Rural Energy for America Program, 10938-10944 [2022-03884]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Business-Cooperative Service

[Federal Register Volume 87, Number 39 (Monday, February 28, 2022)]
[Rules and Regulations]
[Pages 10938-10944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03884]


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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4280

[Docket No. RBS-20-BUSINESS-0027]
RIN 0570-AA98


Rural Energy for America Program

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Final rule; confirmation and response to comments.

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SUMMARY: The Rural Business-Cooperative Service (RBCS or the Agency), a 
Rural Development agency of the United States Department of Agriculture 
(USDA), is confirming the final rule published in the Federal Register 
on April 27, 2021, to remove the provisions relating to guaranteed 
loans and to make other revisions to enhