested the numbers 

indicate that the REAP program, 

including the application process, is not 

accessible for farmers and small 

businesses interested in wind 

generation and there is a programmatic 

bias against small wind projects. 

Response: While the Agency agrees 

with the figures presented by the 

commenters, the Agency disagrees that 

the program is not accessible to farmers 

and small businesses interested in wind 

generation. The Agency has made and is 

making modifications to the program to 

ensure all technologies, including wind, 

have an ability to compete for funding, 

which include: 

• Scoring adjustment in simple 

payback awards full points at a 10-year 

payback period rather than a 4-year 

payback period. This increase in the 

payback period to receive full points has 

helped certain renewable energy system 

projects, including small wind projects. 

• To the extent that any one RES 

technology is unrepresented or underrepresented in REAP awards, the 

program allows State Directors and the 

Administrator to award discretionary 

points to such projects. In fiscal year 

2012 and fiscal year 2013, these 

discretionary points were awarded to 

wind projects and resulted in a higher 

percentage being funded. In fiscal year 

2011, only 19 percent of the wind 

applications received were funded, but 

in fiscal year 2012 and fiscal year 2013 

45 percent and 56 percent, respectively, 

of the wind applications received were 

funded. 

Multi-Farm Anaerobic Digester Projects 

Comment: In commenting on the 

interim final rule, one commenter 

recommended that a separate procedure 

be provided for projects involving 

multiple farms. The commenter 

provided a detailed separate procedure 

for providing an alternative combination 

grant and loan procedures for multifarm digester projects, which would 

differ from the current combination 

grant and guaranteed loan process, as 

follows: 

• The grant portion should be 

available in the full amount of up to 25 

percent of total costs of the activity, as 

authorized by REAP. 

• The loan guarantee portion should 

be authorized for up to 75 percent of 

eligible project costs, less the amount of 

a grant, when: 

(1) At least 15 percent of eligible 

project costs is committed as private 

equity, and 

(2) A minimum 10-year contract has 

been executed for the end-use of the 

fuel. 

• The loan guarantee should also be 

available to support restructuring of 

loan amortization. 

• A project developer should be able 

to apply for a combined grant and loan 

guarantee on a rolling basis, or as soon 

as concept design and business plan are 

completed. 

• Project review should not be based 

on competitive scoring, but would 

instead be expedited and measured 

against a set of fixed criteria. 

• ‘‘Hybrid’’ project funding would be 

simultaneously available in the full 

amount offered by any separate 

program, whether USDA or Department 

of Energy (DOE) or other, and would not 

reduce the availability of the REAP 

grant. 

• An interim procedure should be 

devised for ‘‘shovel ready’’ projects, to 

phase in their financing and 

construction over 2 years, beginning this 

summer. Some funding should be 

allocated from the fiscal year 2011 funds 

to finance the initiation of construction 

in fiscal year 2011 and a commitment of 

fiscal year 2012 funding be provided to 

finance the continuation and 

completion of construction next year. 

The current hard June 15 deadline for 

fiscal year 2011 should be modified to 

allow the submission of applications for 

the filing of interim applications under 

this new procedure. 

• In the alternative, if a combination 

of full, 25 percent funding and a revised 

loan guarantee is to be made available 

for multi-digester projects under a 

competitive scoring procedure, the 

current hard June 15 deadline needs to 

be modified to enable submission of 

applications for funding in fiscal year 

2011. 

The commenter concluded by stating 

that, with greater, targeted funding and 

improved loan financing flexibility for 

these types of projects, the program’s 

incentive value may be greatly leveraged 

so as to reach more farms and more 

sectors of the renewable energy 

marketplace. 

Response: The Agency points out that 

multi-farm anaerobic (community) 

digester projects are eligible projects 

under the current process and disagrees 

with the commenter that a separate 

award procedure is needed for 

providing a combination grant and loan 

for multi-farm anaerobic digesters 

because the current award process is 

sufficient and allows such facilities to 

compete on an equitable basis with all 

other technologies. The Agency has 

implemented periodic guaranteed loanonly competitions in the rule to improve 

access to capital. Furthermore, to fully 

implement the recommendation made 

by the commenter would require the 

Agency to set aside funds specifically 

for multi-farm digesters. This is 

something that the Agency cannot do 

without specific statutory authority, 

which the Agency does not currently 

have. Finally, the Agency works to 

sustain a diverse portfolio of RES and 

EEI projects across every state. To 

develop a procedure specific to one 

technology would be counter to this 

goal for the program. 

Comment: In commenting on the 

interim final rule, a number of 

commenters supported increased 

funding for multi-farm digesters. Some 

simply requested that the interim final 

rule be amended to allow multi-farm 

digester projects to be funded in an 

amount equal to a full 25 percent of 

project costs as authorized by REAP. 

According to one of the commenters, the 

up-front funding cap of $500,000 per 

digester for projects combining a loan 

guarantee with a grant is simply 

insufficient to drive the investment for 

a project of this scale, whereas funding 

of 25 percent of project costs approaches 

the necessary amount. Therefore, the 

commenter recommended changing the 

rule to allow this amount of funding. 

Other commenters echoed similar 

concern and recommendations, 

explaining that the completion of the 

projects hinge largely on whether REAP 

funding can be made available at a level 

in the amount of 25 percent of project 

costs, or substantially more than the 

$750,000 currently authorized by the 

REAP funding rule and thus the cap of 

$750,000 must be raised, but would still 

need to conform to the 25 percent of 

project costs statutory limitation. 

The commenters as a whole stressed 

the potential benefits of these changes to 

facilitate multi-farm digester projects. 

One of commenters noted that these 

projects take advantage of the 

economies of scale involved, where the 

only limitation on the number of farms 

that may be involved in this type of 

project is proximity to the host digester 

site and the associated costs of 

transporting the farm wastes and 

returned nutrient spread and bedding 

byproduct. 

Another commenter noted that there 

are challenges in making digester 

technology cost effective for single, 

small farm operations and that it is hard 


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to envision broad-based application of 

single digester equipment on smaller 

dairy operations as are typically found 

in the eastern United States. This 

commenter stated that the community 

digester model provides a workable 

solution to this challenge by allowing 

multiple producers to supply their 

wastes collectively to a single, larger 

scale operation. 

Still other commenters provided 

examples of projects currently being 

considered that would provide 

renewable natural gas as a substitute for 

#6 and #2 fuel oil in a co-generation 

plants at universities and extensive 

discussion of the potential overall 

benefits of the projects to the 

universities and local farming 

operations. 

Response: As implemented in 2011, 

REAP has two maximum funding levels: 

a $500,000 limit for any one renewable 

energy project and a $750,000 limit to 

any one entity (for all projects funded 

under REAP). With regard to combined 

funding requests (those requests seeking 

both a grant and a loan guarantee) for 

RES, the maximum loan amount is $25 

million and the maximum grant amount 

is $500,000. While the Agency 

acknowledges that certain projects, such 

as multi-farm digesters, may have 

significant funding requirements, the 

Agency seeks a program that not only 

supports a diversity of technologies, but 

provides funds to a large number of 

projects in all states to ensure a 

national-level program. Removing 

maximum funding levels would work 

counter to both of those goals (e.g., very 

large projects could take a significant 

portion of the limited funds available 

thereby reducing the number of projects 

that could otherwise have been funded 

and in turn reduce the diversity of 

projects). Further, multi-farm projects 

are not prohibited from seeking a 

combined funding request, as long as 

the grant portion does not exceed 

$500,000. For these reasons, the Agency 

has retained these levels in the final 

rule. 

Project Eligibility 

Pre-Commercial Technology/

Commercially Available Definition 

Two commenters expressed concern 

about removing pre-commercial 

technology for the rule. 

One commenter stated that the 

rationale behind the removal of precommercial technology was difficult to 

understand. The stated reason is to 

avoid overlap with the Biorefinery 

Assistance guaranteed loan program. 

The Biorefinery Assistance program 

appears to focus primarily on biofuels, 

which presumably encompasses only a 

subset of projects that apply for REAP 

funding. If the Agency is seeking to 

avoid overlap with the Biorefinery 

Assistance program, it appears that 

there are more efficient and precise 

mechanisms, such as explicitly stating 

that biorefinery projects receiving loans 

from the Biorefinery Assistance program 

would be ineligible. 

In pointing to the definition of precommercial technology (Technology 

that has emerged through the research 

and development process and has 

technical and economic potential for 

commercial application, but is not yet 

commercially available), the commenter 

pointed out that the definition is clearly 

broader than biorefinery projects, and 

making this category ineligible affects 

project types outside of what would also 

be relevant for the Biorefinery 

Assistance program. 

As proposed, only commercially 

available technologies would be 

available for funding. The definition for 

commercially available (from the same 

document) begins with ‘‘A system that 

has a proven operating history specific 

to the proposed application’’ and 

contains other requirements such as ‘‘an 

established warranty exists for parts, 

labor, and performance.’’ While the 

definition for pre-commercial is fairly 

broad, the requirements for a technology 

to be considered ‘‘commercially 

available’’ are relatively restrictive. If 

the proposed rule change is accepted, 

then several new (but beyond precommercial) technologies could 

conceivably be made ineligible. Under a 

strict reading of the current definition of 

commercially available, products 

coming onto the market, such as an 

innovative wind turbine design or a new 

biodigester system, would be ineligible 

for REAP funding. 

There may be an argument for 

removing pre-commercial technology 

from eligibility to ensure participating 

projects are likely to succeed, but the 

given rationale appears incongruent 

with the potential consequences. 

The second commenter opposed 

eliminating the pre-commercial 

available technology from the rule 

because many projects do not qualify for 

the Biorefinery Assistance program and 

the removal will leave a void in the 

Agency’s funding spectrum. This 

commenter stated that, if the Agency 

does their due diligence in the technical 

reviews to ensure sound projects are 

funded, the program can continue to 

foster innovative energy improvement 

and renewable energy projects. 

In contrast to these two commenters, 

numerous commenters supported the 

removal of pre-commercial technologies 

as eligible projects from the REAP 

program and, at the same time, 

recommended that the Agency 

strengthen the definition of 

‘‘commercially available.’’ Without the 

qualified examination of documentation 

supporting the claim of commercial 

availability by an organization such as 

National Renewable Energy Laboratory 

(NREL), the broad language (one 

commenter specifically identified 

‘‘operating history of 1 year, established 

design and installation procedures, 

professional service providers’ 

familiarity with the system’’) risks the 

reputation of the program by inviting 

the entry of questionable wind energy 

systems into REAP. 

Commenters strongly recommended 

that the Agency require safety and 

performance standards certification to 

either American Wind Energy 

Association (AWEA) 9.1–2009 (for 

turbines >200m2 rotor area, ∼ 60 kW) or 

International Electrotechnical 

Commission (IEC) 61400–12–1 and IEC 

61400–11 (2005 or future versions) by 

the Small Wind Certification Council, or 

other accredited certification body, for 

qualification as ‘‘commercially 

available.’’ One of the commenters 

specifically recommended that the 

Agency include in the definition of 

‘‘commercially available’’ certification 

standards for all RES from an accredited 

certification body. 

Response: As discussed below, the 

Agency is not including pre-commercial 

technologies as eligible for REAP 

funding in the final rule and has revised 

the definition of ‘‘commercially 

available.’’ 

With regard to the exclusion of precommercial technologies, the Agency 

acknowledges that the Agency’s 

rationale presented in the preamble was 

incomplete. The Agency also 

acknowledges that eliminating the 

overlap with the Section 9003 program 

can be handled in several ways, as 

pointed out by the commenters. 

However, the Agency is concerned that 

including pre-commercial technologies 

within REAP continues to expose the 

Agency and taxpayer dollars to the risks 

associated with financing unproven 

technologies that do not meet the 

commercially available definition. 

Further, with the streamlining of 

applications, the Agency will be 

receiving less information to make 

technical merit determinations. To 

create another set of application 

requirements increases the complexity 

of the program at a time when the 

Agency is making a concerted effort to 

simplify it. Lastly, with regards 

conducting ‘‘due diligence,’’ the Agency 

is concerned that due diligence may be 


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insufficient to overcome the potential 

risks inherent with pre-commercial 

technologies, such as whether the 

technology can be successfully scaledup to a commercial level. 

Several commenters, in supporting 

the removal of pre-commercial 

technologies, recommended that the 

Agency strengthen the definition of 

‘‘commercially available’’ by requiring 

review of applications by such entities 

as the National Renewable Energy 

Laboratory (NREL)and/or requiring 

certification of projects as being 

commercially available by an 

appropriate industry body or meeting 

certain industry standards. The Agency 

has and will continue to work with 

NREL and other recognized industry 

experts, as needed. 

As described below, the Agency has 

revised the definition of ‘‘commercially 

available’’ by requiring the system have: 

• ‘‘Proven performance data’’ in 

addition to a ‘‘proven operating history’’ 

and that there is at least one year of data 

demonstrating both the performance 

data and operating history; and 

• An existing established warranty 

that is valid in the United States. 

In addition, the Agency is adding the 

option of demonstrating that a system 

can be determined ‘‘commercially 

available’’ if it has been certified by a 

recognized industry organization whose 

certification standards are acceptable to 

the Agency. The Agency also revised the 

definition to clarify that the 

requirements apply equally to both 

domestic and foreign systems. 

Finally, with regard to the suggestion 

that the Agency explicitly state that 

biorefinery projects receiving loans from 

the Biorefinery Assistance program 

would be ineligible for REAP, the 

Agency agrees with the commenter that 

this helps delineate the two programs. 

The Agency intends to address this 

suggestion in the Biorefinery Assistance 

program final rule. 

In sum, the changes made in the final 

rule in response to this set of comments 

strengthen, clarify, and increase 

flexibility in demonstrating that a 

system is ‘‘commercially available.’’ 

Definitions (§ 4280.103) 

Anaerobic Digester Product 

Comment: One commenter 

recommended that the underlined text 

be added to the definition: ‘‘Anaerobic 

digester project. A renewable energy 

system that uses animal waste and other 

organic substrates, via anaerobic 

digestion, to produce biomethane that is 

used to produce thermal or electrical 

energy or converted to a compressed 

gaseous or liquid state for direct use or 

for injection into natural gas 

transmission and distribution systems.’’ 

According to the commenter, this 

change will increase the demand for 

renewable biogas produced by anaerobic 

digesters. It would allow anaerobic 

digester projects that inject renewable 

biogas into the natural gas, in addition 

to or instead of using the gas on-site. 

Anaerobic biogas producers can receive 

added value from the renewable quality 

of their biogas, even when that gas is not 

used on site but put into transmission; 

wind and solar generators sell the 

renewable quality of their electrons to 

firms far from where the electrons are 

consumed. Encouraging the wheeling of 

renewable biogas through the natural 

gas transmission system allows 

customers, including stationary fuel cell 

power plants and hydrogen production 

systems at fuel cell electric vehicle 

fueling stations, to take advantage of 

renewable fuel using the existing 

natural gas system. 

Response: With regard to the 

suggestion that the definition be 

modified to include ‘‘for direct use or 

for injection into natural gas 

transmission and distribution systems,’’ 

the Agency disagrees that this is needed. 

The current definition does not exclude 

such uses and including the suggested 

language might unintentionally 

disqualify anaerobic digesters that the 

Agency would otherwise have funded. 

Therefore, the Agency has not included 

this suggested language in the final rule. 

Annual Receipts 

Comment: One commenter stated that 

income limitations should be defined 

using net income, not gross income. 

Response: For the reasons stated 

earlier in our response to comments on 

the definition of ‘‘small business,’’ the 

Agency is using in the final rule the 

definitions of small business as found in 

SBA’s provisions in 13 CFR 121.301(a) 

and (b). Having made this 

determination, the Agency defers to 

SBA’s expertise and years of experience 

in the specific metrics to use to define 

a ‘‘small business’’ and, in the case of 

13 CFR 121.301(b). The Agency notes 

that 13 CFR 121.301(b), is still in the 

process of being updated, but based on 

15 U.S.C. Section 632(a)(5), SBA can 

determine a small business eligible, for 

development company programs and for 

7(a) business loans by using average net 

income after taxes of less than $5 

million and tangible net worth of less 

than $15 million in the preceding 2 

years. Thus, the commenter’s request 

has been accommodated. 

Energy Analysis 

Comment: Two commenters did not 

agree with adding the new definition of 

‘‘Energy Analysis.’’ One commenter 

stated that the definition is ambiguous 

and does not provide a clear meaning as 

to what is expected, while the other 

commenter stated that it adds another 

level of confusion to the energy savings 

documentation requirement. According 

to the commenters, this new term varies 

little from the ‘‘energy assessment’’ 

definition, and will result in added 

confusion for potential applicants. The 

commenters also questioned whether 

this definition will provide the Agency 

with the necessary information for 

informed energy savings decisions. 

Response: After considering these 

comments, the Agency has determined 

that it is unnecessary to have a separate 

definition for ‘‘energy analysis’’ and has 

eliminated the term from the final rule. 

Energy Assessor 

Comment: One commenter raised 

concerns with the ‘‘energy assessor’’ 

definition. The commenter questioned 

the credibility of using 3 years of 

experience and completion of five 

energy assessments or energy audits as 

a measure for a qualified consultant. 

Response: The Agency has reviewed 

the proposed definition for ‘‘energy 

assessor’’ with knowledgeable federal 

professionals who indicated that the 3 

years and five energy assessments or 

energy audits is a reasonable threshold 

to provide sufficient experience to 

perform energy assessments. Further, 

part of the definition of ‘‘energy 

assessor’’ is that the energy assessor is 

a ‘‘Qualified Consultant.’’ To be a 

‘‘qualified consultant,’’ the individual or 

entity must possess ‘‘the knowledge, 

expertise, and experience to perform the 

specific task required.’’ In this case, the 

specific task required is performing an 

energy assessment. The purpose of the 

‘‘number of years of experience’’ and the 

‘‘number of similar projects’’ within the 

definition of ‘‘energy assessor’’ is to set 

a minimum benchmark to be applied 

across the various technologies included 

in REAP. Therefore, the Agency has not 

revised the rule in response to this 

comment. 

Energy Audit 

Comment: One commenter indicated 

that there are three types on energy 

audits: Level I, a walk through audit; 

Level II, a full audit; and Level III, a full 

investment grade audit. The commenter 

asked if walk through audits are 

sufficient for REAP. According to the 

commenter, full audits identify 

numerous energy conservation measures 


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(ECMs) and it is customary to 

recommend that a specialist make a 

detailed analysis of a particular aspect 

regarding an ECM. The commenter 

noted that most REAP projects do not 

focus on one particular piece of 

equipment. If this is indeed the case, the 

commenter recommended that the 

Agency prescribe what is acceptable for 

such measures as many utility rebate or 

state grant programs do. 

Another commenter recommended 

that the Agency makes sure that the 

energy auditor performs the on-farm 

energy audit according to the American 

Society of Agricultural and Biological 

Engineers (ASABE) definitions. 

Response: As defined in the rule, an 

‘‘energy audit’’ is, in part, a 

‘‘comprehensive report that meets an 

Agency-approved standard.’’ Rather 

than defining what level energy audits 

would be acceptable to the Agency in 

the rule, the Agency will include 

guidance on what is acceptable in the 

Agency’s instructions for the rule so as 

to identify those industry-recognized 

energy audit standards that are 

acceptable for conducting energy audits 

under this program. The Agency notes 

that, while the Level II and Level III 

energy audits described by the 

commenter would constitute energy 

audits acceptable to the Agency, a walk 

through energy audit (Level I) may be 

acceptable depending on the work that 

is done and presented in the audit. To 

be accepted by the Agency, an energy 

audit must contain the information 

outlined in Section B of Appendix A to 

7 CFR part 4280. 

While the Agency agrees that an audit 

performed according to ASABE 

definitions is acceptable under REAP, 

not all audits need to be performed 

according to ASABE definitions in order 

for the audit to be acceptable to the 

Agency under REAP. As noted above, 

the Agency will include up-to-date 

guidance on what is acceptable in the 

Agency’s instructions so as to further 

clarify that energy audits include 

industry recognized energy audit 

standards. 

Energy Auditor 

Comment: One commenter 

recommended that the Agency ensures 

that the energy auditor conducting onfarm energy audits is either a 

professional engineer or certified energy 

manager. 

Response: The Agency disagrees with 

the commenter that the only entities 

qualified to perform energy audits under 

REAP are professional engineers and 

certified energy managers. The Agency 

has determined that a certified energy 

auditor; an individual with a 4 year 

engineering or architectural degree with 

at least 3 years of experience and who 

has completed at least five similar type 

energy audits; or an individual 

supervised by one of these individuals, 

has the sufficient experience for 

conducting energy audits under REAP 

and the Agency has not revised the rule 

in response to this comment. 

Inspector 

Comment: One commenter stated that 

the definition of ‘‘inspector’’ does not 

define how the inspector is qualified 

other than having 3 years of experience 

and completion of five energy 

assessments or energy audits. The 

commenter asked how the Agency 

arrived at five assessments or audits as 

a meaningful number and questioned 

whether five audits or assessments in 3 

years makes an individual qualified. 

Response: The Agency points out that 

in the proposed rule ‘‘inspector’’ is used 

in conjunction with the quality of the 

project work completed and not with 

energy audits or energy assessments. 

Nevertheless, the Agency disagrees with 

the commenter’s assertion that the 

definition of ‘‘inspector’’ is solely 

defined by the number of years of 

experience and the number of projects. 

Part of the definition of ‘‘inspector’’ is 

that the inspector is a ‘‘Qualified 

Consultant.’’ To be a ‘‘Qualified 

Consultant,’’ the individual or entity 

must possess ‘‘the knowledge, expertise, 

and experience to perform the specific 

task required.’’ The purpose of the 

number of years of experience and 

number of similar projects within the 

definition of ‘‘inspector’’ is to set a 

minimum benchmark to be applied 

across the various technologies included 

in REAP. The Agency has not revised 

the rule in response to this comment. 

Qualified Consultant 

Comment: One commenter was 

concerned that requiring the Qualified 

Consultant be ‘‘independent’’ will have 

a negative effect on applications for 

small projects, which have the vendor 

perform the energy savings analysis, 

plus supply the equipment, and at times 

the project installation. The commenter 

pointed out that there are many small 

vendors in rural America who are 

qualified to provide the savings analysis 

as a service to their potential customers 

and this should not be discouraged. 

According to the commenter, this 

proposed definition would discourage 

this activity and harm small projects. 

Response: The Agency agrees with the 

point being made by the commenter. 

However, neither the proposed rule nor 

the final rule require projects with total 

project costs of $80,000 or less to use an 

energy assessor, who must be a qualified 

consultant. As found in the definition of 

‘‘Energy Analysis’’ in the proposed rule, 

the energy analysis could have been 

performed by an individual or entity 

with at least 3 years of experience and 

at least five energy assessments or 

energy audits for similar projects. In 

§ 4280.103 of the final rule, while the 

Agency has removed the definition of 

energy analysis (for reasons discussed 

above), such an individual or entity can 

still be used to conduct energy 

assessments for projects with total 

project costs of $80,000 or less (as found 

in Section B of Appendix A to 7 CFR 

part 4280). As such, the final rule does 

not require the individual or entity to be 

‘‘independent.’’ Thus, for these small 

projects, the vendor or installer of the 

RES or EEI may be sufficiently qualified 

to provide energy savings or energy 

replacement information. 

To the extent, however, that the 

commenter is referring to projects with 

total project costs of more than $80,000, 

the Agency disagrees with the 

commenter and is keeping the 

requirement that the energy assessment 

is performed by an independent entity 

(as found in the definition of ‘‘Qualified 

Consultant’’). 

Retrofitting 

Comment: One commenter questioned 

why the term ‘‘retrofitting’’ applies only 

to RES. The commenter asked: ‘‘Can’t 

one retrofit an existing fan, motor, or 

lighting system?’’ 

Response: The Agency agrees that the 

definition of ‘‘retrofitting’’ does not 

need to reference RES and has revised 

the definition accordingly. 

Simple Payback 

Comment: One commenter agreed 

with the proposed change to remove the 

adjustment of energy efficiency 

equipment based on the ratio of capacity 

when determining simple payback. 

According to the commenter, 

annualized energy savings is sufficient 

to ensure the goal of the program is 

being met. 

Response: As in the proposed rule, 

determining simple payback under the 

final rule does not include adjusting the 

EEI based on the ratio of capacity. The 

Agency agrees with the commenter that 

annualized energy saving is sufficient to 

ensure the goal of the program is being 

met. 

Comment: Two commenters disagreed 

with using 36 months of energy use data 

within the ‘‘Simple Payback’’ definition 

for EEI projects because the 36 month 

energy usage history requirement can be 

detrimental to certain applicants. 

According to the commenters, the 


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nature of some industries does not 

require the applicant to record 36 

months of energy usage. The 

commenters further state that the 

penalty of ineligibility due to an 

applicant’s inability to produce 36 

months of energy usage history is too 

severe. One commenter recommended 

that the Agency either retain the current 

12 month energy usage history criteria 

or use a 3-year average. 

Response: In consideration of these 

comments, the Agency has decided not 

to implement the proposed rule’s 36 

month of energy usage, but instead 

allow the applicant a choice to use 

either the most recent 12 months or an 

average of 2, 3, 4, or 5 years to provide 

the baseline data. The ability to use 

more than just 12 months will provide 

a more accurate picture of historical 

data, but not put an undue burden on 

the applicant or auditor to compile the 

data on past energy use for all EEI 

applications. 

Comment: One commenter 

encouraged the Agency to allow 

flexibility with the requirement that all 

utility bills be supplied with the audit/ 

application. The commenter pointed out 

that agricultural producers and 

businesses have the records on file, 

which are submitted to their auditor to 

derive at overall energy consumption, 

and the Agency should only request 

actual bills if necessary. This controls 

the paperwork burden on applicants as 

well as the paper volume for Agency 

files. 

Response: Neither the proposed rule 

nor the final rule requires applicants to 

submit their actual utility bills with 

either the energy audit or the 

application. The energy audit or energy 

assessment must present the 

information in the audit. The Agency 

agrees that applicants should keep such 

documentation in their files should the 

Agency request them as it reviews the 

energy audit and application. 

Comment: One commenter pointed 

out that the simple payback calculation 

allows Production Tax Credits (PTCs) 

and Renewable Energy Credits (RECs) to 

be counted, but not Investment Tax 

Credits (ITCs) or state subsidies. The 

commenter stated that this makes little 

sense, because a subsidy is a subsidy in 

a payback calculation whether it is paid 

at once or over time. According to the 

commenter, not including ITCs 

discriminates against wind and solar 

projects under 100 kW because such 

projects qualify for Section 48 ITCs, 

rather than the Section 45 PTCs. The 

result is that the payback period of 

smaller projects is significantly 

exaggerated and their REAP scores are 

unfairly reduced. 

To remedy this situation, the 

commenter recommended eliminating 

the scoring for micro-projects entirely 

and replacing it with a ‘‘first come/first 

served’’ award system once annual 

funding is determined. The commenter 

stated that this unfair payback 

accounting, at a minimum, must be 

equitably revised so that smaller 

distributed generation projects are not 

improperly penalized. 

Response: The Agency must evaluate 

all projects against each other as 

required by the authorizing statute, and 

thus cannot implement a ‘‘first-come, 

first-served’’ approach, as suggested by 

the commenter, in making awards. 

With regard to making changes to the 

calculation of simple payback, the 

Agency acknowledges that the simple 

payback calculation has been difficult to 

apply because of the differences in 

utility rates and incentives between 

state and regions. Rather than adding 

additional considerations (such as 

investment tax credits) to the 

calculation of simple payback, the 

Agency has decided to simplify its 

calculation by also removing from 

consideration in the calculation of net 

income all tax credits, carbon credits, 

and renewable energy credits. In 

addition to simplifying the calculation, 

this change allows the Agency to better 

evaluate each project on its own merits. 

Comment: One commenter noted that 

the simple payback calculation does not 

allow one time incentives to be figured 

into the return on the project for 

simplicity purposes and to allow 

equitable scoring between EEI projects 

and renewable energy projects and 

stated that this is understandable. The 

commenter then stated that one 

incentive that should be considered in 

the simple payback definition is 

depreciation on RES. This incentive is 

received as an annual benefit to a 

grantee, who installs a renewable energy 

system. The Modified Accelerated Cost 

Recovery System (MACRS) shortens the 

useful life of renewable energy 

equipment to 5 years and is recorded for 

tax purposes. The total value of the 

system (in terms of upfront costs) will 

be taken out of gross income over the 5 

year depreciation period allowed by 

MACRS. For example in the case of 

solar MACRS reduces the solar energy 

equipment owner’s tax liability with a 

net result of them keeping more of the 

annual revenue produced. This is an 

annual benefit taken over a period of 

years and should be reflected in the 

simple payback calculation. The 

commenter pointed out that, as it stands 

now, the formula subtracts depreciation 

to arrive at average net income and then 

adds it back in essentially creating a 

‘‘wash’’ for depreciation and not 

figuring in this valuable annual 

incentive in the payback calculation for 

REAP scoring purposes. This should be 

considered to provide a more realistic 

view of the simple payback on RES. 

According to the commenter, EEI 

projects have historically had 

advantages in scoring under REAP and 

by allowing annual depreciation 

(MACRS) under the formula this would 

allow a more level playing field for the 

two types of purposes under REAP. 

Another commenter stated that tax 

credits and accelerated depreciation 

should be considered in the payback 

calculation if an accountant for the 

applicant can verify the company can 

benefit from them. 

Response: Incorporating MARCS as an 

alternative deduction method would 

result in increasing the complexity of 

the rule and the burden to the applicant 

and the Agency. Further, using MARCS 

would be difficult to calculate for each 

project. Therefore, the Agency is not 

modifying the simple payback 

calculation as requested by the 

commenters. 

Comment: Two commenters stated 

that the simple payback calculation 

should look at eligible project costs 

(EPC) instead of total project costs. 

Because the grant amount is based off of 

EPC, the commenter stated that it only 

makes sense that the scoring criteria 

look at the same amount. 

Response: The Agency agrees with the 

commenter and has modified the 

definition of simple payback to use 

eligible project costs instead of total 

project costs. 

Small Wind System 

Comment: In commenting on the 

interim final rule, one commenter 

recommended eliminating the hub 

height limit of 120 ft. for small wind 

systems (used in various parts of the 

interim final rule), stating that the 

limitation to 100 kW is sufficient. 

Response: The Agency proposed in 

the proposed rule to eliminate the 

distinction between small and large 

wind projects, and the Agency is not 

distinguishing between small and large 

wind projects in the final rule. Thus, 

this comment is not relevant to the rule. 

Total Project Costs 

Comment: In commenting on the 

interim final rule, one commenter 

recommended keeping the feasible 

study or energy audit cost included in 

the total project cost. 

Response: The rule continues to 

include feasibility study and energy 

audit costs as part of a project’s total 

project cost. However, the Agency 


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points out that these two costs are not 

included in calculating a project’s 

eligible project costs. This change was 

made because the 2008 Farm Bill 

allowed grants specific to feasibility 

studies and energy audits available. 

While the 2014 Farm Bill has repealed 

the feasibility study grant the Agency 

has not made a change to eligible 

projects cost. Since the cost for these 

items have already been incurred at 

submission of the RES/EEI application 

and there is no bona-fide need for the 

grant to cover these costs. 

Laws That Contain Other Compliance 

Requirement (§ 4280.108) 

Environmental 

Comment: One commenter agreed 

with changing ‘‘will’’ to ‘‘may’’ with 

regard to the Agency determining 

whether a project becomes ineligible 

when an applicant takes any actions or 

incurs any obligations that would either 

limit the range of alternatives to be 

considered or that would have an 

adverse effect on the environment prior 

to Agency completing the 

environmental review. 

Response: The Agency thanks the 

commenter for supporting this change, 

which has been retained in the final 

rule. 

Comment: One commenter 

recommended that the Agency consider 

allowing environmental reviews to be 

conditional upon award as necessary to 

compete for funding. The commenter 

provided two examples as to why the 

Agency should consider this. 

Example A: A Small producer completing 

an irrigation efficiency project is required to 

spend $1,500 on an archeological survey to 

complete the environmental without a 

funding guarantee. Over 90 percent of the 

time the surveys are completed with no 

findings. Most producers withdraw 

applications versus completing the study. 

Example 2: Applications comes in on 

deadline and Agency must process all 

applications as timely as possible. However, 

the environmental reviews are not always 

completed in time (given required 30 day 

comment period) in order to have such 

affected applications compete for funding. 

Many of these affected applications are 

renewable energy projects, which creates an 

unfair advantage to energy efficiency projects 

who are allowed to compete in all funding 

competitions. 

Response: The Agency cannot 

accommodate the commenter’s 

suggestion allowing environmental 

reviews be conditional upon award 

because the Agency is bound by Agency 

regulations, outside the purview of the 

REAP rule, to complete the necessary 

environmental review prior to the 

obligation of funds for a project. The 

Agency does note that the final rule 

incorporates provisions that allow all 

applications, both for renewable energy 

projects and EEI projects, to compete in 

the same number of funding cycles. 

Thus, while a RES application may not 

be competed in the same funding cycles 

as an EEI application submitted at the 

same time, the RES application is still 

eligible to compete in the same total 

number of funding cycles. This 

addresses the commenter’s concern of 

EEI projects having an ‘‘unfair’’ 

advantage in being able to compete in 

all funding competitions. 

Comment: One commenter stated that 

REAP should grant NEPA Categorical 

Exclusions for single wind turbine 

distributed generation projects up to, as 

a bare minimum, 100 kW and preferably 

for any single turbine up to 200 ft in 

height. Single small wind turbines have 

been installed at National Wildlife 

Refuges, National and State Parks, 

Audubon Preserves, schools, historical 

sites, tribal headquarters, and thousands 

of farms. No published study has 

identified small wind systems as having 

undesirable environmental impacts, 

such as noise or avian impacts. 

Available studies point to little or no 

impact from these small distributed 

installations. Medium scale wind 

turbine with heights up to 200 ft. (the 

Federal Aviation Administration 

determination threshold) have been 

installed at numerous sites and shown 

in pre-installation impact studies and 

post-installation monitoring to have 

little or no avian impacts. There should 

be a clear distinction between the 

environmental concerns for wind farm 

projects and the much smaller 

distributed generation projects. 

The commenter recommended that, if 

this is not acceptable to the Agency, 

then the Agency should adopt the DOE 

NEPA Categorical Exclusions for wind 

turbines up to 20 kW (and solar up to 

60 kW) to reduce the burden on small 

project applicants. 

Response: With regard to the 

recommendation for a categorical 

exclusion for small wind and solar 

projects, it is outside the purview of this 

regulation to make such determinations. 

The Agency notes that it will pass this 

comment on to those within the Agency 

who perform the environmental 

assessments for REAP projects and make 

determinations as to whether these 

projects, or any other projects, should be 

categorically excluded. Thus, no 

changes have been made to this rule 

with regard to categorical exclusions. 

Comment: One commenter pointed to 

the preamble to the proposed rule that 

states, in part: ‘‘To date, no significant 

environmental impacts have been 

reported, and Finding of No Significant 

Impact (FONSI) have been issued for 

each approved application. Taken 

collectively, the applications show no 

potential for significant adverse 

cumulative effects.’’ Given this, the 

commenter asked whether a 

programmatic assessment can be issued 

to limit the Agency’s environmental 

reviews on REAP applications to only 

certain areas per technology type that 

need to be addressed in full to ensure 

potential impacts are mitigated. 

According to the commenter, such 

streamlining would decrease the time 

and potential cost burdens on 

applicants, plus reduce Agency staff 

time as historically the program has 

shown to have no significant adverse 

effects on the environment. 

Response: The commenter is correct 

that all approved REAP projects have 

resulted in FONSIs. Programmatic 

assessments cannot assess the site 

specific impacts of an individual project 

and can be useful only for programmatic 

decisions by the Agency. All applicants 

must comply with the environmental 

requirements applicable to their project. 

Funding a grant or providing a loan 

guarantee is a Federal action requiring 

compliance with the NEPA. While small 

projects are likely to have fewer adverse 

environmental impacts than similar 

larger projects, USDA cannot 

predetermine that all projects will have 

limited impacts. USDA believes it is 

appropriate for environmental 

evaluations to be prepared on a project 

by project basis to analyze the nature 

and extent of a project’s environmental 

impact. Thus, the Agency has not 

accommodated this suggestion. 

The Agency notes that it will pass this 

comment on to those within the Agency 

who perform the environmental 

assessments for REAP projects. 

General Applicant, Application, and 

Funding Provisions (§ 4280.110) 

Project Completion 

Comment: Two commenters are 

concerned that the 2 year deadline for 

project completion will put larger 

projects with longer durations in peril. 

One commenter asks how long a project 

could be extended, if the agency grants 

concurrence. In regard to small projects, 

one commenter suggested that the 

Agency utilize the Grant Agreement or 

the Letter of Conditions to make a 

statement that it has authority to deobligate funds after a specified date. The 

commenter stated that this measure will 

reduce confusion for the applicants. 

Response: The Agency acknowledges 

the commenters’ concern over the two 

year period. Extensions to the two year 


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requirement can be granted with 

justifications by the approval official 

(see § 4280.110(i)(1)). Because there are 

many circumstances that may cause an 

extension to be required, the approval 

official has the authority to grant such 

extensions. The guidance recommended 

by the commenter to be included into 

the Letter of Conditions is acceptable 

and may be used to communicate the 

Agency’s authority to de-obligate funds 

after a specified date. 

Notifications (§ 4280.111) 

Comment: One commenter stated that 

‘‘Disposition of Applications’’ may be a 

conflicting Agency term to determine 

when applications can be destroyed. 

The commenter recommended using 

‘‘Funding Determinations’’ instead. 

Response: The Agency agrees with the 

commenter that using ‘‘disposition of 

applications’’ could be confusing. The 

Agency has revised the terminology in 

the final rule to read ‘‘Handling of 

Ranked Applications Not Funded.’’ 

RES/EEI Applicant Eligibility 

(§ 4280.112) 

Applicant Eligibility 

Comment: In commenting on the 

interim final rule, two commenters 

recommended maintaining eligibility for 

all agricultural producers, regardless of 

location. The commenters supported the 

Agency’s action to remove the rural 

restriction for agricultural producers 

under all relevant REAP programs, 

stating that this action demonstrates 

support for REAP as a diverse program 

providing broad benefits to all 

agricultural producers across the 

country, which should remain a 

defining program goal. 

This is a commendable action for a 

number of reasons. Foremost, the 

authorizing legislation never restricted 

REAP eligibility to only rural 

agricultural producers, just to rural 

small businesses. The exclusion had the 

effect of excluding many nursery and 

greenhouse growers, fruit and vegetable 

growers and other growers of specialty 

crops from participating in this 

program. Many of these sectors have 

their own unique energy needs and can 

benefit from implementing both energy 

efficiency as well as renewable energy 

improvements. 

In addition, this change comports 

REAP with other USDA programs that 

serve all agricultural producers 

regardless of location. By this change 

the REAP program can have a greater 

reach in sectors across the country. The 

commenters urged USDA to maintain 

this policy of eligibility for all 

agricultural producers, regardless of 

location, in the Notice of Proposed 

Rulemaking for REAP. 

Response: The Agency thanks the two 

commenters for their comments and the 

final rule does not take into account an 

agricultural producer’s location in 

determination the agricultural 

producer’s eligibility for REAP funding. 

Dun and Bradstreet Data Universal 

Numbering System/System for Awards 

Management System/Central Contractor 

Registration 

Since the 2011, applicants have been 

required to supply a Central Contractor 

Registration (CCR) number in order to 

be eligible. The CCR requirement was 

implemented through program notices 

published in the Federal Register. The 

CCR number has since been replaced 

with a System for Awards Management 

System (SAM) number, and applicants 

are now required to supply their SAM 

number with their application in order 

to be eligible. The proposed rule 

contains reference to the SAM number 

requirement. The Agency received 

comments on this requirement, whether 

commenting on the CCR or SAM 

number, as presented below. 

Comment: Several commenters were 

concerned over the requirement to 

submit a Dun and Bradstreet Data 

Universal Numbering System (DUNS) 

number and a CCR/SAM number as a 

condition for being eligible for REAP 

funding. 

According to one commenter, the 

process for requiring every applicant 

including individuals to obtain a DUNS 

number and register that number in 

SAM is very burdensome. In addition to 

the application burden, the commenter 

stated that the SAM system does not 

work properly at times, or provides 

delayed results or results are lost in 

cyberspace creating huge burdens for 

applicants and the Agency. This 

commenter further stated that 

individual, including sole proprietors, 

should not have to register with the 

CCR. According to the commenter, 

many of the program’s applicants do not 

have Internet access or are unfamiliar 

with the Internet. According to the 

commenter, the process is burdensome 

and not user friendly, further 

complicating the program rather than 

simplifying it. Therefore, the commenter 

encouraged the Agency to remove the 

SAM requirement and rely on existing 

proven data systems already in use by 

the Agency to provide funding 

information. If this cannot be 

considered, the Agency needs to 

understand that SAM at times has some 

significant issues and it is not always 

feasible for borrowers to get the SAM 

number with expiration in a timely 

fashion. Agency staff should be allowed 

to document such cases in the running 

record, noting attempts made by the 

applicant, and provide waivers as 

needed in this event. 

Two other commenters were 

concerned about the burden of the CCR 

requirement on small farmers and 

businesses. One of these commenters 

stated that the requirement for the CCR 

registration will create a hurdle as many 

of the farmers and small business 

people are not computer literate, or will 

find the process too complicated. This 

commenter, therefore, suggested that 

projects less than $50,000 be exempted 

from the CCR requirements. The 

commenter stated that in Washington 

State, there are not many applicants for 

less than $20,000 projects, and after 

completing the applications for them, he 

knows why. The commenter 

acknowledged that Agency staff have 

been very helpful in supporting 

applicants and that the commenter 

hopes the process can be streamlined. 

Response: While the Agency shares 

the commenters’ concerns, the DUNS 

and CCR/SAM requirement is a Federalwide law. Effective October 1, 2010, 

changes were adopted to 2 CFR part 25 

which required all grant applicants 

other than individuals who would use 

the grant for personal use (unrelated to 

any business or nonprofit organization 

they may own or operate in their name), 

to have a DUNS number and to be 

registered in the CCR database, which 

has since migrated to the SAM. The 

Agency will continue to work with all 

applicants to help ease the burden 

associated with meeting this Federal 

requirement. 

Comment: One commenter 

recommended exempting micro wind 

and solar projects from being required to 

demonstrate that satisfactory sources of 

revenue in an amount sufficient to 

provide for the operation, management, 

maintenance, and debt service of the 

project are available for the life of the 

project (§ 4280.113(h)). According to the 

commenter, it is burdensome and 

unnecessary to require applicants to 

show that resources for operations and 

maintenance and debt service are 

available for the life of the project. First, 

it assumes that these costs will exceed 

the savings in electric bills and, second, 

it implies that rural businesses are ill 

equipped to make sound investment 

decisions. Because REAP grants are 

limited to 25 percent of project costs, 

the commenter recommended 

eliminating this requirement. 

Response: The Agency disagrees with 

the commenter’s recommendation. 

Regardless of an applicant’s size, the 

Agency has determined that this 


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information is necessary to help ensure 

that it is making awards that are 

financially viable. It would be an 

imprudent use of taxpayer money to 

approve a project that cannot show that 

it is financially viable. Therefore, the 

Agency has not revised the rule in 

response to this comment. 

Residential 

Comment: In commenting on the 

interim final rule, two commenters 

suggested alternatives to the residential 

restriction on farms. 

One commenter noted that the interim 

final rule allows excess electricity to be 

sold to the grid, but not to be used in 

a farm-related residence. This means the 

applicant can get some value for excess, 

but not maximum value. It also means 

that the utility makes a profit on selling 

excess electricity generated from the 

project even though they did not pay 

any of the capital costs. The commenter 

believes a better approach would be to 

remove the residential restriction on 

farms with only one meter or allow 

applicant certification of non-use for 

non-business purposes. Applicants 

would show and affirm as part of a 

simplified form that the farm operation 

uses more energy on an annual basis 

than the RES is projected to produce. 

The other commenter supported the 

restriction of funding residential RES or 

EEI projects, but suggested allowing 

prorating project cost to the nonresidential uses. According to this 

commenter, many agricultural 

producers wish to also power their 

homes on their farmsteads with RES and 

requiring a separate meter at additional 

costs discourages these applicants from 

applying. If we allowed them to size the 

system accordingly, interconnect to all 

load sources, but only provide funding 

for business portion of their load 

supported by appropriate 

documentation, both the applicant and 

the Agency would win. 

Response: The Agency agrees with the 

commenters that there should be more 

flexibility to allow agricultural 

producers to submit applications for 

RES where the resulting power is shared 

between the farm operation and the 

farm residence. To this end, the final 

rule provides applicants with three 

options to qualify an RES project in 

which a residence is closely associated 

with and shares an energy metering 

devices with the agricultural operation: 

• Install a second meter (or similar 

device) that results in all of the energy 

generated by the RES to be used for nonresidential energy usage; 

• Certify that any excess power 

generated will be sold to the grid and 

will not be used by the residence; or 

• Demonstrate that 51 percent or 

greater of the energy to be generated will 

benefit the agricultural operation. If the 

farm residence uses more than 49 

percent of the energy, however, this 

option would not apply. 

Although not requested by the 

commenters, the Agency has concluded 

that rural small business seeking to 

purchase RES that would provide 

energy to the small business and the 

business’ residence should be afforded 

the same options, provided the 

residence is located at the place of 

business, and the Agency has 

incorporated this in the final rule. 

In addition, the Agency has revised 

the eligible project cost provisions to 

make clear as to what items associated 

with these options qualify as eligible 

project costs. Specifically, the following, 

as applicable, are eligible project costs: 

• The installation of the second 

meter, and 

• The portion of the project that 

benefits the agricultural operation or 

rural small business. 

Project Eligibility (§ 4280.113) 

New and Unused Versus Refurbished/

Remanufactured 

Comment: Numerous commenters 

requested that the Agency disallow 

refurbished wind turbines or, in general, 

refurbished RES. The commenters stated 

that refurbished wind turbines undergo 

tremendous wear and tear and are being 

sold for scrap metal prices when 

decommissioned, and must be 

significantly refurbished to gain 

additional viability for an additional 20 

years. Commenters were concerned that 

allowing refurbished turbines may 

create significant problem for the 

Agency in the future, with one 

commenter stating that significant 

variances in quality will damage the 

reputation of the program. 

One of the commenters recommended 

that § 4280.113(a) specify ‘‘new and 

unused’’ because, according to the 

commenter, there is no way to 

adequately police the degree to which a 

wind turbine is refurbished/

remanufactured and most of the 

refurbished turbines that have been sold 

to farmers were mostly cleaned up and 

repainted. Another commenter stated 

that the refurbishment process for wind 

turbines is not well governed. 

Commenters also pointed out that there 

is a risk of purchasing unviable 

refurbished turbines. 

One commenter pointed out that the 

Internal Revenue Service, the American 

Recovery and Reinvestment Act of 2009 

program, and most states require new 

equipment ‘‘nor previously placed in 

service’’ for tax credit and rebate 

eligibility. According to the commenter, 

there are con artists exploiting the REAP 

loophole and the Agency should close 

it. 

Commenters also stated that new 

turbines are often more cost effective 

than their refurbished counterparts, 

with one commenter stating that to 

refurbish a wind turbine that has 

operated in a wind farm for 15 to 20 

years so that it can be expected to 

provide an additional 20 years of service 

costs more than a new wind turbine. 

If refurbished systems are allowed, 

commenters suggested that the Agency 

works with NREL to establish technical 

criteria for refurbished wind systems to 

ensure they meet standards for safety, 

performance and reliability. 

Commenters also suggested that 

refurbished wind turbines receive 

approval from qualified engineers to 

ensure project quality. For example, one 

commenter stated that any retrofitted or 

refurbished renewable energy system 

should receive the review and approval 

of a qualified engineer—a ‘‘wet 

stamp’’—to ensure project quality and 

that engineering qualifications should 

be based on significant experience 

working with correlating RES. This 

commenter also recommended that the 

Agency require engineering 

recertification for the replacement of 

dynamic components as well as a 

review of all non-dynamic components 

to ensure sound support structures. 

Finally, commenters objected to 

subsidizing components that have 

previously been subsidized under other 

Federal programs because it constitutes 

unfair competition to the current 

manufacturers, amounting to, as one 

commenter described, a ‘‘double 

subsidy.’’ 

Response: The Agency disagrees with 

the comments recommending that 

refurbished/remanufactured RES, such 

as wind systems, be ineligible for REAP 

funding. Many of the uncertainties 

surrounding refurbished wind turbines 

is a matter of missing market 

information that can be resolved with 

clear signaling; that is to say, an 

established set of certifications and/or 

standards and commensurate guarantees 

and/or warranty security. Secondary 

markets for small wind should in 

principle be no different than for that of 

used cars, farm equipment, etc. Given 

sufficient market information, 

agricultural producers and rural small 

businesses should be able to choose 

intelligently among available 

technologies subject to their 

preferences, policy support, and budget 

constraints. The presumption of unfair 

price competition assumes that 


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refurbished and new wind systems sell 

for the same price, which would not be 

the case given sufficient market 

information. 

In allowing refurbished equipment to 

be eligible for REAP funding, the 

Agency has revised the definition of 

‘‘refurbished’’ to address concerns and 

suggestions raised by the commenters. 

Specifically, the revised definition: 

• Requires the RES to be brought into 

a commercial facility for refurbishment. 

This is intended to reduce unqualified 

businesses from ‘‘refurbishing’’ RES. 

• Requires a warranty that is 

approved by the Agency or its designee. 

This is intended to provide additional 

market information to the potential 

buyer of the refurbished RES and to 

reduce unqualified businesses from 

‘‘refurbishing’’ RES. 

The Agency agrees that an RES could 

be refurbished and establishes a new 

‘‘useful life.’’ 

Comment: One commenter, in 

supporting the use of refurbished and 

retrofitted energy systems on the basis 

that it is consistent with other programs 

aimed at supporting small renewable 

energy projects, recommended that the 

Agency develop resources for project 

developers to find quality refurbished 

parts. 

Response: The Agency thanks the 

commenter for their support on this 

provision of the rule. However, the 

Agency cannot accommodate the 

commenters suggestion because REAP is 

a financing program and cannot serve as 

a ‘‘clearinghouse’’ for acceptable 

refurbished parts. 

Certification of Turbines 

Comment: Several commenters 

recommended that wind turbines be 

certified. 

One commenter, who commented on 

both the interim final rule and the 

proposed rule, recommended that the 

Agency establish a requirement that 

small wind turbines be certified by an 

independent certification body prior to 

awarding grants and loans through 

REAP in order to promote confidence 

that small wind turbines installed with 

REAP funding have been tested for 

safety, function, performance and 

durability and to ensure consistency in 

ratings. In addition, for the 2011 

funding cycle, the commenter 

recommended that small wind turbines 

that have achieved at least Small Wind 

Certification Council (SWCC) Limited 

Power Performance Certification or 

Conditional Temporary Certification 

receive higher scores in application 

review. 

The commenter provided detailed 

suggestions for such certification. This 

commenter requested that the Agency 

establish a requirement for wind 

turbines to be certified by an 

independent certification body. In 

addition, for the 2013 funding cycle, the 

commenter recommended that wind 

turbines that have achieved either full 

certification to the AWEA 9.1 Standard 

or at least SWCC Limited Power 

Performance Certification or 

Conditional Temporary Certification (or 

equivalent) receive higher scores during 

application review. 

The growth of the distributed wind 

market is often tied to grants, incentives 

and rebates administered by Federal, 

State and utility programs. On-site wind 

turbines have great potential to serve 

increasing demands for distributed 

generation and can provide a costeffective solution for many homes, 

farms, schools and other end-users. 

However, performance and reliability 

obstacles have hindered greater 

adoption, and both consumers and 

agencies providing financial incentives 

need greater assurance of safety, 

functionality, and durability to justify 

investments. Certification helps prevent 

unethical marketing and false claims, 

thereby ensuring consumer protection 

and industry credibility. 

The commenter has received 50 

Notices of Intent to Apply for 

Certification since its inception, 

certified its first turbine model in 2011 

and became an accredited certification 

body in 2012. The commenter pointed 

out that it has recently issued its fourth 

full certification along with a new 

Conditional Temporary Certification, 

bringing the tally to nine turbine models 

now SWCC-certified. 

Representing a significant share of the 

North American distributed wind 

market, the commenter’s published 

certification ratings and labels are 

allowing easier comparison shopping, 

aiding incentive programs with setting 

payment levels, and leading toward 

national requirements. In addition to the 

nine models carrying SWCC 

certifications, five other models are 

currently collecting data at their 

respective testing sites, and several 

more are taking steps towards 

certification. 

SWCC certification has been 

identified as a pathway to eligibility for 

most of the leading wind incentive 

programs nationwide, and numerous 

programs have taken steps to require 

independent certification for small and 

medium wind turbines to be eligible for 

funding. The time is now for USDA to 

follow suit and ensure REAP’s support 

of the continued development of the 

distributed wind sector. To provide 

perspective, the commenter included 

information on wind incentive programs 

already requiring or expecting to require 

certification, including links to 

individual programs administered by 

states. 

The commenter is an independent 

non-profit organization with the public 

purpose of providing certification 

services. A three-member Certification 

Commission makes all certification 

decisions. SWCC Commissioners are 

qualified and independent industry 

experts appointed by the SWCC Board 

of Directors. The Board includes 

representatives of different stakeholder 

groups and includes 3 directors (out of 

11) who represent the industry sector. 

SWCC bylaws and operating procedures 

prevent conflicts of interest in 

certification decisions. 

A second commenter on the interim 

final rule stated support for the specific 

language regarding certification that is 

being recommended by the first 

commenter. 

A third commenter recommended that 

turbines certified by the SWCC should 

have priority over projects with 

uncertified equipment. Suitable 

approved lists would include that as 

provided and maintained by the 

Interstate Technical Advisory Council. 

Another commenters requested that 

the Agency provide guidance on what 

hardware is used, to require that 

turbines be certified, or in process of 

certification, so that the installed wind 

turbine actually works and the REAP 

money is well used. 

Response: All technologies eligible for 

REAP funding must be found to have 

technical merit and the proposed project 

must be found determined to be 

technically feasible. The documentation 

applicants submit with their 

applications must be sufficient to allow 

the Agency to make these 

determinations. The Agency will 

continue to use experts, such as those in 

NREL and other public institutions, to 

assist in making these determinations 

when needed in order to ensure safety, 

performance, and reliability of RES, 

including refurbished wind systems. 

In some cases, the documentation to 

support technical merit and technical 

feasibility determinations may require, 

or be enhanced by, appropriate 

certifications from existing boards for a 

particular type of technology. The 

Agency, however, is not incorporating 

into the rule specific certification 

requirements for wind turbines or any 

other technology. It remains the 

applicant’s responsibility to 

demonstrate the quality of the 

technology being proposed. No changes 

have been made to the rule as a result 

of this comment. 


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Projected Annual Energy Costs 

Comment: One commenter suggested 

that the Agency clarify in 

§ 4280.113(a)(4)(i) that a project is 

eligible without being subject to any 

capacity calculation reductions that are 

currently applied due to size of building 

or equipment if annual projected energy 

usage is less than historical usage. 

Response: The Agency agrees with the 

commenter that, in determining if a 

project qualifies as an EEI, there is no 

adjustment to the energy usage based on 

capacity differences before and after the 

EEI. The language in the rule text cited 

by the commenter makes no mention of 

such an adjustment. Further, the 

definition of ‘‘energy efficiency 

improvement’’ specifically references a 

reduction of energy consumption on an 

annual basis and also does not reference 

any adjustment to take into account any 

capacity changes. Thus, the Agency has 

determined that it is unnecessary to 

modify the language in the rule as 

suggested by the commenter. 

RES/EEI Repeat Assistance on Same 

Project 

Comment: One commenter found the 

term ‘‘shortly thereafter’’ in 

§ 4280.113(a)(4)(ii) to be ambiguous. 

The commenter recommended 

providing a definitive timeframe after 

grant installation. The commenter 

suggested using the useful life of the 

improvements as outlined in the grant 

agreement for the originally funded 

project. 

Response: The Agency agrees that the 

example provided in the proposed rule 

needs further definition and that 

reference to the useful life of the EEI as 

the timeframe is appropriate. The 

Agency has revised the cited paragraph 

in the final rule to make clear that a 

subsequent EEI to previously REAPfunded EEI is eligible only if the 

following two conditions are met: (1) 

The replacement occurs at or after the 

end of the useful life as specified in the 

grant agreement of the previously REAPfunded EEI, and (2) the subsequent EEI 

is more energy efficient than the 

previously REAP-funded EEI. 

Grant Applications—General 

(§ 4280.115) 

Comment: One commenter stated that 

all REAP applicants should receive 

funding for some proportion of their 

project cost. 

Response: While the Agency 

appreciates the commenter’s sentiment, 

it is simply not feasible to do so. The 

authorizing statute requires the Agency 

to score applications using certain 

criteria and that by doing so we rank 

applications to determine those projects 

that score the highest. It is through such 

a process that the Agency is able to 

distribute the limited resources made 

available to the program to the more 

meritorious projects. No changes have 

been made to the rule in response to this 

comment. 

Third-Party Contributions 

Comment: In commenting on the 

interim final rule, two commenters 

recommended reinstating the 

prohibition against third-party in-kind 

contributions as found in the 2005 final 

rule for REAP. Because REAP helps 

fund construction and equipment costs, 

it is not the type of assistance program 

where a third-party would come in and 

offer a valued assistance. According to 

the commenters, allowing in-kind 

contributions allows the applicant to 

manipulate total project costs. One of 

the two commenters also stated that 

allowing third-party in-kind 

contributions becomes a processing 

burden when determining how to value 

in-kind contributions, thus further 

complicating the program rather than 

simplifying it. 

Response: The Agency removed the 

prohibition against third-party in-kind 

contributions because it conflicts with 

Agency regulations found in 7 CFR 

3015, which specifically allows the use 

of third-party in-kind contributions to 

count towards satisfying cost-sharing 

and matching requirements of a Federal 

grant (see 7 CFR 3015.51(b)). Thus, the 

Agency has not reinstated the 

prohibition on third-party in-kind 

contributions in the final rule. 

Eligible Project Costs (§ 4280.115(c)) 

Comment: One commenter stated that 

eligible project costs should not include 

remanufactured or refurbished 

equipment for the reasons previously 

provided by the commenter on allowing 

the purchase of refurbished RES as an 

eligible project for REAP funding. 

Response: As discussed previously in 

responding to comments on allowing 

the purchase of a refurbished RES to be 

an eligible project, the Agency has 

determined that it is equally reasonable 

to allow refurbished equipment to be an 

eligible project cost, provided such 

equipment comes with a warranty that 

is approved by the Agency or its 

designee. 

Comment: In commenting on the 

interim final rule, one commenter 

recommended that storage bins be 

excluded as an eligible project cost, but 

that grain dryers and other energy 

efficient savings, such as an air transfer 

system that is replacing a diesel tractor, 

be included as eligible project costs. 

Limiting the total project cost to just the 

dryer and any EEI. Putting up an 80,000 

bushel storage bin that was included in 

the total project cost is not energy 

improvements. The money allocated for 

the 80,000 bushel bin could have been 

used for helping a first generation 

farmer replace two 30 year old bin 

dryers with a more energy efficient 

dryer. The commenter stated that more 

clarification is needed on eligible costs 

(i.e., what can be included and what 

must be excluded). 

Response: The Agency agrees with the 

commenter that more clarification is 

needed on what is included as eligible 

project costs, as illustrated through the 

commenter’s example on storage bins, 

but disagrees with a blanket exclusion 

of storage bins as eligible project costs. 

In order to qualify as an eligible project 

cost for an EEI, the item in question (in 

this case, the storage bins) must be 

identified in the audit and must be 

‘‘directly related to and its use and 

purpose is limited to’’ the EEI. If a 

project proposed to replace a grain dryer 

and its associated storage bins, the 

entire project would have to show an 

energy savings in order to be eligible. If 

this condition is met, then only those 

project items identified in the energy 

audit or energy assessment and that are 

directly related to and their use and 

purpose are solely for the EEI would be 

considered eligible project costs. If 

storage bins are added to eligible project 

costs, the simple payback for the project 

would be longer, potentially decreasing 

the score and competitiveness of the 

project. Thus, for the storage bins to be 

included as an eligible project cost, they 

must be identified in the energy audit or 

energy assessment, must be directly 

related to the EEI, and cannot be used 

for any other purpose. So, in some 

cases, storage bins may qualify as an 

eligible project costs and in others cases, 

they may not. 

The final rule contains slightly 

different provisions if the applicant is 

seeking a guaranteed loan. In this case, 

the storage bins are ‘‘directly related to’’ 

the EEI and would qualify as an eligible 

project cost. 

The Agency notes that in either case— 

grant or guaranteed loan—the storage 

bins would be part of total project costs. 

Comment: One commenter stated that 

capacity for a grain crop should be 

defined as the number of bushels 

harvested. A farmer should have to 

show an average as proven by at least 2 

years. Unless there is a catastrophic 

event (hailstorm, drought, tornado)— 

then omit the 1 year and use the prior 

year—explaining why. 

Another commenter stated that, 

relevant to grain dryer applications, 


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information provided by energy auditors 

that have completed hundreds of grain 

dryer audits in over 20 states indicates 

that comparing bushels per hour (BPH) 

does not provide a reliable measurement 

of drying capacity change when 

evaluating two grain drying systems. A 

measurement of BPH indicates a 

system’s speed of drying, much like the 

miles per hour when driving a vehicle. 

The best measurement of capacity 

change between two drying systems is 

measuring the total number of bushels 

dried through each system on an annual 

basis which then compare apples to 

apples. Using BPH is inaccurate, 

particularly for in-bin dryers compared 

to continuous flow dryers. 

In the case of in-bin systems, these 

operate with fewer BPH when compared 

to a high capacity systems and require 

more time dry from a certain moisture 

point to another (i.e., 25% to 15% 

which is the safe storage moisture). 

When measuring the total BTUs 

consumed by a dryer annually, the total 

annual bushels dried makes the most 

impact on the total consumption of fuel 

and electrical power. The lower BPH 

system in most cases utilize less fuel, 

but more electricity per bushel to 

remove 10 percentage points of moisture 

because of lower instant air heating 

temperature and more time with fans 

operating on electrical horsepower. 

Consequently, when completing 

several grain dryer energy audits where 

a lower BPH system is looking to be 

replaced by a higher BPH system, often 

the lower BPH system has lower energy 

consumption and illustrates more 

efficiency when drying the same 

amount of bushels annually, but takes 

more time. Such as the typical case 

where projects involving converting 

from an in-bin dryer to a high capacity/ 

continuous flow dryer have 

demonstrated notably higher BPH have 

been deemed inadequate for application 

to REAP because of the higher fuel cost. 

Response: The Agency disagrees with 

the comment to use bushels harvested 

because the amount of energy to be 

saved is directly related to the amount 

of grain to be dried and not to the 

amount of bushels harvested. To 

illustrate, an agricultural producer can 

use corn several different ways. The 

corn could be used for high moisture 

corn in the agricultural producers 

operation, sold without being dried, or 

dried and sold to a local grain elevator. 

Thus using bushels harvested could 

over estimate energy savings for an 

agricultural producer that is replacing a 

grain dryer. 

The Agency agrees with the 

commenter that limiting of capacity 

such as bushels per hours may not be 

the best way to evaluate a process, and 

the capacity limitation has been 

removed. The final rule requires actual 

average annual energy usage, based on 

historical records for up to 5 

consecutive years, to be used in the 

energy assessment or energy audit for 

replacement of an inefficient system. An 

energy audit or energy assessment must 

document the historical energy usage by 

either attaching energy bills or 

providing a summary of those bills. If an 

agricultural producer had a bad year or 

catastrophic event where not as much 

grain was dried, it can be averaged with 

prior years or subsequent years, as 

appropriate. 

Comment: In commenting on the 

interim final rule, one commenter stated 

that, at the time of the NOFA, there 

were several changes that made it seem 

that the Agency was trying not to fund 

grants for grain dryers, especially 

through the limitation of capacity. 

When this was implemented in the 

interim final rule as the capacity of 

harvest (prior year) compared to 

capacity of harvest (current year), this 

allowed farmers to update outdated 

equipment, but didn’t allow them to 

double or triple their set-up. The 

commenter stated that, while this was 

an excellent way of handling this, the 

Agency could just state that only the 

grain dryer and the motors (perhaps also 

a variable frequency drive because it 

makes the motors run more efficiently) 

for grain moving equipment are 

eligible—this would make it much 

clearer and fairer. The commenter then 

continued, stating that he would like to 

see the money awarded in a much fairer 

manner. According to the commenter, 

larger farmers are always somehow able 

to be eligible for greater amounts and 

seem to always figure out a way to 

expand at the expense of others. 

Response: While the Agency disagrees 

with the commenter’s characterization 

of trying not to fund grain dryers, the 

Agency was, and is still, seeking to 

develop a scoring methodology that 

would achieve a greater diversification 

of technologies receiving funds under 

REAP. To further achieve this goal, the 

Agency included several changes to the 

REAP program and some of the 

proposed changes address the 

commenter’s concern about awarding 

funds in a clearer and fairer manner. For 

example, one proposed change was to 

modify one of the scoring criteria for EEI 

projects to awards points on an ‘‘energy 

saved per dollar amount requested,’’ 

which applies to all energy efficiency 

technologies, including grain dryers. 

Further, the proposed rule removed the 

‘‘capacity’’ aspect for determining the 

amount of a project’s cost that is an 

eligible project cost and instead 

required that the project as a whole 

showed energy savings in order to be an 

eligible EEI project. These two proposed 

changes, which are included in the final 

rule, help level the playing field across 

all size applicants. 

Funding Limits 

Comment: In commenting on the 

interim final rule, one commenter stated 

that the award process should allow for 

some flexibility in the award amount. 

For some of the projects very close to 

the cut-off score that might be funded if 

their request was smaller, the Agency 

should be able to ask multiple 

applicants if they would be interested in 

a reduction of funds or if they need the 

amount applied for. 

Response: The Agency agrees with the 

commenter and proposed a process to 

allow an applicant to accept a lower 

level of funding in the proposed rule. 

The Agency is retaining this provision 

in the final rule. 

Application—General (§§ 4280.116 

through 4280.119) 

Number of Copies 

Comment: In commenting on the 

interim final rule, one commenter stated 

that USDA should only require the 

original application to be submitted to 

the Agency (not original and one copy). 

Response: The Agency agrees with 

commenter, especially now that the 

Agency is encouraging electronic 

submittals. As was proposed in the 

proposed rule, the final rule requires 

only the original application be 

submitted to the Agency. 

Foreign Technology 

Comment: In commenting on the 

interim final rule, one commenter 

encourages the Agency to use 

§ 4280.116(a)(3) to police unproven/

risky foreign wind turbines, but is 

concerned that the Agency may not 

have the technical expertise to make 

these judgments, particularly in light of 

the fraudulent documentation that some 

unscrupulous manufacturers and 

exporters have provided in the past. The 

commenter stated that they have 

previously recommended the adoption 

of certification standards for turbines 

that fall under the scope of AWEA 9.1– 

2009 (>200m2 rotor area, ∼ 40 kW). 

Response: As noted in a response to 

previous comments regarding 

certification standards for wind 

turbines, the Agency will continue to 

use experts, such as those in NREL and 

other public institutions, to assist in 

making these determinations when 

needed in order to ensure safety, 


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performance, and reliability of RES, 

including refurbished wind systems. In 

addition, both domestic and foreign 

technologies are held to the same set of 

standards for demonstrating that they 

are commercially available technologies 

(see the definition of Commercially 

Available), including the option of being 

considered Commercially Available if 

the system is certified by a recognized 

industry organization whose 

certification standards are acceptable to 

the Agency. 

With regard to the recommendation to 

adopt certification standards for wind 

turbines, the Agency notes, as stated in 

a previous response, that the 

documentation to support technical 

merit and technical feasibility 

determinations may require, or be 

enhanced by, appropriate certifications 

from existing boards for a particular 

type of technology. The Agency, 

however, is not incorporating into the 

rule specific certification requirements 

for wind turbines or any other 

technology. No changes to the rule have 

been in response to this specific 

comment. 

Applications—Period and Submittal 

Timing of Notices 

Comment: In commenting on the 

interim final rule, several commenters 

expressed concern as to the timing for 

when applications would be accepted, 

including frequency and consideration 

for accepting applications throughout 

the year. Commenters as a whole 

recommended advancing the timing of 

the whole solicitation process in the 

calendar year, which would allow more 

time for application preparation. 

One commenter stated that an earlier 

solicitation process would allow 

awardees to start construction before the 

winter freeze and to improve 

coordination with other Agency 

programs that will facilitate the 

construction of digesters. 

Another commenter pointed out that, 

since the beginning of the REAP 

program, the Agency has had difficulty 

releasing program funding notice before 

agricultural producers start spring 

planting. While state offices now accept 

applications based on the previous 

year’s notice, this practice is not well 

known and is unevenly followed in the 

states. 

Another commenter stated that in 

2011 the Agency allowed only 2 months 

between the release of the NOFA (April 

15) and the due date for applications 

(June 15). The early due date is not wellexplained, especially as USDA reserves 

more time for itself to review 

applications than for applicants to 

prepare them—with 3.5 months before 

the end of the fiscal year. The timing is 

during the busiest part of the year for 

many agricultural producers, reducing 

their ability to use the program. The late 

release date and early deadline restrict 

the ability of various farm energy 

technology sectors to use the program. 

The commenter stated that USDA needs 

to release the funding notice by 

December or January. 

Still another commenter stated that 

the Agency needs to provide guidance 

or role for the 2012 program sooner than 

within 60 days of the deadline. 

Response: The Agency acknowledges 

the concerns expressed by the 

commenters. Under the final rule, REAP 

applications are accepted throughout 

the year. The rule establishes 

application deadlines and increases the 

number of competitions cycles and 

application deadlines depending on the 

type of application as follows: 

• RES/EEI grant applications 

requesting $20,000 or less may be 

competed up to five times a year; 

• combined RES/EEI guaranteed loan 

and grants twice a year; and 

• guaranteed loan-only applications 

will be competed periodically, provided 

that the Agency receives a sufficient 

number of applications in order to 

maintain a competitive awards process. 

This process is accomplished in the 

final rule without the need to publish a 

notice in the Federal Register each year 

and thus there is no longer an issue 

associated with waiting for funding 

before publishing a notice seeking 

applications. While the application 

deadlines are found in the final rule, the 

Agency will continue to identify the 

application deadlines in a FR notice 

published prior to the Federal fiscal 

year. In addition, the Agency intends to 

identify the application deadlines on 

the REAP Web page of the Agency’s 

Web site and on grants.gov as 

applicable. 

Hard Deadlines 

Comment: In commenting on the 

interim final rule, two commenters 

stated that the series of fixed deadlines 

for the submission of grant applications 

represents a tremendous disincentive 

for larger-scale projects, involving a 

number of farms and diverse 

technologies. According to the 

commenters, it is very difficult to 

incorporate a hard deadline and the 

concept of competitive funding into the 

two-party project design and review that 

must occur for this type of project. As 

one of the commenters stated, the 

current procedure may allow for fair 

review of the submission of a number of 

single farm digester projects, but it is 

quite an impediment for a project such 

as this, involving intensive, two-sided, 

review and negotiation between project 

developer and large-scale customer. 

One of the commenters also stated 

that this form of application procedure 

is unduly burdensome for a project that 

utilizes private equity. A review 

procedure should be devised that first 

requires and then serves to verify the 

due diligence that must have been 

performed by the investors. 

Further, the prospect that a properly 

designed and financed project must 

nonetheless be contingent on the 

competitive allocation of limited funds 

is almost an overwhelming obstacle for 

start-up entrepreneurs and their 

customer partners. It is one thing to put 

time and capital at risk as part of the 

business venture. It is quite another to 

be required to risk capital in an 

uncertain competition for funding. One 

of the commenters stated that he was 

sure that more than one similar project 

has been taken off the drawing board 

because either developer or customer, or 

both, does not have the wherewithal to 

pursue design of the project by a set 

deadline, and without any certainty that 

in the end the project will even be 

funded. 

According to one commenter, the 

combination of an arbitrary deadline 

and then passage of time for the 

competitive process is onerous for the 

development of a project in a northern 

climate because these areas have a 

limited building season to begin with, 

and the passage of any additional time 

creates tremendous pressure. 

The same commenter recommended 

that the Agency implement a rolling 

application procedure, which would 

allow for submission of design and 

business plans as soon as completed, 

and then quick review of such plans 

against stated project funding 

requirements derived from the current 

scoring protocol. According to this 

commenter, combining this quick 

review procedure with on-line, updated 

notice of current available funds would 

allow developers to know where they 

stand going into development of a 

project and minimize many of these 

risks for all parties concerned. 

Response: As noted in an earlier 

response, the Agency has included a 

continuous application process for both 

grant and guaranteed loan applications 

with periodic competitions throughout 

the year depending on the type of 

application. This allows applicants to 

submit applications any time during the 

year. These provisions should help 

mitigate the commenters’ concerns. 

Comment: In commenting on the 

interim final rule, one commenter noted 


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that there is no mention of the 

possibility of going to an open and 

continuous grant cycle for micro 

projects. 

Response: As noted in the response to 

the previous comment, both the 

proposed rule and the final rule include 

a continuous application process with 

periodic competitions for grant 

applications for all technologies, 

including micro projects. 

Rolling Over Applications 

Comment: In commenting on the 

interim final rule, one commenter 

suggested that the option for rolling over 

the same application should remain 

each year so that the applicant of a 

project has started construction has a 

chance at two funding cycles instead of 

just one. The commenter noted that 

many of the other Rural Development 

funding programs allow for funding 

consideration in more than one cycle. 

In contrast, another commenter 

commenting on the interim final rule 

recommended removing the option for 

rolling over an application. The 

commenter pointed out that the program 

is already oversubscribed and if a 

project did not score high enough to be 

funded in a fiscal year, the likelihood 

that it will be funded in a subsequent 

year is minimal. The commenter 

suggested that the applicant instead 

have the option to re-file a new 

application for the same project if the 

project has not already been completed. 

This same commenter, in commenting 

on the proposed rule, supported the 

proposed provision that would limit 

roll-over applications to two semiannual competitions and one National 

competition. 

Response: After considering these 

comments, the Agency has made a few 

changes to how RES and EEI grant 

applications will be competed. 

A RES and EEI grant application 

requesting more than $20,000 in grant 

funds will be eligible to compete twice 

in one fiscal year—once in a state 

competition and, if unfunded at the 

state level, once in a national 

competition. If the application remains 

unfunded after the national 

competition, the Agency will 

discontinue considering the application 

for potential funding. 

A RES and EEI grant application 

requesting $20,000 or less in grant funds 

will be eligible to compete in up to five 

consecutive competitions—three state 

competitions and two national 

competitions. The order in which such 

an application is competed can be two 

state competitions followed by one 

National competition for grants of 

$20,000 or less, followed by one state 

competition and one National 

competition for all grants regardless of 

size (all within the same Federal fiscal 

year) or one state and one national 

competition for grants of $20,000 or 

less, then one state competition and one 

national competition for all grants 

regardless of size and another state 

competition, which means that the 

application would be competed across 

two fiscal years. If an application 

requesting $20,000 or less in grant funds 

is not funded after its fifth competition, 

the Agency will discontinue considering 

the application for potential funding. 

First-Come, First Served Basis 

Comment: In commenting on the 

interim final rule, two commenters 

recommended the Agency include a 

‘‘first-come, first-served’’ application 

procedure, one for multi-farm projects 

and one for small REAP grants. 

One commenter requested that a 

separate application procedure be 

devised to allow projects involving 

multi-farms and a fixed price fuel 

supply contract to apply on a rolling 

basis as they are ready, on a first-come, 

first-serve basis. According to the 

commenter, this will remove the 

impediments of the current application 

procedure. 

The other commenter stated that 

qualifying small REAP grants should be 

awarded on a first-come, first-served 

basis once funding is determined for 

that fiscal year. After submission from 

the state offices the qualifying 

applications should be funded in the 

order of their submission date until the 

mandatory 20 percent of REAP funds 

are exhausted. 

Response: As noted in a previous 

response, the Agency must evaluate all 

projects against each other as required 

by the authorizing statute, and thus 

cannot implement a ‘‘first-come, firstserved’’ approach to making awards. 

Small Projects/$20,000 or Less Grant 

Requests/Total Project Costs $80,000 or 

Less 

Placement 

Comment: In commenting on the 

interim final rule, one commenter 

recommended placing the short-form 

application for grants under $20,000 in 

§ 4280.116. 

Response: The Agency agrees that the 

placement of the application material 

for grants of $20,000 or less could have 

been placed more appropriately. The 

Agency restructured the application 

provisions in the proposed rule to 

delineate clearly the application 

requirements for projects whose total 

project costs are $200,000 and greater 

(§ 4280.117), less than $200,000, but 

more than $80,000 (§ 4280.118), and 

$80,000 or less (§ 4280.119). The 

Agency has determined this structure is 

reasonable and has retained it in the 

final rule. 

Streamline Application Process 

Comment: In commenting on the 

interim final rule, one commenter stated 

that, while applications can be 

submitted year round, the application 

process and grant making overall still 

takes longer than necessary for small 

wind projects. 

Another commenter stated that the 

current documentation requirements 

require a professional grant writer to 

win REAP awards. The commenter 

suggested that past distribution of REAP 

grants in Oregon would show that 

distribution is skewed in favor of large 

agricultural producers established in 

areas closest to metropolitan areas 

because agricultural producers in the 

commenter’s county (Lake County) are 

so remote from where grant writers live 

that they typically do not have access to 

grant writers willing to travel to the 

county to do the grant work at a cost the 

agricultural producer is willing to pay 

for the chance of winning a grant. The 

commenter pointed out that they wrote 

a grant for the same financial benefit 

through the Oregon Department of 

Energy that could be completed in a 6- 

page document compared to the 60+ 

page document required by the REAP 

process. If the REAP documentation 

cannot be reduced to allow ranchers to 

write their own grants, then the REAP 

process, as it has been established, will 

continue with large agricultural 

producers being the beneficiaries of the 

program. 

Response: With the changes proposed 

to the program as adopted in the final 

rule, the Agency has reduced the burden 

associated with submitting applications 

under REAP, especially for small 

projects. The Agency notes that it still 

must collect sufficient information both 

to evaluate the merits of a project and 

for competition. Thus, there is a limit to 

how much the process can be 

streamlined. The Agency also notes that 

it will be making available an 

application form that will help 

streamline the process for applicants 

seeking grants of $20,000 or less. 

Comment: In commenting on the 

interim final rule, one commenter 

believes that, although OMB has 

approved the information collection 

requirements and Rural Development 

states that the information being 

collected is necessary to ensure 

compliance with the regulation and 

proper use of funds, the information 


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required of applicants is excessive, 

duplicative, and burdensome. 

This commenter recommended that 

the REAP rule allow the smallest 

projects to have a greatly simplified 

application. REAP has a standard 

application and a simplified application 

for projects below $200,000, but it lacks 

a third, even simpler, application for the 

special category of small projects— 

expressly created by Congress—with 

grants up to $20,000. Farmers and rural 

businesses wanting to apply for these 

smallest grants often have to resort to 

paid grant writers to assemble the 40 to 

50 pages of documentation required for 

a qualifying application. Many qualified 

applicants are dissuaded from applying 

by the difficulty of the application. The 

commenter has prepared and attached a 

suggested 12 page streamlined 

alternative (of which all but 3 pages are 

mandatory Federal forms) to the existing 

application requirements which meet all 

of the statutory requirements. The 

commenter believes that a simpler, less 

intimidating, application for REAP 

grants up to $20,000 would 

substantially increase participation, 

particularly for projects using smallscale wind and solar technologies. 

The commenter stated that the failure 

to streamline ‘‘mini-project’’ 

applications may not meet the intent of 

the Regulatory Flexibility Act, despite 

Rural Development’s assertion that the 

rule has ‘‘no significant impact’’ because 

it only impacts those that choose to 

participate in the program. This position 

neglects those that choose not to 

participate in the program because the 

requirements for the application are 

overly burdensome. Small wind system 

retailers report that up to 90 percent of 

potential applicants are dissuaded by 

the application requirements such as 

plot plans, financial statements, tax 

returns, and the NEPA form (they do not 

understand that the short form is often 

sufficient). 

Another commenter on the interim 

final rule also recommended that the 

Agency continue to reduce application 

complexity, especially for small 

projects. The interim final rule takes a 

strong step toward program 

simplification by removing the 

preferences for grant/loan guarantee 

applications. More complex application 

systems mean that many applicants 

must hire grant writers, which biases 

the program towards those who are 

better able to afford grant writers. 

Simplification will benefit agricultural 

producers of all means, especially 

smaller operators. REAP rules should 

require a greatly simplified application 

process for the smallest projects. 

Because so many smaller systems used 

off-the shelf technology, much of the 

application can be drastically 

simplified. A number of requirements, 

such as for design warranties not 

commonly offered, should be removed 

from application requirements for small 

projects. 

A third commenter echoed these same 

concerns. The commenter stated that the 

grant application is lengthy and overly 

burdensome for small, independent 

operators whose main focus is running 

their business. Faced with these 

burdensome requirements, many small 

business operators are contemplating 

hiring outside grant writers at 

considerable expense. Any action to 

lessen the burden for these operators 

would be a welcome change. 

Alternatively, the Department could 

allow application preparation as an 

eligible expense under professional 

service fees. 

Response: In the proposed rule, the 

Agency proposed a third-tier 

application process for projects with 

total project costs of $80,000 or less, 

which streamlines the application 

process for these smaller projects. The 

final rule maintains this third-tier 

application process. The Agency notes 

that there is a limit to how much the 

application process can be streamlined 

because the Agency must still receive 

sufficient information in order to 

determine a project’s technical merit 

and to make selection among various 

meritorious projects. 

Comment: Many commenters 

expressed concern over the amount of 

paperwork and resulting expense 

required to file an application. 

Two commenters commended the 

Agency for creating a third category for 

projects with total project costs of 

$80,000 or less, and agreed that the 

smallest projects should have a greatly 

simplified application. According to the 

commenters, the current application is a 

lengthy 40 to 50 pages for project grants 

up to $20,000, and farmers and rural 

small businesses interested in RES are 

often dissuaded by the daunting 

application process, or end up paying 

grant writers to assemble the paperwork. 

The commenters, therefore, 

recommended that the Agency develop 

a short form and, if practicable, an online application. One of these 

commenters provided a 12 page 

application example that, according to 

the commenter, meets all of the 

statutory requirements as an alternative 

to the current, lengthy application. 

According to the commenters creating 

simplified, less-intimidating 

applications for projects totaling under 

$80,000 and under $200,000 would 

substantially increase the number of 

small project applications (e.g., small 

wind energy) to and participation in the 

REAP program. 

Another commenter, who has worked 

on REAP applications since 2005, stated 

that REAP grants are long, repetitive, 

and cumbersome. The commenter asked 

for the Agency to make them shorter 

and easier to file. 

Another commenter has stated 

dissatisfaction with the length and 

difficulty of REAP applications, citing it 

took over a week of intensive work to 

complete each application package for 

$20,000 grants. The commenter 

highlighted that a consultant fee for the 

present application ranges from $3,000 

to $5,000, which is too high of a cost for 

a potential return of $20,000. The 

commenter stated that the commenter 

will not participate unless wind is able 

to compete fairly, and the application is 

drastically shortened. According to the 

commenter, nothing in a small wind 

grant application should take more than 

two pages or more than one hour to 

complete. 

Response: The Agency thanks the 

commenters for the recommendations. 

The proposed rule streamlines the 

application process, including a 

simplified application for grants of 

$20,000 or less is provided in the final 

rule. The final rule incorporates three 

application categories, for which the 

Agency has developed forms to assist 

applicants with the application 

requirements. For projects with total 

costs $200,000 and greater, applicants 

can use RD Form 4280–3C, 

‘‘Application for Renewable Energy 

Systems and Energy Efficiency 

Improvement Projects, Total Project 

Cost of $200,000 and Greater.’’ For 

projects with total costs of less than 

$200,000, but more than $80,000, 

applicants can use Form RD 4280–3B, 

‘‘Application for Renewable Energy 

Systems and Energy Efficiency 

Improvement Projects, Total Project 

Cost of Less Than $200,000, but More 

Than $80,000.’’ Finally, for projects 

with total costs of $80,000 or less, 

applicants can use Form RD 4280–3A, 

‘‘Application for Renewable Energy 

Systems and Energy Efficiency 

Improvement Projects, Total Project 

Cost of $80,000 or Less.’’ The three 

application categories require different 

amounts of paperwork. 

The smaller the total project costs, the 

lesser amount of paperwork and burden 

are associated with the process. The 

forms can be used to meet the 

application requirements and will 

reduce burden because all the 

information needed for a complete 

application is in one complete concise 

form. 


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Certifications 

Comment: One commenter agreed 

with simplifying the application process 

to require certifications versus 

additional information upfront. 

Response: The Agency thanks the 

commenter for supporting this change. 

The final rule contains the same set of 

certifications as in the proposed rule for 

this set of applications. 

Energy Bills 

Comment: One commenter stated that, 

with regard to applications for projects 

with total project costs of $80,000 or 

less, the requirement of small producers 

to maintain and provide 36 months of 

energy bills (see proposed 

§ 4280.119(b)(3)(iii)) is burdensome on 

the applicant and will result in many 

applicants being deemed ineligible after 

applying. According to the commenter, 

requiring a producer to go back for 36 

months when they had no idea that they 

would be applying for these funds 30 

months ago is unrealistic and should 

not be required. 

Response: As noted in the response to 

this issue on the calculation of simple 

payback, the Agency agrees with the 

commenter that maintaining 36 months’ 

worth of energy bills may be 

burdensome to some applicants. The 

final rule allows the applicant to use the 

most recent 12 months or calculate an 

annual average over the most recent 24, 

36, 48, or 60 month period for the 

energy assessment and energy audit. 

Technical Review 

Comment: In commenting on the 

interim final rule, one commenter 

suggested that the Agency improve 

technical oversight at the program level 

and reduce technical reporting for single 

projects, especially small ones. Many of 

the concerns for project and technology 

viability that are addressed in 

applications can be addressed through 

other means. In the early years of the 

REAP program, the Agency worked 

more closely with the NREL to review 

and score applications. NREL works on 

renewable energy programming across 

multiple agencies and can continue to 

provide beneficial program design 

advice to the Agency. For example, 

NREL can assist the Agency in 

developing lists of prequalified 

equipment for the REAP program in 

order to avoid funding bad technology. 

In addition, a certification process is 

now under development in the small 

wind industry. The commenter 

recommended incorporating this 

process in order to bypass high 

reporting and application requirements. 

If a manufacturer’s equipment has 

already been certified, that should be 

sufficient for technology evaluation. The 

commenter recommended that the 

Agency use prequalification and valid 

industry certification systems to reduce 

technical reporting requirements. 

Response: The Agency will work with 

third-party agencies, such as NREL, on 

an as-needed basis to help address 

concerns with ‘‘questionable’’ 

technologies. For example, the Agency 

will use a third-party to help review all 

applications received for refurbished 

systems. 

With regard to reducing technical 

reporting for projects, especially small 

ones, the Agency has targeted the 

burden associated with the technical 

reporting requirements based on the size 

of the request for funding. This has 

resulted in much less burden for small 

project applications (those with total 

project costs of $80,000 or less). 

However, the Agency must collect 

sufficient information to both evaluate 

the merit of a project and compete that 

project with others. Thus, there is a 

limit to how much the process can be 

streamlined. The Agency also notes that 

it will be making available an 

application template that will help 

streamline the process for applicants 

seeking grants of $20,000 or less. 

The Agency disagrees that 

precertification of technologies is 

appropriate for this program. However, 

the final rule allows a technology to be 

determined commercially available if it 

is certified by a recognized industry 

organization whose certification 

standards are acceptable to the Agency. 

Matching Funds Verification 

Comment: One commenter agreed 

with the Agency’s decision to require 

applicants to provide a verification of 

matching funds equal to the 75 percent 

contribution. 

Another commenter agreed with the 

Agency’s decision to require applicants 

to provide the remainder of total project 

costs as a match. The commenter asked 

if the equity raised from the sale of 

Federal tax credits is able to be 

documented at the time of application 

in order to be used as a match. 

Response: The Agency thanks the 

commenters for the support. In response 

to the one commenter’s question, equity 

raised from tax credits can be counted 

as equity if they can provide third party 

verification. 

Working With Applicants 

Comment: Two commenters requested 

that the Agency work closely with 

applicants to help them through the 

application process. 

One commenter suggested that there 

be a representative to work directly with 

farmers or the installers that work with 

farmers in order to get more farmers 

putting in systems. 

The other commenter recommended 

that the Agency focus on providing 

paperwork assistance to applicant that 

is part of smaller agricultural operations 

or business owners, with a similar 

change considered for beginning farmers 

and entrepreneurs. The commenter 

noted that applicants that fall into these 

categories may not have the resources to 

seek extra assistance if they require it, 

and that paperwork assistance may 

determine the success of an application. 

The commenter stated that, if increased 

assistance were implemented within the 

program, it would help minimize the 

difficulty of applying for a loan, making 

it much easier for small operations to 

take advantage of REAP and encourage 

a diverse set of applicants. 

Response: Subject to available 

resources, the Agency endeavors to 

assist every potential REAP participant 

that requests support in completing an 

application. A simplified application for 

grants of $20,000 or less is provided in 

the final rule. 

Evaluation of Applications (§ 4280.120) 

Independent Organizations 

Comment: In commenting on the 

interim final rule, one commenter 

recommended that the Agency contract 

with an independent organization to 

evaluate the actual benefits from the 

broad inclusion of grain dryers under 

program eligibility and recommended 

program changes with a goal to focus 

limited program funds on adoption of 

the most energy efficient technologies 

available. 

The commenter stated that, over the 

years, the REAP program has worked 

better for some technologies than others. 

In recent years, the commenter has seen 

a growing dominance in the number of 

awards for a small handful of awards 

technologies. Grain dryers, in particular, 

have risen greatly in awards under the 

REAP program. The commenter stated 

that project award information they 

have reviewed is not definitive on 

which awards are grain dryers, but the 

numbers of awards clearly reach well 

over 1,300. As a result, many other 

technology providers are coming to 

regard REAP as ‘‘the grain dryer 

program.’’ 

The commenter stated that project 

data they have reviewed indicates 

claims of increases in grain dryer 

efficiency of 33 percent to as much as 

77 percent, usually for propane but also 

natural gas and electricity. The new 


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grain dryers are modern equipment 

using modern moisture sensors, flow 

control and metering that often replace 

equipment that is decades old and of 

lower technology. As a result, for some 

manufacturers, every grain dryer in their 

product line qualifies for REAP when 

replacing an old system, with no 

programmatic favor for more efficient 

models. The commenter questioned if 

REAP is truly driving technology 

improvements or if this is essentially a 

bonus for grain dryer purchases due to 

occur anyway (the ‘‘free rider’’ effect). 

In previous years, many awards for 

dryers were based upon expanded 

capacity for the new system. The 

interim final rule includes new changes 

that address this by restricting the 

amount of the award to the replacement 

capacity of the system. The rule 

addresses the definition of ‘‘capacity,’’ 

which varies for the many technologies 

covered by REAP (in some cases 

generating capacity, or horsepower 

capacity or BPH or other). The Agency 

should be commended for taking first 

steps to rein in the unwelcome 

dominance of REAP by one technology 

sector, but there is more to be done. The 

new definition should establish set 

criteria for definitions and calculation 

used by national and state offices for the 

sake of fairness and accuracy. As a rule, 

the Agency should focus the already 

limited program funds on adoption of 

the most energy efficient technology 

available. 

The large number of grain dryers 

funded under the program raises 

questions regarding how truly diverse 

the REAP program is when one type of 

technology so thoroughly dominates. In 

the case of grain dryers, this equipment 

is run only a few weeks per year, raising 

questions of how much energy is 

actually saved for the investment of 

public dollars. The commenter stated 

that they have heard reports that these 

grain dryers have also been very helpful 

in saving grain during the wet harvest 

seasons of recent years, though that is a 

side benefit. The commenter 

recommended that the Agency contract 

with an independent organization to 

evaluate the actual benefits from the 

broad inclusion of grain dryers under 

program eligibility and recommend 

program changes to reflect total energy 

efficiency gains due to program 

incentives. 

Response: The commenter is 

especially concerned with how well 

REAP allows for the diversification of 

projects, pointing specifically to grain 

dryers and whether additional oversight 

is needed to verify information being 

reported in grain dryer applications. 

While the Agency acknowledges that 

grain dryers have been a dominate 

technology, the Agency points out that 

the program (e.g., awarding 

discretionary points to underrepresented technologies) helped 

diversify the program’s portfolio, such 

that the percentage of the projects 

awarded to grain dryers fell by 50 

percent or more from 52 percent in 

fiscal year 2010 to between 13 and 26 

percent in fiscal years 2011 through 

2013. 

The Agency expects a further 

diversification to take place under the 

final rule by scoring projects on the 

basis of energy saved per Federal dollar 

requested. This should level the playing 

field further. In addition, by obtaining 

this metric, the Agency will be able to 

identify any project (grain dryer or 

otherwise) that reports a very high 

energy saved per Federal dollar 

requested figure to the extent that such 

a figure appears to be an outlier. The 

Agency will then be able to target such 

applications for further evaluation and 

can enlist, as necessary, additional 

assistance from third-parties, such as 

NREL, to help ensure that the 

information being reported is 

appropriate and not overstated. 

Scoring Applications (§ 4280.120) 

Overhaul 

Comment: In commenting on the 

interim final rule, one commenter stated 

that the existing scoring system used for 

the REAP program is in need of review 

and improvement. The commenter 

recommended that the point system be 

reorganized so as to realize public 

policy goals of the program, which 

include maximizing environmental 

protection, energy savings, and 

renewable energy production for 

producers and rural businesses. Many of 

the existing scores in the program relate 

more to paperwork preparation and less 

to energy or environmental performance 

of the system in question. The majority 

of points should evaluate the degree to 

which the proposals meet program goals 

for energy and environmental benefits. 

The changes should result in clear 

definitions, clear criteria, and a 

weighting that reflects the program 

criteria. In some cases, it will be helpful 

to develop criteria in consultation with 

the DOE and other Federal or state 

agencies with relevant experience. 

Response: The Agency agrees with the 

commenter that the program’s scoring 

system needed improvement. The 

Agency reviewed the scoring system 

and the final rule contains changes that 

address the commenter’s concerns. 

Under the existing rule, the energy 

(replacement, generation, and savings) 

and environmental benefit scoring 

criteria represented approximately 20 

percent of the total potential application 

score. Under the final rule, these two 

scoring criteria account for 30 percent of 

the total potential score, thus 

emphasizing these particular aspects of 

the program’s goals. The Agency also 

provides clearer definitions and scoring 

criteria. Finally, the Agency has 

evaluated the relative weightings of the 

scoring criteria to reflect all of the goals 

of the program. 

Comment: In commenting on the 

interim final rule, one commenter 

recommended that anaerobic waste 

digester technology that produces 

renewable biogas power and electricity 

be treated under the rule in a manner 

that is equitable in comparison to other 

renewable technologies. One of the 

specific suggestions made by the 

commenter was to improve the ranking/ 

scoring criteria that support digester 

projects by making changes to the 

ranking criteria that consider 

environmental attributes of a digester 

project. 

A second commenter expressed 

similar concerns, stating that anaerobic 

digesters need to be better supported by 

the USDA. More REAP or similar funds 

need to be dedicated to anaerobic 

digesters as the bigger lobbying interests 

of wind power, solar power, and ethanol 

have long monopolized USDA funds. 

Anaerobic digesters are proven 

technology that cannot happen on our 

dairy farms without financial assistance 

from the Agency. This type of renewable 

energy project needs to have funding 

equity with the other technologies being 

funded under REAP. 

Response: In both the proposed rule 

and the final rule, the Agency has 

strived to reduce any actual or 

perceived imbalances in its 

consideration of meritorious projects to 

fund. However, with any set of scoring 

criteria, some technologies will have 

inherent advantages or disadvantages 

compared to others. It is impossible to 

totally eliminate this. With the 

inclusion of discretionary points for 

under-represented technologies, the 

Agency can help alleviate any 

unintended biases that occur as a result 

of the scoring criteria. 

With regard to funds being dedicated 

to a particular technology, in this case 

anaerobic digesters, the Agency cannot 

do so without specific statutory 

authorization. 

Comment: One commenter asserted 

that the scoring criteria in the proposed 

rule still places renewable energy 

projects at a disadvantage. The 

commenter suggested that reverting to 

separate pools of money per technology 


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type as a first round competition may 

help renewable energy projects to 

compete. Those that did not score high 

enough to be funded in their technology 

type pool should also be allowed to 

compete in the final National 

competition of funds. 

Response: While the Agency disagrees 

with the commenter’s assertion, the 

Agency cannot accommodate the 

suggestion to create separate pools of 

money for each technology type without 

statutory authority. 

Environmental Benefits 

Comment: One commenter asked why 

this criterion is being scored as an ‘‘all 

or nothing’’ rather than being scored on 

a graduated basis. Typically, the 

program has awarded points when 

appropriate documentation is made 

available and it specifically cites the 

project, but almost all EEI and RES 

projects have benefits. The commenter 

stated that it would be more effective to 

award more points when a project 

demonstrates that it is reducing 

greenhouse gases more than another. If 

that is not the case, then what are the 

quantitative values or is simply a pass/ 

fail document worth 5 points? The 

commenter stated that the Agency’s 

criterion lacks any quantitative aspect. 

Response: The Agency agrees that this 

criterion can be scored on a graduated 

basis based on meeting one or more of 

the three impact areas—environment, 

public health, and resource 

conservation. However, the Agency 

disagrees that this scoring criterion can 

be scored on a quantitative graduated 

basis as there are too many potential 

metrics and no one metric that would be 

suitable to all of the potential 

technologies. Further, selecting one 

specific metric, such as the commenter’s 

greenhouse gas example, will raise a 

particular environmental aspect to a 

higher level than other, equally 

important environmental aspects; that 

is, it is difficult, if not impossible, to 

weigh one positive environmental 

impact against another. 

In consideration of the comment, the 

Agency has revised the rule to award 

one point if any one of the three impact 

areas is met, three points if any two of 

the three impact areas are met, and 5 

points if all three impact areas are met. 

Comment: In commenting on the 

interim final rule, three commenters 

recommended increasing the points 

awarded for the Environmental Benefits 

scoring criterion. A fourth commenter, 

commenting on the proposed rule, also 

recommended increasing the points 

awarded for this criterion. 

One commenter recommended that 

the points awarded be increased from 10 

to 25 points, with acceptable 

documentation being an NRCSapproved conservation plan. 

A second commenter also believes 

more weight needs to be considered for 

the environmental benefits provided 

from REAP-eligible projects. Dairy 

farmers have never faced greater 

environmental demands than they do 

today. Fortunately, there are tools 

available to help alleviate many of these 

concerns. For example, anaerobic 

digester systems can provide vast 

opportunities for dairy farmers to 

mitigate air and water concerns. An 

anaerobic digester system can allow for 

a dairy farmer to vastly reduce their 

greenhouse gas emissions, especially 

methane. Also, anaerobic digester 

systems give dairy farmers a tool to 

reduce and control key nutrients, such 

as nitrogen and phosphorus. 

The third commenter stated that the 

Agency should increase the scoring 

proportion for air and water co-benefits. 

According to the commenter, a key 

rationale for the existence of REAP is to 

provide environmental benefits, but the 

program scoring falls short of gauging 

projects by their ability to serve this 

fundamental public policy goal of an 

improved environment. The commenter 

points out that the 10 points for 

environmental benefits are only 

approximately 8 percent of the overall 

program scoring. Furthermore, by 

undervaluing environmental benefits, 

the interim final rule’s point allocation 

may miss opportunities during 

technology selection to achieve 

environmental gains such as better 

water or air quality, or habitat diversity. 

The marketplace already undervalues 

environmental benefits and REAP 

should provide a strong corrective for 

this market failure by more strongly 

favoring projects with environmental 

benefits. Examples of environmental cobenefits that should receive higher value 

include water savings from more energy 

efficient irrigation technologies, reduced 

pathogens or surface water due to 

anaerobic digesters, or the complete 

elimination of fossil fuel combustion 

due to noncombustible renewable 

energy sources such as wind and solar. 

Lastly, the third commenter stated 

that the existing requirement of a letter 

from a state agency is largely 

meaningless. The true determination of 

the letter is more a reflection of the 

ability of state agencies to generate them 

for specific projects rather than 

improved stewardship. The commenter 

recommended that the Agency replace 

this letter requirement with a better 

system reflecting environmental cobenefits. 

The commenter on the proposed rule 

recommended increasing the 

environmental benefit criterion point 

value from the proposed maximum of 5 

points to some level above the 

maximum 10 points as found in the 

interim final rule. The commenter stated 

that this is an important facet of the 

program, as it helps give priority to 

projects that have a positive impact 

within the specified areas of the 

criterion—public health, the 

environment, and resource 

conservation. According to the 

commenter, these focus areas of this 

criterion are at the heart of REAP, and 

should be given sufficient weight. 

Projects that show a positive effect on 

the criterion’s impact categories should 

be given priority, especially if a positive 

impact can be shown across all three. 

Response: The Agency has considered 

the commenters’ recommendation to 

increase the point value for the 

environmental criterion to some level 

higher than 10 points. The primary 

purpose of REAP is to generate or save 

energy through RES and EEI, not to 

provide environmental benefits as 

claimed by one of the commenters. The 

Agency acknowledges that general 

letters from states were not a useful 

mechanism, and therefore revised the 

provision in the proposed rule. The 

Agency further acknowledges many of 

the points made by the commenters 

concerning the need to reduce the 

adverse impacts on the environment 

caused by energy generation. However, 

consideration of environmental impacts 

is but one of a number of criteria that 

the Agency must consider in 

determining which projects to fund. 

Because many, if not all, projects 

eligible for funding will have some 

positive impact on the environment, 

this criterion is not necessarily a very 

good discriminator between projects 

and is subjective. Further, as noted in 

the previous response, it is difficult to 

weigh one positive environmental 

impact against another, let alone to 

necessarily be able to measure them 

prior to a project being built. In 

consideration of these factors, the 

Agency reviewed the scoring criteria 

and their associated weights and has 

determined that relative to the overall 

goals of the program the 5 points for this 

criterion as found in the proposed rule 

is reasonable and is retained in the final 

rule. 

Energy Generated or Saved per Dollar 

Requested/Quantity of Energy Replaced, 

Produced, or Saved 

Comment: Many commenters were 

against the addition of the ‘‘energy 

generated per dollar requested’’ 


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criterion on the basis that it places small 

wind systems at a disadvantage. 

A number of the commenters stated 

that solar systems often have state or 

utility based incentives not available to 

wind, and ‘‘dumping’’ of Chinese solar 

modules has created a distorted market 

place which this criterion would 

exacerbate. According to the 

commenters, over 70 percent of the solar 

modules installed in the U.S. in 2012 

were built in China, while 91 percent of 

the small wind systems installed in 

America were built here. By making this 

change in the scoring criterion, the 

commenters state that this proposal will 

reduce the participation of small wind 

in the REAP program. 

Two commenters also did not support 

the Agency’s proposed change to this 

scoring criterion because, according to 

these commenters, it favors certain 

renewable energy technologies, which 

one of the commenters stated would 

contradict the promotion of all 

renewable energy technologies 

mandated by the 2002 and 2008 Farm 

Bills. One of these two commenter 

stated that, based on sample 

calculations, solar projects would score 

lower than the typical energy efficiency 

projects, precluding them from 

competing fairly for REAP grant funds. 

Energy generation programs are 

typically more costly, and it is unfair 

that they are scored using the same 

criterion as efficiency projects. The 

commenter requests a study be done to 

fairly award energy system projects on 

an equal basis as energy efficiency 

projects. 

The other of these two commenters 

stated that certain RES often have state 

or utility based incentives not available 

to other technologies (e.g., solar 

renewable energy payment incentives, 

Made-in a certain state solar energy tax 

credits, technology specific feed-in 

tariffs, etc.). To a degree, all forms of 

energy receive incentives, but certain 

technologies receive disproportionate 

ones, which skews the energy 

marketplace. The commenter, therefore, 

recommended that the Agency 

statistically normalize scoring across 

technologies rather than apply a blunt 

‘‘energy-generated-per-dollar-requested’’ 

criterion. 

Response: Based on the comments 

received, the Agency has modified this 

scoring criterion. The modifications are: 

• Creating two scoring components as 

follows: 

(1) Quantity of energy generated or 

saved per dollar requested. The points 

allocated to criterion were reduced from 

the 25 points in the proposed rule to 10 

points. To obtain maximum points, the 

project must demonstrate it can generate 

or save at least 50,000 BTU’s per dollar 

requested. This is an increase from the 

25,000 BTU’s published in the proposed 

rule. 

(2) Quantity of energy replaced, 

produced, or saved as found in the 

REAP program, but not in the proposed 

rule. However, energy efficiency 

projects must demonstrate 50 percent 

savings, up from 35 percent in the 

program, to receive the maximum of 15 

points. 

• Applications for RES and EEI 

projects are eligible to receive points 

under both the ‘‘Quantity of energy 

generated or saved per REAP dollar 

requested,’’ and the ‘‘Energy generated, 

replaced, or saved’’ components. 

To the extent that any technologies 

become under-represented as a result of 

this change (or as the result of any other 

changes to the scoring criteria), the final 

rule also allows State Directors and the 

Administrator to award up to 10 

discretionary points. 

With regard to the suggestion that the 

Agency ‘‘normalize’’ the scoring, this is 

not feasible at the state competition 

level because the level of funds is 

insufficient to allow a meaningful 

normalization. While there may be 

sufficient funding at the National Office 

pool level to consider normalization, the 

Agency has determined a more objective 

scoring criterion with the ability to 

award up to 10 discretionary points for 

under-represented technologies is the 

preferred approach and will still allow 

a broadly diverse project portfolio of 

renewable energy system and EEI 

technologies. 

Comment: In commenting on the 

interim final rule, one commenter stated 

that anaerobic digester technologies 

provide for energy replacement, energy 

savings, and energy generation. The 

commenter then suggested that 

anaerobic digester technologies be 

eligible to receive the maximum points 

associated for all three categories under 

§ 4280.117(c)(1) of the interim final rule. 

Currently, the digester systems would 

be able to receive points for only one of 

these three categories and this 

discriminates against valuable and 

important attributes of the system. 

Response: The Agency acknowledges 

that anaerobic digesters have multiple 

attributes, but they are not the only 

technology to have such multiple 

attributes. To help maintain a balanced 

portfolio of technologies, the Agency 

has determined that it is reasonable to 

determine the primary use of the 

technology (either energy generation or 

energy savings) in the awarding of 

points. If a technology is found to be 

under-represented under the program, 

the regulation allows State Directors and 

the Administrator to award 

discretionary points to such 

technologies. The Agency has not made 

any changes to the final rule in response 

to this comment. 

Comment: In commenting on the 

interim final rule, one commenter 

recommended that the Agency add 

‘‘anaerobic digesters and biomethane 

fueling stations’’ as a special, separate 

category reflecting the Secretary’s 

commitment to rapidly expand the 

digester industry. The commenter 

specifically referred to: § 4280.117(c)(1) 

of the interim final rule, add a new 

§ 4280.117(v) detailing that digesters 

and biomethane fueling stations should 

receive similar sliding scale of points 

depending on the combination amount 

of energy replaced, saved and generated; 

in 7 CFR 4280.117(c)(10), add 

‘‘anaerobic digesters and biomethane 

fueling stations.’’ 

Response: The 2014 Farm Bill 

modified the definition of renewable 

energy system to produce a usable 

energy from a renewable energy source 

and may include distribution 

components necessary to move energy 

produced by such system to initial point 

of sale, but may not include a 

mechanism for dispensing energy at 

retail. Therefore the Agency is unable to 

create a separate category for ‘‘anaerobic 

digesters and biomethane fueling 

stations’’ and has not revised the final 

rule in response to this comment. 

Comment: In commenting on the 

interim final rule, one commenter 

suggested that the underlined text be 

added to paragraph § 4280.117(c)(1)(iii): 

‘‘(iii) Energy generation or biomethane 

production. If the proposed RES is 

intended primarily for production of 

energy for sale, or for the production of 

biomethane for injection into natural gas 

transmission and distribution systems, 

10 points will be awarded.’’ The 

commenter believes this change will 

increase the demand for renewable 

biogas produced by anaerobic digesters. 

It would allow anaerobic digester 

projects that inject renewable biogas 

into the natural gas, in addition to or 

instead of using the gas on-site. 

Anaerobic biogas producers can receive 

added value from the renewable quality 

of their biogas, even when that gas is not 

used on site but put into transmission; 

wind and solar generators sell the 

renewable quality of their electrons to 

firms far from where the electrons are 

consumed. 

Encouraging the wheeling of 

renewable biogas through the natural 

gas transmission system allows 

customers, including stationary fuel cell 

power plants and hydrogen production 

systems and hydrogen production 


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systems at fuel cell electric vehicle 

fueling stations, to take advantage of 

renewable fuel using the existing 

natural gas system. 

Response: The Agency does not agree 

with the commenter that the suggested 

text needs to be included in the rule. 

Under the scoring system in the 

proposed rule and as included in the 

final rule scoring, a biogas application 

qualifies for points based on the biogas 

produced, including biogas that is 

cleaned, compressed, and injected into 

a natural gas transmission and 

distribution system. Thus, the Agency 

has not revised the rule as suggested by 

the commenter. 

Comment: In commenting on the 

interim final rule, one commenter stated 

that as a key goal of the program is to 

replace or save energy, or produce 

renewable energy, the overall weight for 

this scoring criterion should increase. 

As it stands now, this share of the 

points for energy replaced, produced, or 

saved is approximately 12 percent of the 

overall score. The weight should be 

substantially increased in proportion to 

the overall score, at least to 25 percent. 

The commenter recommended that 

the minimum energy efficiency gains 

required to earn additional points 

should be increased at all levels, 

especially the highest, in order to 

provide greater energy savings benefits. 

The commenter pointed out that the 

interim final rule provides more 

maximum points for energy efficiency 

or energy replacement, 15, compared to 

10 maximum points for renewable 

energy for sale. The additional five 

points at the highest level should only 

be awarded in those cases with 

significantly higher efficiency gains or 

for use of multiple energy efficiency 

technologies, so as to award the highest 

points to the best performing proposals 

and not unduly diminishing renewable 

energy generation awards. 

Response: The Agency acknowledges 

that awarding of points for this scoring 

criterion needed to be revised. The 

Agency proposed revisions to this 

scoring criterion in the proposed rule, 

which addresses the commenter’s 

concerns, including increasing the 

maximum points available under this 

criterion to 25 points and this maximum 

is retained in the final rule. 

Comment: In commenting on the 

interim final rule, one commenter 

opposes favored treatment of any 

eligible technology, particularly when 

small wind systems received 

approximately 2 percent of the 2010 

awards. 

Response: The Agency revised the 

State Director and Administrator 

discretionary criterion in the final rule 

so that all projects, including small 

wind projects, will be equally eligible to 

receive discretionary points if they meet 

any of the conditions identified in this 

criterion, including, for example, if they 

are an under-represented technology or 

are needed to achieve geographic 

diversity. 

Comment: In commenting on the 

interim final rule, one commenter stated 

that a renewable energy project being 

installed at a brand new facility does 

not receive points under this scoring 

criterion. The commenter recommended 

that a new scoring criterion be added to 

incentivize new businesses to install 

renewable energy projects. 

Response: The Agency added a 

scoring criterion found in the proposed 

rule, and as carried into § 4280.120(b)(1) 

of the final rule that awards points to a 

renewable energy systems based on the 

amount of energy generated per dollar 

requested. In addition, new facilities 

may qualify for points under 

§ 4280.120(b)(2)(iii) which allows points 

to be awarded for energy production. 

These changes address the concern 

raised by the commenter and the need 

for another separate scoring criterion is 

unnecessary. 

Readiness 

Comment: One commenter asked if 

the readiness scoring criteria will have 

a sliding scale for readiness points. 

Response: The Agency has revised 

this criterion to reflect a sliding scale for 

those applications that can show more 

than 50 percent matching funds and 

other funds, while those applications 

showing 50 percent or less will still 

receive no points. In addition, the 

Agency is reducing the maximum 

number of points for this criterion from 

the 25 in the proposed rule to 20 points 

in the final rule; note that the 20 points 

is still higher than the maximum 15 

points under the existing program. 

To illustrate the effect of the sliding 

scale compared to the interim final rule 

provision, please see the following 

table: 

Percentage of 

matching funds 

and other funds 

Points awarded 

Interim final 

rule Final rule 

50% or less ....... 0 0 

60 ...................... 5 4 

70 ...................... 5 8 

75 ...................... 10 10 

80 ...................... 10 12 

90 ...................... 10 16 

100 .................... 15 20 

Previous Grantees and Borrowers 

Comment: One commenter agreed 

with increasing the maximum points 

awarded under the ‘‘previous grantee 

and borrower’’ criterion, but 

recommended that the Agency give 

more to this scoring criterion. 

Response: The Agency has reviewed 

the overall scoring weights for the 

criteria in light of this and other 

comments and has determined that 

increasing the maximum points that can 

be awarded under this criterion to 15 

would further encourage new applicants 

to apply. The final rule reflects this 

increase to 15 points for this scoring 

criterion. 

Comment: The commenter suggested 

that the Agency polls its field offices 

with specific calculations to determine 

how the proposed scoring change would 

affect the proposals prior to making any 

regulatory changes. 

Response: The Agency engaged its 

field staff during the development of the 

proposed rule. In addition, the public, 

including Agency field staff, has had the 

opportunity to comment on the 

proposed rule. Thus, the Agency has 

determined it is not necessary to further 

pursue the commenter’s suggestion. 

State Director and Administrator 

Priority Points 

Comment: One commenter 

recommended that, if comments are 

being sought for awarding underrepresented or administrator points, the 

Agency should allow each state to 

award additional points specific to 

encouraging necessary growth within 

their state. 

Response: In considering the 

categories for which the State Director 

and Administrator can award their 

priority points, the Agency has 

expanded this criterion by adding three 

additional categories. The addition 

categories will allow State Directors 

more flexibility in awarding points to 

encourage necessary growth within their 

state for projects funded from their state 

allocation. These three categories are, in 

brief: (1) The applicant is a member of 

an unserved or under-served 

population; (2) furthers a Presidential 

initiative or Secretary of Agriculture 

priority; and (3) the proposed project is 

located in an impoverished area, has 

experienced long-term population 

decline, or loss of employment. The 

Agency has determined that these 

categories for administrative points are 

required to maintain uniformity and 

consistency for awarding points 

between states. 

Comment: One commenter 

encouraged the Agency to allow states 

to retain the State Director awarded 

administrative points for a percentage of 

their caseload submitted to the National 


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Office for the pooled funding award 

consideration. 

Response: The commenter is 

requesting that the National Office keep 

any State Director points awarded to an 

application that is forward to the 

National Office for competition in the 

national pool of funds. The Agency 

disagrees with this recommendation 

because the purpose of the National 

competition is to compete all unfunded, 

eligible projects against each other to 

determine, at a National level, underrepresentation and geographic 

distribution. It is using the ‘‘national’’ 

lens that the Administrator will be 

determining whether to award these 

discretionary points. 

Normalization 

Comment: In commenting on the 

interim final rule, numerous 

commenters recommended reinstituting 

data normalization across technologies 

in the application scoring process. One 

of the commenters stated that the recent 

dominance of grain dryers in REAP, and 

the desire to continue to promote 

technology diversity, could be 

addressed in other ways. In previous 

years, the Agency took steps intended to 

increase technology diversity in 

determining REAP awards. The Agency 

employed a ‘‘normalization’’ process 

developed by the NREL. The 

normalization process took place after 

proposals were all scored and sought to 

preserve some degree of balance among 

the technologies supported in the 

program. The normalization system 

maintained the relative point scores 

within single technology classes. 

This one commenter, in commenting 

on the proposed rule, again 

recommended that the Agency consider 

applying the normalization process to 

the REAP application process to avoid 

the dominance by one single 

technology. The commenter 

acknowledged that this may be difficult 

to do with the existing system for state 

allocations of program funds, but the 

allocations themselves also need to be 

reviewed and should be based on a 

metric related to energy. (Right now the 

state allocation system is vague and the 

method used to arrive at it is opaque). 

The Agency could also apply the 

normalization process across states to 

avoid grossly disproportionate awards. 

In contrast to these commenters, two 

commenters suggested that 

normalization should not come back 

into the final regulation for REAP. 

According to these commenters, a 

normalization process just complicates 

the program and removes the 

transparency of awards. 

Response: The Agency has chosen not 

to normalize, but to allocate funding to 

the states which has increased both 

technology diversity and participation 

in all 50 states and territories, and no 

changes have been made to the rule in 

response to this set of comments. The 

normalization procedure was performed 

in the past when only one funding 

competition was held and there were no 

state allocations. The use of 

administrative points has also allowed 

the Agency to sustain a broadly diverse 

technology portfolio. 

With regard to the comment 

suggesting that the allocations also need 

to be reviewed and should be based on 

a metric related to energy, that is 

outside the purview of this particular 

rulemaking, but the Agency will pass 

this comment on to those within the 

Agency dealing with state allocation of 

funds. 

Small Projects 

Comment: In commenting on the 

interim final rule, one commenter 

recommended that the REAP 

application scoring system should be 

abandoned for the smallest projects and 

its complexity was inappropriate for 

micro projects. According to the 

commenter, the current REAP 

application scoring system is 

disproportionately complex and opaque 

for the smallest (grants up to $20,000) 

projects and it should be replaced with 

a simple checklist for the state offices to 

use before forwarding an application to 

USDA-Washington and all projects that 

meet this criteria should be eligible. 

Response: The Agency partially agrees 

with the commenter in that some of 

scoring criteria were unduly complex 

for very small (micro) projects, 

including the technical merit criterion 

and the commercial availability 

criterion. Both criteria were excluded in 

the proposed rule. The Agency removed 

the criterion for commercial availability 

entirely (for reasons discussed 

elsewhere in this preamble) and 

replaced the technical merit scoring 

criterion with a pass/fail determination. 

The Agency, however, cannot 

abandon a scoring system for the 

smallest projects because the Agency 

still needs to evaluate all projects 

against each other, as required by the 

authorizing statute, in order to 

determine the more meritorious 

projects. A ‘‘simple checklist’’ does not 

do this and, even though a project may 

be ‘‘checked off,’’ it does not speak to 

the project’s merits relative to the 

Agency’s goals. 

Technical Report/Technical Merit 

Comment: In commenting on the 

interim final rule, several commenters 

recommended that the technical report 

be a pass/fail review instead of being 

scored using a points system. According 

to the commenters, the score awarded is 

subjective and depends on the opinion 

of the reviewer causing inconsistencies 

among similar projects. Similarly, a 

number of commenters on the proposed 

rule supported the proposed removal of 

technical merit as a scoring criterion 

due to its inconsistency and subjectivity 

in favor of a ‘‘pass/fail’’ screen. 

Response: The Agency agrees with the 

commenters, although the scoring 

criterion being referred to by the 

commenters was ‘‘technical merit’’ and 

not ‘‘technical report.’’ The Agency 

recognized that the ‘‘technical merit’’ 

criterion was posing the difficulties 

identified by the commenters and, in 

the proposed rule, proposed to remove 

it as a scoring criterion and replace it 

with a pass/fail determination, which 

the Agency is retaining in the final rule. 

Comment: Some commenters 

recommended that the Agency work 

closely with NREL to establish the 

‘‘pass/fail’’ criteria for the proposed 

rule. One of the commenters pointed out 

that NREL has a renewable energy 

science and engineering background to 

provide guidance to identify technically 

qualified projects. 

Response: The Agency agrees that the 

rule needs to identify a metric by which 

the ‘‘pass/fail’’ determination will be 

made, and has included such in the 

final rule. Both the areas in the 

technical reports and the criteria 

developed and used to score a project’s 

technical merit were developed in 

consultation with NREL. The Agency 

took that information to identify the key 

areas of each technical report to 

examine in determining whether a 

project has ‘‘technical merit’’ and 

distilled the criteria used to score 

projects on technical merit into a 

concise metric—does the information 

exhibit any weaknesses in the area and 

does it show that the project meets or 

exceeds any requirements specified for 

it. 

Comment: Due to the nature of the 

small wind market, some commenters 

recommended that the Agency regularly 

communicate with the NREL to 

maintain a current and consistent 

understanding of which manufacturers 

and distributors may be considered 

reputable. 

Response: The Agency agrees with the 

commenter. While Agency staff will 

continue to work to ensure that 

technologies eligible for REAP funding 


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are commercially available and 

meritorious, it is not the Agency’s role 

to be either a clearinghouse of 

information on manufacturers and 

distributors or to make judgments on 

their reputations. 

Commercial Availability and Warranty 

Comment: In commenting on the 

interim final rule (§ 4280.117(c)(3)), one 

commenter recommended that the 

Agency add the ability to utilize an 

‘‘Operations and Performance’’ contract 

as an alternative to a warranty 

requirement. Two other commenters 

stated that the scoring criterion that 

gives 5 extra points for a 5-year 

warranty should be removed. According 

to these two commenters, this criterion 

is unclear and can be interpreted in 

many ways, and it is difficult to prove 

that the applicant actually received the 

warranty upon project completion. 

Response: The Agency has removed 

the ‘‘commercial availability’’ scoring 

criterion and, as a result, the language 

concerning warranties referred to by the 

commenter is no longer part of scoring. 

Thus, the concerns expressed by the 

commenters are no longer relevant. 

Comment: In commenting on the 

interim final rule, one commenter 

pointed out that The Innovation Center 

for U.S. Dairy is working with USDA to 

address the lack of a North American 

Industry Classification System (NAICS) 

code(s) for anaerobic digesters, which 

would help relieve difficulties 

experienced by the industry in applying 

for Federal grants. If such a new code(s) 

is established or selected, the 

commenter urges its immediate 

adoption by the program for the process 

of analyzing an applicant’s credit. 

Response: The Agency acknowledges 

that at this time anaerobic digesters do 

not have a NAICS code specifically 

applicable to them, and that they are 

being covered under an ‘‘energy 

generation’’ NAICS code. If and when a 

NAICS code specific to anaerobic 

digesters is developed, the Agency does 

not anticipate any issues with its 

adoption as soon as it is available. The 

Agency notes that no changes to the rule 

are required to address the commenter’s 

concern. 

Construction Planning and Performing 

Development (§ 4280.124) 

Comment: One commenter, 

referencing page 22048, column 3, 

paragraph 4 of the proposed rule’s 

Federal Register notice, expressed 

support for the elimination of all 

procurement contracts for projects with 

total project cost less than $200,000. 

Response: While the Agency thanks 

the commenter for their support, the 

Agency notes that the preamble 

paragraph the commenter is referencing 

states ‘‘. . . the Agency is proposing to 

remove the requirement that the Agency 

has to sign off on all procurement 

contracts for projects with total project 

costs of less than $200,000.’’ The 

Agency did not propose to eliminate 

procurement contracts for this set of 

projects. The Agency has retained the 

proposed rule’s provision found in 

§§ 4280.118(c)(2) and 4280.119(c)(2) of 

the final rule to remove the ‘‘sign off’’ 

requirement and no changes were made 

to the final rule as a result of this 

comment. 

Comment: One commenter disagreed 

with the Agency’s removal of surety on 

contracts between $100,000 and 

$200,000 and the ability to use deposits 

and letters of credit in lieu of payment 

and performance bonds. The commenter 

indicated that a payment bond provides 

superior protection compared to a letter 

of credit or cash deposit to public 

bodies because a subcontractor or 

supplier can make a direct claim against 

the payment bond. A performance bond 

assures that qualified contractors are 

hired and that funds are available to 

complete the project. 

Response: The Agency has not 

removed the requirement for surety for 

contracts between $100,000 and 

$200,000, but has enabled the grantee to 

request exception to the surety 

requirement under certain conditions 

(see § 4280.124(a)(3)(v)). The Agency 

has added language to 

§ 4280.124(a)(3)(v) of the final rule that 

this must be requested by the applicant 

and, if an exception is made, Agency 

funds will not be paid out until the 

project is operational and performing as 

describe in the technical report. 

Comment: One commenter noted that 

proposed § 4280.124(a)(3)(i) requires 

that the Agency be named as co-obligee 

on the required surety bonds. The 

commenter did not object to the 

addition as co-obligee subject to certain 

clarifying conditions. The Agency, as a 

co-obligee on the bond, is not a party to 

the contract between the contractor and 

grantee. It is a well-established principle 

that the obligee may not enforce the 

surety’s obligations under the bond if 

the obligee itself is in default under the 

contract. However, the commenter 

presumes that the Agency is not a party 

to the contract. Thus, there is a question 

of whether the Agency can still require 

the surety to complete a project even 

when the grantee has stopped paying 

the contractor. A surety typically 

requires that the dual obligee bond have 

clarifying language to state that the 

surety cannot be expected to perform by 

either obligee if the first obligee (in this 

case, the grantee) is in breach of its 

payment obligations. The commenter 

recommended that such language be 

included in the regulations and the 

bond form. 

Response: The Agency agrees with the 

commenter that clarifying language is 

needed, but will address this in 

instructions to the rule rather than in 

the rule itself. The Agency is required 

to review and approve all contracts and 

will require that the clarifying language 

reference by the commenter be included 

in all contracts. It is noted that the 

Agency/applicant would typically 

resolve any undisputed financial 

obligations prior to bond enforcement. 

Comment: In referring to proposed 

§ 4280.124(a)(l), which includes within 

the examples of competitive restrictions 

‘‘unnecessary . . . bonding 

requirements,’’ one commenter (Duke) 

suggested that bond requirements 

should not be viewed as an 

unreasonable barrier to entry if the pool 

of eligible contract awardees that the 

grantee and Agency wish to reach are 

qualified contractors. According to the 

commenter, through prequalification as 

described by the commenter, bonds 

facilitate the procuring agency’s 

function of awarding contracts to 

capable and qualified contractors. The 

commenter further stated that bonds 

help ensure that the pool of contractors 

competing for a procurement are 

qualified and bonds do not keep such 

contractors from competing. 

Response: The Agency did not intend 

the wording in the proposed rule 

concerning ‘‘unnecessary . . . bonding 

requirements’’ to create the situation 

outlined by the commenter. The Agency 

generally agrees with the commenter. 

Therefore, to clarify the proposed rule 

language, the final rule reads, in part: 

‘‘unnecessary experience or excessive 

bonding.’’ 

Comment: One commenter supported 

the proposed exemption from the 

requirement to use a licensed 

professional engineer (PE) either when 

tribal (or state) law does not require the 

use of a licensed PE or when the project 

is not complex, as determined by the 

Agency, and can be completed to meet 

the requirements of this program 

without the services of a licensed PE. 

Response: The Agency thanks the 

commenter for their support on these 

proposed revisions, which have been 

included in the final rule. 

Comment: In commenting on the 

interim final rule, two commenters 

recommended that the forms referenced 

in § 4280.119(e)(8), Final Payments, not 

be required for projects that are 

reimbursed by grant funds after project 

completion. Because the applicant is 


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allowed to incur costs as soon as the 

application is submitted, there is a 

chance that the project has been 

completed for some time before grant 

approval. Thus, it is burdensome to 

require paperwork on contracts that are 

already fulfilled and payment complete. 

One of the two commenters further 

stated that the applicant should assume 

this responsibility during the 

construction phase and the Agency 

would pay out funds only after the 

project proves it is operational. 

Response: The Agency disagrees with 

the commenters as these forms are 

needed to ensure that there are no 

outstanding liens on the project before 

the Agency disburses funds, and the 

final rule continues to require them. 

After the application has been 

submitted, the Agency can provide 

these forms to the applicant if the 

applicant makes the Agency aware that 

the applicant is going to start 

construction. This allows the applicant 

to have the forms for contractor sign off 

at the time the project is completed. 

Awarding and Administering RES and 

EEI Grants (§ 4280.122) 

Comment: Two commenters agreed 

with the Agency’s decision in the 

proposed rule to obtain certain forms 

and certifications on approved projects 

after selection rather than having every 

applicant complete them with their 

application. 

Response: The Agency thanks the 

commenter for the support. The final 

rule incorporates the same provisions in 

this regard as found in the proposed 

rule. 

Servicing RES and EEI Grants 

(§ 4280.123) 

Programmatic Changes 

Comment: One commenter stated that 

Agency concurrence on programmatic 

changes should only be required if the 

project costs increase. If a grantee is able 

to do the project at the same level as 

planned and do it for less cost, the 

Agency should not need to be consulted 

in advance of the work being done. 

Because reimbursements are made after 

the project is completed, the Agency 

would still be able to limit the 

maximum grant to 25 percent of actual 

costs. According to the commenter, 

getting Agency prior approval to spend 

less money is burdensome for both the 

grantee and the Agency and serves no 

useful purpose. 

Response: The Agency generally 

agrees with the commenter that 

requiring Agency prior approval for a 

decrease in project costs applied 

burdens both the grantee and the 

Agency, and is of no advantage to the 

Federal Government, provided that the 

reason(s) for decrease in the project cost 

does not have a negative impact on the 

long-term viability of the project. If the 

reason(s) for the lower cost is associated 

with the technology, its installation, or 

any other factor that negatively affects 

the long-term viability of the project, 

however, the Agency must retain the 

ability to approve any such cost 

reductions. Further, the final rule 

requires any decrease in project cost 

that does not have a negative impact on 

the long-term viability to be reviewed 

and approved by the Agency prior to 

disbursement of funds. 

Note: These changes discussed here do not 

affect the requirement for prior Agency 

approval for changes in project scope and 

contractor or vendor. 

Renewable Energy System Reports 

Comment: Two commenters 

supported the Agency’s proposal to 

remove the health/sanitation 

requirement from the RES servicing 

report. 

Response: The Agency thanks the 

commenter for their support and the 

final rule does not require, as found it 

the proposed rule, this information to be 

submitted with the RES servicing report. 

Energy Efficiency Improvement Reports 

Comment: One commenter was 

concerned about whether a grantee 

would be able to report the actual 

amount of energy saved in the project 

performance report for EEI. For 

example, if a grantee is switching fuel 

types from diesel to electric the grantee 

is not going to have any idea how much 

energy has been saved. The commenter 

recommended that the report instead 

ask for how much energy the grantee 

has used and the Agency can then 

compare that figure to grantee’s 

previous energy usage as shown in the 

grantee’s energy audit and prior energy 

bills. The commenter noted that making 

this change would allow the Agency to 

use consistent numbers when 

calculating the BTU value of each 

energy type and would provide a better 

overall report of savings from the overall 

projects. 

A second commenter made a similar 

suggestion, but recommended that 

grantees be given two options—either 

report the annual energy savings as 

calculated by the applicant or report 

annual energy consumption by fuel 

source to be compared to the energy 

audit and calculated by the Agency. 

According to the commenter, these 

changes would ensure the accuracy of 

information the Agency provides to 

Congress. 

Response: The Agency disagrees with 

the commenters that the requirement for 

applicants to report energy savings 

should be shifted from the applicant to 

the Agency. It is the Agency’s position 

that, unlike other Federal programs 

where the government is implementing 

the improvement, REAP is financing the 

applicant to do the improvements. 

Thus, it is the applicant’s responsibility 

to report to the Agency the energy 

savings to be realized. The Agency 

developed forms to assist applicants in 

meeting this requirement and to achieve 

more consistent reporting. 

Comment: One commenter stated that 

the Agency has no recognized 

Measurement and Verification 

Procedure for monitoring energy 

generated or saved for any of its 

projects. The commenter asked how 

reporting can be deemed accurate 

without a Measurement and Verification 

protocol. The Agency’s report on results 

issued to Congress shows the actual 

performance of projected energy saved 

or generated based on projected results 

for 2009 REAP projects as 35.66 percent 

realized for 2010 and 75.84 percent in 

2011. For 2010, REAP projects reporting 

shows 39.74 percent of the projected 

results were realized. Some of 

individual project reporting results 

show that the projected energy saved or 

generated is exactly the same, which is 

an improbable result. Without any real 

measurement and verification 

mechanism how does anyone really 

know how effective this program is? 

Measurement and Verification protocol 

is a common practice in the industry 

and it is requirement in the Federal 

Energy Management Program. While the 

typical Measurement and Verification 

protocol cost adds 10 percent to project 

costs, not every Measurement and 

Verification protocol program need be 

that expensive. The single most 

expensive monitoring expense that 

REAP identified has been a separate gas 

meter. However, data loggers are 

available that record the use of propane 

burners, given the operating 

characteristics of equipment, time of use 

may be correlated to gas use. The cost 

of data logger equipment is relatively 

inexpensive. The commenter asked why 

the Agency has not adopted a program 

of Measurement and Verification if only 

on a spot basis to test a sample of 

projects. The commenter also asked, 

‘‘What is the justification for selfreporting?’’ 

Response: The Agency acknowledges 

that a formal measurement and 

verification program helps ensure the 

accuracy of information reported. 

However, the Agency has decided not to 

implement such a program for this rule. 


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It is the Agency’s position that, unlike 

other Federal programs where the 

Government is implementing the 

improvement, REAP is financing the 

applicant to do the improvements. 

Thus, it is the applicant’s responsibility 

to (self-) report to the Agency the energy 

savings to be realized. Further, requiring 

a third-party verification process will 

increase the cost of the program to the 

grantee and may be cost prohibitive for 

some grantees. Implementing a ‘‘spot’’ 

check program run by the Agency 

would in appropriately shift the burden 

from the applicant to the government. 

The Agency has not made any changes 

to the rule as a result of this comment. 

However, the Agency will develop 

templates to assist applicants in 

providing accurate and consistent 

measurement of energy saved or 

generated by the project funded with 

REAP. 

Job Reporting 

Comment: One commenter stated that 

the requirement to submit jobs created 

or saved will, in virtually every case of 

energy efficiency, result in a negative 

report. If we already know that to be the 

case, why require it from the grantee for 

the 2 to 3 years of reports that have to 

be filed? 

Another commenter suggested 

directly incorporating into the 

regulation and reporting documents that 

energy savings reports may report zero 

jobs if applicable. The commenter also 

recommended that the Agency clarify in 

the reporting document that the jobs 

must be a direct result of the project, not 

simply a statement of the number of 

individuals that the business currently 

employs. 

Response: While the primary purpose 

of REAP is energy creation and savings, 

the Agency is frequently asked by 

Administration officials and Congress to 

identify the number of jobs created or 

saved by all of its programs. Thus, even 

though EEI projects are unlikely to 

create or save many jobs, the Agency 

still needs to gather this information, 

which is at most a minimal burden on 

the grantee. 

With regard to the comments made by 

the second commenter, the Agency has 

made revisions to the final rule by (1) 

adding ‘‘if any’’ to follow ‘‘Actual 

number of jobs’’ to address the comment 

about being able to report ‘‘0 jobs’’; and 

(2) revising the requirement to read, in 

part, ‘‘created or saved as a direct result 

of the EEI [RES] project for which REAP 

funding was used’’ to address the 

comment about not reporting the 

number of people employed by the 

business. 

Guaranteed Loans 

Guaranteed Loans Awarded Subject to 

Available Funds 

Comment: One commenter stated that 

the Agency needs to ensure that it has 

funding available when selecting 

awarded projects, or that it has the 

ability to issue conditional 

commitments subject to funding if the 

guaranteed loan program is to be 

successful. 

Response: The Agency agrees with the 

commenter that funding must be in 

hand before the Agency makes any 

obligations to projects selected for 

funding. The Agency does not intend to 

issue ‘‘conditional commitments’’ as 

suggested because it would commit the 

Agency to funding projects before it 

actually has the funds available, which 

would be in violation of the Antideficiency Act. 

Funding Level 

Comment: In referring to the interim 

final rule, one commenter stated that 

increasing the maximum amount of the 

loan guarantee made available to an 

eligible project from 50 percent to 75 

percent of the eligible project costs and 

increasing the total amount of loans 

guaranteed to any one borrower from 

$10 million to $25 million would 

enhance the REAP program’s 

effectiveness in fostering the 

development of more anaerobic 

digesters. 

On the other hand, another 

commenter stated that the interim final 

rule further facilitates larger projects 

through increases in loan/grant 

percentage (50 percent to 75 percent) 

and the maximum loan guarantee to a 

single borrower ($10 million to $25 

million). The commenter stated that 

these two changes will further tilt the 

program towards the already successful 

larger project segment. This commenter 

recommended eliminating these two 

changes. The commenter stated that a 

project that needs a USDA loan 

guarantee is not a better project than one 

that does not and pointed to distributed 

wind projects with medium and large 

scale wind turbines that are going 

unfunded by REAP because they have 

not needed or wanted USDA loan 

guarantees. 

In commenting on the proposed rule, 

a third commenter stated that, given 

there are already equity requirements in 

place for all REAP guaranteed loan 

projects, the 75 percent cap hinders the 

growth of the program. The commenter 

suggested, for example, that a small 

business or agricultural producer should 

be able to seek a REAP guaranteed loan 

for 100 percent of total project costs 

through a lender and that the 25 percent 

equity requirement should be placed on 

the business or agricultural producer 

and demonstrated from the balance 

sheet at closing as it is done in the B&I 

program. 

This third commenter then pointed 

out that the B&I program does not 

implement a 75 percent cap, but still 

has plenty of risk mitigation due to the 

requirements of the tangible balance 

sheet equity formula—20 percent for 

existing businesses and 10 percent for 

new businesses. [Agency note: The 

commenter inadvertently reversed the 

percentages—the correct percentages are 

10 percent for existing businesses and 

20 percent for new businesses. See 7 

CFR 4279.131(d).] The commenter 

recommended that the same be 

implemented for REAP guaranteed 

loans. The renewable energy sector has 

matured somewhat since the early 

implementation of this program in 2002. 

At that time it would have seemed 

reasonable to impose a 75 percent 

threshold on funds and promote cost 

sharing with REAP guaranteed loans; 

however, the risk of these projects has 

decreased and elimination of the 75 

percent cap would attract more lending 

institutions to utilize these 

underutilized guaranteed loan program 

funds and benefit rural businesses and 

agricultural producers as is the 

intention of the program. 

Response: The Agency implemented 

these two provisions in response to the 

2008 Farm Bill, which limited the 

maximum amount of a loan guaranteed 

under REAP to $25 million and the 

maximum amount of a combined grant 

and loan guarantee to no more than 75 

percent of the cost of the activity. 

With regards to the $25 million 

limitation, the Agency must apply this 

statutory. Further this limitation is 

being applied not only on a single 

project basis, but on a single borrower 

basis over the life of the program. 

The 75 percent of total eligible funds 

cap is specifically identified in the 2008 

Farm Bill and continued in the 2014 

Farm Bill as applying to combination 

requests (i.e., grant plus guaranteed loan 

requests) and the Agency must retain 

and cannot modify that requirement. 

Further, the Agency determined that 

extending this same cap to guaranteed 

loan-only requests is consistent with the 

intent of the statute as stated in the bill’s 

accompanying managers’ report. 

Guarantee Fee Language 

Comment: One commenter expressed 

concern that the guarantee fee language 

will automatically result in increased 

guarantee and annual renewal fees, 

making the already undersubscribed 


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REAP guarantee program less attractive 

to lenders. The commenter encouraged 

the Agency to maintain existing annual 

and renewal fees to encourage 

participation. 

Response: The guarantee fee language 

in the proposed rule will not 

automatically result in the Agency 

increasing guarantee and annual 

renewal fees. Rather, the proposed 

language provides the Agency the 

ability to change the fee if and when 

necessary to have an operational 

program. Therefore, the Agency has 

incorporated the proposed rule language 

in the final rule. 

Comment: One commenter 

recommended that the REAP guarantee 

fee be allowed to be passed on to the 

borrower as is allowed in the B&I 

program. 

Response: The Agency agrees with the 

commenter, and points out that the 

proposed rule allowed the guarantee fee 

to be passed onto the borrower. This has 

been retained in the final rule. 

Balloons 

Comment: In commenting on the 

interim final rule, one commenter 

recommended that anaerobic waste 

digester technology that produces 

renewable biogas power and electricity 

be treated under the rule in a manner 

that is equitable in comparison to other 

renewable technologies. One of the 

specific suggestions made by the 

commenter was for the Agency to add 

flexibility to loan term guidelines by 

allowing balloon maturities in 

combination with longer amortization 

schedules, because commercial banks 

that might typically utilize the REAP 

guarantee program will not extend loans 

past (say) ten years. The commenter 

pointed out that, although digester 

projects are steady cash flow producers, 

they typically cannot generate sufficient 

cash to amortize 100 percent of 

principal in 10 years. 

Another commenter, also commenting 

on the interim final rule, recommended 

that the lender and borrower be able to 

negotiate a term for the loan that may 

be shorter than the amortization 

schedule (e.g., a balloon payment which 

would then extinguish the loan 

guarantee.) 

Response: The Agency acknowledges 

the potential benefit of allowing balloon 

maturities in combination with longer 

amortization schedules; however, doing 

so is not without risk both to the Agency 

and the borrower (in this case, to the 

rural small business and agricultural 

producer). It is because of this increased 

risk that all RBS guaranteed loan 

programs do not allow balloon 

payments. Therefore the Agency has 

decided not to implement balloon 

payments. 

Restructuring Loan 

Comment: In commenting on the 

interim final rule, one commenter 

stressed the importance of changing the 

interim final rule to enable restructuring 

of amortization as part of a loan 

guarantee. Currently, the REAP rule 

allows only a simple loan guarantee in 

which the borrower must pay equal 

principal and interest payments for the 

term of the loan. This is a reasonable 

approach for a project where the 

technology needs to be proven out, or to 

provide further guarantee for a 

borrower. 

A project relying on private equity to 

secure the loan and utilizing proven 

technology certainly still benefit in part 

from this form of loan guarantee, as it 

no doubt ensures the security for the 

lending institution. Yet this benefit of a 

loan guarantee can be greatly enhanced 

with authorization of use of the loan 

guarantee to restructure the 

amortization. Again, this would ensure 

sufficient return on equity for the first 

few years. At the same time, the loan 

can be repaid well in advance of the 

expiration of the equipment’s useful 

life. 

Response: The Agency intends to 

conform the REAP regulation for 

guaranteed loans to the B&I program. 

Under the B&I program, loan 

reamortization is only available when a 

loan is in default (either technical or 

monetary default). The Agency finds no 

grounds for deviating from those 

provisions for projects funded under 

REAP and therefore has not revised the 

rule as a result of this comment. 

Personal and Corporate Guarantees 

Comment: In commenting on the 

interim final rule, one commenter 

recommended that the Agency 

incorporate a graduated reduction of the 

personal loan guarantee requirement for 

digester projects forecasting positive 

debt service coverage; that is, as the 

forecast coverage increases, the extent of 

the guarantee is reduced so that at some 

predetermined coverage level the 

personal guarantee requirement is 

eliminated entirely. According to the 

commenter, this change is needed to 

allow anaerobic waste digester 

technology that produces renewable 

biogas power and electricity to be 

treated under the rule in a manner that 

is equitable in comparison to other 

renewable technologies. 

Response: The Agency disagrees with 

the recommendation made by the 

commenter for a graduated reduction of 

the personal loan guarantee 

requirement. The Agency has 

determined that a higher probability of 

success for a project can be achieved 

when the borrower is actively managing 

the project. Reducing the personal 

guarantee can reduce the incentive for 

actively managing a project and may 

results in placing the project in a higher 

risk position that could result in higher 

losses. For these reasons, the Agency 

has not revised the rule in response to 

the commenter’s recommendation. 

The Agency notes that the personal 

(and corporate) guarantee provisions for 

REAP in this regard are consistent with 

the Agency’s B&I program and that a 

lender may request exceptions in cases 

where collateral, equity, cash flow, and 

profitability indicate an above average 

ability to repay the loan (see 7 CFR 

4279.149(b)). 

Comment: In commenting on the 

interim final rule, one commenter 

recommended revising § 4280.142(b) to 

underscore that an exemption be 

allowed to the longstanding requirement 

for a personal loan guarantee. The 

commenter specifically recommended 

that the Agency prepare business 

criteria for state offices to provide to 

lenders to evaluate the financial 

strength of digester projects utilizing a 

Debt Service Coverage Ratio (DSCR). 

Response: In the proposed rule, the 

Agency proposed to incorporate fully 

the personal and corporate guarantee 

provisions from the B&I program (see 7 

CFR 4279.149). The B&I provisions 

allow exemptions from the personal 

loan guarantee under certain 

circumstances. The Agency has 

determined that this change, as 

incorporated in the final rule, is 

sufficient so as to meet the concern of 

the commenter. Lastly, the suggestion to 

prepare separate business criteria to 

provide to lenders is administrative in 

nature and outside the scope of the final 

rule. 

Working Capital Funding 

Comment: While recognizing the 

benefit on placing a cap on working 

capital, one commenter recommended 

increasing the limit (cap) in order to 

help attract lenders to the guaranteed 

loan portion of REAP. According to the 

commenter, applicants have requested 

working capital for existing energy 

projects under REAP, but have 

consequently funded such projects 

under the Business and Industry 

guaranteed loan program. The 

commenter also recommended that the 

REAP regulation provide the Agency the 

discretion to set annual working capital 

funding caps as deemed necessary given 

program subscriptions to allow 

maximum flexibility from year to year. 


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Response: The Agency has 

determined that the 5 percent cap is 

appropriate for existing businesses 

because the items included in the cap 

have already been incurred by the 

business. The Agency has not revised 

the rule in response to this comment. 

Energy Audit and REDA Grants 

Applicant Eligibility 

Comment: Several commenters 

recommended expanding the applicant 

eligibility section for energy audits and 

renewable energy developing assistance 

grants. 

One commenter recommended 

including non-profit entities that can 

document, in their application, their 

qualification and historical success in 

providing renewable energy 

development assistance. 

A second commenter recommended 

including as eligible entities non-profit 

or public entities, including those 

entities that provide water and sewer 

service in rural areas. 

A third commenter recommended 

allowing milk cooperatives to be eligible 

for energy audit grants and renewable 

energy development assistance grants. 

Truly being the ‘‘boots on the ground,’’ 

milk cooperative field staff interacts 

every day with dairy farmers and have 

explicit knowledge and understanding 

of the operations of the farm. The 

commenter believes milk cooperatives 

have the ability and resources to 

provide this important service to better 

improve the delivery of energy audits 

and renewable energy development 

assistance. 

Response: In determining which 

entities are eligible to apply for an 

energy audit or REDA grant, the Agency 

is limited to those entities identified in 

the authorizing statute. The authorizing 

statute identifies three specific groups of 

entities—a unit of state, tribal, or local 

government; a land grant college or 

university or other institution of higher 

education; and a rural electric 

cooperative or public power entity. 

None of the entities suggested by the 

commenters match any of these entities 

identified in the statute. The closest 

possible match is reference to ‘‘public 

power companies’’ and the public 

entities that provide water and sewer 

that were mentioned by one of the 

commenters. However, it is the intent of 

the statute that public power entities 

have the same definition of state utility 

as defined in section 214(a) of the 

Federal Power Act (16 U.S.C. 824q(a)), 

where state utility is defined, in part as 

‘‘. . . to carry on the business of 

developing, transmitting, utilizing, or 

distributing power.’’ Public entities that 

provide water and sewer are not 

providing ‘‘power’’ and thus would not 

be included. 

The authorizing statute also allows as 

eligible entities ‘‘any other similar 

entity, as determined by the Secretary.’’ 

None of the entities suggested by the 

commenters are ‘‘similar.’’ For example, 

none are educational institutions or 

government bodies. While one 

commenter suggested allowing milk 

cooperatives as eligible entities and the 

statue identifies rural electric 

cooperatives as eligible entities, the fact 

that both entities are cooperatives is 

insufficient to find them to be similar to 

the extent that milk cooperatives would 

be an eligible entity under the ‘‘any 

other similar entity’’ provision. 

In summary, none of the entities 

identified by the commenters are found 

to be eligible under the statutory 

provisions and no changes to the rule 

have been made as a result of these 

comments. 

Scoring EA and REDA Grant 

Applications 

Comment: In commenting on the 

interim final rule, one commenter stated 

that the point scoring system for the 

$100,000 renewable energy 

development assistance grants provides 

up to 15 points for low cost energy 

audits, which means that proposals that 

provide energy audit services have a 

potential 15 point advantage over 

proposals that provide renewable energy 

development assistance. Given this 

criterion, it appears that the Agency 

does not really want to provide 

renewable energy development 

assistance, but is more focused on 

energy audits. Or does this scoring 

criterion only apply to energy audit 

proposals . . . and renewable energy 

development assistance grants will not 

be judged using this criterion or judged 

against the energy audit proposals? 

The commenter asked: ‘‘How can the 

rules give a fair opportunity and level 

playing field to both renewable energy 

development assistance as well as 

energy audits?’’ Both are equally vital 

and important in creating rural success 

in the transition to a secure clean energy 

future. 

Response: The Agency acknowledges 

the commenter’s concern, which the 

Agency addressed in the proposed and 

final rules by providing equal footing for 

both energy audit grant applications and 

renewable energy development 

assistance grant applications. 

Reporting EA/REDA 

Comment: One commenter asked 

whether the Agency knew the number 

of EEI projects resulting from energy 

audits the program has funded. 

Response: The Agency does not know 

the number of EEI projects that have 

resulted from energy audit funding 

under REAP. The Agency will consider 

developing a data management system 

for future tracking. 

Appendix Comments 

Proposed Rule—Appendix A 

Comment: One commenter found the 

second paragraph in Appendix A to be 

confusing, stating that allowing EEI 

projects costing $200,000 or less the 

ability to conduct either an energy audit 

or energy assessment appears to conflict 

with the new definition for energy 

analysis and when it can be used. 

Response: The Agency understands 

the potential confusion expressed by the 

commenter. For the reasons discussed 

previously in a response to another 

comment, the Agency has removed the 

definition of energy analysis from the 

final rule. Removing the definition of 

energy analysis from the rule eliminates 

this potential confusion. 

Interim Final Rule—Appendix A and 

Appendix B, Section 2—Anaerobic 

Digester Projects 

Comment: One commenter suggests 

adding the underlined text to the 

introductory paragraph: ‘‘The technical 

requirements specified in this section 

apply to anaerobic digester projects, 

which are, as defined in § 4280.103, RES 

that use animal waste and other organic 

substrates to produce thermal or 

electrical energy via anaerobic digestion 

or produce biomethane in a compressed 

gaseous or liquid state for direct use or 

for injection into natural gas 

transmission and distribution systems.’’ 

The commenter also suggests the 

following addition to paragraph (b)(2): 

‘‘(2) For systems planning to 

interconnect with a gas or electric 

utility, describe the utility’s system 

interconnection requirements, power 

purchase agreements, or licenses where 

required and the anticipated schedule 

for meeting those requirements and 

obtaining those agreements.’’ 

The commenter believes these 

changes will increase the demand for 

renewable biogas produced by anaerobic 

digesters. It would allow anaerobic 

digester projects that inject renewable 

biogas into the natural gas, in addition 

to or instead of using the gas on-site. 

Anaerobic biogas producers can receive 

added value from the renewable quality 

of their biogas, even when that gas is not 

used on site but put into transmission; 

wind and solar generators sell the 

renewable quality of their electrons to 


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firms far from where the electrons are 

consumed. 

Encouraging the wheeling of 

renewable biogas through the natural 

gas transmission system allows 

customers, including stationary fuel cell 

power plants and hydrogen production 

systems and hydrogen production 

systems at fuel cell electric vehicle 

fueling stations, to take advantage of 

renewable fuel using the existing 

natural gas system. 

Response: For the reasons discussed 

earlier in response to comments made 

by this commenter on the definition of 

‘‘anaerobic digesters,’’ the Agency is not 

revising the rule as requested by the 

commenter. In addition, the proposed 

rule, and as found in the final rule, no 

longer contains the text being referred to 

by the commenter and, thus, the 

comment regarding the appendix for 

RES is no longer relevant. 

Interim Final Rule, Appendix A, Section 

8(f) 

Comment: One commenter stated that 

the instructions for the payback analysis 

for small wind systems (Appendix A of 

Subpart B, Section 8) list inclusion of 

‘‘applicable investment incentives’’, 

which conflicts with the definition of 

simple payback found in § 4280.103. 

Response: The ‘‘applicable investment 

incentives’’ the commenter is referring 

to is in the context of providing an 

economic assessment of the project and 

is not in reference to the calculation of 

simple payback. Thus, there is no 

conflict and no changes to the rule have 

been made as a result of this comment. 

Interim Final Rule, Appendix A, Section 

8—Small Wind 

Comment: One commenter noted that 

Section 8(i)(1) includes a requirement 

for a ‘‘10 year warranty on design’’ and 

a ‘‘3 year warranty on equipment’’. 

According to the commenter, the design 

warranty concept is not used in the 

wind industry. The commenter 

suggested that there should be a 

requirement for a 5-year parts and labor 

warranty and that turbines under 200 

square meters should be certified to 

AWEA 9.1–2009 by the SWCC or a 

Nationally Recognized Testing 

Laboratory. 

Response: The final rule, as in the 

proposed rule, does not contain the ‘‘10- 

year’’ or ‘‘3-year’’ warranty 

requirements, as referenced by the 

commenter. Instead, the final rule 

requires that a system, such as wind, 

have an established warranty for major 

parts and labor (that is applicable for 

that particular system) as part of the 

requirement for being determined 

‘‘commercially available.’’ The Agency 

will provide more specific guidance in 

an instructions document for the rule. 

Interim Final Rule, Appendix B, Section 

8—Small Wind 

Comment: One commenter stated that 

the requirements of Appendix B of 

Subpart B, Technical Reports, Section 8, 

should be radically simplified or 

eliminated (at least for micro projects). 

The commenter stated that a short-form 

application the commenter developed 

hits all the statutory requirements and 

would eliminate the need for the 

technical report. 

Response: The Agency needs 

information on each proposed project in 

order to determine the merit of the 

project and to evaluate it against other 

projects. Thus, the Agency cannot 

eliminate technical reports, even for 

micro-projects. However, the Agency 

streamlined the application process, 

which includes the requirement for the 

technical report, for small and midsized grants under the proposed rule 

and has retained that streamlined 

application process in the final rule. 

List of Subjects in 7 CFR Part 4280 

Loan programs—Business and 

Industry, Economic Development, 

Energy, Energy Efficiency 

Improvements, Grant programs, 

Guaranteed Loan programs, Renewable 

Energy Systems, and Rural areas. 

For the reasons set forth in the 

preamble, under the authority at 5 

U.S.C. 301, 7 U.S.C. 1989, and 7 U.S.C. 

8107, chapter XLII of title 7 of the Code 

of Federal Regulations (CFR) is 

amended as follows: 

PART 4280—LOAN AND GRANTS 

■ 1. The authority citation for part 4280 

continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 940c; 7 

U.S.C. 8107 

■ 2. Subpart B is revised to read as 

follows: 

Subpart B—Rural Energy for America 

Program 

General 

Sec. 

4280.101 Purpose. 

4280.102 Organization of subpart. 

4280.103 Definitions. 

4280.104 Exception authority. 

4280.105 Review or appeal rights. 

4280.106 Conflict of interest. 

4280.107 Statute and regulation references. 

4280.108 U.S. Department of Agriculture 

Departmental Regulations and laws that 

contain other compliance requirements. 

4280.109 Ineligible Applicants, borrowers, 

and owners. 

4280.110 General Applicant, application, 

and funding provisions. 

4280.111 Notifications. 

Renewable Energy System and Energy 

Efficiency Improvement Grants 

4280.112 Applicant eligibility. 

4280.113 Project eligibility. 

4280.114 RES and EEI grant funding. 

4280.115 Grant applications—general. 

4280.116 Determination of technical merit. 

4280.117 Grant applications for RES and 

EEI projects with total project costs 

$200,000 and greater. 

4280.118 Grant applications for RES and 

EEI projects with total project costs of 

less than $200,000, but more than 

$80,000. 

4280.119 Grant applications for RES and 

EEI projects with total project costs of 

$80,000 or less. 

4280.120 Scoring RES and EEI grant 

applications. 

4280.121 Selecting RES and EEI grant 

applications for award. 

4280.122 Awarding and administering RES 

and EEI grants. 

4280.123 Servicing RES and EEI grants. 

4280.124 Construction planning and 

performing development. 

Renewable Energy System and Energy 

Efficiency Improvement Guaranteed Loans 

4280.125 Compliance with §§ 4279.29 

through 4279.99 of this chapter. 

4280.126 Guarantee/annual renewal fee. 

4280.127 Borrower eligibility. 

4280.128 Project eligibility. 

4280.129 Guaranteed loan funding. 

4280.130 Loan processing. 

4280.131 Credit quality. 

4280.132 Financial statements. 

4280.133 [Reserved] 

4280.134 Personal and corporate 

guarantees. 

4280.135 Scoring RES and EEI guaranteed 

loan-only applications. 

4280.136 [Reserved] 

4280.137 Application and documentation. 

4280.138 Evaluation of RES and EEI 

guaranteed loan applications. 

4280.139 Selecting RES and EEI guaranteed 

loan-only applications for award. 

4280.140 [Reserved] 

4280.141 Changes in borrower. 

4280.142 Conditions precedent to issuance 

of loan note guarantee. 

4280.143 Requirements after project 

construction. 

4280.144–4280.151 [Reserved] 

4280.152 Servicing guaranteed loans. 

4280.153–4280.164 [Reserved] 

Combined Funding for Renewable Energy 

Systems and Energy Efficiency Improvements 

4280.165 Combined grant and guaranteed 

loan funding requirements. 

4280.166–4280.185 Reserved] 

Energy Audit and Renewable Energy 

Development Assistance Grants (REDA) 

4280.186 Applicant eligibility. 

4280.187 Project eligibility. 

4280.188 Grant funding for Energy Audit 

And Renewable Energy Development 

Assistance. 

4280.189 [Reserved] 

4280.190 Energy Audit and REDA grant 

applications—content. 


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4280.191 Evaluation of Energy Audit and 

REDA grant applications. 

4280.192 Scoring Energy Audit and REDA 

grant applications. 

4280.193 Selecting Energy Audit and REDA 

grant applications for award. 

4280.194 [Reserved] 

4280.195 Awarding and administering 

Energy Audit and REDA grants. 

4280.196 Servicing Energy Audit and REDA 

grants. 

4280.197–4280.199 [Reserved] 

4280.200 OMB control number. 

Appendix A to Subpart B of Part 4280— 

Technical Reports for Energy Efficiency 

Improvement (EEI) Projects 

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 

Subpart B—Rural Energy for America 

Program 

General 

§ 4280.101 Purpose. 

This subpart contains the procedures 

and requirements for providing the 

following financial assistance under the 

Rural Energy for America Program 

(REAP): 

(a) Grants or guaranteed loans, or a 

combination grant and guaranteed loan, 

for the purpose of purchasing and 

installing Renewable Energy Systems 

(RES) and Energy Efficiency 

Improvements (EEI); and 

(b) Grants to assist Agricultural 

Producers and Rural Small Businesses 

by conducting Energy Audits (EA) and 

providing recommendations and 

information on Renewable Energy 

Development Assistance (REDA) and 

improving energy efficiency. 

§ 4280.102 Organization of subpart. 

(a) Sections 4280.103 through 

4280.111 discuss definitions; exception 

authority; review or appeal rights; 

conflict of interest; USDA Departmental 

Regulations; other applicable laws; 

ineligible Applicants, borrowers, and 

owners; general Applicant, application, 

and funding provisions; and 

notifications, which are applicable to all 

of the funding programs under this 

subpart. 

(b) Sections 4280.112 through 

4280.124 discuss the requirements 

specific to RES and EEI grants. Sections 

4280.112 and 4280.113 discuss, 

respectively, Applicant and project 

eligibility. Section 4280.114 addresses 

funding provisions for these grants. 

Sections 4280.115 through 4280.119 

address grant application content, 

technical merit determination, and 

required documentation. Sections 

4280.120 through 4280.123 address the 

scoring, selection, awarding and 

administering, and servicing of these 

grant applications. Section 4280.124 

addresses construction planning and 

development. 

(c) Sections 4280.125 through 

4280.152 discuss the requirements 

specific to RES and EEI guaranteed 

loans. Sections 4280.125 through 

4280.128 discuss eligibility and 

requirements for making and processing 

loans guaranteed by the Agency. Section 

4280.129 addresses funding for 

guaranteed loans. In general, Sections 

4280.130 through 4280.152 provide 

guaranteed loan origination and 

servicing requirements. These 

requirements apply to lenders, holders, 

and other parties involved in making, 

guaranteeing, holding, servicing, or 

liquidating such loans. Section 4280.137 

addresses the application requirements 

for guaranteed loans. 

(d) Section 4280.165 presents the 

process by which the Agency will make 

combined loan guarantee and grant 

funding available for RES and EEI 

projects. 

(e) Sections 4280.186 through 

4280.196 present the process by which 

the Agency will make EA and REDA 

grant funding available. These sections 

cover Applicant and project eligibility, 

grant funding, application content, 

evaluation, scoring, selection, awarding 

and administering, and servicing. 

(f) Appendices A through C cover 

technical report requirements. 

Appendix A applies to EEI projects; 

Appendix B applies to RES projects 

with Total Project Costs of Less Than 

$200,000, but more than $80,000; and 

Appendix C applies RES projects with 

Total Project Costs $200,000 and 

Greater. Appendices A and B do not 

apply to RES and EEI projects with 

Total Project Costs of $80,000 or less, 

respectively. Instead, technical report 

requirements for these projects are 

found in § 4280.119. 

§ 4280.103 Definitions. 

Terms used in this subpart are 

defined in either § 4279.2 of this chapter 

or in this section. If a term is defined in 

both § 4279.2 and this section, it will 

have, for purposes of this subpart only, 

the meaning given in this section. Terms 

used in this subpart that have the same 

meaning as the terms defined in this 

section have been capitalized in this 

subpart. 

Administrator. The Administrator of 

Rural Business-Cooperative Service 

within the Rural Development Mission 

Area of the U.S. Department of 

Agriculture (USDA). 

Agency. The Rural BusinessCooperative Service (RBS) or successor 

agency assigned by the Secretary of 

Agriculture to administer the Rural 

Energy for America Program. References 

to the National Office, Finance Office, 

State Office, or other Agency offices or 

officials should be read as prefaced by 

‘‘Agency’’ or ‘‘Rural Development’’ as 

applicable. 

Agricultural Producer. An individual 

or entity directly engaged in the 

production of agricultural products, 

including crops (including farming); 

livestock (including ranching); forestry 

products; hydroponics; nursery stock; or 

aquaculture, whereby 50 percent or 

greater of their gross income is derived 

from those products. 

Anaerobic Digester Project. A 

Renewable Energy System that uses 

animal waste or other Renewable 

Biomass and may include other organic 

substrates, via anaerobic digestion, to 

produce biomethane that is used to 

produce thermal or electrical energy or 

that is converted to a compressed 

gaseous or liquid state. 

Annual Receipts. Means receipts as 

calculated under 13 CFR 121.104. 

Applicant. (1) Except for EA and 

REDA grants, the Agricultural Producer 

or Rural Small Business that is seeking 

a grant, guaranteed loan, or a 

combination of a grant and loan, under 

this subpart. 

(2) For EA and REDA grants, a unit of 

State, Tribal, or local government; a 

land-grant college or university or other 

Institution of Higher Education; a rural 

electric cooperative; a Public Power 

Entity; Council as defined in 16 U.S.C. 

3451; or an Instrumentality of a State, 

Tribal, or local government that is 

seeking an EA or REDA grant under this 

subpart. 

Assignment Guarantee Agreement 

(Form RD 4279–6, or successor form). 

The signed agreement among the 

Agency, the lender, and the holder 

containing the terms and conditions of 

an assignment of a guaranteed portion of 

a loan, using the single note system. 

Bioenergy Project. A Renewable 

Energy System that produces fuel, 

thermal energy, or electric power from 

a Renewable Biomass source only. 

Capacity. The maximum output rate 

that an apparatus or heating unit is able 

to attain on a sustained basis as rated by 

the manufacturer. 

Commercially Available. A system 

that meets the requirements of either 

paragraph (1) or (2) of this definition. 

(1) A domestic or foreign system that: 

(i) Has, for at least one year specific 

to the proposed application, both a 


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proven and reliable operating history 

and proven performance data; 

(ii) Is based on established design and 

installation procedures and practices 

and is replicable; 

(iii) Has professional service 

providers, trades, large construction 

equipment providers, and labor who are 

familiar with installation procedures 

and practices; 

(iv) Has proprietary and balance of 

system equipment and spare parts that 

are readily available; 

(v) Has service that is readily 

available to properly maintain and 

operate the system; and 

(vi) Has an existing established 

warranty that is valid in the United 

States for major parts and labor. 

(2) A domestic or foreign Renewable 

Energy System that has been certified by 

a recognized industry organization 

whose certification standards are 

acceptable to the Agency. 

Complete Application. An application 

that contains all parts necessary for the 

Agency to determine Applicant and 

project eligibility, score the application, 

and, where applicable, enable the 

Agency to determine the technical merit 

of the project. 

Conditional Commitment (Form RD 

4279–3, or successor form). The 

Agency’s notice to the lender that the 

loan guarantee it has requested is 

approved subject to the completion of 

all conditions and requirements set 

forth by the Agency and outlined in the 

Conditional Commitment. 

Council. As defined in 16 U.S.C. 3451. 

Departmental Regulations. The 

regulations of the USDA’s Office of 

Chief Financial Officer (or successor 

office) as codified in 2 CFR chapter IV. 

Design/Build Method. A method of 

project development whereby all design, 

engineering, procurement, construction, 

and other related project activities are 

performed under a single contract. The 

contractor is solely responsible and 

accountable for successful delivery of 

the project to the grantee and/or 

borrower as applicable. 

Eligible Project Costs. The Total 

Project Costs that are eligible to be paid 

or guaranteed with REAP funds. 

Energy Assessment. An Agencyapproved report assessing energy use, 

cost, and efficiency by analyzing energy 

bills and surveying the target building 

and/or equipment sufficiently to 

provide an Agency-approved Energy 

Assessment. 

(1) If the project’s Total Project Cost 

is greater than $80,000, the Energy 

Assessment must be conducted by 

either an Energy Auditor or an Energy 

Assessor or an individual supervised by 

either an Energy Assessor or Energy 

Auditor. The final Energy Assessment 

must be validated and signed by the 

Energy Assessor or Energy Auditor who 

conducted the Energy Assessment or by 

the supervising Energy Assessor or 

Energy Auditor of the individual who 

conducted the assessment, as 

applicable. 

(2) If the project’s Total Project Cost 

is $80,000 or less, the Energy 

Assessment may be conducted in 

accordance with paragraph (1) of this 

definition or by an individual or entity 

that has at least 3 years of experience 

and completed at least five energy 

assessments or energy audits on similar 

type projects. 

Energy Assessor. A Qualified 

Consultant who has at least 3 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. A comprehensive 

report that meets an Agency-approved 

standard prepared by an Energy Auditor 

or an individual supervised by an 

Energy Auditor that 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. 

The final Energy Audit must be 

validated and signed off by the Energy 

Auditor who conducted the audit or by 

the supervising Energy Auditor of the 

individual who conducted the audit, as 

applicable. 

Energy Auditor. A Qualified 

Consultant that meets one of the 

following criteria: 

(1) A Certified Energy Auditor 

certified by the Association of Energy 

Engineers; 

(2) A Certified Energy Manager 

certified by the Association of Energy 

Engineers; 

(3) A Licensed Professional Engineer 

in the State in which the audit is 

conducted with at least 1 year 

experience and who has completed at 

least two similar type energy audits; or 

(4) An individual with a 4 year 

engineering or architectural degree with 

at least 3 years of experience and who 

has completed at least five similar type 

energy audits. 

Energy Efficiency Improvement (EEI). 

Improvements to or replacement of an 

existing building and/or equipment that 

reduces energy consumption on an 

annual basis. 

Feasibility Study. An analysis 

conducted by a Qualified Consultant of 

the economic, market, technical, 

financial, and management feasibility of 

a proposed project or business 

operation. 

Federal Fiscal Year. The 12-month 

period beginning October 1 of any given 

year and ending on September 30 of the 

following year. 

Financial Feasibility. The ability of a 

project or business operation to achieve 

sufficient income, credit, and cash flow 

to financially sustain a project over the 

long term. The concept of financial 

feasibility includes assessments of the 

cost-accounting system, the availability 

of short-term credit for seasonal 

businesses operations, and the adequacy 

of raw materials and supplies. 

Geothermal Direct Generation. A 

system that uses thermal energy directly 

from a geothermal source. 

Geothermal Electric Generation. A 

system that uses thermal energy from a 

geothermal source to produce 

electricity. 

Grant Agreement (Form RD 4280–2, 

Rural Business Cooperative Service 

Grant Agreement, or successor form). 

An agreement between the Agency and 

the grantee setting forth the provisions 

under which the grant will be 

administered. 

Hybrid. A combination of two or more 

Renewable Energy technologies that are 

incorporated into a unified system to 

support a single project. 

Hydroelectric Source. A Renewable 

Energy System producing electricity 

using various types of moving water 

including, but not limited to, diverted 

run-of-river water, in-stream run-of-river 

water, and in-conduit water. For the 

purposes of this subpart, only those 

Hydroelectric Sources with a Rated 

Power of 30 megawatts or less are 

eligible. 

Hydrogen Project. A system that 

produces hydrogen from a Renewable 

Energy source or that uses hydrogen 

produced from a Renewable Energy 

source as an energy transport medium 

in the production of mechanical or 

electric power or thermal energy. 

Immediate Family. Individuals who 

are closely related by blood, marriage, or 

adoption, or who live within the same 

household, such as a spouse, domestic 

partner, parent, child, brother, sister, 

aunt, uncle, grandparent, grandchild, 

niece, or nephew. 

Inspector. A Qualified Consultant 

who has at least 3 years of experience 

and completed at least five inspections 

on similar type projects. A project might 

require one or more Inspectors to 

perform the required inspections. 

Institution of Higher Education. As 

defined in 20 U.S.C. 1002(a). 


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Instrumentality. An organization 

recognized, established, and controlled 

by a State, Tribal, or local government, 

for a public purpose or to carry out 

special purposes. 

Interconnection Agreement. A 

contract containing the terms and 

conditions governing the 

interconnection and parallel operation 

of the grantee’s or borrower’s electric 

generation equipment and the utility’s 

electric power system. 

Lender’s Agreement (Form RD 4279– 

4, or Successor Form). Agreement 

between the Agency and the lender 

setting forth the lender’s loan 

responsibilities. 

Loan Note Guarantee (Form RD 4279– 

5, or Successor Form). A guarantee 

issued and executed by the Agency 

containing the terms and conditions of 

the guarantee. 

Matching Funds. Those project funds 

required by the 7 U.S.C. 8107 to receive 

the grant or guaranteed loan under this 

program. Funds provided by the 

applicant in excess of matching funds 

are not matching funds. Unless 

authorized by statute, other Federal 

grant funds cannot be used to meet a 

Matching Funds requirement. 

Ocean Energy. 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. 

Passive Investor. An equity investor 

that does not actively participate in 

management and operation decisions of 

the business entity as evidenced by a 

contractual agreement. 

Power Purchase Agreement. The 

terms and conditions governing the sale 

and transportation of electricity 

produced by the grantee or borrower to 

another party. 

Public Power Entity. Is defined using 

the definition of ‘‘State utility’’ as 

defined in section 217(A)(4) of the 

Federal Power Act (16 U.S.C. 

824q(a)(4)). As of this writing, the 

definition ‘‘means a State or any 

political subdivision of a State, or any 

agency, authority, or Instrumentality of 

any one or more of the foregoing, or a 

corporation that is wholly owned, 

directly or indirectly, by any one or 

more of the foregoing, competent to 

carry on the business of developing, 

transmitting, utilizing, or distributing 

power.’’ 

Qualified Consultant. An 

independent third-party individual or 

entity possessing the knowledge, 

expertise, and experience to perform the 

specific task required. 

Rated Power. The maximum amount 

of energy that can be created at any 

given time. 

Refurbished. Refers to a piece of 

equipment or Renewable Energy System 

that has been brought into a commercial 

facility, thoroughly inspected, and worn 

parts replaced and has a warranty that 

is approved by the Agency or its 

designee. 

Renewable Biomass. (1) Materials, 

pre-commercial thinnings, or invasive 

species from National Forest System 

land or public lands (as defined in 

section 103 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 oldgrowth maintenance, restoration, and 

management direction of paragraphs 

(e)(2), (e)(3), and (e)(4) and large-tree 

retention of subsection (f) of section 102 

of the Healthy Forests Restoration Act of 

2003 (16 U.S.C. 6512); 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: 

(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, yard waste, 

and other biodegradable waste. (Waste 

material does not include unsegregated 

solid waste.) 

Renewable Energy. 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 wind, solar, 

ocean (including tidal, wave, current, 

and thermal), geothermal or 

Hydroelectric Sources. 

Renewable Energy Development 

Assistance (REDA). Assistance provided 

by eligible grantees to Agricultural 

Producers and Rural Small Businesses 

to become more energy efficient and to 

use Renewable Energy technologies and 

resources. The Renewable Energy 

Development Assistance may consist of 

Renewable Energy Site Assessment and/ 

or Renewable Energy Technical 

Assistance. 

Renewable Energy Site Assessment. A 

report provided to an Agricultural 

Producer or Rural Small Business 

providing information regarding and 

recommendations for the use of 

Commercially Available Renewable 

Energy technologies in its operation. 

The report must be prepared by a 

Qualified Consultant and must contain 

the information specified in Sections A 

through C of Appendix B. 

Renewable Energy System (RES). 

Meets the requirements of paragraph (1) 

and (2) of this definition: 

(1) A system that: 

(i) Produces usable energy from a 

Renewable Energy source; and 

(ii) May include distribution 

components necessary to move energy 

produced by such system to initial point 

of sale. 

(2) A system described in paragraph 

(1) of this definition may not include a 

mechanism for dispensing energy at 

retail. 

Renewable Energy Technical 

Assistance. Assistance provided to 

Agricultural Producers and Rural Small 

Businesses on how to use Renewable 

Energy technologies and resources in 

their operations. 

Retrofitting. A modification that 

incorporates a feature or features not 

included in the original design or for the 

replacement of existing components 

with ones that improve the original 

design and does not impact original 

warranty if the warranty is still in 

existence. 

Rural or Rural Area. Any area of a 

State not in a city or town that has a 

population of more than 50,000 

inhabitants, according to the latest 

decennial census of the United States, 

or in the urbanized area contiguous and 

adjacent to a city or town that has a 

population of more than 50,000 

inhabitants, and any area that has been 

determined to be ‘‘rural in character’’ by 

the Under Secretary for Rural 

Development, or as otherwise identified 

in this definition. 

(1) An area that is attached to the 

urbanized area of a city or town with 

more than 50,000 inhabitants by a 

contiguous area of urbanized census 

blocks that is not more than two census 

blocks wide. Applicants from such an 

area should work with their Rural 

Development State Office to request a 

determination of whether their project is 


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located in a Rural Area under this 

provision. 

(2) For the purposes of this definition, 

cities and towns are incorporated 

population centers with definite 

boundaries, local self-government, and 

legal powers set forth in a charter 

granted by the State. 

(3) For the Commonwealth of Puerto 

Rico, the island is considered Rural and 

eligible except for the San Juan Census 

Designated Place (CDP) and any other 

CDP with greater than 50,000 

inhabitants. CDPs with greater than 

50,000 inhabitants, other than the San 

Juan CDP, may be determined to be 

eligible if they are ‘‘not urban in 

character.’’ 

(4) For the State of Hawaii, all areas 

within the State are considered Rural 

and eligible except for the Honolulu 

CDP within the County of Honolulu. 

(5) For the purpose of defining a Rural 

Area in the Republic of Palau, the 

Federated States of Micronesia, and the 

Republic of the Marshall Islands, the 

Agency shall determine what 

constitutes Rural and Rural Area based 

on available population data. 

(6) The determination that an area is 

‘‘rural in character’’ will be made by the 

Under Secretary of Rural Development. 

The process to request a determination 

under this provision is outlined in 

paragraph (6)(ii) of this definition. 

(i) The determination that an area is 

‘‘rural in character’’ under this 

definition will apply to areas that are 

within: 

(A) An urbanized area that has two 

points on its boundary that are at least 

40 miles apart, which is not contiguous 

or adjacent to a city or town that has a 

population of greater than 150,000 

inhabitants or the urbanized area of 

such a city or town; or 

(B) An urbanized area contiguous and 

adjacent to a city or town of greater than 

50,000 inhabitants that is within 1/4 

mile of a Rural Area. 

(ii) Units of local government may 

petition the Under Secretary of Rural 

Development for a ‘‘rural in character’’ 

designation by submitting a petition to 

both the appropriate Rural Development 

State Director and the Administrator on 

behalf of the Under Secretary. The 

petition shall document how the area 

meets the requirements of paragraph 

(6)(i)(A) or (B) of this definition and 

discuss why the petitioner believes the 

area is ‘‘rural in character,’’ including, 

but not limited to, the area’s population 

density, demographics, and topography 

and how the local economy is tied to a 

rural economic base. Upon receiving a 

petition, the Under Secretary will 

consult with the applicable Governor or 

leader in a similar position and request 

comments to be submitted within 5 

business days, unless such comments 

were submitted with the petition. The 

Under Secretary will release to the 

public a notice of a petition filed by a 

unit of local government not later than 

30 days after receipt of the petition by 

way of publication in a local newspaper 

and posting on the Agency’s Web site, 

and the Under Secretary will make a 

determination not less than 15 days, but 

no more than 60 days, after the release 

of the notice. Upon a negative 

determination, the Under Secretary will 

provide to the petitioner an opportunity 

to appeal a determination to the Under 

Secretary, and the petitioner will have 

10 business days to appeal the 

determination and provide further 

information for consideration. 

Rural Small Business. A Small 

Business that is located in a Rural Area 

or that can demonstrate the proposed 

project for which assistance is being 

applied for under this subpart is located 

in a Rural Area. 

Simple Payback. The estimated 

Simple Payback of a project funded 

under this subpart as calculated using 

paragraph (1) or (2) as applicable, of this 

definition. 

(1) For projects that generate energy 

for use offsite, Simple Payback is 

calculated as follows: 

(i) Simple Payback = (Eligible Project 

Costs)/(typical year) earnings before 

interest, taxes, depreciation, and 

amortization (EBITDA) for the project 

only. 

(ii) EBITDA will be based on: 

(A) All energy-related revenue 

streams and all revenue from 

byproducts produced by the energy 

system for a typical year including the 

fair market value of byproducts 

produced by and used in the project or 

related enterprises. 

(B) Income remaining after all project 

obligations are paid (operating and 

maintenance). 

(C) The Agency’s review and 

acceptance of the project’s typical year 

income (which is after the project is 

operating and stabilized) projections at 

the time of application submittal. 

(D) Does not include any tax credits, 

carbon credits, renewable energy 

credits, and construction and 

investment-related benefits. 

(2) For projects that reduce or replace 

onsite energy use (e.g., EEI projects that 

reduce and RES projects that replace 

onsite energy use), Simple Payback is 

calculated as follows: 

(i) Simple Payback = (Eligible Project 

Costs)/Dollar Value of Energy reduced 

or replaced) 

(ii) Dollar Value of Energy reduced or 

replaced incorporates the following: 

(A) Energy reduced or replaced will 

be calculated on the quantity of energy 

saved or replaced as determined by 

subtracting the result obtained under 

paragraph (2)(ii)(A)(2) from the result 

obtained under paragraph (2)(ii)(A)(1) of 

this definition, and converting to a 

monetary value using a constant value 

or price of energy (as determined under 

paragraph (2)(ii)(A)(3) of this 

definition). 

(1) Actual energy used in the original 

building and/or equipment, as 

applicable, prior to the RES or 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. 

(2) Projected energy use if the 

proposed RES or EEI project had been 

in place for the original building and/or 

equipment, as applicable, for the same 

time period used to determine that 

actual energy use under paragraph 

(2)(ii)(A)(1) of this definition. 

(3) Value or price of energy must be 

the actual average price paid over the 

same time period used to calculate the 

actual energy used under paragraph 

(2)(ii)(A)(1) of this definition. RES 

projects that will replace 100 percent of 

an Applicant’s energy use will be 

required to use the actual average price 

paid for the energy replaced and the 

projected revenue received from energy 

sold in a typical year. 

(B) Does not allow Energy Efficiency 

Improvements to monetize benefits 

other than the dollar amount of the 

energy savings the Agricultural 

Producer or Rural Small Business 

realizes as a result of the improvement. 

(C) Does not include any tax credits, 

carbon credits, renewable energy 

credits, and construction and 

investment-related benefits. 

Small Business. An entity or utility, as 

applicable, described below that meets 

Small Business Administration’s (SBA) 

definition of Small Business as found in 

13 CFR part 121.301(a) or (b). With the 

exception of the entities identified in 

this paragraph, all other non-profit 

entities are ineligible. 

(1) A private for-profit entity, 

including a sole proprietorship, 

partnership, and corporation; 

(2) A cooperative (including a 

cooperative qualified under section 

501(c)(12) of the Internal Revenue 

Code); 

(3) An electric utility (including a 

Tribal or governmental electric utility) 

that provides service to rural consumers 

and must operate independent of direct 

government control; and 

(4) Tribal corporations or other Tribal 

business entities (as described in 


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paragraph (4)(i) and (ii) of this 

definition). The Agency shall determine 

the Small Business status of such Tribal 

entity without regard to the resources of 

the Tribal government. 

(i) Chartered under Section 17 of the 

Indian Reorganization Act (25 U.S.C. 

477), or 

(ii) Other Tribal business entities that 

have similar structures and 

relationships with their Tribal 

governments as determined by the 

Agency. 

State. Any of the 50 States of the 

United States, the Commonwealth of 

Puerto Rico, 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. 

Total Project Costs. The sum of all 

costs associated with a completed 

project. 

Used Equipment. Any equipment that 

has been used in any previous 

application and is provided in an ‘‘as 

is’’ condition. 

§ 4280.104 Exception authority. 

The Administrator may, with the 

concurrence of the Secretary of 

Agriculture, make an exception, on a 

case-by-case basis, to any requirement 

or provision of this subpart that is not 

inconsistent with any authorizing 

statute or applicable law, if the 

Administrator determines that 

application of the requirement or 

provision would adversely affect the 

Federal Government’s financial interest. 

§ 4280.105 Review or appeal rights. 

An Applicant, lender, holder, 

borrower, or grantee may seek a review 

of an Agency decision or appeal to the 

National Appeals Division in 

accordance with 7 CFR part 11. 

(a) Guaranteed Loan. In cases where 

the Agency has denied or reduced the 

amount of final loss payment to the 

lender, the adverse decision may be 

appealed by the lender only. An adverse 

decision that only impacts the holder 

may be appealed by the holder only. A 

decision by a lender adverse to the 

interest of the borrower is not a decision 

by the Agency, whether or not 

concurred in by the Agency. 

(b) Combined guaranteed loan and 

grant. For an adverse decision involving 

a combination guaranteed loan and 

grant funding request, only the party 

that is adversely affected may request 

the review or appeal. 

§ 4280.106 Conflict of interest. 

(a) General. No conflict of interest or 

appearance of conflict of interest will be 

allowed. For purposes of this subpart, 

conflict of interest includes, but is not 

limited to, distribution or payment of 

grant, guaranteed loan funds, and 

Matching Funds or award of project 

construction contracts to an individual 

owner, partner, or stockholder, or to a 

beneficiary or Immediate Family of the 

Applicant or borrower when the 

recipient will retain any portion of 

ownership in the Applicant’s or 

borrower’s project. Grant and Matching 

Funds may not be used to support costs 

for services or goods going to, or coming 

from, a person or entity with a real or 

apparent conflict of interest. 

(b) Assistance to employees, relatives, 

and associates. The Agency will process 

any requests for assistance under this 

subpart in accordance with 7 CFR part 

1900, subpart D. 

(c) Member/delegate clause. No 

member of or delegate to Congress shall 

receive any share or part of this grant or 

any benefit that may arise there from; 

but this provision shall not be construed 

to bar, as a contractor under the grant, 

a publicly held corporation whose 

ownership might include a member of 

Congress. 

§ 4280.107 Statute and regulation 

references. 

All references to statutes and 

regulations are to include any and all 

successor statutes and regulations. 

§ 4280.108 U.S. Department of Agriculture 

Departmental Regulations and laws that 

contain other compliance requirements. 

(a) Departmental Regulations. All 

projects funded under this subpart are 

subject to the provisions of the 

Departmental Regulations, as 

applicable, which are incorporated by 

reference herein. 

(b) Equal opportunity and 

nondiscrimination. The Agency will 

ensure that equal opportunity and 

nondiscrimination requirements are met 

in accordance with the Equal Credit 

Opportunity Act, 15 U.S.C. 1691 et seq. 

and 7 CFR part 15d, Nondiscrimination 

in Programs and Activities Conducted 

by the United States Department of 

Agriculture. The Agency will not 

discriminate against Applicants on the 

basis of race, color, religion, national 

origin, sex, marital status, or age 

(provided that the Applicant has the 

capacity to contract); because all or part 

of the Applicant’s income derives from 

any public assistance program; or 

because the Applicant has in good faith 

exercised any right under the Consumer 

Credit Protection Act, 15 U.S.C. 1601 et 

seq. 

(c) Civil rights compliance. Recipients 

of grants must comply with the 

Americans with Disabilities Act of 1990, 

42 U.S.C. 12101 et seq., Title VI of the 

Civil Rights Act of 1964, 42 U.S.C. 

2000d et seq., and Section 504 of the 

Rehabilitation Act of 1973, 29 U.S.C. 

794. This includes collection and 

maintenance of data on the race, sex, 

and national origin of the recipient’s 

membership/ownership and employees. 

These data must be available to conduct 

compliance reviews in accordance with 

7 CFR 1901.204. 

(1) Initial compliance reviews will be 

conducted by the Agency prior to funds 

being obligated. 

(2) Grants will require one subsequent 

compliance review following project 

completion. This will occur after the 

last disbursement of grant funds has 

been made. 

(d) Environmental analysis. 7 CFR 

part 1940, subpart G outlines 

environmental procedures and 

requirements for this subpart. 

Prospective Applicants are advised to 

contact the Agency to determine 

environmental requirements as soon as 

practicable after they decide to pursue 

any form of financial assistance directly 

or indirectly available through the 

Agency. 

(1) Any required environmental 

review must be completed by the 

Agency prior to the Agency obligating 

any funds. 

(2) The Applicant will be notified of 

all specific compliance requirements, 

including, but not limited to, the 

publication of public notices, and 

consultation with State Historic 

Preservation Offices and the U.S. Fish 

and Wildlife Service. 

(3) A site visit by the Agency may be 

scheduled, if necessary, to determine 

the scope of the review. 

(e) Discrimination complaints—(1) 

Who may file. Persons or a specific class 

of persons believing they have been 

subjected to discrimination prohibited 

by this section may file a complaint 

personally, or by an authorized 

representative with USDA, Director, 

Office of Adjudication, 1400 

Independence Avenue SW., 

Washington, DC 20250. 

(2) Time for filing. A complaint must 

be filed no later than 180 days from the 

date of the alleged discrimination, 

unless the time for filing is extended by 

the designated officials of USDA or 

Rural Development. 

§ 4280.109 Ineligible Applicants, 

borrowers, and owners. 

Applicants, borrowers, and owners 

will be ineligible to receive funds under 

this subpart as discussed in paragraphs 

(a) and (b) of this section. 


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(a) If an Applicant, borrower, or 

owner has an outstanding judgment 

obtained by the U.S. in a Federal Court 

(other than in the United States Tax 

Court), is delinquent in the payment of 

Federal income taxes, or is delinquent 

on a Federal debt, the Applicant, 

borrower, or owner is not eligible to 

receive a grant or guaranteed loan until 

the judgment is paid in full or otherwise 

satisfied or the delinquency is resolved. 

(b) If an Applicant, borrower, or 

owner is debarred from receiving 

Federal assistance, the Applicant, 

borrower, or owner is not eligible to 

receive a grant or guaranteed loan under 

this subpart. 

§ 4280.110 General Applicant, application, 

and funding provisions. 

(a) Satisfactory progress. An 

Applicant that has received one or more 

grants and/or guaranteed loans under 

this program must make satisfactory 

progress, as determined by the Agency, 

toward completion of any previously 

funded projects before the Applicant 

will be considered for subsequent 

funding. 

(b) Application submittal. 

Applications must be submitted in 

accordance with the provisions of this 

subpart unless otherwise specified in a 

Federal Register notice. Grant 

applications, guaranteed loan-only 

applications, and combined guaranteed 

loan and grant applications for financial 

assistance under this subpart may be 

submitted at any time. 

(1) Grant applications. Complete grant 

applications will be accepted on a 

continuous basis, with awards made 

based on the application’s score and 

subject to available funding. 

(2) Guaranteed loan-only 

applications. Complete guaranteed loanonly applications will be accepted on a 

continuous basis, with awards made 

based on the application’s score and 

subject to available funding. Each 

application that is ready for funding and 

that scores at or above the minimum 

score will be competed on a periodic 

basis, with higher scoring applications 

receiving priority. Each application 

ready for funding that receives a score 

below the minimum score will be 

competed in a National Office 

competition at the end of the fiscal year 

in which the application was ready to 

be competed. 

(3) Combined guaranteed loan and 

grant applications. Applications 

requesting a RES or EEI grant and a 

guaranteed loan under this subpart will 

be accepted on a continuous basis, with 

awards made based on the grant 

application’s score and subject to 

available funding. 

(c) Limit on number of applications. 

An Applicant can apply for only one 

RES project and one EEI project under 

this subpart per Federal Fiscal Year. 

(d) Limit on type of funding requests. 

An Applicant can submit only one type 

of funding request (grant-only, 

guaranteed loan-only, or combined 

funding) for each project under this 

subpart per Federal Fiscal Year. 

(e) Application modification. Once 

submitted and prior to Agency award, if 

an Applicant modifies its application, 

the application will be treated as a new 

application. The submission date of 

record for such modified applications 

will be the date the Agency receives the 

modified application, and the 

application will be processed by the 

Agency as a new application under this 

subpart. 

(f) Incomplete applications. 

Applicants must submit Complete 

Applications in order to be considered 

for funding. If an application is 

incomplete, the Agency will identify 

those parts of the application that are 

incomplete and return it, with a written 

explanation, to the Applicant for 

possible future resubmission. Upon 

receipt of a Complete Application by the 

appropriate Agency office, the Agency 

will complete its evaluation and will 

compete the application in accordance 

with the procedures specified in 

§§ 4280.121, 4280.179, or 4280.193 as 

applicable. 

(g) Application withdrawal. During 

the period between the submission of an 

application and the execution of loan 

and/or grant award documents for an 

application selected for funding, 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 rescinded 

and/or the application withdrawn. 

(h) Technical report. Each technical 

report submitted under this subpart, as 

specified in §§ 4280.117(e), 

4280.118(b)(4), and 4280.119(b)(3) and 

4280.119(b)(4) must comply with the 

provisions specified in paragraphs (h)(1) 

through (3), as applicable, of this 

section. 

(1) Technical report format and 

detail. The information in the technical 

report must follow the format specified 

in § 4280.119(b)(3), § 4280.119(b)(4), 

and Appendices A through C of this 

subpart, as applicable. Supporting 

information may be submitted in other 

formats. Design drawings and process 

flowcharts are encouraged as exhibits. 

In addition, information must be 

provided, in sufficient detail, to: 

(i) Allow the Agency to determine the 

technical merit of the Applicant’s 

project under § 4280.116; 

(ii) Allow the calculation of Simple 

Payback as defined in § 4280.103; and 

(iii) Demonstrate that the RES or EEI 

will operate or perform over the 

project’s useful life in a reliable, safe, 

and a cost-effective manner. Such 

demonstration shall address project 

design, installation, operation, and 

maintenance. 

(2) Technical report modifications. If 

a technical report is prepared prior to 

the Applicant’s selection of a final 

design, equipment vendor, or 

contractor, or other significant decision, 

it may be modified and resubmitted to 

the Agency, provided that the overall 

scope of the project is not materially 

changed as determined by the Agency. 

Changes in the technical report may 

require an updated Form RD 1940–20, 

‘‘Request for Environmental 

Information.’’ 

(3) Hybrid projects. If the application 

is for a Hybrid project, technical reports 

must be prepared for each technology 

that comprises the Hybrid project. 

(i) Time limit on use of grant funds. 

Except as provided in paragraph (i)(1) of 

this section, grant funds not expended 

within 2 years from the date the Grant 

Agreement was signed by the Agency 

will be returned to the Agency. 

(1) Time extensions. The Agency may 

extend the 2-year time limit if the 

Agency determines, at its sole 

discretion, that the grantee is unable to 

complete the project for reasons beyond 

the grantee’s control. Grantees must 

submit a request for the no-cost 

extension no later than 30 days before 

the expiration date of the Grant 

Agreement. This request must describe 

the extenuating circumstances that were 

beyond their control to complete the 

project for which the grant was 

awarded, and why an approval is in the 

government’s best interest. 

(2) Return of funds to the agency. 

Funds remaining after grant closeout 

that exceed the amount the grantee is 

entitled to receive under the Grant 

Agreement will be returned to the 

Agency. 

§ 4280.111 Notifications. 

(a) Eligibility. If an Applicant and/or 

their application are determined by the 

Agency to be eligible for participation, 

the Agency will notify the Applicant or 

lender, as applicable, in writing. 

(b) Ineligibility. If an Applicant and/ 

or their application are determined to be 

ineligible at any time, the Agency will 

inform the Applicant or lender, as 

applicable, in writing of the decision, 

reasons therefore, and any appeal rights. 


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No further processing of the application 

will occur. 

(c) Funding determinations. Each 

Applicant and/or lender, as applicable, 

will be notified of the Agency’s decision 

on their application. If the Agency’s 

decision is not to fund an application, 

the Agency will include in the 

notification any applicable appeal or 

review rights. 

Renewable Energy System and Energy 

Efficiency Improvement Grants 

§ 4280.112 Applicant eligibility. 

To receive a RES or EEI grant under 

this subpart, an Applicant must meet 

the requirements specified in 

paragraphs (a) through (e) of this 

section. If an award is made to an 

Applicant, that Applicant (grantee) must 

continue to meet the requirements 

specified in this section. If the grantee 

does not, then grant funds may be 

recovered from the grantee by the 

Agency in accordance with 

Departmental Regulations. 

(a) Type of Applicant. The Applicant 

must be an Agricultural Producer or 

Rural Small Business. 

(b) Ownership and control. The 

Applicant must: 

(1) Own or be the prospective owner 

of the project; and 

(2) Own or control the site for the 

project described in the application at 

the time of application and, if an award 

is made, for the useful life of the project 

as described in the Grant Agreement. 

(c) Revenues and expenses. 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 its operation and 

maintenance, for which the assistance is 

sought. Notwithstanding the provisions 

of this paragraph, the Applicant may 

employ a Qualified Consultant under 

contract to manage revenues and 

expenses of the project and its operation 

and/or maintenance. 

(d) Legal authority and responsibility. 

Each Applicant must have the legal 

authority necessary to apply for and 

carry out the purpose of the grant. 

(e) Universal identifier and System for 

Awards Management (SAM). Unless 

exempt under 2 CFR 25.110, the 

Applicant must: 

(1) Be registered in the SAM prior to 

submitting an application; 

(2) Maintain an active SAM 

registration with current information at 

all times during which it has an active 

Federal award or an application under 

consideration by the Agency; and 

(3) Provide its Dun and Bradstreet 

Data Universal Numbering System 

(DUNS) number in each application it 

submits to the Agency. Generally, the 

DUNS number is included on Standard 

Form–424, ‘‘Application for Federal 

Assistance’’. 

§ 4280.113 Project eligibility. 

For a project to be eligible to receive 

a RES or EEI grant under this subpart, 

the proposed project must meet each of 

the requirements specified in 

paragraphs (a) through (f) of this section. 

(a) Be for: 

(1) The purchase of a new RES; 

(2) The purchase of a Refurbished 

RES; 

(3) The Retrofitting of an existing RES; 

or 

(4) Making EEI that will use less 

energy on an annual basis than the 

original building and/or equipment that 

it will improve or replace as 

demonstrated in an Energy Assessment 

or Energy Audit as applicable. 

(i) Types of improvements. Eligible 

EEI include, but are not limited to: 

(A) Efficiency improvements to 

existing RES and 

(B) Construction of a new energy 

efficient building only when the 

building is used for the same purpose as 

the existing building, and, based on an 

Energy Assessment or Energy Audit, as 

applicable, it will be more cost effective 

to construct a new building and will use 

less energy on annual basis than 

improving the existing building. 

(ii) Subsequent Energy Efficiency 

Improvements. A proposed EEI that 

replaces or duplicates an EEI previously 

funded under this subpart may or may 

not be eligible for funding. 

(A) If the proposed EEI would replace 

or duplicate the same EEI that had 

previously received funds under this 

subpart prior to the end of the useful 

life, as specified in the Grant 

Agreement, of that same EEI, then the 

proposed improvement, even if it is 

more energy efficient than the 

previously funded improvement, is 

ineligible. Example: An Applicant 

received a REAP grant to replace an 

exhaust fan (exhaust fan A) in a barn 

with a more energy efficient exhaust fan 

(exhaust fan B) with an expected useful 

life of 15 years, as specified in the Grant 

Agreement. If the Applicant decides to 

replace exhaust fan B after 8 years (i.e., 

before it has reached the end of its 

useful life as specified it the Grant 

Agreement), an application for exhaust 

fan C to replace exhaust fan B would be 

ineligible for funding under this subpart 

even if exhaust fan C is more energy 

efficient than exhaust fan B. 

(B) If the proposed EEI would replace 

or duplicate the same EEI that had 

previously received funds under this 

subpart at or after the end of the useful 

life, as specified in the Grant 

Agreement, of that same EEI, then the 

proposed improvement is eligible for 

funding under this subpart provided it 

is more energy efficient than the 

previously funded improvement. If the 

proposed EEI is not more energy 

efficient than the previously funded 

improvement, then it is not eligible for 

funding under this subpart. 

(b) Be for a Commercially Available 

technology; 

(c) Have technical merit, as 

determined using the procedures 

specified in § 4280.116; and 

(d) Be located in a Rural Area in a 

State if the type of Applicant is a Rural 

Small Business, or in a Rural or nonRural Area in a State if the type of 

Applicant is an Agricultural Producer. If 

the Agricultural Producer’s operation is 

in a non-Rural Area, then the 

application can only be for RES or EEI 

on components that are directly related 

to and their use and purpose is limited 

to the agricultural production operation, 

such as vertically integrated operations, 

and are part of and co-located with the 

agricultural production operation. 

(e) For an RES project in which a 

residence is closely associated with and 

shares an energy metering device with 

a Rural Small Business, where the 

residence is located at the place of 

business, or agricultural operation, the 

application is eligible if the applicant 

can document that one of the options 

specified in paragraphs (e)(1) through 

(3) of this section is met: 

(1) Installation of a second meter (or 

similar device) that results in all of the 

energy generated by the RES being used 

for non-residential energy usage; 

(2) Certification is provided in the 

application that any excess power 

generated by the RES will be sold to the 

grid and will not be used by the 

Applicant for residential purposes; or 

(3) Demonstration that 51 percent or 

greater of the energy to be generated will 

benefit the Rural Small Business or 

agricultural operation. The Applicant 

must provide documentation that 

includes, but is not limited to, the 

following: 

(i) A Renewable Energy Site 

Assessment; or 

(ii) The amount of energy that is used 

by the residence and the amount that is 

used by the Rural Small Business or 

agricultural operation. Provide 

documentation, calculations, etc. to 

support the breakout of energy amounts. 


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The Agency may request additional data 

to determine residential versus business 

operation usage; and 

(iii) The actual percentage of energy 

determined to benefit the Rural Small 

Business or agricultural operation will 

be the basis to determine eligible project 

costs. 

(f) The Applicant is cautioned against 

taking any actions or incurring any 

obligations prior to the Agency 

completing the environmental review 

that would either limit the range of 

alternatives to be considered or that 

would have an adverse effect on the 

environment, such as the initiation of 

construction. If the Applicant takes any 

such actions or incurs any such 

obligations, it could result in project 

ineligibility. 

§ 4280.114 RES and EEI grant funding. 

(a) Grant amounts. The amount of 

grant funds that will be made available 

to an eligible RES or EEI project under 

this subpart will not exceed 25 percent 

of Eligible Project Costs. Eligible Project 

Costs are specified in paragraph (c) of 

this section. 

(1) Minimum request. Unless 

otherwise specified in a Federal 

Register notice, the minimum request 

for a RES grant application is $2,500 

and the minimum request for an EEI 

grant application is $1,500. 

(2) Maximum request. Unless 

otherwise specified in a Federal 

Register notice, the maximum request 

for a RES grant application is $500,000 

and the maximum request for an EEI 

grant application is $250,000. 

(3) Maximum grant assistance. Unless 

otherwise specified in a Federal 

Register notice, the maximum amount 

of grant assistance to one individual or 

entity under this subpart will not 

exceed $750,000 per Federal Fiscal 

Year. 

(b) Matching funds and other funds. 

The Applicant is responsible for 

securing the remainder of the Total 

Project Costs not covered by grant 

funds. 

(1) Without specific statutory 

authority, other Federal grant funds 

cannot be used to meet the Matching 

Funds requirement. A copy of the 

statutory authority must be provided to 

the Agency to verify if the other Federal 

grant funds can be used to meet the 

Matching Funds requirement under this 

subpart. 

(2) Passive third-party equity 

contributions are acceptable for RES 

projects, including equity raised from 

the sale of Federal tax credits. 

(c) Eligible Project Costs. Eligible 

Project Costs are only those costs 

incurred after a Complete Application 

has been received by the Agency and are 

associated with the items identified in 

paragraphs (c)(1) through (6) of this 

section. Each item identified in 

paragraphs (c)(1) through (6) of this 

section is only an Eligible Project Cost 

if it is directly related to and its use and 

purpose is limited to the RES or EEI. 

(1) Purchase and installation of new 

or Refurbished equipment. 

(2) Construction, Retrofitting, 

replacement, and improvements. 

(3) EEI identified in the applicable 

Energy Assessment or Energy Audit. 

(4) Fees for construction permits and 

licenses. 

(5) Professional service fees for 

Qualified Consultants, contractors, 

installers, and other third-party services. 

(6) For an eligible RES in which a 

residence is closely associated with the 

Rural Small Business or agricultural 

operation the installation of a second 

meter to separate the residence from the 

portion of the project that benefits the 

Rural Small Business or agricultural 

operation, as applicable. 

(d) Ineligible project costs. Ineligible 

project costs for RES and EEI projects 

include, but are not limited to: 

(1) Agricultural tillage equipment, 

Used Equipment, and vehicles; 

(2) Residential RES or EEI projects; 

(3) Construction or equipment costs 

that would be incurred regardless of the 

installation of a RES or EEI shall not be 

included as an Eligible Project Costs. 

For example, the foundation for a 

building where a RES is being installed, 

storage only grains bins connected to 

drying systems, and the roofing of a 

building where solar panels are being 

attached; 

(4) Business operations that derive 

more than 10 percent of annual gross 

revenue (including any lease income 

from space or machines) from gambling 

activity, excluding State or Tribalauthorized lottery proceeds, as 

approved by the Agency, conducted for 

the purpose of raising funds for the 

approved project; 

(5) Business operations deriving 

income from activities of a sexual nature 

or illegal activities; 

(6) Lease payments; 

(7) Any project that creates a conflict 

of interest or an appearance of a conflict 

of interest as provided in § 4280.106; 

(8) Funding of political or lobbying 

activities; and 

(9) To pay off any Federal direct or 

guaranteed loans or other Federal debts. 

(e) Award amount considerations. In 

determining the amount of a RES or EEI 

grant awarded, the Agency will take into 

consideration the following six criteria: 

(1) The type of RES to be purchased; 

(2) The estimated quantity of energy 

to be generated by the RES; 

(3) The expected environmental 

benefits of the RES; 

(4) The quantity of energy savings 

expected to be derived from the activity, 

as demonstrated by an Energy Audit; 

(5) The estimated period of time for 

the energy savings generated by the 

activity to equal the cost of the activity; 

and 

(6) The expected energy efficiency of 

the RES. 

§ 4280.115 Grant applications—general. 

(a) General. Separate applications 

must be submitted for RES and EEI 

projects. An original of each application 

is required. 

(b) Application content. Applications 

for RES projects or EEI projects must 

contain the information specified in 

§ 4280.117 unless the requirements of 

either § 4280.118(a) or § 4280.119(a) are 

met. If the requirements of § 4280.118(a) 

are met, the application may contain the 

information specified in § 4280.118(b). 

If the requirements of § 4280.119(a) are 

met, the application may contain the 

information specified in § 4280.119(b). 

(c) Evaluation of applications. The 

Agency will evaluate each RES and EEI 

grant application and make a 

determination as to whether: 

(1) The application is complete, as 

defined in § 4280.103; 

(2) The Applicant is eligible according 

to § 4280.112; 

(3) The project is eligible according to 

§ 4280.113; and 

(4) The proposed project has technical 

merit as determined under § 4280.116. 

§ 4280.116 Determination of technical 

merit. 

The Agency will determine the 

technical merit of all proposed projects 

for which Complete Applications are 

submitted under §§ 4280.117, 4280.118, 

and 4280.119 under this subpart using 

the procedures specified in this section. 

Only projects that have been determined 

by the Agency to have technical merit 

are eligible for funding under this 

subpart. 

(a) General. The Agency will use the 

information provided in the Applicant’s 

technical report to determine whether or 

not the project has technical merit. In 

making this determination, the Agency 

may engage the services of other 

Government agencies or other 

recognized industry experts in the 

applicable technology field, at its 

discretion, to evaluate and rate the 

technical report. For guaranteed loanonly applications that are purchasing an 

existing RES, the technical report 

requirements can be provided in the 

technical feasibility section of the 

Feasibility Study, instead of completing 

separate technical report. 


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(b) Technical report areas. The areas 

that the Agency will evaluate in the 

technical reports when making the 

technical merit determination are 

specified in paragraphs (b)(1) through 

(5) of this section. 

(1) EEI whose total project costs are 

$80,000 or less. The following areas will 

be evaluated in making the technical 

merit determination: 

(i) Project description; 

(ii) Qualifications of EEI provider(s); 

and 

(iii) Energy Assessment (or EA if 

applicable). 

(2) RES whose total project costs are 

$80,000 or less. The following areas will 

be evaluated in making the technical 

merit determination: 

(i) Project description; 

(ii) Resource assessment; 

(iii) Project economic assessment; and 

(iv) Qualifications of key service 

providers. 

(3) EEI whose total project costs are 

greater than $80,000. The following 

areas will be evaluated in making the 

technical merit determination: 

(i) Project information; 

(ii) Energy Assessment or EA as 

applicable; and 

(iii) Qualifications of the contractor or 

installers. 

(4) RES whose total project costs are 

less than $200,000, but more than 

$80,000. The following areas will be 

evaluated in making the technical merit 

determination: 

(i) Project description; 

(ii) Resource assessment; 

(iii) Project economic assessment; 

(iv) Project construction and 

equipment; and 

(v) Qualifications of key service 

providers. 

(5) RES whose total project costs are 

$200,000 and greater. The following 

areas will be evaluated in making the 

technical merit determination: 

(i) Qualifications of the project team; 

(ii) Agreements and permits; 

(iii) Resource assessment; 

(iv) Design and engineering; 

(v) Project development; 

(vi) Equipment procurement and 

installation; and 

(vii) Operations and maintenance. 

(c) Pass/fail assignments. The Agency 

will assign each area of the technical 

report, as specified in paragraph (b) of 

this section, a ‘‘pass’’ or ‘‘fail.’’ An area 

will receive a ‘‘pass’’ if the information 

provided for the area has no weaknesses 

and meets or exceeds any requirements 

specified for the area. Otherwise, the 

area will receive a fail. 

(d) Determination. The Agency will 

compile the results for each area of the 

technical report to determine how to 

further process an application. 

(1) A project whose technical report 

receives a ‘‘pass’’ in each of the 

applicable technical report areas will be 

considered to have ‘‘technical merit’’ 

and is eligible for further consideration 

for funding. 

(2) A project whose technical report 

receives a ‘‘fail’’ in any one technical 

report area will be considered to be 

without technical merit and is not be 

eligible for funding. 

§ 4280.117 Grant Applications for RES and 

EEI projects with total project costs of 

$200,000 and greater. 

Grant applications for RES and EEI 

projects with Total Project Costs of 

$200,000 and Greater must provide the 

information specified in this section. 

This information must be presented in 

the order shown in paragraphs (a) 

through (f), as applicable, of this 

section. Each Applicant is encouraged, 

but is not required, to self-score the 

project using the evaluation criteria in 

§ 4280.120 and to submit with their 

application the total score, including 

appropriate calculations and attached 

documentation or specific crossreferences to information elsewhere in 

the application. 

(a) Forms and certifications. Each 

application must contain the forms and 

certifications specified in paragraphs 

(a)(1) through (9), as applicable, of this 

section, except that paragraph (a)(4). 

(1) Form SF–424. 

(2) Form SF–424C, ‘‘Budget 

Information-Construction Programs.’’ 

(3) Form SF–424D, ‘‘AssurancesConstruction Programs.’’ 

(4) Identify the ethnicity, race, and 

gender of the applicant. This 

information is optional and is not 

required for a Complete Application. 

(5) Form RD 1940–20 with 

documentation attached for the 

appropriate level of environmental 

assessment. The Applicant should 

contact the Agency to determine what 

documentation is required to be 

provided. 

(6) The Applicant must identify 

whether or not the Applicant has a 

known relationship or association with 

an Agency employee. If there is a known 

relationship, the Applicant must 

identify each Agency employee with 

whom the Applicant has a known 

relationship. 

(7) Certification that the Applicant is 

a legal entity in good standing (as 

applicable), and operating in accordance 

with the laws of the State(s) or Tribe 

where the Applicant has a place of 

business. 

(8) Certification by the Applicant that 

the equipment required for the project is 

available, can be procured and delivered 

within the proposed project 

development schedule, and will be 

installed in conformance with 

manufacturer’s specifications and 

design requirements. This would not be 

applicable when equipment is not part 

of the project. 

(9) Certification by the Applicant that 

the project will be constructed in 

accordance with applicable laws, 

regulations, agreements, permits, codes, 

and standards. 

(b) Applicant information. Provide 

information specified in paragraphs 

(b)(1) through (4) of this section to allow 

the Agency to determine the eligibility 

of the Applicant. 

(1) Type of Applicant. Demonstrate 

that the Applicant meets the definition 

of Agricultural Producer or Rural Small 

Business, including appropriate 

information necessary to demonstrate 

that the Applicant meets the 

Agricultural Producer’s percent of gross 

income derived from agricultural 

operations or the Rural Small Business’ 

size, as applicable, requirements 

identified in these definitions. Include a 

description of the Applicant’s farm/

ranch/business operation. 

(i) Rural Small Business Applicants. 

Identify the primary North American 

Industry Classification System (NAICS) 

code applicable to the Applicant’s 

business concern. Provide sufficient 

information to determine total Annual 

Receipts and number of employees of 

the business concern and any parent, 

subsidiary, or affiliate to demonstrate 

that the Applicant meets the definition 

of Small Business according to the time 

frames specified below. 

(A) For Applicant business concerns, 

parents, subsidiaries, and affiliates that 

have been in operation for 36 months or 

more, provide Annual Receipts 

information for the 36 months and the 

number of employees for the 12 months 

preceding the date the application is 

submitted. 

(B) For Applicant business concerns, 

parents, subsidiaries, and affiliates that 

have been in operation for less than 36 

months but for at least 12 months, 

provide Annual Receipts and the 

number of employees for as long as the 

business concern, parent, subsidiary, or 

affiliate has been in operation. 

(C) For Applicant business concerns, 

parents, subsidiaries, and affiliates that 

have been in operation for less than 12 

months, provide Annual Receipts and 

number of employees projections for the 

applicable entity based upon a typical 

operating year for a 3-year time period. 

(ii) Agricultural Producer Applicants. 

Provide the gross market value of the 

Applicant’s agricultural products, gross 

agricultural income of the Applicant, 


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and gross nonfarm income of the 

Applicant according to the Annual 

Receipts time frames specified in 

paragraphs (b)(1)(i)(A) through (C) of 

this section, as applicable to the length 

of time that Applicant’s agricultural 

operation has been in operation. 

(2) Applicant description. Describe 

the ownership of the Applicant, 

including the following information if 

applicable. 

(i) Ownership and control. Describe 

how the Applicant meets the ownership 

and control requirements. 

(ii) Affiliated companies. For entities 

(e.g., corporate parents, affiliates, 

subsidiaries), provide a list of the 

individual owners with their contact 

information of those entities. Describe 

the relationship between the Applicant 

and these other entities, including 

management and products exchanged. 

(3) Financial information. Financial 

information is required on the total 

operation of the Agricultural Producer/ 

Rural Small Business and its parent, 

subsidiary, or affiliates. All information 

submitted under this paragraph must be 

substantiated by authoritative records. 

(i) Historical financial statements. 

Provide historical financial statements 

prepared in accordance with Generally 

Accepted Accounting Practices (GAAP) 

for the past 3 years, including income 

statements and balance sheets. If 

Agricultural Producers are unable to 

present this information in accordance 

with GAAP, they may instead present 

financial information in the format that 

is generally required by commercial 

agriculture lenders. For a Rural Small 

Business or Agricultural Producer that 

has been in operation for less than 3 

years, provide income statements and 

balance sheets for as long as the 

business operation has been in 

existence. 

(ii) Current balance sheet and income 

statement. Provide a current balance 

sheet and income statement prepared in 

accordance with GAAP and dated 

within 90 days of the application. 

Agricultural Producers can present 

financial information in the format that 

is generally required by commercial 

agriculture lenders. 

(iii) Pro forma financial statements. 

Provide pro forma balance sheet at startup of the Agricultural Producer’s/Rural 

Small Business’ business operation that 

reflects the use of the loan proceeds or 

grant award; and 3 additional years, 

indicating the necessary start-up capital, 

operating capital, and short-term credit; 

and projected cash flow and income 

statements for 3 years supported by a 

list of assumptions showing the basis for 

the projections. 

(4) Previous grants and loans. State 

whether the Applicant has received any 

grants and/or loans under this subpart. 

If the Applicant has, identify each such 

grant and/or loan and describe the 

progress the Applicant has made on 

each project for which the grant and/or 

loan was received, including projected 

schedules and actual completion dates. 

(c) Project information. Provide 

information concerning the proposed 

project as a whole and its relationship 

to the Applicant’s operations, including 

the following: 

(1) Identification as to whether the 

project is for a RES or an EEI project. 

Include a description and the location of 

the project. 

(2) A description of the process that 

will be used to conduct all procurement 

transactions to demonstrate compliance 

with § 4280.124(a)(1). 

(3) Describe how the proposed project 

will have a positive effect on resource 

conservation (e.g., water, soil, forest), 

public health (e.g., potable water, air 

quality), and the environment (e.g., 

compliance with the U.S. 

Environmental Protection Agency’s 

(EPA) renewable fuel standard(s), 

greenhouse gases, emissions, particulate 

matter). 

(4) Identify the amount of funds and 

the source(s) the Applicant is proposing 

to use for the project. Provide written 

commitments for funds at the time the 

application is submitted to receive 

points under this scoring criterion. 

(i) If financial resources come from 

the Applicant, the Applicant must 

submit documentation in the form of a 

bank statement that demonstrates 

availability of funds. 

(ii) If a third party is providing 

financial assistance, 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 

any applicable rates and terms. If the 

third party is a bank, a letter-of-intent, 

pre-qualification letter, subject to bank 

approval, or other underwriting 

requirements or contingencies are not 

acceptable. An acceptable condition 

may be based on the receipt of the REAP 

grant or an appraisal. 

(d) Feasibility Study. If the 

application is for a RES project with 

Total Project Costs of $200,000 and 

Greater, a Feasibility Study must be 

submitted. The Feasibility Study must 

be conducted by a Qualified Consultant. 

(e) Technical report. Each application 

must contain a technical report 

prepared in accordance with 

§ 4280.110(h) and Appendix A or C, as 

applicable, of this subpart. 

(f) Construction planning and 

performing development. Each 

application submitted must be in 

accordance with § 4280.124 for 

planning, designing, bidding, 

contracting, and constructing RES and 

EEI projects as applicable. 

§ 4280.118 Grant applications for RES and 

EEI Projects with total project costs of less 

than $200,000, but more than $80,000. 

Grant applications for RES and EEI 

projects with Total Project Costs of less 

than $200,000, but more than $80,000, 

may provide the information specified 

in this section or, if the Applicant elects 

to do so, the information specified in 

§ 4280.117. In order to submit an 

application under this section, the 

criteria specified in paragraph (a) of this 

section must be met. The content for 

applications submitted under this 

section is specified in paragraph (b) of 

this section. Unless otherwise specified 

in this subpart, the construction 

planning and performing development 

procedures and the payment process 

that will be used for awards for 

applications submitted under this 

section are specified in paragraphs (c) 

and (d), respectively, of this section. 

(a) Criteria for submitting applications 

for projects with total project costs of 

less than $200,000, but more than 

$80,000. In order to submit an 

application under this section, each of 

the conditions specified in paragraphs 

(a)(1) through (7) of this section must be 

met. 

(1) The Applicant must be eligible in 

accordance with § 4280.112. 

(2) The project must be eligible in 

accordance with § 4280.113. 

(3) Total Project Costs must be less 

than $200,000, but more than $80,000. 

(4) Construction planning and 

performing development must be 

performed in compliance with 

paragraph (c) of this section. The 

Applicant or the Applicant’s prime 

contractor assumes all risks and 

responsibilities of project development. 

(5) The Applicant or the Applicant’s 

prime contractor is responsible for all 

interim financing, including during 

construction. 

(6) The Applicant agrees not to 

request reimbursement from funds 

obligated under this program until after 

project completion and is operating in 

accordance with the information 

provided in the application for the 

project. 

(7) The Applicant must maintain 

insurance as required under 

§ 4280.122(b), except business 

interruption insurance is not required. 

(b) Application content. Applications 

submitted under this section must 


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78266 Federal Register / Vol. 79, No. 248 / Monday, December 29, 2014 / Rules and Regulations 

contain the information specified in 

paragraphs (b)(1) through (4) of this 

section and must be presented in the 

same order. Each Applicant is 

encouraged, but is not required, to selfscore the project using the evaluation 

criteria in § 4280.120 and to submit with 

their application the total score, 

including appropriate calculations and 

attached documentation or specific 

cross-references to information 

elsewhere in the application. 

(1) Forms and certifications. The 

application must contain the items 

identified in § 4280.117(a). In addition, 

the Applicant must submit a 

certification that the Applicant meets 

each of the criteria for submitting an 

application under this section as 

specified in paragraph (a) of this 

section. 

(2) Applicant information. The 

application must contain the items 

identified in § 4280.117(b), except that 

the information specified in 

§ 4280.117(b)(3) is not required. 

(3) Project information. The 

application must contain the items 

identified in § 4280.117(c). 

(4) Technical report. Each application 

must contain a technical report in 

accordance with § 4280.110(h) and 

Appendix A or B, as applicable, of this 

subpart. 

(c) Construction planning and 

performing development. Applicants 

submitting applications under this 

section must comply with the 

requirements specified in paragraphs 

(c)(1) through (3) of this section for 

construction planning and performing 

development. 

(1) General. Paragraphs (a)(1), (2), and 

(4) of § 4280.124 apply. 

(2) Small acquisition and construction 

procedures. Small acquisition and 

construction procedures are those 

relatively simple and informal 

procurement methods that are sound 

and appropriate for a procurement of 

services, equipment, and construction of 

a RES or EEI project with a Total Project 

Cost of not more than $200,000. The 

Applicant is solely responsible for the 

execution of all contracts under this 

procedure, and Agency review and 

approval is not required. 

(3) Contractor forms. Applicants must 

have each contractor sign, as applicable: 

(i) Form RD 400–6, ‘‘Compliance 

Statement,’’ for contracts exceeding 

$10,000; and 

(ii) Form AD–1048, ‘‘Certification 

Regarding Debarment, Suspension, 

Ineligibility and Voluntary Exclusion— 

Lower Tier Covered Transactions,’’ for 

contracts exceeding $25,000. 

(d) Payment process for applications 

for res and eei projects with total project 

costs of less than $200,000, but more 

than $80,000. (1) Upon completion of 

the project, the grantee must submit to 

the Agency a copy of the contractor’s 

certification of final completion for the 

project and a statement that the grantee 

accepts the work completed. At its 

discretion, the Agency may require the 

Applicant to have an Inspector certify 

that the project is constructed and 

installed correctly. 

(2) The RES or EEI project must be 

constructed, installed, and operating as 

described in the technical report prior to 

disbursement of funds. For RES, the 

system must be operating at the steady 

state operating level described in the 

technical report for a period of not less 

than 30 days, unless this requirement is 

modified by the Agency, prior to 

disbursement of funds. Any 

modification to the 30-day steady state 

operating level requirement will be 

based on the Agency’s review of the 

technical report and will be 

incorporated into the Letter of 

Conditions. 

(3) Prior to making payment, the 

Agency will be provided with Form RD 

1924–9, ‘‘Certificate of Contractor’s 

Release,’’ and Form RD 1924–10, 

‘‘Release by Claimants,’’ or similar 

forms, executed by all persons who 

furnished materials or labor in 

connection with the contract. 

§ 4280.119 Grant applications for res and 

eei projects with total project costs of 

$80,000 or less. 

Grant applications for RES and EEI 

projects with Total Project Costs of 

$80,000 or less must provide the 

information specified in this section or, 

if the Applicant elects to do so, the 

information specified in either 

§§ 4280.117 or 4280.118. In order to 

submit an application under this 

section, the criteria specified in 

paragraph (a) of this section must be 

met. The content for applications 

submitted under this section is specified 

in paragraph (b) of this section. Unless 

otherwise specified in this subpart, the 

construction planning and performing 

development procedures and the 

payment process that will be used for 

awards for applications submitted under 

this section are specified in paragraphs 

(c) and (d), respectively, of this section. 

(a) Criteria for submitting applications 

for RES and EEI projects with total 

project costs of $80,000 or less. In order 

to submit an application under this 

section, each of the conditions specified 

in paragraphs (a)(1) through (7) of this 

section must be met. 

(1) The Applicant must be eligible in 

accordance with § 4280.112. 

(2) The project must be eligible in 

accordance with § 4280.113. 

(3) Total Project Costs must be 

$80,000 or less. 

(4) Construction planning and 

performing development must be 

performed in compliance with 

paragraph (c) of this section. The 

Applicant or the Applicant’s prime 

contractor assumes all risks and 

responsibilities of project development. 

(5) The Applicant or the Applicant’s 

prime contractor is responsible for all 

interim financing, including during 

construction. 

(6) The Applicant agrees not to 

request reimbursement from funds 

obligated under this program until after 

the project has been completed and is 

operating in accordance with the 

information provided in the application 

for the project. 

(7) The Applicant must maintain 

insurance as required under 

§ 4280.122(b), except business 

interruption insurance is not required. 

(b) Application content. Applications 

submitted under this section must 

contain the information specified in 

paragraphs (b)(1) through (4), as 

applicable, of this section and must be 

presented in the same order. Each 

Applicant is encouraged, but is not 

required, to self-score the project using 

the evaluation criteria in § 4280.120 and 

to submit with their application the 

total score, including appropriate 

calculations and attached 

documentation or specific crossreferences to information elsewhere in 

the application. 

(1) Forms and certifications. Each 

application must contain the forms and 

certifications specified in paragraphs 

(b)(1)(i) through (ix), as applicable, of 

this section except that paragraph 

(b)(1)(iv) is optional. 

(i) Form SF–424. 

(ii) Form SF–424C. 

(iii) Form SF–424D. 

(iv) Identify the ethnicity, race, and 

gender of the applicant. This 

information is optional and is not 

required for a Complete Application. 

(v) Form RD 1940–20 with 

documentation attached for the 

appropriate level of environmental 

assessment. The Applicant should 

contact the Agency to determine what 

documentation is required to be 

provided. 

(vi) Certification by the Applicant 

that: 

(A) The Applicant meets each of the 

Applicant eligibility criteria found in 

§ 4280.112; 

(B) The proposed project meets each 

of the project eligibility requirements 

found in § 4280.113; 


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(C) The design, engineering, testing, 

and monitoring will be sufficient to 

demonstrate that the proposed project 

will meet its intended purpose; 

(D) The equipment required for the 

project is available, can be procured and 

delivered within the proposed project 

development schedule, and will be 

installed in conformance with 

manufacturer’s specifications and 

design requirements. This would not be 

applicable when equipment is not part 

of the project; 

(E) The project will be constructed in 

accordance with applicable laws, 

regulations, agreements, permits, codes, 

and standards; 

(F) The Applicant meets the criteria 

for submitting an application for 

projects with Total Project Costs of 

$80,000 or less; 

(G) The Applicant will abide by the 

open and free competition requirements 

in compliance with § 4280.124(a)(1); 

and 

(H) For Bioenergy Projects, any and 

all woody biomass feedstock from 

National Forest System land or public 

lands cannot be otherwise used as a 

higher value wood-based product. 

(vii) State whether the Applicant has 

received any grants and/or loans under 

this subpart. If the Applicant has, 

identify each such grant and/or loan and 

describe the progress the Applicant has 

made on each project for which the 

grant and/or loan was received, 

including projected schedules and 

actual completion dates. 

(viii) The Applicant must identify 

whether or not the Applicant has a 

known relationship or association with 

an Agency employee. If there is a known 

relationship, the Applicant must 

identify each Agency employee with 

whom the Applicant has a known 

relationship. 

(ix) The Applicant is a legal entity in 

good standing (as applicable), and 

operating in accordance with the laws of 

the state(s) or Tribe where the Applicant 

has a place of business. 

(2) General. For both RES and EEI 

project applications: 

(i) Identify whether the project is for 

a RES or an EEI project; 

(ii) Identify the primary NAICS code 

applicable to the Applicant’s operation 

if known or a description of the 

operation in enough detail for the 

Agency to determine the primary NAICS 

code; 

(iii) Describe in detail or document 

how the proposed project will have a 

positive effect on resource conservation 

(e.g., water, soil, forest), public health 

(e.g., potable water, air quality), and the 

environment (e.g., compliance with the 

EPA’s renewable fuel standard(s), 

greenhouse gases, emissions, particulate 

matter); and 

(iv) Identify the amount of Matching 

Funds and other funds and the source(s) 

the Applicant is proposing to use for the 

project. In order to receive points under 

this scoring criterion, written 

commitments for funds (e.g., a Letter of 

Commitment, bank statement) must be 

submitted when the application is 

submitted. 

(A) If financial resources come from 

the Applicant, the Applicant must 

submit documentation in the form of a 

bank statement that demonstrates 

availability of funds. 

(B) If a third party is providing 

financial assistance, 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 

any applicable rates and terms. If the 

third party is a bank, a letter-of-intent, 

pre-qualification letter, subject to bank 

approval, or other underwriting 

requirements or contingencies are not 

acceptable. An acceptable condition 

may be based on the receipt of the REAP 

grant or an appraisal. 

(3) Technical report for EEI. Each EEI 

application submitted under this section 

must include a technical report in 

accordance with § 4280.110(h) and 

paragraphs (b)(3)(i) through (iv) of this 

section. 

(i) Project description. Provide a 

description of the proposed EEI, 

including its intended purpose and how 

it meets the requirements for being 

Commercially Available. 

(ii) Qualifications of EEI provider(s). 

Provide a resume or other evidence of 

the contractor or installer’s 

qualifications and experience with the 

proposed EEI technology. Any 

contractor or installer with less than 2 

years of experience may be required to 

provide additional information in order 

for the Agency to determine if they are 

a qualified installer/contractor. 

(iii) Energy assessment. Provide a 

copy of the Energy Assessment (or 

Energy Audit) performed for the project 

as required under Section C of 

Appendix A to this subpart and the 

qualifications of the individual or entity 

which completed the Energy 

Assessment. 

(iv) Simple Payback. Provide an 

estimate of Simple Payback, including 

all calculations, documentation, and 

any assumptions. 

(4) Technical report for RES. Each 

RES application submitted under this 

section must include a technical report 

in accordance with § 4280.110(h) and 

paragraphs (b)(4)(i) through (iv) of this 

section. 

(i) Project description. Provide a 

description of the project, including its 

intended purpose and a summary of 

how the project will be constructed and 

installed, and how it meets the 

definition of Commercially Available. 

Identify the project’s location and 

describe the project site. 

(ii) Resource assessment. Describe the 

quality and availability of the renewable 

resource to the project. Identify the 

amount of Renewable Energy that will 

be generated once the proposed system 

is operating at its steady state operating 

level. 

(iii) Project economic assessment. 

Describe the projected financial 

performance of the proposed project. 

The description must address Total 

Project Costs, energy savings, and 

revenues, including applicable 

investment and other production 

incentives accruing from government 

entities. Revenues to be considered shall 

accrue from the sale of energy, offset or 

savings in energy costs, and byproducts. 

Provide an estimate of Simple Payback, 

including all calculations, 

documentation, and any assumptions. 

(iv) Qualifications of key service 

providers. Describe the key service 

providers, including the number of 

similar systems installed and/or 

manufactured, professional credentials, 

licenses, and relevant experience. If 

specific numbers are not available for 

similar systems, you may submit an 

estimation of the number of similar 

systems. 

(c) Construction planning and 

performing development for 

applications submitted under this 

section. All Applicants submitting 

applications under this section must 

comply with the requirements specified 

in paragraphs (c)(1) through (3) of this 

section for construction planning and 

performing development. 

(1) General. Paragraphs (a)(1), (2), and 

(4) of § 4280.124 apply. 

(2) Small acquisition and construction 

procedures. Small acquisition and 

construction procedures are those 

relatively simple and informal 

procurement methods that are sound 

and appropriate for a procurement of 

services, equipment and construction of 

a RES or EEI project with a Total Project 

Cost of not more than $80,000. The 

Applicant is solely responsible for the 

execution of all contracts under this 

procedure, and Agency review and 

approval is not required. 

(3) Contractor forms. Applicants must 

have each contractor sign, as applicable: 

(i) Form RD 400–6 for contracts 

exceeding $10,000; and 

(ii) Form AD–1048 for contracts 

exceeding $25,000. 


tkelley on DSK3SPTVN1PROD with RULES3
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(d) Payment process for applications 

for RES and EEI projects with total 

project costs of $80,000 or less. (1) Upon 

completion of the project, the grantee 

must submit to the Agency a copy of the 

contractor’s certification of final 

completion for the project and a 

statement that the grantee accepts the 

work completed. At its discretion, the 

Agency may require the Applicant to 

have an Inspector certify that the project 

is constructed and installed correctly. 

(2) The RES or EEI project must be 

constructed, installed, and operating as 

described in the technical report prior to 

disbursement of funds. For RES, the 

system must be operating at the steady 

state operating level described in the 

technical report for a period of not less 

than 30 days, unless this requirement is 

modified by the Agency, prior to 

disbursement of funds. Any 

modification to the 30-day steady state 

operating level requirement will be 

based on the Agency’s review of the 

technical report and will be 

incorporated into the Letter of 

Conditions. 

(3) Prior to making payment, the 

grantee must provide the Agency with 

Form RD 1924–9 and Form RD 1924–10, 

or similar forms, executed by all persons 

who furnished materials or labor in 

connection with the contract. 

§ 4280.120 Scoring RES and EEI grant 

applications. 

Agency personnel will score each 

eligible RES and EEI application based 

on the scoring criteria specified in this 

section, unless otherwise specified in a 

Federal Register notice, with a 

maximum score of 100 points possible. 

(a) Environmental benefits. A 

maximum of 5 points will be awarded 

for this criterion based on whether the 

Applicant has documented in the 

application that the proposed project 

will have a positive effect on any of the 

three impact areas: Resource 

conservation (e.g., water, soil, forest), 

public health (e.g., potable water, air 

quality), and the environment (e.g., 

compliance with EPA’s renewable fuel 

standard(s), greenhouse gases, 

emissions, particulate matter). Points 

will be awarded as follows: 

(1) If the proposed project has a 

positive impact on any one of the three 

impact areas, 1 point will be awarded. 

(2) If the proposed project has a 

positive impact on any two of the three 

impact areas, 3 points will be awarded. 

(3) If the proposed project has a 

positive impact on all three impact 

areas, 5 points will be awarded. 

(b) Energy generated, replaced, or 

saved. A maximum of 25 points will be 

awarded for this criterion. Applications 

for RES and EEI projects will be 

awarded points under both paragraphs 

(b)(1) and (2) of this section. 

(1) Quantity of energy generated or 

saved per REAP grant dollar requested. 

A maximum of 10 points will be 

awarded for this sub-criterion. For RES 

and EEI projects, points will be awarded 

for either the amount of energy 

generation per grant dollar requested, 

which includes those projects that are 

replacing energy usage with a renewable 

source, or the actual annual average 

energy savings over the most recent 12, 

24, 36, 48, or 60 consecutive months of 

operation per grant dollar requested; 

points will not be awarded for more 

than one category. 

(i) Renewable Energy Systems. The 

quantity of energy generated per grant 

dollar requested will be determined by 

dividing the projected total annual 

energy generated by the RES, which will 

be converted to BTUs, by the grant 

dollars requested. Points will be 

awarded based on the annual amount of 

energy generated per grant dollar 

requested for the proposed RES as 

determined using paragraphs (b)(1)(i)(A) 

and (B) of this section. A maximum of 

10 points will be awarded under this 

criterion. 

(A) The energy generated per grant 

dollar requested will be calculated using 

Equation 1. 

Equation 1: EG/$ = (EG12/GR) 

where: 

EG/$ = Energy generated per grant dollar 

requested. 

EG12 = Projected total annual energy 

generated (BTUs) by the proposed RES 

for a typical year. 

GR = Grant amount requested under this 

subpart. 

(B) If the projected total annual energy 

generated per grant dollar requested 

calculated under paragraph (b)(1)(i)(A) 

of this section is: 

(1) Less than 50,000 BTUs annual 

energy generated per grant dollar 

requested, points will be awarded as 

follows: Points awarded = (EG/$)/50,000 

× 10 points, where the points awarded 

are rounded to the nearest hundredth of 

a point. 

(2) 50,000 BTUs average annual 

energy saved per grant dollar requested 

or higher, 10 points will be awarded. 

For example, an Applicant has 

requested a $500,000 grant to install an 

Anaerobic Digester Project with a 500 

kilowatt (kW) generator set. The 

Anaerobic Digester Project will produce 

5,913,000 kilowatt hours (kWh) per 

year. At 3,412 BTUs per kWh, this is 

equivalent to 20,175,156,000 BTUs. 

Based on this example, there are 

40,350.312 BTUs generated per grant 

dollar requested (20,175,156,00 BTUs/

$500,000). Because this is less than 

50,000 BTUs average annual energy 

saved per grant dollar requested, points 

will be awarded as follows: 

Points awarded = 40,350.312 BTUs/

50,000 BTUs × 10 = 8.07006 

This would be rounded to the nearest 

hundredth, or to 8.07 points. 

(ii) Energy Efficiency Improvements. 

Energy savings per grant dollar 

requested will be determined by 

dividing the average annual energy 

projected to be saved as determined by 

the Energy Assessment or Energy Audit 

for the EEI, which will be converted to 

BTUs, by the grant dollars requested. 

Points will be awarded based on the 

average annual amount of energy saved 

per grant dollar requested for the 

proposed EEI as determined using 

paragraphs (b)(1)(ii)(A) and (B) of this 

section. A maximum of 10 points will 

be awarded under this criterion. 

(A) The average annual energy saved 

per grant dollar requested shall be 

calculated using Equation 2. 

Equation 2: ES/$ = (ES36/GR) 

where: 

ES/$ = Average annual energy saved per 

grant dollar requested. 

ES36 = Average annual energy saved by the 

proposed EEI over the same period used 

in the Energy Assessment or Energy 

Audit, as applicable. 

GR = Grant amount requested under this 

subpart. 

(B) If the average annual energy saved 

per grant dollar requested calculated 

under paragraph (b)(1)(ii)(A) of this 

section is: 

(1) Less than 50,000 BTUs average 

annual energy saved per grant dollar 

requested, points will be awarded as 

follows: Points awarded = (ES/$)/50,000 

× 10 points, where the points awarded 

are rounded to the nearest hundredth of 

a point. 

(2) 50,000 BTUs average annual 

energy saved per grant dollar requested 

or higher, 10 points will be awarded. 

For example, an Applicant has 

requested a $1,500 grant to install a new 

boiler. The average BTU usage of the 

existing boiler for the most recent 12 

months prior to submittal of the 

application was 125,555,000 BTUs per 

year. If the new boiler had been in place 

for those same 12 months, the annual 

average BTU usage is estimated to be 

100,000,000 BTUs. Thus, the new boiler 

is projected to save the Applicant 

25,555,000 BTUs per year. Based on this 

example, there are 17,036.6667 BTUs 

saved per grant dollar requested 

(25,555,000 BTUs/$1,500). Because this 

is less than 50,000 BTUs average annual 

energy saved per grant dollar requested, 

points will be awarded as follows: 


tkelley on DSK3SPTVN1PROD with RULES3
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Points awarded = 17,036.6667 BTUs/ 

50,000 BTUs × 10 = 3.407 

This would be rounded to the nearest 

hundredth, or to 3.41 points. 

(2) Quantity of energy replaced, 

saved, or generated. A maximum of 15 

points will be awarded for this subcriterion. Points may only be awarded 

for energy replacement, energy savings, 

or energy generation. Points will not be 

awarded for more than one category. 

(i) Energy replacement. If the 

proposed RES is intended primarily for 

self-use by the Agricultural Producer or 

Rural Small Business and will provide 

energy replacement of greater than zero, 

but equal to or less than 25 percent, 5 

points will be awarded; greater than 25 

percent, but equal to or less than 50 

percent, 10 points will be awarded; or 

greater than 50 percent, 15 points will 

be awarded. Energy replacement is to be 

determined by dividing the estimated 

quantity of Renewable Energy to be 

generated over the most recent 12- 

month period, by the quantity of energy 

consumed over the same period by the 

applicable energy application. For a 

project to qualify as an energy 

replacement it must provide 

documentation on prior energy use. For 

a project involving new construction 

and being installed to serve the new 

facility, the project may be classified as 

energy replacement only if the applicant 

can document previous energy use from 

a facility of approximately the same 

size. Approximately the same size is 

further clarified to be 10 percent larger 

or smaller than the facility it is 

replacing. The estimated quantities of 

energy must be converted to either 

BTUs, Watts, or similar energy 

equivalents to facilitate scoring. If the 

estimated energy produced equals more 

than 150 percent of the energy 

requirements of the applicable 

process(es), the project will be scored as 

an energy generation project. 

(ii) Energy savings. If the estimated 

energy expected to be saved over the 

same period used in the Energy 

Assessment or Energy Audit, as 

applicable, by the installation of the EEI 

will be from 20 percent up to, but not 

including 35 percent, 5 points will be 

awarded; 35 percent up to, but not 

including 50 percent, 10 points will be 

awarded; or, 50 percent or greater, 15 

points will be awarded. Energy savings 

will be determined by the projections in 

an Energy Assessment or Energy Audit. 

(iii) Energy generation. If the 

proposed RES is intended for 

production of energy, 10 points will be 

awarded. 

(c) Commitment of funds. A 

maximum of 20 points will be awarded 

for this criterion based on the 

percentage of written commitment an 

Applicant has from its fund sources that 

are documented with a Complete 

Application. The percentage of written 

commitment must be calculated using 

the following equation. 

Percentage of written commitment = 

Total amount of funds for which written 

commitments have been submitted with 

the application/Total amount of 

Matching Funds and other funds 

required. 

(1) If the percentage of written 

commitments as calculated is 100 

percent of the Matching Funds, 20 

points will be awarded. 

(2) If the percentage of written 

commitments as calculated is less than 

100 percent, but more than 50 percent, 

points will be awarded as follows: 

((percentage of written commitments ¥ 

50 percent)/(50 percent)) × 20 points, 

where points awarded are rounded to 

the nearest hundredth of a point. 

(3) If the percentage of written 

commitments as calculated is 50 percent 

or less, no points will be awarded. 

(d) Size of Agricultural Producer or 

Rural Small Business. A maximum of 10 

points will be awarded for this criterion 

based on the size of the Applicant’s 

agricultural operation or business 

concern, as applicable, compared to the 

SBA Small Business size standards 

categorized by the NAICS found in 13 

CFR 121.201. For Applicants that are: 

(1) One-third or less of the maximum 

size standard identified by SBA, 10 

points will be awarded. 

(2) Greater than one-third up to and 

including two-thirds of the maximum 

size standard identified by SBA, 5 

points will be awarded. 

(3) Larger than two-thirds of the 

maximum size standard identified by 

SBA, no points will be awarded. 

(e) Previous grantees and borrowers. 

A maximum of 15 points will be 

awarded for this criterion based on 

whether the Applicant has received a 

grant or guaranteed loan under this 

subpart. 

(1) If the Applicant has never received 

a grant and/or guaranteed loan under 

this subpart, 15 points will be awarded. 

(2) If the Applicant has not received 

a grant and/or guaranteed loan under 

this subpart within the 2 previous 

Federal Fiscal Years, 5 points will be 

awarded. 

(3) If the Applicant has received a 

grant and/or guaranteed loan under this 

subpart within the 2 previous Federal 

Fiscal Years, no points will be awarded. 

(f) Simple Payback. A maximum of 15 

points will be awarded for this criterion 

based on the Simple Payback of the 

project. Points will be awarded for 

either RES or EEI; points will not be 

awarded for more than one category. 

(1) Renewable Energy Systems. If the 

Simple Payback of the proposed project 

is: 

(i) Less than 10 years, 15 points will 

be awarded; 

(ii) 10 years up to but not including 

15 years, 10 points will be awarded; 

(iii) 15 years up to and including 25 

years, 5 points will be awarded; or 

(iv) Longer than 25 years, no points 

will be awarded. 

(2) Energy Efficiency Improvements. If 

the Simple Payback of the proposed 

project is: 

(i) Less than 4 years, 15 points will be 

awarded; 

(ii) 4 years up to but not including 8 

years, 10 points will be awarded; 

(iii) 8 years up to and including 12 

years, 5 points will be awarded; or 

(iv) Longer than 12 years, no points 

will be awarded. 

(g) State Director and Administrator 

priority points. A maximum of 10 points 

will be awarded for this criterion. A 

State Director, for its State allocation 

under this subpart, or the 

Administrator, for making awards from 

the National Office reserve, may award 

up to 10 points to an application based 

on the conditions specified in 

paragraphs (g)(1) through (5) of this 

section. In no case shall an application 

receive more than 10 points under this 

criterion. 

(1) The application is for an underrepresented technology. 

(2) Selecting the application helps 

achieve geographic diversity. 

(3) The Applicant is a member of an 

unserved or under-served population. 

(4) Selecting the application helps 

further a Presidential initiative or a 

Secretary of Agriculture priority. 

(5) The proposed project is located in 

an impoverished area, has experienced 

long-term population decline, or loss of 

employment. 

§ 4280.121 Selecting RES and EEI grant 

applications for award. 

Unless otherwise provided for in a 

Federal Register notice, RES and EEI 

grant applications will be processed in 

accordance with this section. Complete 

Applications will be evaluated, 

processed, and subsequently ranked, 

and will compete for funding, subject to 

the availability of grant funding. 

(a) RES and EEI grant applications. 

Complete RES and EEI grant 

applications, regardless of the amount of 

funding requested (which includes 

$20,000 or less), are eligible to compete 

in two competitions each Federal Fiscal 

Year—a State competition and a 

National competition. 


tkelley on DSK3SPTVN1PROD with RULES3
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(1) To be competed in the State and 

National competitions, Complete 

Applications must be received by the 

applicable State Office by 4:30 p.m. 

local time no later than April 30. If 

April 30 falls on a weekend or a 

federally-observed holiday, the next 

Federal business day will be considered 

the last day for receipt of a Complete 

Application. Complete Applications 

received after this date and time will be 

processed in the subsequent fiscal year. 

(2) All eligible RES and EEI grant 

applications that remain unfunded after 

completion of the State competitions 

will be competed in a National 

competition. 

(b) RES and EEI grant applications 

requesting $20,000 or less. Complete 

RES and EEI grant applications 

requesting $20,000 or less are eligible to 

compete in up to five competitions— 

two State competitions and a National 

competition for grants of $20,000 or less 

set aside, as well as the two 

competitions referenced in paragraph (a) 

of this section (see paragraph (e)(2) of 

this section). 

(1) For Complete RES and EEI grant 

applications for grants requesting 

$20,000 or less, there will be two State 

competitions each Federal Fiscal Year. 

Complete Applications for $20,000 or 

less that are received by the Agency by 

4:30 p.m. local time on October 31 of 

the Federal Fiscal Year will be 

competed against each other. Complete 

Applications for $20,000 or less that are 

received by the Agency by 4:30 p.m. 

local time on April 30 of the Federal 

Fiscal Year will be competed against 

each other, including any applications 

for $20,000 or less that were not funded 

from the prior competition. If either 

October 31 or April 30 falls on a 

weekend or a federally-observed 

holiday, the next Federal business day 

will be considered the last day for 

receipt of a Complete Application. 

Complete Applications received after 

4:30 p.m. local time on April 30, 

regardless of the postmark on the 

application, will be processed in the 

subsequent fiscal year. 

(2) All eligible RES and EEI grant 

applications requesting $20,000 or less 

that remain unfunded after completion 

of the State competition for applications 

received by April 30 will be competed 

in the National competition. 

(c) Ranking of applications. The 

Agency will rank complete eligible 

applications using the scoring criteria 

specific in § 4280.120. Higher scoring 

applications will receive first 

consideration. 

(d) Funding selected applications. As 

applications are funded, if insufficient 

funds remain to fund the next highest 

scoring application, the Agency may 

elect to fund a lower scoring 

application. Before this occurs, the 

Agency will provide the Applicant of 

the higher scoring application the 

opportunity to reduce the amount of the 

Applicant’s grant request to the amount 

of funds available. If the Applicant 

agrees to lower its grant request, the 

Applicant must certify that the purposes 

of the project will be met and provide 

the remaining total funds needed to 

complete the project. At its discretion, 

the Agency may also elect to allow any 

remaining multi-year funds to be carried 

over to the next fiscal year rather than 

selecting a lower scoring application. 

(e) Handling of ranked applications 

not funded. Based on the availability of 

funding, a ranked application might not 

be funded. How the unfunded 

application is handled depends on 

whether it is requesting more than 

$20,000 or is requesting $20,000 or less 

(1) The Agency will discontinue 

consideration for funding all complete 

and eligible applications requesting 

more than $20,000 that are not selected 

for funding after the State and National 

competitions for the Federal Fiscal Year. 

(2) All complete and eligible 

applications requesting $20,000 or less 

may be competed in up to five 

consecutive competitions as illustrated 

below. Example 1: An application that 

is unfunded in the first State 

competition of a fiscal year is eligible to 

be competed in the second State 

competition and the National 

competition for grants of $20,000 or 

less, as well as, the State and National 

competitions for all grants regardless of 

the dollar amount being requested, in 

that fiscal year. Example 2: An 

application that is first competed in the 

second State competition of a fiscal year 

can be competed in the National 

competition for that fiscal year and the 

first State competition in the following 

fiscal year for grants of $20,000 or less. 

In addition the application may 

compete in the State and National 

competitions for all grants regardless of 

the amount of funding requested, which 

are referenced in paragraph (a) of this 

section. The Agency will discontinue 

for potential funding all application 

requesting $20,000 or less that are not 

selected for funding after competing in 

a total of three State competitions and 

two national competitions. 

(f) Commencement of the project. Not 

all grant applications that compete for 

funding will receive an award. Thus, the 

Applicant assumes all risks if the 

Applicant chooses to purchase the 

technology proposed or start 

construction of the project to be 

financed in the grant application after 

the Complete Application has been 

received by the Agency, but before the 

Applicant is notified as to whether or 

not they have been selected for an 

award. 

§ 4280.122 Awarding and administering 

RES and EEI grants. 

The Agency will award and 

administer RES and EEI grants in 

accordance with Departmental 

Regulations and with paragraphs (a) 

through (h) of this section. 

(a) Letter of Conditions. A Letter of 

Conditions will be prepared by the 

Agency, establishing conditions that 

must be agreed to by the Applicant 

before any obligation of funds can 

occur. Upon reviewing the conditions 

and requirements in the Letter of 

Conditions, the Applicant must 

complete, sign, and return the Form RD 

1942–46, ‘‘Letter of Intent to Meet 

Conditions,’’ and Form RD 1940–1, 

‘‘Request for Obligation of Funds,’’ to 

the Agency if they accept the conditions 

of the grant; or if certain conditions 

cannot be met, the Applicant may 

propose alternate conditions to the 

Agency. The Agency must concur with 

any changes proposed to the Letter of 

Conditions by the Applicant before the 

application will be further processed. 

(b) Insurance requirements. Agency 

approved insurance coverage must be 

maintained for 3 years after the Agency 

has approved the final performance 

report unless this requirement is waived 

or modified by the Agency in writing. 

Insurance coverage shall include, but is 

not limited to: 

(1) Property insurance, such as fire 

and extended coverage, will normally be 

maintained on all structures and 

equipment. 

(2) Liability. 

(3) National flood insurance is 

required in accordance with 7 CFR part 

1806, subpart B, if applicable. 

(4) Business interruption insurance 

for projects with Total Project Costs of 

more than $200,000. 

(c) Forms and certifications. The 

forms specified in paragraphs (c)(1) 

through (8) of this section will be 

attached to the Letter of Conditions 

referenced in paragraph (a) of this 

section. The forms specified in 

paragraphs (c)(1) through (7) of this 

section and all of the certifications must 

be submitted prior to grant approval. 

The form specified in paragraph (c)(8) of 

this section, which is to be completed 

by contractors, does not need to be 

returned to the Agency, but must be 

kept on file by the grantee. 

(1) Form RD 1942–46, ‘‘Letter of 

Intent to Meet Conditions.’’ 

(2) Form RD 1940–1. 


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(3) Form AD–1049, ‘‘Certification 

Regarding Drug-Free Workplace 

Requirements (Grants) Alternative 1-For 

Grantees Other than Individuals.’’ 

(4) Form SF–LLL, ‘‘Disclosure of 

Lobbying Activities,’’ if the grant 

exceeds $100,000 and/or if the grantee 

has made or agreed to make payment 

using funds other than Federal 

appropriated funds to influence or 

attempt to influence a decision in 

connection with the application. 

(5) Form AD–1047, ‘‘Certification 

Regarding Debarment, Suspension, and 

Other Responsibility Matters-Primary 

Covered Transactions.’’ 

(6) Form RD 400–1, ‘‘Equal 

Opportunity Agreement,’’ or successor 

form. 

(7) Form RD 400–4, ‘‘Assurance 

Agreement,’’ or successor form. 

(8) Form AD–1048, as signed by the 

contractor or other lower tier party. 

(d) Evidence of Matching Funds and 

other funds. If an Applicant submitted 

written evidence of Matching Funds and 

other funds with the application, the 

Applicant is responsible for ensuring 

that such written evidence is still in 

effect (i.e., not expired) when the grant 

is executed. If the Applicant did not 

submit written evidence of Matching 

Funds and other funds with the 

application, the Applicant must submit 

such written evidence that is in effect 

before the Agency will execute the 

Grant Agreement. In either case, written 

evidence of Matching Funds and other 

funds needed to complete the project 

must be provided to the Agency before 

execution of the Grant Agreement and 

must be in effect (i.e., must not have 

expired) at the time Grant Agreement is 

executed. 

(e) SAM number. Before the Grant 

Agreement can be executed, the number 

and expiration date of the Applicant’s 

SAM number are required. 

(f) Grant Agreement. Once the 

requirements specified in paragraphs (a) 

through (e) of this section have been 

met, the Grant Agreement can be 

executed by the grantee and the Agency. 

The grantee must abide by all 

requirements contained in the Grant 

Agreement, this subpart, and any other 

applicable Federal statutes or 

regulations. Failure to follow these 

requirements might result in 

termination of the grant and adoption of 

other available remedies. 

(g) Grant approval. The grantee will 

be sent a copy of the executed Form RD 

1940–1, the approved scope of work, 

and the Grant Agreement. 

(h) Power Purchase Agreement. Where 

applicable, the grantee shall provide to 

the Agency a copy of the executed 

Power Purchase Agreement within 12 

months from the date that the Grant 

Agreement is executed, unless 

otherwise approved by the Agency. 

§ 4280.123 Servicing RES and EEI Grants. 

The Agency will service RES and EEI 

grants in accordance with the 

requirements specified in Departmental 

Regulations; 7 CFR part 1951, subparts 

E and O, other than 7 CFR 

1951.709(d)(1)(B)(iv); the Grant 

Agreement; and paragraphs (a) through 

(k) of this section. 

(a) Inspections. Grantees must permit 

periodic inspection of the project 

records and operations by a 

representative of the Agency. 

(b) Programmatic changes. Grantees 

may make changes to an approved 

project’s costs, scope, contractor, or 

vendor subject to the provisions 

specified in paragraphs (b)(1) through 

(3) of this section. If the changes result 

in lowering the project’s score to below 

what would have qualified the 

application for award, the Agency will 

not approve the changes. 

(1) Prior approval. The grantee must 

obtain prior Agency approval for any 

change to the scope, contractor, or 

vendor of the approved project. Changes 

in project cost will require Agency 

Approval as outlined in paragraph 

(a)(1)(iii) of this section. 

(i) Grantees must submit requests for 

programmatic changes in writing to the 

Agency for Agency approval. 

(ii) Failure to obtain prior Agency 

approval of any such change could 

result in such remedies as suspension, 

termination, and recovery of grant 

funds. 

(iii) Prior Agency approval is required 

for all increases in project costs. Prior 

Agency approval is required for a 

decrease in project cost only if the 

decrease would have a negative effect 

on the long-term viability of the project. 

A decrease in project cost that does not 

have a negative impact on long-term 

viability requires Agency review and 

approval prior to disbursement of funds. 

(2) Changes in project cost or scope. 

If there is a significant change in project 

cost or any change in project scope, then 

the grantee’s funding needs, eligibility, 

and scoring, as applicable, will be 

reassessed. Decreases in Agency funds 

will be based on revised project costs 

and other factors, including Agency 

regulations used at the time of grant 

approval. 

(3) Change of contractor or vendor. 

When seeking a change, the grantee 

must submit to the Agency a written 

request for approval. The proposed 

contractor or vendor must have 

qualifications and experience acceptable 

to the Agency. The written request must 

contain sufficient information, which 

may include a revised technical report 

as required under § 4280.117(e), 

§ 4280.118(b)(4), § 4280.119(b)(3), or 

§ 4280.119(b)(4), as applicable, to 

demonstrate to the Agency’s satisfaction 

that such change maintains project 

integrity. If the Agency determines that 

project integrity continues to be 

demonstrated, the grantee may make the 

change. If the Agency determines that 

project integrity is no longer 

demonstrated, the change will not be 

approved and the grantee has the 

following options: Continue with the 

original contractor or vendor; find 

another contractor or vendor that has 

qualifications and experience acceptable 

to the Agency to complete the project; 

or terminate the grant by providing a 

written request to the Agency. No 

additional funding will be available 

from the Agency if costs for the project 

have increased. The Agency decision 

will be provided in writing. 

(c) Transfer of obligations. Prior to the 

construction of the project, the grantee 

may request, in writing, a transfer of 

obligation to a different (substitute) 

grantee. Subject to Agency approval 

provided in writing, an obligation of 

funds established for a grantee may be 

transferred to a substitute grantee 

provided: 

(1) The substituted grantee 

(i) Is eligible; 

(ii) Has a close and genuine 

relationship with the original grantee; 

and 

(iii) Has the authority to receive the 

assistance approved for the original 

grantee; and 

(2) The type of RES or EEI technology, 

the project cost and scope of the project 

for which the Agency funds will be used 

remain unchanged. 

(d) Transfer of ownership. After the 

project is completed and operational, 

the grantee may request, in writing, a 

transfer of the Grant Agreement to 

another entity. Subject to Agency 

approval provided in writing, the Grant 

Agreement may be transferred to 

another entity provided: 

(1) The entity is determined by the 

Agency to be an eligible entity under 

this subpart; and 

(2) The type of RES or EEI technology 

and the scope of the project for which 

the Agency funds will be used remain 

unchanged. 

(e) Disposition of acquired property. 

Grantees must abide by the disposition 

requirements outlined in Departmental 

Regulations. 

(f) Financial management system and 

records. The grantee must provide for 

financial management systems and 


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maintain records as specified in 

paragraphs (f)(1) and (2) of this section. 

(1) Financial management system. 

The grantee will provide for a financial 

system that will include: 

(i) Accurate, current, and complete 

disclosure of the financial results of 

each grant; 

(ii) Records that identify adequately 

the source and application of funds for 

grant-supporting activities, together 

with documentation to support the 

records. Those records must contain 

information pertaining to grant awards 

and authorizations, obligations, 

unobligated balances, assets, liabilities, 

outlays, and income; and 

(iii) Effective control over and 

accountability for all funds. The grantee 

must adequately safeguard all such 

assets and must ensure that funds are 

used solely for authorized purposes. 

(2) Records. The grantee will retain 

financial records, supporting 

documents, statistical records, and all 

other records pertinent to the grant for 

a period of at least 3 years after 

completion of grant activities except 

that the records must be retained 

beyond the 3-year period if audit 

findings have not been resolved or if 

directed by the United States. The 

Agency and the Comptroller General of 

the United States, or any of their duly 

authorized representatives, must have 

access to any books, documents, papers, 

and records of the grantee that are 

pertinent to the specific grant for the 

purpose of making audit, examination, 

excerpts, and transcripts. 

(g) Audit requirements. If applicable, 

grantees must provide an annual audit 

in accordance with 7 CFR part 3052. 

The Agency may exercise its right to do 

a program audit after the end of the 

project to ensure that all funding 

supported Eligible Project Costs. 

(h) Grant disbursement. As 

applicable, grantees must disburse grant 

funds as scheduled in accordance with 

the appropriate construction and 

inspection requirements in §§ 4280.118, 

4280.119 or 4280.124 as applicable. 

Unless required by third parties 

providing cost sharing payments to be 

provided on a pro-rata basis with other 

funds, grant funds will be disbursed 

after all other funds have been 

expended. 

(1) Unless authorized by the Agency 

to do so, grantees may submit requests 

for reimbursement no more frequently 

than monthly. Ordinarily, payment will 

be made within 30 days after receipt of 

a proper request for reimbursement. 

(2) Grantees must not request 

reimbursement for the Federal share of 

amounts withheld from contractors to 

ensure satisfactory completion of work 

until after it makes those payments. 

(3) Payments will be made by 

electronic funds transfer. 

(4) Grantees must use SF–271, 

‘‘Outlay Report and Request for 

Reimbursement for Construction 

Programs,’’ or other format prescribed 

by the Agency to request grant 

reimbursements. 

(5) For a grant awarded to a project 

with Total Project Costs of $200,000 and 

greater, grant funds will be disbursed in 

accordance with the above through 90 

percent of grant disbursement. The final 

10 percent of grant funds will be held 

by the Agency until construction of the 

project is completed, the project is 

operational, and the project has met or 

exceeded the steady state operating 

level as set out in the grant award 

requirements. In addition, the Agency 

reserves the right to request additional 

information or testing if upon a final site 

visit the 30 day steady state operating 

level is not found acceptable to the 

Agency. 

(i) Monitoring of project. Grantees are 

responsible for ensuring that all 

activities are performed within the 

approved scope of work and that funds 

are only used for approved purposes. 

(1) Grantees shall constantly monitor 

performance to ensure that: 

(i) Time schedules are being met; 

(ii) Projected work is being 

accomplished by projected time periods; 

(iii) Financial resources are being 

appropriately expended by contractors 

(if applicable); and 

(iv) Any other performance objectives 

identified in the scope of work are being 

achieved. 

(2) To the extent that resources are 

available, the Agency will monitor 

grantees to ensure that activities are 

performed in accordance with the 

Agency-approved scope of work and to 

ensure that funds are expended for 

approved purposes. The Agency’s 

monitoring of grantees neither: 

(i) Relieves the grantee of its 

responsibilities to ensure that activities 

are performed within the scope of work 

approved by the Agency and that funds 

are expended for approved purposes 

only; nor 

(ii) Provides recourse or a defense to 

the grantee should the grantee conduct 

unapproved activities, engage in 

unethical conduct, engage in activities 

that are or that give the appearance of 

a conflict of interest, or expend funds 

for unapproved purposes. 

(j) Reporting requirements. Financial 

and project performance reports must be 

provided by grantees and contain the 

information specified in paragraphs 

(j)(1) through (3) of this section. 

(1) Federal Financial Reports. 

Between grant approval and completion 

of project (i.e., construction), SF–425, 

‘‘Federal Financial Report’’ will be 

required of all grantees as applicable on 

a semiannual basis. The grantee will 

complete the project within the total 

sums available to it, including the grant, 

in accordance with the scope of work 

and any necessary modifications thereof 

prepared by grantee and approved by 

the Agency. 

(2) Project performance reports. 

Between grant approval and completion 

of project (i.e., construction), grantees 

must provide semiannual project 

performance reports and a final project 

development report containing the 

information specified in paragraphs 

(j)(2)(i) and (ii) of this section. These 

reports are due 30 working days after 

June 30 and December 31 of each year. 

(i) Semiannual project performance 

reports. Each semiannual project 

performance report must include the 

following: 

(A) A comparison of actual 

accomplishments to the objectives for 

that period; 

(B) Reasons why established 

objectives were not met, if applicable; 

(C) Reasons for any problems, delays, 

or adverse conditions which will affect 

attainment of overall program 

objectives, prevent meeting time 

schedules or objectives, or preclude the 

attainment of particular objectives 

during established time periods. This 

disclosure must be accompanied by a 

statement of the action taken or planned 

to resolve the situation; and 

(D) Objectives and timetables 

established for the next reporting 

period. 

(ii) Final project development report. 

The final project development report 

must be submitted 90 days after project 

completion and include: 

(A) A detailed project funding and 

expense summary; and 

(B) A summary of the project’s 

installation/construction process, 

including recommendations for 

development of similar projects by 

future Applicants to the program. 

(3) Outcome project performance 

reports. Once the project has been 

constructed, the grantee must provide 

the Agency periodic reports. These 

reports will include the information 

specified in paragraphs (j)(3)(i) or (ii) of 

this section, as applicable. 

(i) Renewable Energy Systems. For 

RES projects, commencing the first full 

calendar year following the year in 

which project construction was 

completed and continuing for 3 full 

years, provide a report detailing the 


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information specified in paragraphs 

(j)(3)(i)(A) through (G) of this section. 

(A) Type of technology; 

(B) The actual annual amount of 

energy generated in BTUs, kilowatthours, or similar energy equivalents; 

(C) Annual income for systems that 

are selling energy, if applicable, and/or 

energy savings of the RES; 

(D) A summary of the cost of 

operations and maintenance; 

(E) A description of any associated 

major maintenance or operational 

problems; 

(F) Recommendations for 

development of future similar projects; 

and 

(G) Actual number of jobs, if any, 

created or saved as a direct result of the 

RES project for which REAP funding 

was used. 

(ii) Energy Efficiency Improvements. 

For EEI projects, commencing the first 

full calendar year following the year in 

which project construction was 

completed and continuing for 2 full 

years, provide a report detailing, 

including calculations and any 

assumptions: 

(A) The actual amount of energy 

saved annually as determined by the 

difference between: 

(1) The annual amount of energy used 

by the project with the project in place 

and 

(2) The annual average amount of 

energy used in the period prior to 

application submittal as reported in the 

Energy Assessment or Energy Audit 

submitted with the application; and 

(B) Actual number of jobs, if any, 

created or saved as a direct result of the 

EEI project for which REAP funding was 

used. 

(k) Grant close-out. Grant close-out 

must be performed in accordance with 

the requirements specified in 

Departmental Regulations. 

§ 4280.124 Construction planning and 

performing development. 

(a) General. The following 

requirements are applicable to all 

procurement methods specified in 

paragraph (f) of this section. 

(1) Maximum open and free 

competition. All procurement 

transactions, regardless of procurement 

method and dollar value, must be 

conducted in a manner that provides 

maximum open and free competition. 

Procurement procedures must not 

restrict or eliminate competition. 

Competitive restriction examples 

include, but are not limited to, the 

following: Placing unreasonable 

requirements on firms in order for them 

to qualify to do business; 

noncompetitive practices between firms; 

organizational conflicts of interest; and 

unnecessary experience or excessive 

bonding requirements. In specifying 

material(s), the grantee and its 

consultant will consider all materials 

normally suitable for the project 

commensurate with sound engineering 

practices and project requirements. The 

Agency will consider any 

recommendation made by the grantee’s 

consultant concerning the technical 

design and choice of materials to be 

used for such a project. If the Agency 

determines that a design or material, 

other than those that were 

recommended, should be considered by 

including them in the procurement 

process as an acceptable design or 

material in the project, the Agency will 

provide such Applicant or grantee with 

a comprehensive justification for such a 

determination. The justification will be 

documented in writing. 

(2) Equal employment opportunity. 

For all construction contracts and grants 

in excess of $10,000, the contractor 

must comply with Executive Order 

11246, as amended by Executive Order 

11375 and Executive Order 13672, and 

as supplemented by applicable 

Department of Labor regulations (41 

CFR part 60). The Applicant, or the 

lender and borrower, as applicable, is 

responsible for ensuring that the 

contractor complies with these 

requirements. 

(3) Surety. Any contract exceeding 

$100,000 for procurement will require 

surety, except as provided for in 

paragraph (a)(3)(v) of this section. 

(i) Surety covering both performance 

and payment will be required. The 

United States, acting through the 

Agency, will be named as co-obligee on 

all surety unless prohibited by State or 

Tribal law. Surety may be provided as 

specified in paragraphs (a)(3)(i)(A) or (B) 

of this section. 

(A) Surety in the amount of 100 

percent of the contract cost may be 

provided using either: 

(1) A bank letter of credit; or 

(2) Performance bonds and payment 

bonds. Companies providing 

performance bonds and payment bonds 

must hold a certificate of authority as an 

acceptable surety on Federal bonds as 

listed in Treasury Circular 570 as 

amended and be legally doing business 

in the State where the project is located. 

(B) Cash deposit in escrow of at least 

50 percent of the contract amount. The 

cash deposit cannot be from funds 

awarded under this subpart. 

(ii) The surety will normally be in the 

form of performance bonds and 

payment bonds; however, when other 

methods of surety are necessary, bid 

documents must contain provisions for 

such alternative types of surety. The use 

of surety other than performance bonds 

and payment bonds requires 

concurrence by the Agency after 

submission of a justification to the 

Agency together with the proposed form 

of escrow agreement or letter of credit. 

(iii) For contracts of lesser amounts, 

the grantee may require surety. 

(iv) When surety is not provided, 

contractors must furnish evidence of 

payment in full for all materials, labor, 

and any other items procured under the 

contract in an Agency-approved form. 

(v) Applicants may request exceptions 

to surety for any of the situations 

identified in paragraphs (a)(3)(v)(A) 

through (D) of this section. Applicants 

must submit a written request to the 

Agency. 

(A) Small acquisition and 

construction procedures as specified in 

§ 4280.118(c) and (d) or § 4280.119(c) 

and (d) as applicable are used. 

(B) The proposed project is for 

equipment purchase and installation 

only and the contract costs for the 

equipment purchase and installation are 

$200,000 or less. 

(C) The proposed project is for 

equipment purchase and installation 

only and the contract costs for the 

equipment purchase and installation are 

more than $200,000 and the following 

requirements can be met: 

(1) The project involves two or fewer 

subcontractors; and 

(2) The equipment manufacturer or 

provider must act as the general 

contractor. 

(D) Other construction projects that 

have only one contractor performing 

work. 

(4) Grantees accomplishing work. In 

some instances, grantees may wish to 

perform a part of the work themselves. 

Grantees may accomplish construction 

by using their own personnel and 

equipment, provided the grantees 

possess the necessary skills, abilities, 

and resources to perform the work and 

there is not a negative impact to their 

business operation. For a grantee to 

provide a portion of the work, with the 

remainder to be completed by a 

contractor: 

(i) A clear understanding of the 

division of work must be established 

and delineated in the contract; 

(ii) Grantees are not eligible for 

payment for their own work as it is not 

an Eligible Project Cost; 

(iii) Warranty requirements applicable 

to the technology must cover the 

grantee’s work; and 

(iv) Inspection and acceptance of the 

grantee’s work must be completed by 

either: 

(A) An Inspector that will: 


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(1) Inspect, as applicable, and accept 

construction; and 

(2) Furnish inspection reports; or 

(B) A licensed engineer that will: 

(1) Prepare design drawings and 

specifications; 

(2) Inspect, as applicable, and accept 

construction; and 

(3) Furnish inspection reports. 

(b) Forms used. Technical service and 

procurement documents must be 

approved by the Agency and may be 

used only if they are customarily used 

in the area and protect the interest of the 

Applicant and the Government with 

respect to compliance with items such 

as the drawings, specifications, 

payments for work, inspections, 

completion, nondiscrimination in 

construction work and acceptance of the 

work. The Agency will not become a 

party to a construction contract or incur 

any liability under it. No contract will 

become effective until concurred in 

writing by the Agency. Such 

concurrence statement must be attached 

to and made a part of the contract. 

(c) Technical services. Unless the 

requirements of paragraph (c)(4) of this 

section can be met, all RES and EEI 

projects with Total Project Costs greater 

than $400,000 require: 

(1) The design, installation 

monitoring, testing prior to commercial 

operation, and project completion 

certification be completed by a licensed 

professional engineer (PE) or team of 

licensed PEs. Licensed PEs may be ‘‘inhouse’’ PEs or contracted PEs. 

(2) Any contract for design services 

must be subject to Agency concurrence. 

(3) Engineers must be licensed in the 

State where the project is to be 

constructed. 

(4) The Agency may grant an 

exception to the requirements of 

paragraphs (c)(1) through (3) of this 

section if the following requirements are 

met: 

(i) State or Tribal law does not require 

the use of a licensed PE; and 

(ii) The project is not complex, as 

determined by the Agency, and can be 

completed to meet the requirements of 

this program without the services of a 

licensed PE. 

(d) Design policies. Final plans and 

specifications must be reviewed by the 

Agency and approved prior to the start 

of construction. Facilities funded by the 

Agency must meet the following design 

requirements, as applicable: 

(1) Environmental review. Facilities 

financed by the Agency must undergo 

an environmental analysis in 

accordance with the National 

Environmental Policy Act and 7 CFR 

part 1940, subpart G of this title. Project 

planning and design must not only be 

responsive to the grantee’s needs but 

must consider the environmental 

consequences of the proposed project. 

Project design must incorporate and 

integrate, where practicable, mitigation 

measures that avoid or minimize 

adverse environmental impacts. 

Environmental reviews serve as a means 

of assessing environmental impacts of 

project proposals, rather than justifying 

decisions already made. Applicants may 

not take any action on a project proposal 

that will have an adverse environmental 

impact or limit the choice of reasonable 

project alternatives being reviewed prior 

to the completion of the Agency’s 

environmental review. If such actions 

are taken, the Agency has the right to 

withdraw and discontinue processing 

the application. 

(2) Architectural barriers. All facilities 

intended for or accessible to the public 

or in which physically handicapped 

persons may be employed must be 

developed in compliance with the 

Architectural Barriers Act of 1968 (42 

U.S.C. 4151 et seq.) as implemented by 

41 CFR 101–19.6, 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.). 

(3) Energy/environment. Project 

design shall consider cost effective 

energy-efficient and environmentallysound products and services. 

(4) Seismic safety. All new structures, 

fully or partially enclosed, used or 

intended for sheltering persons or 

property will be designed with 

appropriate seismic safety provisions in 

compliance with the Earthquake 

Hazards Reduction Act of 1977 (42 

U.S.C. 7701 et seq.), and EO 12699, 

Seismic Safety of Federal and Federally 

Assisted or Regulated New Building 

Construction. Designs of components 

essential for system operation and 

substantial rehabilitation of structures 

that are used for sheltering persons or 

property shall incorporate seismic safety 

provisions to the extent practicable as 

specified in 7 CFR part 1792, subpart C. 

(e) Contract methods. This paragraph 

identifies the three types of contract 

methods that can be used for projects 

funded under this subpart. The 

procurement methods, which are 

applicable to each of these contract 

methods, are specified in paragraph (f) 

of this section. 

(1) Traditional method or design-bidbuild. The services of the consulting 

engineer or architect and the general 

construction contractor must be 

procured in accordance with the 

following paragraphs. 

(i) Solicitation of offers. Solicitation of 

offers must: 

(A) Incorporate a clear and accurate 

description of the technical 

requirements for the material, product, 

or service to be procured. The 

description must not, in competitive 

procurements, contain features that 

unduly restrict competition. The 

description may include a statement of 

the qualitative nature of the material, 

product or service to be procured, and 

when necessary will set forth those 

minimum essential characteristics and 

standards to which it must conform if it 

is to satisfy its intended use. When it is 

impractical or uneconomical to make a 

clear and accurate description of the 

technical requirements, a ‘‘brand name 

or equal’’ description may be used to 

define the performance or other salient 

requirements of a procurement. The 

specific features of the named brands 

which must be met by offerors must be 

clearly stated. 

(B) Clearly specify all requirements 

which offerors must fulfill and all other 

factors to be used in evaluating bids or 

proposals. 

(ii) Contract pricing. Cost plus a 

percentage of cost method of contracting 

must not be used. 

(iii) Unacceptable bidders. The 

following will not be allowed to bid on, 

or negotiate for, a contract or 

subcontract related to the construction 

of the project: 

(A) An engineer or architect as an 

individual or entity who has prepared 

plans and specifications or who will be 

responsible for monitoring the 

construction; 

(B) Any entity in which the grantee’s 

architect or engineer is an officer, 

employee, or holds or controls a 

substantial interest in the grantee; 

(C) The grantee’s governing body 

officers, employees, or agents; 

(D) Any member of the grantee’s 

Immediate Family or partners in 

paragraphs (e)(1)(iii)(A), (B), or (C) of 

this section; or 

(E) An entity which employs, or is 

about to employ, any person in 

paragraph (e)(1)(iii)(A), (B), (C), or (D) of 

this section. 

(iv) Contract award. Contracts must 

be made only with responsible parties 

possessing the potential ability to 

perform successfully under the terms 

and conditions of a proposed 

procurement. Consideration must 

include, but not be limited to, matters 

such as integrity, record of past 

performance, financial and technical 

resources, and accessibility to other 

necessary resources. Contracts must not 

be made with parties who are 

suspended or debarred. 


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(2) Design/build method. The Design/ 

Build Method, where the same person 

or entity provides design and 

engineering work, as well as 

construction or installation, may be 

used with Agency written approval. 

(i) Concurrence information. The 

Applicant will request Agency 

concurrence by providing the Agency at 

least the information specified in 

paragraphs (e)(2)(i)(A) through (H) of 

this section. 

(A) The grantee’s written request to 

use the Design/Build Method with a 

description of the proposed method. 

(B) A proposed scope of work 

describing in clear, concise terms the 

technical requirements for the contract. 

It shall include a nontechnical 

statement summarizing the work to be 

performed by the contractor, the results 

expected, and a proposed construction 

schedule showing the sequence in 

which the work is to be performed. 

(C) A proposed firm-fixed-price 

contract for the entire project which 

provides that the contractor will be 

responsible for any extra cost which 

result from errors or omissions in the 

services provided under the contract, as 

well as compliance with all Federal, 

State, local, and Tribal requirements 

effective on the contract execution date. 

(D) Where noncompetitive negotiation 

is proposed and found, by the Agency, 

to be an acceptable procurement 

method, then the Agency will evaluate 

documents indicating the contractor’s 

performance on previous similar 

projects in which the contractor acted in 

a similar capacity. 

(E) A detailed listing and cost 

estimate of equipment and supplies not 

included in the construction contract 

but which are necessary to properly 

operate the project. 

(F) Evidence that a qualified 

construction Inspector who is 

independent of the contractor has or 

will be hired. 

(G) Preliminary plans and outline 

specifications. However, final plans and 

specifications must be completed and 

reviewed by the Agency prior to the 

start of construction. 

(H) The grantee’s attorney’s opinion 

and comments regarding the legal 

adequacy of the proposed contract 

documents and evidence that the 

grantee has the legal authority to enter 

into and fulfill the contract. 

(ii) Agency concurrence of design/

build method. The Agency will review 

the material submitted by the Applicant. 

When all items are acceptable, the 

Agency approval official will concur in 

the use of the Design/Build Method for 

the proposal. 

(iii) Forms used. Agency approved 

contract documents must be used 

provided they are customarily used in 

the area and protect the interest of the 

Applicant and the Agency with respect 

to compliance with items such as the 

drawings, specifications, payments for 

work, inspections, completion, 

nondiscrimination in construction 

work, and acceptance of the work. The 

Agency will not become a party to a 

construction contract or incur any 

liability under it. No contract shall 

become effective until concurred, in 

writing, by the Agency. Such 

concurrence statement must be attached 

to and made a part of the contract. 

(iv) Contract provisions. Contracts 

will have a listing of attachments and 

must contain the following: 

(A) The contract sum; 

(B) The dates for starting and 

completing the work; 

(C) The amount of liquidated 

damages, if any, to be charged; 

(D) The amount, method, and 

frequency of payment; 

(E) Surety provisions that meet the 

requirements of paragraph (a)(3) of this 

section; 

(F) The requirement that changes or 

additions must have prior written 

approval of the Agency as identified in 

the letter of conditions; 

(G) Contract review and concurrence. 

The grantee’s attorney will review the 

executed contract documents, including 

performance and payment bonds, and 

will certify that they are in compliance 

with Federal, State, or Tribal law, and 

that the persons executing these 

documents have been properly 

authorized to do so. The contract 

documents, engineer’s recommendation 

for award, and bid tabulation sheets will 

be forwarded to the Agency for 

concurrence prior to awarding the 

contract. All contracts will contain a 

provision that they are not effective 

until they have been concurred, in 

writing, by the Agency; 

(H) This part does not relieve the 

grantee of any responsibilities under its 

contract. The grantee is responsible for 

the settlement of all contractual and 

administrative issues arising out of 

procurement entered into in support of 

Agency funding. These include, but are 

not limited to, source evaluation, 

protests, disputes, and claims. Matters 

concerning violation of laws are to be 

referred to the applicable local, State, 

Tribal, or Federal authority; and 

(3) Construction management. 

Construction managers as a constructor 

(CMc) acts in the capacity of a general 

contractor and is financially and 

professionally responsible for the 

construction. This type of construction 

management is also referred to as 

construction manager ‘‘At Risk.’’ The 

construction contract is between the 

grantee and the CMc. The CMc in turn 

subcontracts for some or all of the work. 

The CMc will need to carry the Agency 

required 100 percent surety and 

insurance, as required under paragraph 

(a)(3) of this section. Projects using 

construction management must follow 

the requirements of (e)(2)(i) through (iv) 

of this section. 

(f) Procurement methods. 

Procurement must be made by one of 

the following methods: competitive 

sealed bids (formal advertising); 

competitive negotiation; or 

noncompetitive negotiation. 

Competitive sealed bids (formal 

advertising) are the preferred 

procurement method for construction 

contracts. 

(1) Competitive sealed bids. In 

competitive sealed bids (formal 

advertising), sealed bids are publicly 

solicited and a firm-fixed-price contract 

(lump sum or unit price) is awarded to 

the responsible bidder whose bid, 

conforming with all the material terms 

and conditions of the invitation for bids, 

is lowest, price and other factors 

considered. When using this method, 

the following will apply: 

(i) At a sufficient time prior to the 

date set for opening of bids, bids must 

be solicited from an adequate number of 

qualified sources. In addition, the 

invitation must be publicly advertised. 

(ii) The invitation for bids, including 

specifications and pertinent 

attachments, must clearly define the 

items or services needed in order for the 

bidders to properly respond to the 

invitation under paragraph (f)(1) of this 

section. 

(iii) All bids must be opened publicly 

at the time and place stated in the 

invitation for bids. 

(iv) A firm-fixed-price contract award 

must be made by written notice to that 

responsible bidder whose bid, 

conforming to the invitation for bids, is 

lowest. When specified in the bidding 

documents, factors such as discounts 

and transportation costs will be 

considered in determining which bid is 

lowest. 

(v) The Applicant, with the 

concurrence of the Agency, will 

consider the amount of the bids or 

proposals, and all conditions listed in 

the invitation. On the basis of these 

considerations, the Applicant will select 

and notify the lowest responsible 

bidder. The contract will be awarded 

using an Agency-approved form. 

(vi) Any or all bids may be rejected by 

the grantee when it is in their best 

interest. 


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(2) Competitive negotiation. In 

competitive negotiations, proposals are 

requested from a number of sources. 

Negotiations are normally conducted 

with more than one of the sources 

submitting offers (offerors). Competitive 

negotiation may be used if conditions 

are not appropriate for the use of formal 

advertising and where discussions and 

bargaining with a view to reaching 

agreement on the technical quality, 

price, other terms of the proposed 

contract and specifications are 

necessary. If competitive negotiation is 

used for procurement, the following 

requirements will apply: 

(i) Proposals must be solicited from 

two qualified sources, unless otherwise 

approved by the Agency, to permit 

reasonable competition consistent with 

the nature and requirements of the 

procurement. 

(ii) The Request for Proposal must 

identify all significant evaluation 

factors, including price or cost where 

required, and their relative importance. 

(iii) The grantee must provide 

mechanisms for technical evaluation of 

the proposals received, determination of 

responsible offerors for the purpose of 

written or oral discussions, and 

selection for contract award. 

(iv) Award may be made to the 

responsible offeror whose proposal will 

be most advantageous to the grantee, 

price and other factors considered. 

Unsuccessful offerors must be promptly 

notified. 

(v) Owners may utilize competitive 

negotiation procedures for procurement 

of architectural/engineering and other 

professional services, whereby the 

offerors’ qualifications are evaluated 

and the most qualified offeror is 

selected, subject to negotiations of fair 

and reasonable compensation. 

(3) Noncompetitive negotiation. 

Noncompetitive negotiation is 

procurement through solicitation of a 

proposal from only one source. 

Noncompetitive negotiation may be 

used when the award of a contract is not 

feasible under small acquisition and 

construction procedures, competitive 

sealed bids (formal advertising) or 

competitive negotiation procedures. 

Circumstances under which a contract 

may be awarded by noncompetitive 

negotiations are limited to the 

following: 

(i) After solicitation of a number of 

sources, competition is determined 

inadequate; or 

(ii) No acceptable bids have been 

received after formal advertising. 

(4) Additional procurement methods. 

The grantee may use additional 

innovative procurement methods 

provided the grantee receives prior 

written approval from the Agency. 

Contracts will have a listing of 

attachments and the minimum 

provisions of the contract will include: 

(i) The contract sum; 

(ii) The dates for starting and 

completing the work; 

(iii) The amount of liquidated 

damages to be charged; 

(iv) The amount, method, and 

frequency of payment; 

(v) Whether or not surety bonds will 

be provided; and 

(vi) The requirement that changes or 

additions must have prior written 

approval of the Agency. 

(g) Contracts awarded prior to 

applications. Owners awarding 

construction or other procurement 

contracts prior to filing an application, 

must provide evidence that is 

satisfactory to the Agency that the 

contract was entered into without intent 

to circumvent the requirements of 

Agency regulations. 

(1) Modifications. The contract shall 

be modified to conform to the 

provisions of this subpart. Where this is 

not possible, modifications will be made 

to the extent practicable and, as a 

minimum, the contract must comply 

with all State and local laws and 

regulations as well as statutory 

requirements and executive orders 

related to the Agency financing. 

(2) Consultant’s certification. Provide 

a certification by an engineer, licensed 

in the State where the facility is 

constructed, that any construction 

performed complies fully with the plans 

and specifications. 

(3) Owner’s certification. Provide a 

certification by the owner that the 

contractor has complied with applicable 

statutory and executive requirements 

related to Agency financing. 

(h) Contract administration. Contract 

administration must comply with 7 CFR 

1780.76. If another authority, such as a 

Federal, State, or Tribal agency, is 

providing funding and requires 

oversight of inspections, change orders, 

and pay requests, the Agency will 

accept copies of their reports or forms 

as meeting oversight requirements of the 

Agency. 

Renewable Energy System and Energy 

Efficiency Improvement Guaranteed 

Loans 

§ 4280.125 Compliance with §§ 4279.29 

through 4279.99 of this chapter. 

All loans guaranteed under this 

subpart must comply with the 

provisions found in §§ 4279.29 through 

4279.99 of this chapter. 

§ 4280.126 Guarantee/annual renewal fee. 

Except for the conditions for receiving 

reduced guarantee fee and unless 

otherwise specified in a Federal 

Register notice, the provisions specified 

in § 4279.107 of this chapter apply to 

loans guaranteed under this subpart. 

§ 4280.127 Borrower eligibility. 

To receive a RES or EEI guaranteed 

loan under this subpart, a borrower 

must be eligible under § 4280.112. In 

addition, borrower must meet the 

requirements of paragraphs (a) through 

(e) of this section. Borrowers who 

receive a loan guaranteed under this 

subpart must continue to meet the 

requirements specified in this section. 

(a) Type of borrower. The borrower 

must be an Agricultural Producer or 

Rural Small Business. 

(b) Ownership. The borrower must: 

(1) Own or be the prospective owner 

of the project; and 

(2) Own or control the site for the 

project at the time of application and, if 

the loan is guaranteed under this 

subpart, for the term of the loan. 

(c) Revenues and expenses. The 

borrower must have available or be able 

to demonstrate, 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 term of the loan. In 

addition, the borrower must control the 

revenues and expenses of the project, 

including its operation and 

maintenance, for which the loan is 

sought. Notwithstanding the provisions 

of this paragraph, the borrower may 

employ a Qualified Consultant under 

contract to manage revenues and 

expenses of the project and its operation 

and/or maintenance. 

(d) Legal authority and responsibility. 

Each borrower and lender must have the 

legal authority necessary to apply for 

and carry out the purpose of the 

guaranteed loan. 

(e) Universal identifier and SAM. 

Unless exempt under 2 CFR 25.110, the 

borrower must: 

(1) Be registered in the SAM prior to 

submitting an application; 

(2) Maintain an active SAM 

registration with current information at 

all times during which it has an active 

Federal award or an application under 

consideration by the Agency; and 

(3) Provide its DUNS number in each 

application it submits to the Agency. 

§ 4280.128 Project eligibility. 

For a RES or EEI project to be eligible 

to receive a guaranteed loan under this 

subpart, the project must meet each 

criteria specified in § 4280.113(a) 


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through (f). In addition, the purchase of 

an existing RES that meets the criteria 

specified in § 4280.113(b) through (f) is 

an eligible project under this section. 

§ 4280.129 Guaranteed loan funding. 

(a) The amount of the loan that will 

be made available to an eligible project 

under this subpart will not exceed 75 

percent of Eligible Project Costs. Eligible 

Project Costs are specified in paragraph 

(e) of this section. Ineligible project 

costs are identified in paragraph (f) of 

this section. 

(b) The minimum amount of a 

guaranteed loan made to a borrower will 

be $5,000, less any program grant 

amounts. The maximum amount of a 

guaranteed loan made to a borrower is 

$25 million. 

(c) The percentage of guarantee, up to 

the maximum allowed by this section, 

will be negotiated between the lender 

and the Agency. The maximum 

percentage of guarantee is: 

(1) 85 percent for loans of $600,000 or 

less; 

(2) 80 percent for loans greater than 

$600,000 up to and including $5 

million; 

(3) 70 percent for loans greater than 

$5 million up to and including $10 

million; and 

(4) 60 percent for loans greater than 

$10 million. 

(d) The total amount of the loans 

guaranteed under this subpart to one 

borrower, including the guaranteed and 

unguaranteed portion, the outstanding 

principal, and interest balance of any 

existing loans guaranteed under this 

program and the new loan request, must 

not exceed $25 million. 

(e) Eligible Project Costs are only 

those costs associated with the items 

identified in § 4280.114(c)(1) through 

(c)(6) and paragraphs (e)(1) through (6) 

of this section as long as the items 

identified in both sets of paragraphs are 

directly related to the RES or EEI. The 

Eligible Project Costs identified in 

paragraphs (e)(1) through (4) of this 

section cannot exceed more than 5 

percent of the loan amount. 

(1) Working capital. 

(2) Land acquisition. 

(3) Routine lender fees, as described 

in § 4279.120(a) of this chapter. 

(4) Energy Assessments, Energy 

Audits, technical reports, business 

plans, and Feasibility Studies 

completed and acceptable to the 

Agency, except if any portion was 

financed by any other Federal or State 

grant or payment assistance, including, 

but not limited to, a REAP Energy 

Assessment or Energy Audit, or REDA 

grant. 

(5) Building and equipment for an 

existing RES. 

(6) Refinancing outstanding debt 

when the original purpose of the debt 

being refinanced meets the eligible 

project requirements of § 4280.128. 

Existing debt may be refinanced 

provided that: 

(i) The project identified in the 

application meets the requirements of 

§ 4280.128; 

(ii) The debt being refinanced must be 

less than 50 percent of the overall loan; 

(iii) Refinancing is necessary to 

improve cash flow and viability of the 

project identified in the application; 

(iv) At the time of application, the 

loan being refinanced has been current 

for at least the past 12 months (unless 

such status is achieved by the lender 

forgiving the borrower’s debt); and 

(v) The lender is providing better rates 

or terms for the loan being refinanced. 

(f) Ineligible project costs include, but 

are not limited to costs identified in 

§§ 4280.114(d)(1), (d)(2), (d)(4) through 

(d)(9), guaranteeing loans made by other 

Federal agencies, subordinated owner 

debt, and loans made with the proceeds 

of any obligation the interest on which 

is excludable from income under 26 

U.S.C. 103 or a successor statute. Funds 

generated through the issuance of taxexempt obligations may neither be used 

to purchase the guaranteed portion of 

any Agency guaranteed loan nor may an 

Agency guaranteed loan serve as 

collateral for a tax-exempt issue. The 

Agency may guarantee a loan for a 

project which involves tax-exempt 

financing only when the guaranteed 

loan funds are used to finance a part of 

the project that is separate and distinct 

from the part which is financed by the 

tax-exempt obligation, and the 

guaranteed loan has at least a parity 

security position with the tax-exempt 

obligation. 

(g) In determining the amount of a 

loan awarded, the Agency will take into 

consideration the criteria specified in 

§ 4280.114(e). 

§ 4280.130 Loan processing. 

(a) Processing RES and EEI guaranteed 

loans under this subpart must comply 

with the provisions found in 

§§ 4279.120 through 4279.187 of this 

chapter, except for those sections 

specified in paragraph (b) of this 

section, and as provided in §§ 4280.131 

through 4280.142. 

(b) The provisions found in 

§§ 4279.150, 4279.155, 4279.161, and 

4279.175 of this chapter do not apply to 

loans guaranteed under this subpart. 

§ 4280.131 Credit quality. 

Except for § 4279.131(d) of this 

chapter, the credit quality provisions of 

§ 4279.131 of this chapter apply to this 

subpart. Instead of complying with 

§ 4279.131(d), borrowers must 

demonstrate evidence of cash equity 

injection in the project of not less than 

25 percent of total Eligible Project Costs. 

Cash equity injection must be in the 

form of cash. For guaranteed loan-only 

requests, Federal grant funds may be 

counted as cash equity. 

§ 4280.132 Financial statements. 

All financial statements must be in 

accordance with § 4279.137 of this 

chapter except that, for Agricultural 

Producers, the borrower may provide 

financial information in the manner that 

is generally required by agricultural 

commercial lenders. 

§ 4280.133 [Reserved] 

§ 4280.134 Personal and corporate 

guarantees. 

Except for Passive Investors, all 

personal and corporate guarantees must 

be in accordance with § 4279.149 of this 

chapter. 

§ 4280.135 Scoring RES and EEI 

guaranteed loan-only applications. 

(a) Evaluation criteria. The Agency 

will score each guaranteed loan-only 

application received using the 

evaluation criteria specified in 

§ 4280.120, except that, in 

§ 4280.120(b)(1), the calculation will be 

made on the loan amount requested and 

not on the grant amount requested. 

(b) Minimum score. The Agency will 

establish a minimum score that 

guaranteed loan-only applications must 

meet in order to be considered for 

funding in periodic competitions, as 

specified in § 4280.139(a). The 

minimum score is 50 points, and may be 

adjusted through the publishing of a 

Notice in the Federal Register. Any 

application that does not meet the 

applicable minimum score is only 

eligible to compete in a National 

competition as specified in 

§ 4280.139(c)(2). 

(c) Notification. The Agency will 

notify in writing each lender and 

borrower whose application does not 

meet the applicable minimum score. 

§ 4280.136 [Reserved] 

§ 4280.137 Application and 

documentation. 

The requirements in this section 

apply to guaranteed loan applications 

for RES and EEI projects under this 

subpart. 

(a) General. Guaranteed loan 

applications must be submitted in 

accordance with the guaranteed loan 

requirements specified in § 4280.110 

and in this section. 


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(b) Application content for 

guaranteed loans greater than $600,000. 

Each guaranteed loan-only application 

for greater than $600,000 must contain 

the information specified in paragraphs 

(b)(1) and (2) of this section. 

(1) Application content. Each 

application submitted under this 

paragraph must contain the information 

specified in §§ 4280.117(a)(6) through 

(9) and (b) through (e) and as specified 

in paragraph (b)(2) of this section, and 

must present the information in the 

same order as shown in § 4280.117. 

(2) Lender forms, certifications, and 

agreements. Each application submitted 

under paragraph (b) of this section must 

contain applicable forms, certifications, 

and agreements specified in paragraphs 

(b)(2)(i) through (xi) of this section 

instead of the forms and certifications 

specified in § 4280.117(a). 

(i) A completed Form RD 4279–1, 

‘‘Application for Loan Guarantee.’’ 

(ii) Form RD 1940–20. 

(iii) Identify the ethnicity, race, and 

gender of the applicant. This 

information is optional and is not 

required for a Complete Application. 

(iv) A personal credit report from an 

Agency approved credit reporting 

company for each owner, partner, 

officer, director, key employee, and 

stockholder owning 20 percent or more 

interest in the borrower’s business 

operation, except Passive Investors and 

those corporations listed on a major 

stock exchange. 

(v) Appraisals completed in 

accordance with § 4279.144 of this 

chapter. Completed appraisals should 

be submitted when the application is 

filed. If the appraisal has not been 

completed when the application is filed, 

the Lender must submit an estimated 

appraisal. Agency approval in the form 

of a Conditional Commitment may be 

issued subject to receipt of adequate 

appraisals. In all cases, a completed 

appraisal must be submitted prior to the 

loan being closed. 

(vi) Commercial credit reports 

obtained by the lender on the borrower 

and any parent, affiliate, and subsidiary 

firms. 

(vii) Current personal and corporate 

financial statements of any guarantors. 

(viii) Financial information is 

required on the total operation of the 

Agricultural Producer/Rural Small 

Business and its parent, subsidiary, or 

affiliates. All information submitted 

under this paragraph must be 

substantiated by authoritative records. 

(A) Historical financial statements. 

Provide historical financial statements, 

including income statements and 

balance sheets, according to the Annual 

Receipts time frames specified in 

paragraphs § 4280.117(b)(1)(i)(A) 

through (C), as applicable to the length 

of time that Applicant’s Rural Small 

Business or agricultural operation has 

been in operation. Agricultural 

Producers may present historical 

financial information in the format that 

is generally required by commercial 

agriculture lenders. 

(B) Current balance sheet and income 

statement. Provide a current balance 

sheet and income statement presented 

in accordance with GAAP and dated 

within 90 days of the application 

submittal. Agricultural Producers may 

present financial information in the 

format that is generally required by 

commercial agriculture lenders or in a 

similar format used when submitting 

the same information in support of the 

borrower’s Federal income tax returns. 

(C) Pro forma financial statements. 

Provide pro forma balance sheet at startup of the borrower’s business operation 

that reflects the use of the loan proceeds 

or grant award; 3 additional years of 

financial statements, indicating the 

necessary start-up capital, operating 

capital, and short-term credit; and 

projected cash flow and income 

statements for 3 years supported by a 

list of assumptions showing the basis for 

the projections. 

(ix) Lender’s complete comprehensive 

written analysis in accordance with 

§ 4280.131. 

(x) A certification by the lender that 

the borrower is eligible, the loan is for 

authorized purposes, and there is 

reasonable assurance of repayment 

ability based on the borrower’s history, 

projections, equity, and the collateral to 

be obtained. 

(xi) A proposed loan agreement or a 

sample loan agreement with an attached 

list of the proposed loan agreement 

provisions. The following requirements 

must be addressed in the proposed or 

sample loan agreement: 

(A) Prohibition against assuming 

liabilities or obligations of others; 

(B) Restriction on dividend payments; 

(C) Limitation on the purchase or sale 

of equipment and fixed assets; 

(D) Limitation on compensation of 

officers and owners; 

(E) Minimum working capital or 

current ratio requirement; 

(F) Maximum debt-to-net worth ratio; 

(G) Restrictions concerning 

consolidations, mergers, or other 

circumstances; 

(H) Limitations on selling the 

business without the concurrence of the 

lender; 

(I) Repayment and amortization 

provisions of the loan; 

(J) List of collateral and lien priority 

for the loan, including a list of persons 

and corporations guaranteeing the loan 

with a schedule for providing the lender 

with personal and corporate financial 

statements. Financial statements for 

corporate and personal guarantors must 

be updated at least annually once the 

guarantee is provided; 

(K) Type and frequency of financial 

statements to be required from the 

borrower for the duration of the loan; 

(L) The addition of any requirements 

imposed by the Agency in its 

Conditional Commitment; 

(M) A reserved section for any Agency 

environmental requirements; and 

(N) A provision for the lender or the 

Agency to have reasonable access to the 

project and its performance information 

during its useful life or the term of the 

loan, whichever is longer, including the 

periodic inspection of the project by a 

representative of the lender or the 

Agency. 

(c) Application content for guaranteed 

loans of $600,000 or Less. Each 

guaranteed loan-only application for 

$600,000 or less must contain the 

information specified in paragraphs 

(c)(1) and (2) of this section. 

(1) Application contents. If the 

application is for less than $200,000, but 

more than $80,000, the application must 

contain the information specified in 

§ 4280.118(b), except as specified in 

paragraph (c)(2) of this section (e.g., the 

grant forms under § 4280.117(a) are not 

required to be submitted), and must 

present the information in the same 

order as shown in § 4280.118(b). If the 

application is for $200,000 and greater, 

the application must contain the 

information specified in § 4280.117, 

except as specified in paragraph (c)(2) of 

this section, and must present the 

information in the same order as shown 

in § 4280.117. 

(2) Lender forms, certifications, and 

agreements. Each application submitted 

under paragraph (c) of this section must 

use Form RD 4279–1A, ‘‘Application for 

Loan Guarantee, Short Form,’’ and the 

forms and certifications specified in 

paragraphs (b)(2)(ii), (iii) (if not 

previously submitted), (v), (viii), (ix), 

(x), and (xi) of this section. The lender 

must have the documentation contained 

in paragraphs (b)(2)(iv), (vi), and (vii) 

available in its files for the Agency’s 

review. 

§ 4280.138 Evaluation of RES and EEI 

guaranteed loan applications. 

The provisions of § 4279.165 of this 

chapter apply to this subpart, although 

the Agency will determine borrower and 

project eligibility in accordance with the 

provisions of this subpart. 


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§ 4280.139 Selecting RES and EEI 

guaranteed loan-only applications for 

award. 

Complete and eligible guaranteed 

loan-only applications that are ready to 

be approved will be processed 

according to this section, unless 

otherwise modified by the Agency in a 

notice published in the Federal 

Register. Guaranteed loan applications 

that are part of a grant-guaranteed loan 

combination request will be processed 

according to § 4280.165(d). 

(a) Competing applications. On a 

periodic basis, the Agency will compete 

each eligible application that is ready to 

be funded and that has a priority score, 

as determined under § 4280.135, that 

meets or exceeds the applicable 

minimum score. Higher scoring 

applications will receive first 

consideration. An application that does 

not meet the minimum score will be 

competed as provided in paragraph 

(c)(2) of this section. 

(b) Funding selected applications. As 

applications are funded, the remaining 

guaranteed funding authority may be 

insufficient to fund the next highest 

scoring application or applications in 

those cases where two or more 

applications receive the same priority 

score. The procedures described in 

paragraphs (b)(1) and (2) of this section 

may be repeated as necessary in order 

to consider all applications as 

appropriate. 

(1) If the remaining funds are 

insufficient to fund the next highest 

scoring project completely, the Agency 

will notify the lender and offer the 

lender the opportunity to accept the 

level of funds available. If the lender 

does not accept the offer, the Agency 

will process the next highest scoring 

application. 

(2) If the remaining funds are 

insufficient to fund each project that 

receives the same priority score, the 

Agency will notify each lender and offer 

the lenders the opportunity to accept 

the level of funds available and the level 

of funds the Agency offers to each such 

lender will be proportional to the 

amount of the lenders’ requests. If funds 

are still remaining, the Agency may 

consider funding the next highest 

scoring project. 

(3) Any lender offered less than the 

full amount requested under either 

paragraph (b)(1) or (2) of this section 

may either accept the funds available or 

can request to compete in the next 

competition. Under no circumstances 

would there be an assurance that the 

project(s) would be funded in 

subsequent competitions. 

(4) If a lender agrees to the lower loan 

funding offered by the Agency under 

either paragraph (b)(1) or (2) of this 

section, the lender must certify that the 

purpose(s) of the project can still be met 

at the lower funding level and must 

provide documentation that the 

borrower has obtain the remaining total 

funds needed to complete the project. 

(c) Handling of ranked applications 

not funded. How the Agency disposes of 

ranked applications that have not 

received funding depends on whether 

the application’s priority score is equal 

to or greater than the minimum score or 

is less than the minimum score. 

(1) An application with a priority 

score equal to or greater than the 

minimum score that is not funded in a 

periodic competition will be retained by 

the Agency for consideration in 

subsequent competitions. If an 

application is not selected for funding 

after 12 months, including the first 

month in which the application was 

competed, the application will be 

withdrawn by the Agency from further 

funding consideration. 

(2) An application with a priority 

score less than the applicable minimum 

priority score will be competed against 

all other guaranteed loan-only 

applications in a National competition 

on the first business day of September 

of the Federal Fiscal Year in which the 

application is ready for funding. If the 

application is not funded, the 

application will be withdrawn by the 

Agency from further funding 

consideration. 

(d) Unused funding. After each 

periodic competition, the Agency will 

roll any remaining guaranteed funding 

authority into the next competition. At 

the end of each Federal Fiscal Year, the 

Agency may elect at its discretion to 

allow any remaining multi-year funds to 

be carried over to the next Federal 

Fiscal Year rather than selecting a lower 

scoring application. 

(e) Commencement of the project. The 

Applicant assumes all risks if the choice 

is made to purchase the technology 

proposed or start construction of the 

project to be financed in the guaranteed 

loan-only application after the Complete 

Application has been received by the 

Agency, but prior to award 

announcement. 

§ 4280.140 [Reserved] 

§ 4280.141 Changes in borrower. 

All changes in borrowers must be in 

accordance with § 4279.180 of this 

chapter, but the eligibility requirements 

of this subpart apply. 

§ 4280.142 Conditions precedent to 

issuance of loan note guarantee. 

The provisions of § 4279.181 of this 

chapter apply except for § 4279.181(b). 

In addition, paragraphs (a) and (b) of 

this section must be met. 

(a) The project has been performing at 

a steady state operating level in 

accordance with the technical 

requirements, plans, and specifications, 

conforms with applicable Federal, State, 

and local codes, and costs have not 

exceeded the amount approved by the 

lender and the Agency. 

(b) Where applicable, the lender must 

provide to the Agency a copy of the 

executed Power Purchase Agreement. 

§ 4280.143 Requirements after project 

construction. 

Once the project has been 

constructed, the lender must provide 

the Agency reports from the borrower in 

accordance with § 4280.123(j)(3), as 

applicable. 

§§ 4280.144–4280.151 [Reserved] 

§ 4280.152 Servicing guaranteed loans. 

Except as specified in paragraphs (a) 

and (b) of this section, all loans 

guaranteed under this subpart must be 

in compliance with the provisions 

found in § 4287.101(b) and in 

§§ 4287.107 through 4287.199 of this 

chapter. 

(a) Documentation of request. In 

complying with § 4287.134(a) of this 

chapter, all transfers and assumptions 

must be to eligible borrowers in 

accordance with § 4280.127. 

(b) Additional loan funds. In 

complying with § 4287.134(e) of this 

chapter, loans to provide additional 

funds in connection with a transfer and 

assumption must be considered as a 

new loan application under § 4280.137. 

§§ 4280.153–4280.164 [Reserved] 

Combined Funding for Renewable 

Energy Systems and Energy Efficiency 

Improvements 

§ 4280.165 Combined grant and 

guaranteed loan funding requirements. 

The requirements for a RES or EEI 

project for which an Applicant is 

seeking a combined grant and 

guaranteed loan are specified in this 

section. 

(a) Eligibility. All Applicants must be 

eligible under the requirements 

specified in § 4280.112. If the Applicant 

is seeking a grant, the Applicant must 

also meet the Applicant eligibility 

requirements specified in § 4280.112. If 

the Applicant is seeking a loan, the 

Applicant must also meet the borrower 

eligibility requirements specified in 

§ 4280.127. Projects must meet the 

project eligibility requirements specified 

in §§ 4280.113 and 4280.128, as 

applicable. 


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(b) Funding. Funding provided under 

this section is subject to the limits 

described in paragraphs (b)(1) and (2) of 

this section. 

(1) The amount of any combined grant 

and guaranteed loan shall not exceed 75 

percent of Eligible Project Costs and the 

grant portion shall not exceed 25 

percent of Eligible Project Costs. For 

purposes of combined funding requests, 

Eligible Project Costs are based on the 

total costs associated with those items 

specified in §§ 4280.114(c) and 

4280.129(e). The Applicant must 

provide the remaining total funds 

needed to complete the project. 

(2) The minimum combined funding 

request allowed is $5,000, with the grant 

portion of the funding request being at 

least $1,500 for EEI projects and at least 

$2,500 for RES projects. 

(c) Application and documentation. 

When applying for combined funding, 

the Applicant must submit separate 

applications for both types of assistance 

(grant and guaranteed loan). The 

separate applications must be submitted 

simultaneously by the lender. 

(1) Each application must meet the 

requirements, including the requisite 

forms and certifications, specified in 

§§ 4280.117, 4280.118, 4280.119, and 

4280.137, as applicable, and as follows: 

(i) Notwithstanding Form RD 4279–1, 

the SAM number and its expiration date 

must be provided prior to obligation of 

funds; 

(ii) A combined funding request for a 

guaranteed loan greater than $600,000 

must contain the information specified 

in § 4280.137(b)(1); and 

(iii) A combined funding request for 

a guaranteed loan of $600,000 or less 

must contain the information specified 

in § 4280.137(c)(1) and (2). 

(2) Where both the grant application 

and the guaranteed loan application 

provisions request the same 

documentation, form, or certification, 

such documentation, form, or 

certification may be submitted once; 

that is, the combined application does 

not need to contain duplicate 

documentation, forms, and 

certifications. 

(d) Evaluation. The Agency will 

evaluate each application according to 

§ 4280.115(c). The Agency will select 

applications according to applicable 

procedures specified in § 4280.121(a) 

unless modified by this section. A 

combination loan and grant request will 

be selected based upon the grant score 

of the project. 

(e) Interest rate and terms of loan. The 

interest rate and terms of the guaranteed 

loan for the loan portion of the 

combined funding request will be 

determined based on the procedures 

specified in §§ 4279.125 and 4279.126 

of this chapter for guaranteed loans. 

(f) Other provisions. In addition to the 

requirements specified in paragraphs (a) 

through (e) of this section, the combined 

funding request is subject to the other 

requirements specified in this subpart, 

including, but not limited to, processing 

and servicing requirements, as 

applicable, as described in paragraphs 

(f)(1) through (6) of this section. 

(1) All other provisions of §§ 4280.101 

through 4280.111 apply to the combined 

funding request. 

(2) All other provisions of §§ 4280.112 

through 4280.123 apply to the grant 

portion of the combined funding request 

and § 4280.124 applies if the project for 

which the grant is sought has a Total 

Project Cost of $200,000 and greater. 

(3) All other provisions of §§ 4280.125 

through 4280.152, as applicable, apply 

to the guaranteed loan portion of the 

combined funding request. 

(4) All guarantee loan and grant 

combination applications that are 

ranked, but not funded, will be 

processed in accordance with 

provisions found in § 4280.121(d), (e), 

and (f). 

(5) Applicants whose combination 

applications are approved for funding 

must utilize both the loan and the grant. 

The guaranteed loan will be closed prior 

to grant funds being disbursed. The 

Agency reserves the right to reduce the 

total loan guarantee and grant award, as 

appropriate, if construction costs are 

less than projected or if funding sources 

differ from those provided in the 

application. 

(6) Compliance reviews will be 

conducted on a combined grant and 

guaranteed loan request. The 

compliance review will encompass the 

entire operation, program, or activity to 

be funded with Agency assistance. 

§§ 4280.166–4280.185 [Reserved] 

Energy Audit and Renewable Energy 

Development Assistance (REDA) Grants 

§ 4280.186 Applicant eligibility. 

To be eligible for an Energy Audit 

grant or a REDA grant under this 

subpart, the Applicant must meet each 

of the criteria, as applicable, specified in 

paragraphs (a) through (d) of this 

section. The Agency will determine an 

Applicant’s eligibility. 

(a) The Applicant must be one of the 

following: 

(1) A unit of State, Tribal, or local 

government; 

(2) A land-grant college or university, 

or other Institution of Higher Education; 

(3) A rural electric cooperative; 

(4) A Public Power Entity; 

(5) An Instrumentality of a State, 

Tribal, or local government; or 

(6) A Council. 

(b) The Applicant must have 

sufficient capacity to perform the 

Energy Audit or REDA activities 

proposed in the application to ensure 

success. The Agency will make this 

assessment based on the information 

provided in the application. 

(c) The Applicant must have the legal 

authority necessary to apply for and 

carry out the purpose of the grant. 

(d) The Applicant must: 

(1) Be registered in the SAM prior to 

submitting an application; 

(2) Maintain an active SAM 

registration with current information at 

all times during which it has an active 

Federal award or an application under 

consideration by the Agency; and 

(3) Provide its DUNS number in each 

application it submits to the Agency. 

Generally, the DUNS number is 

included on Standard Form–424. 

§ 4280.187 Project eligibility. 

To be eligible for an Energy Audit or 

a REDA grant, the grant funds for a 

project must be used by the grantee to 

assist Agricultural Producers or Rural 

Small Businesses in one or both of the 

purposes specified in paragraphs (a) and 

(b) of this section, and must also comply 

with paragraphs (c) through (f) of this 

section. 

(a) Conducting and promoting Energy 

Audits. 

(b) Conducting and promoting REDA 

by providing to Agricultural Producers 

and Rural Small Businesses 

recommendations and information on 

how to improve the energy efficiency of 

their operations and to use Renewable 

Energy technologies and resources in 

their operations. 

(c) Energy Audit and REDA can be 

provided only to a project located in a 

Rural Area unless the grantee of such 

project is an Agricultural Producer. If 

the project is owned by an Agricultural 

Producer, the project for which such 

services are being provided may be 

located in either a Rural or non-Rural 

Area. If the Agricultural Producer’s 

project is in a non-Rural Area, then the 

Energy Audit or REDA can only be for 

an EEI or RES on components that are 

directly related to and their use and 

purpose is limited to the Agricultural 

Producer’s project, such as vertically 

integrated operations, that are part of 

and co-located with the agricultural 

production operation. 

(d) The Energy Audit or REDA must 

be provided to a recipient in a State. 

(e) The Applicant must have a place 

of business in a State. 

(f) The Applicant is cautioned against 

taking any actions or incurring any 


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obligations prior to the Agency 

completing the environmental review 

that would either limit the range of 

alternatives to be considered or that 

would have an adverse effect on the 

environment, such as the initiation of 

construction. If the Applicant takes any 

such actions or incurs any such 

obligations, it could result in project 

ineligibility. 

§ 4280.188 Grant funding for Energy Audit 

and Renewable Energy Development 

Assistance. 

(a) Maximum grant amount. The 

maximum aggregate amount of Energy 

Audit and REDA grants awarded to any 

one recipient under this subpart cannot 

exceed $100,000 in a Federal Fiscal 

Year. Grant funds awarded for Energy 

Audit and REDA projects may be used 

only to pay Eligible Project Costs, as 

described in paragraph (b) of this 

section. Ineligible project costs are listed 

in paragraph (c) of this section. 

(b) Eligible project costs. Eligible 

Project Costs for Energy Audits and 

Renewable Energy Development 

Assistance are those costs incurred after 

the date a Complete Application has 

been received by the Agency and that 

are directly related to conducting and 

promoting Energy Audits and REDA, 

which include but are not limited to: 

(1) Salaries; 

(2) Travel expenses; 

(3) Office supplies (e.g., paper, pens, 

file folders); and 

(4) Expenses charged as a direct cost 

or as an indirect cost of up to a 

maximum of 5 percent for administering 

the grant. 

(c) Ineligible project costs. Ineligible 

project costs for Energy Audit and 

REDA grants include, but are not 

limited to: 

(1) Payment for any constructionrelated activities; 

(2) Purchase or lease of equipment; 

(3) Payment of any judgment or debt 

owed to the United States; 

(4) Any goods or services provided by 

a person or entity who has a conflict of 

interest as provided in § 4280.106; 

(5) Any costs of preparing the 

application package for funding under 

this subpart; and 

(6) Funding of political or lobbying 

activities. 

(d) Energy audits. A grantee that 

conducts an Energy Audit must require 

that, as a condition of providing the 

Energy Audit, the Agricultural Producer 

or Rural Small Business pay at least 25 

percent of the cost of the Energy Audit. 

Further, the amount paid by the 

Agricultural Producer or Rural Small 

Business will be retained by the grantee 

as a contribution towards the cost of the 

Energy Audit and considered program 

income. The grantee may use the 

program income to further the objectives 

of their project or Energy Audit services 

offered during the grant period in 

accordance with Departmental 

Regulations. 

§ 4280.189 [Reserved] 

§ 4280.190 Energy Audit and REDA grant 

applications—content. 

(a) Unless otherwise specified in a 

Federal Register notice, Applicants may 

only submit one Energy Audit grant 

application and one REDA grant 

application each Federal Fiscal Year. No 

combination (Energy Audit and REDA) 

applications will be accepted. 

(b) Applicants must submit Complete 

Applications consisting of the elements 

specified in paragraphs (b)(1) through 

(7) of this section, except that paragraph 

(b)(4), is optional. 

(1) Form SF–424. 

(2) Form SF–424A. 

(3) Form SF–424B. 

(4) Identify the ethnicity, race, and 

gender of the applicant. This 

information is optional and is not 

required for a Complete Application. 

(5) Certification that the Applicant is 

a legal entity in good standing (as 

applicable), and operating in accordance 

with the laws of the State(s) or Tribe 

where the Applicant has a place of 

business. 

(6) The Applicant must identify 

whether or not the Applicant has a 

known relationship or association with 

an Agency employee. If there is a known 

relationship, the Applicant must 

identify each Agency employee with 

whom the Applicant has a known 

relationship. 

(7) A proposed scope of work to 

include the following items: 

(i) A brief summary including a 

project title describing the proposed 

project; 

(ii) Goals of the proposed project; 

(iii) Geographic scope or service area 

of the proposed project and the method 

and rationale used to select the service 

area; 

(iv) Identification of the specific 

needs for the service area and the target 

audience to be served. The number of 

Agricultural Producers and/or Rural 

Small Businesses to be served must be 

identified including name and contact 

information, if available, as well as the 

method and rationale used to select the 

Agricultural Producers and/or Rural 

Small Businesses; 

(v) Timeline describing the proposed 

tasks to be accomplished and the 

schedule for implementation of each 

task. Include whether organizational 

staff, consultants, or contractors will be 

used to perform each task. If a project 

is located in multiple States, resources 

must be sufficient to complete all 

projects; 

(vi) Marketing strategies to include a 

discussion on how the Applicant will be 

marketing and providing outreach 

activities to the proposed service area 

ensuring that Agricultural Producers 

and/or Rural Small Businesses are 

served; 

(vii) Applicant’s experience as 

follows: 

(A) If applying for a REDA grant, the 

Applicant’s experience in completing 

similar REDA activities, including the 

number of similar projects the 

Applicant has performed and the 

number of years the Applicant has been 

performing a similar service. 

(B) If applying for an Energy Audit 

grant, the number of energy audits and 

energy assessments the Applicant has 

completed and the number of years the 

Applicant has been performing those 

services; 

(C) For all Applicants, the amount of 

experience in administering Energy 

Audit, REDA, or similar activities as 

applicable to the purpose of the 

proposed project. Provide discussion if 

the Applicant has any existing programs 

that can demonstrate the achievement of 

energy savings or energy generation 

with the Agricultural Producers and/or 

Rural Small Businesses the Applicant 

has served. If the Applicant has received 

one or more awards within the last 5 

years in recognition of its Renewable 

Energy, energy savings, or energy-based 

technical assistance, please describe the 

achievement; and 

(viii) Identify the amount of Matching 

Funds and other funds and the source(s) 

the Applicant is proposing to use for the 

project. Provide written commitments 

for Matching Funds and other funds at 

the time the application is submitted. 

(A) If financial resources come from 

the Applicant, the Applicant must 

submit documentation in the form of a 

bank statement that demonstrates 

availability of funds. 

(B) If a third party is providing 

financial assistance to the project, the 

Applicant must submit a commitment 

letter signed by an authorized official of 

the third party. The letter must be 

specific to the project and identify the 

dollar amount being provided. 

§ 4280.191 Evaluation of Energy Audit and 

REDA grant applications. 

Section 4280.115(c) applies to Energy 

Audit and REDA grants, except for 

§ 4280.115(c)(4). 


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§ 4280.192 Scoring Energy Audit and 

REDA grant applications. 

The Agency will score each Energy 

Audit and REDA application using the 

criteria specified in paragraphs (a) 

through (f) of this section, with a 

maximum score of 100 points possible. 

(a) Applicant’s organizational 

experience in completing the Energy 

Audit or REDA proposed activity. A 

maximum of 25 points will be awarded 

for this criterion based on the 

experience of the organization in 

providing energy audits or renewable 

energy development assistance as 

applicable to the purpose of the 

proposed project. The organization must 

have been in business and provided 

services for the number of years as 

identified in the paragraphs below. 

(1) More than 10 years of experience, 

25 points will be awarded. 

(2) At least 5 years and up to and 

including 10 years of experience, 20 

points will be awarded. 

(3) At least 2 years and up to and 

including 5 years of experience, 10 

points will be awarded. 

(4) Less than 2 years of experience, no 

points will be awarded. 

(b) Geographic scope of project in 

relation to identified need. A maximum 

of 20 points can be awarded. 

(1) If the Applicant’s proposed or 

existing service area is State-wide or 

includes all or parts of multiple States, 

and the scope of work has identified 

needs throughout that service area, 20 

points will be awarded. 

(2) If the Applicant’s proposed or 

existing service area consists of multiple 

counties in a single State and the scope 

of work has identified needs throughout 

that service area, 15 points will be 

awarded. 

(3) If the Applicant’s service area 

consists of a single county or 

municipality and the scope of work has 

identified needs throughout that service 

area, 10 points will be awarded. 

(c) Number of Agricultural Producers/ 

Rural Small Businesses to be served. A 

maximum of 20 points will be awarded 

for this criterion based on the proposed 

number of ultimate recipients to be 

assisted and if the Applicant has 

provided the names and contact 

information for the ultimate recipients 

to be assisted. 

(1) If the Applicant plans to provide 

Energy Audits or REDA to: 

(i) Up to 10 ultimate recipients, 2 

points will be awarded. 

(ii) Between 11 and up to and 

including 25 ultimate recipients, 5 

points will be awarded. 

(iii) More than 25 ultimate recipients, 

10 points will be awarded. 

(2) If the Applicant provides a list of 

ultimate recipients, including their 

name and contact information, that are 

ready to be assisted, an additional 10 

points may be awarded. 

(d) Potential of project to produce 

energy savings or generation and its 

attending environmental benefits. A 

maximum of 10 points will be awarded 

for this criterion under both paragraphs 

(d)(1) and (2) of this section 

(1) If the Applicant has an existing 

program that can demonstrate the 

achievement of energy savings or energy 

generation with the Agricultural 

Producers and/or Rural Small 

Businesses it has served, 5 points will 

be awarded. 

(2) If the Applicant provides evidence 

that it has received one or more awards 

within the last 5 years in recognition of 

its renewable energy, energy savings, or 

energy-based technical assistance, up to 

a maximum of 5 points will be awarded 

as follows: 

(i) International/national—3 points for 

each. 

(ii) Regional/State—2 points for each. 

(iii) Local—1 point for each. 

(e) Marketing and outreach plan. A 

maximum of 5 points will be awarded 

for this criterion. If the scope of work 

included in the application provides a 

satisfactory discussion of each of the 

following criteria, one point for each 

can be awarded. 

(1) The goals of the project; 

(2) Identified need; 

(3) Targeted ultimate recipients; 

(4) Timeline and action plan; and 

(5) Marketing and outreach strategies 

and supporting data for strategies. 

(f) Commitment of funds for the total 

project cost. A maximum of 20 points 

will be awarded for this criterion if 

written documentation from each source 

providing Matching Funds and other 

funds are submitted with the 

application. 

(1) If the Applicant proposes to match 

50 percent or more of the grant funds 

requested, 20 points will be awarded. 

(2) If the Applicant proposes to match 

20 percent or more but less than 50 

percent of the grant funds requested, 15 

points will be awarded. 

(3) If the Applicant proposes to match 

5 percent or more but less than 20 

percent of the grant funds requested, 10 

points will be awarded. 

(4) If the Applicant proposes to match 

less than 5 percent of the grant funds 

requested, no points will be awarded. 

§ 4280.193 Selecting Energy Audit and 

REDA grant applications for award. 

Unless otherwise provided for in a 

Federal Register notice, Energy Audit 

and REDA grant applications will be 

processed in accordance with this 

section. 

(a) Application competition. Complete 

Energy Audit and REDA applications 

received by the Agency by 4:30 p.m. 

local time on January 31 will be 

competed against each other. If January 

31 falls on a weekend or a federallyobserved holiday, the next Federal 

business day will be considered the last 

day for receipt of a Complete 

Application. Complete Applications 

received after 4:30 p.m. local time on 

January 31, regardless of the postmark 

on the application, will be processed in 

the subsequent fiscal year. Unless 

otherwise specified in a Federal 

Register notice, the two highest scoring 

applications from each State, based on 

the scoring criteria established under 

§ 4280.192, will compete for funding. 

(b) Ranking of applications. All 

applications submitted to the National 

Office under paragraph (a) of this 

section will be ranked in priority score 

order. All applications that are ranked 

will be considered for selection for 

funding. 

(c) Selection of applications for 

funding. Using the ranking created 

under paragraph (a) of this section, the 

Agency will consider the score an 

application has received compared to 

the scores of other ranked applications, 

with higher scoring applications 

receiving first consideration for funding. 

If two or more applications score the 

same and if remaining funds are 

insufficient to fund each such 

application, the Agency will distribute 

the remaining funds to each such 

application on a pro-rata basis. At its 

discretion, the Agency may also elect to 

allow any remaining multi-year funds to 

be carried over to the next fiscal year 

rather than funding on a pro-rata basis. 

(d) Handling of ranked applications 

not funded. Based on the availability of 

funding, a ranked application submitted 

for Energy Audit and/or REDA funds 

may not be funded. Such ranked 

applications will not be carried forward 

into the next Federal Fiscal Year’s 

competition. 

§ 4280.194 [Reserved] 

§ 4280.195 Awarding and administering 

Energy Audit and REDA grants. 

The Agency will award and 

administer Energy Audit and REDA 

grants in accordance with Departmental 

Regulations and with the procedures 

and requirements specified in 

§ 4280.122, except as specified in 

paragraphs (a) through (c) of this 

section. 

(a) Instead of complying with 

§ 4280.122(b), the grantee must provide 

satisfactory evidence to the Agency that 

all officers of grantee organization 


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authorized to receive and/or disburse 

Federal funds are covered by such 

bonding and/or insurance requirements 

as are normally required by the grantee. 

(b) Form RD 400–1 specified in 

§ 4280.122(c)(6) is not required. 

(c) The Power Purchase Agreement 

specified in § 4280.122(h) is not 

required. 

§ 4280.196 Servicing Energy Audit and 

REDA grants. 

The Agency will service Energy Audit 

and REDA grants in accordance with the 

requirements specified in Departmental 

Regulations, the Grant Agreement, 7 

CFR part 1951, subparts E and O, other 

than 7 CFR 1951.709(d)(1)(i)(B)(iv), and 

the requirements in § 4280.123, except 

as specified in paragraphs (a) through 

(d) of this section. 

(a) Grant disbursement. The Agency 

will determine, based on the applicable 

Departmental Regulations, whether 

disbursement of a grant will be by 

advance or reimbursement. Form SF– 

270 must be completed by the grantee 

and submitted to the Agency no more 

often than monthly to request either 

advance or reimbursement of funds. 

(b) Semiannual performance reports. 

Project performance reports shall 

include, but not be limited to, the 

following: 

(1) A comparison of actual 

accomplishments to the objectives 

established for that period (e.g., the 

number of Energy Audits performed, 

number of recipients assisted and the 

type of assistance provided for REDA); 

(2) A list of recipients, each 

recipient’s location, and each recipient’s 

NAICS code; 

(3) Problems, delays, or adverse 

conditions, if any, that have in the past 

or will in the future affect attainment of 

overall project objectives, prevent 

meeting time schedules or objectives, or 

preclude the attainment of particular 

project work elements during 

established time periods. This 

disclosure shall be accompanied by a 

statement of the action taken or planned 

to resolve the situation; 

(4) Objectives and timetable 

established for the next reporting 

period. 

(c) Final performance report. A final 

performance report will be required 

with the final Federal financial report 

within 90 days after project completion. 

The final performance report must 

contain the information specified in 

paragraphs (c)(2)(i) or (ii), as applicable, 

of this section. 

(1) For Energy Audit projects, the 

final performance report must provide 

complete information regarding: 

(i) The number of audits conducted, 

(ii) A list of recipients (Agricultural 

Producers and Rural Small Businesses) 

with each recipient’s NAICS code, 

(iii) The location of each recipient, 

(iv) The cost of each audit and 

documentation showing that the 

recipient of the Energy Audit provided 

25 percent of the cost of the audit, and 

(v) The expected energy saved for 

each audit conducted if the audit is 

implemented. 

(2) For REDA projects, the final 

performance report must provide 

complete information regarding: 

(i) The number of recipients assisted 

and the type of assistance provided, 

(ii) A list of recipients with each 

recipient’s NAICS code, 

(iii) The location of each recipient, 

and 

(iv) The expected Renewable Energy 

that would be generated if the projects 

were implemented. 

(d) Outcome project performance 

report. One year after submittal of the 

final performance report, the grantee 

will provide the Agency a final status 

report on the number of projects that are 

proceeding with the grantee’s 

recommendations, including the 

amount of energy saved and the amount 

of Renewable Energy generated, as 

applicable. 

§§ 4280.197–4280.199 [Reserved] 

§ 4280.200 OMB control number. 

The information collection 

requirements contained in this subpart 

have been approved by the Office of 

Management and Budget (OMB) and 

have been assigned OMB control 

number 0570–0067. A person is not 

required to respond to a collection of 

information unless it displays a 

currently valid OMB control number. 

Appendix A to Subpart B of Part 4280— 

Technical Reports for Energy Efficiency 

Improvement (EEI) Projects 

For all EEI projects with Total Project Costs 

of more than $80,000, provide the 

information specified in Sections A and D 

and in Section B or Section C, as applicable. 

If the application is for an EEI project with 

Total Project Costs of $80,000 or less, please 

see § 4280.119(b)(3) for the technical report 

information to be submitted with your 

application. 

If the application is for an EEI project with 

Total Project Costs of $200,000 and greater, 

you must conduct an Energy Audit. However, 

if the application is for an EEI project with 

a Total Project Costs of less than $200,000, 

you may conduct either an Energy 

Assessment or an Energy Audit. 

Section A—Project Information. Describe 

how all the improvements to or replacement 

of an existing building and/or equipment 

meet the requirements of being Commercially 

Available. Describe how the design, 

engineering, testing, and monitoring are 

sufficient to demonstrate that the proposed 

project will meet its intended purpose, 

ensure public safety, and comply with 

applicable laws, regulations, agreements, 

permits, codes, and standards. Describe how 

all equipment required for the EEI(s) is 

available and able to be procured and 

delivered within the proposed project 

development schedule. In addition, present 

information regarding component warranties 

and the availability of spare parts. 

Section B—Energy audit. If conducting an 

EA, provide the following information. 

(1) Situation report. Provide a narrative 

description of the existing building and/or 

equipment, its energy system(s) and usage, 

and activity profile. Also include average 

price per unit of energy (electricity, natural 

gas, propane, fuel oil, renewable energy, etc.) 

paid by the customer for the most recent 12 

months, or an average of 2, 3, 4, or 5 years, 

for the building and equipment being 

audited. Any energy conversion should be 

based on use rather than source. 

(2) Potential improvement description. 

Provide a narrative summary of the potential 

improvement and its ability to reduce energy 

consumption or improve energy efficiency, 

including a discussion of reliability and 

durability of the improvements. 

(i) Provide preliminary specifications for 

critical components. 

(ii) Provide preliminary drawings of project 

layout, including any related structural 

changes. 

(iii) Identify significant changes in future 

related operations and maintenance costs. 

(iv) Describe explicitly how outcomes will 

be measured. 

(3) Technical analysis. Give consideration 

to the interactions among the potential 

improvements and the current energy 

system(s). 

(i) For the most recent 12 months, or an 

average of 2, 3, 4, or 5 years, prior to the date 

the application is submitted, provide both 

the total amount and the total cost of energy 

used for the original building and/or 

equipment, as applicable, for each 

improvement identified in the potential 

project. In addition, provide for each 

improvement identified in the potential 

project an estimate of the total amount of 

energy that would have been used and the 

total cost that would have been incurred if 

the proposed project were in operation for 

this same time period. 

(ii) Calculate all direct and attendant 

indirect costs of each improvement; 

(iii) Rank potential improvements 

measures by cost-effectiveness; and 

(iv) Provide an estimate of Simple Payback, 

including all calculations, documentation, 

and any assumptions. 

(4) Qualifications of the auditor. Provide 

the qualifications of the individual or entity 

which completed the Energy Audit. 

Section C—Energy Assessment. If 

conducting an Energy Assessment, provide 

the following information. 

(1) Situation report. Provide a narrative 

description of the existing building and/or 

equipment, its energy system(s) and usage, 

and activity profile. Also include average 


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price per unit of energy (electricity, natural 

gas, propane, fuel oil, renewable energy, etc.) 

paid by the customer for the most recent 12 

months, or an average of 2, 3, 4, or 5 years, 

for the building and equipment being 

evaluated. Any energy conversion shall be 

based on use rather than source. 

(2) Potential improvement description. 

Provide a narrative summary of the potential 

improvement and its ability to reduce energy 

consumption or improve energy efficiency. 

(3) Technical analysis. Giving 

consideration to the interactions among the 

potential improvements and the current 

energy system(s), provide the information 

specified in paragraphs C.(3)(i) through (iii) 

of this appendix. 

(i) For the most recent 12 months, or an 

average of 2, 3, 4, or 5 years, prior to the date 

the application is submitted, provide both 

the total amount and the total cost of energy 

used for the original building and/or 

equipment, as applicable, for each 

improvement identified in the potential 

project. In addition, provide for each 

improvement identified in the potential 

project an estimate of the total amount of 

energy that would have been used and the 

total cost that would have been incurred if 

the proposed project were in operation for 

this same time period. 

(ii) Document baseline data compared to 

projected consumption, together with any 

explanatory notes on source of the projected 

consumption data. When appropriate, show 

before-and-after data in terms of 

consumption per unit of production, time, or 

area. 

(iii) Provide an estimate of Simple 

Payback, including all calculations, 

documentation, and any assumptions. 

(4) Qualifications of the assessor. Provide 

the qualifications of the individual or entity 

that completed the assessment. If the Energy 

Assessment for a project with Total Project 

Costs of $80,000 or less is not conducted by 

Energy Auditor or Energy Assessor, then the 

individual or entity must have at least 3 years 

of experience and completed at least five 

Energy Assessments or Energy Audits on 

similar type projects. 

Section D—Qualifications. Provide a 

resume or other evidence of the contractor or 

installer’s qualifications and experience with 

the proposed EEI technology. Any contractor 

or installer with less than 2 years of 

experience may be required to provide 

additional information in order for the 

Agency to determine if they are qualified 

installer/contractor. 

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 

Provide the information specified in 

Sections A through D for each technical 

report prepared under this appendix. A 

Renewable Energy Site Assessment may be 

used in lieu of Sections A through C if the 

Renewable Energy Site Assessment contains 

the information requested in Sections A 

through C. In such instances, the technical 

report would consist of Section D and the 

Renewable Energy Site Assessment. 

Note: If the Total Project Cost for the RES 

project is $80,000 or less, this appendix does 

not apply. Instead, for such projects, please 

provide the information specified in 

§ 4280.119(b)(4). 

Section A—Project Description. Provide a 

description of the project, including its 

intended purpose and a summary of how the 

project will be constructed and installed. 

Describe how the system meets the definition 

of Commercially Available. Identify the 

project’s location and describe the project 

site. 

Section B—Resource Assessment. Describe 

the quality and availability of the renewable 

resource to the project. Identify the amount 

of Renewable Energy generated that will be 

generated once the proposed project is 

operating at its steady state operating level. 

If applicable, also identify the percentage of 

energy being replaced by the system. 

If the application is for a Bioenergy Project, 

provide documentation that demonstrates 

that any and all woody biomass feedstock 

from National Forest System land or public 

lands cannot be used as a higher value woodbased product. 

Section C—Project Economic Assessment. 

Describe the projected financial performance 

of the proposed project. The description must 

address Total Project Costs, energy savings, 

and revenues, including applicable 

investment and other production incentives 

accruing from Government entities. Revenues 

to be considered shall accrue from the sale 

of energy, offset or savings in energy costs, 

and byproducts. Provide an estimate of 

Simple Payback, including all calculations, 

documentation, and any assumptions. 

Section D—Project Construction and 

Equipment Information. Describe how the 

design, engineering, testing, and monitoring 

are sufficient to demonstrate that the 

proposed project will meet its intended 

purpose, ensure public safety, and comply 

with applicable laws, regulations, 

agreements, permits, codes, and standards. 

Describe how all equipment required for the 

RES is available and able to be procured and 

delivered within the proposed project 

development schedule. In addition, present 

information regarding component warranties 

and the availability of spare parts. 

Section E—Qualifications of Key Service 

Providers. Describe the key service providers, 

including the number of similar systems 

installed and/or manufactured, professional 

credentials, licenses, and relevant 

experience. When specific numbers are not 

available for similar systems, estimations will 

be acceptable. 

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 

Provide the information specified in 

Sections A through G for each technical 

report prepared under this appendix. Provide 

the resource assessment under Section C that 

is applicable to the project. 

Section A—Qualifications of the Project 

Team. Describe the project team, their 

professional credentials, and relevant 

experience. The description shall support 

that the project team key service providers 

have the necessary professional credentials, 

licenses, certifications, and relevant 

experience to develop the proposed project. 

Section B—Agreements and Permits. 

Describe the necessary agreements and 

permits (including any for local zoning 

requirements) required for the project and the 

anticipated schedule for securing those 

agreements and permits. For example, 

Interconnection Agreements and Power 

Purchase Agreements are necessary for all 

Renewable Energy projects electrically 

interconnected to the utility grid. 

Section C—Resource Assessment. Describe 

the quality and availability of the renewable 

resource and the amount of Renewable 

Energy generated through the deployment of 

the proposed system. For all Bioenergy 

Projects, except Anaerobic Digesters Projects, 

complete Section C.3 of this appendix. For 

Anaerobic Digester Projects, complete 

Section C.6 of this appendix. 

1. Wind. Provide adequate and appropriate 

data to demonstrate the amount of renewable 

resource available. Indicate the source of the 

wind data and the conditions of the wind 

monitoring when collected at the site or 

assumptions made when applying nearby 

wind data to the site. 

2. Solar. Provide adequate and appropriate 

data to demonstrate the amount of renewable 

resource available. Indicate the source of the 

solar data and assumptions. 

3. Bioenergy Project. Provide adequate and 

appropriate data to demonstrate the amount 

of renewable resource available. Indicate the 

type, quantity, quality, and seasonality of the 

Renewable Biomass resource, including 

harvest and storage, where applicable. Where 

applicable, also indicate shipping or 

receiving method and required infrastructure 

for shipping. For proposed projects with an 

established resource, provide a summary of 

the resource. Document that any and all 

woody biomass feedstock from National 

Forest System land or public lands cannot be 

used as a higher value wood-based product. 

4. Geothermal Electric Generation. Provide 

adequate and appropriate data to 

demonstrate the amount of renewable 

resource available. Indicate the quality of the 

geothermal resource, including temperature, 

flow, and sustainability and what conversion 

system is to be installed. Describe any special 

handling of cooled geothermal waters that 

may be necessary. Describe the process for 

determining the geothermal resource, 

including measurement setup for the 

collection of the geothermal resource data. 

For proposed projects with an established 

resource, provide a summary of the resource 

and the specifications of the measurement 

setup. 

5. Geothermal Direct Generation. Provide 

adequate and appropriate data to 

demonstrate the amount of renewable 

resource available. Indicate the quality of the 

geothermal resource, including temperature, 

flow, and sustainability and what direct use 

system is to be installed. Describe any special 

handling of cooled geothermal waters that 

may be necessary. Describe the process for 

determining the geothermal resource, 

including measurement setup for the 


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collection of the geothermal resource data. 

For proposed projects with an established 

resource, provide a summary of the resource 

and the specifications of the measurement 

setup. 

6. Anaerobic Digester Project. Provide 

adequate and appropriate data to 

demonstrate the amount of renewable 

resource available. Indicate the substrates 

used as digester inputs, including animal 

wastes or other Renewable Biomass in terms 

of type, quantity, seasonality, and frequency 

of collection. Describe any special handling 

of feedstock that may be necessary. Describe 

the process for determining the feedstock 

resource. 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. 

7. Hydrogen Project. Provide adequate and 

appropriate data to demonstrate the amount 

of renewable resource available. Indicate the 

type, quantity, quality, and seasonality of the 

Renewable Biomass resource. For solar, 

wind, or geothermal sources of energy used 

to generate hydrogen, indicate the renewable 

resource where the hydrogen system is to be 

installed. Local resource maps may be used 

as an acceptable preliminary source of 

renewable resource data. For proposed 

projects with an established renewable 

resource, provide a summary of the resource. 

8. Hydroelectric/Ocean Energy Projects. 

Provide adequate and appropriate data to 

demonstrate the amount of renewable 

resource available. Indicate the quality of the 

resource, including temperature (if 

applicable), flow, and sustainability of the 

resource, including a summary of the 

resource evaluation process and the 

specifications of the measurement setup and 

the date and duration of the evaluation 

process and proximity to the proposed site. 

If less than 1 year of data is used, a Qualified 

Consultant must provide a detailed analysis 

of the correlation between the site data and 

a nearby, long-term measurement site. 

Section D—Design and Engineering. 

Describe the intended purpose of the project 

and the design, engineering, testing, and 

monitoring needed for the proposed project. 

The description shall support that the system 

will be designed, engineered, tested, and 

monitored so as to meet its intended purpose, 

ensure public safety, and comply with 

applicable laws, regulations, agreements, 

permits, codes, and standards. In addition, 

identify that all major equipment is 

Commercially Available, including 

proprietary equipment, and justify how this 

unique equipment is needed to meet the 

requirements of the proposed design. In 

addition, information regarding component 

warranties and the availability of spare parts 

must be presented. 

Section E—Project Development. Describe 

the overall project development method, 

including the key project development 

activities and the proposed schedule, 

including proposed dates for each activity. 

The description shall identify each 

significant historical and projected activity, 

its beginning and end, and its relationship to 

the time needed to initiate and carry the 

activity through to successful project 

completion. The description shall address 

Applicant project development cash flow 

requirements. Details for equipment 

procurement and installation shall be 

addressed in Section F of this appendix. 

Section F—Equipment Procurement and 

Installation. Describe the availability of the 

equipment required by the system. The 

description shall support that the required 

equipment is available and can be procured 

and delivered within the proposed project 

development schedule. Describe the plan for 

site development and system installation, 

including any special equipment 

requirements. In all cases, the system or 

improvement shall be installed in 

conformance with manufacturer’s 

specifications and design requirements, and 

comply with applicable laws, regulations, 

agreements, permits, codes, and standards. 

Section G—Operations and Maintenance. 

Describe the operations and maintenance 

requirements of the system, including major 

rebuilds and component replacements 

necessary for the system to operate as 

designed over its useful life. The warranty 

must cover and provide protection against 

both breakdown and a degradation of 

performance. The performance of the RES or 

EEI shall be monitored and recorded as 

appropriate to the specific technology. 

Dated: December 17, 2014. 

Lisa Mensah, 

Under Secretary, Rural Development. 

[FR Doc. 2014–30133 Filed 12–24–14; 8:45 am] 

BILLING CODE 3410–XY–P 


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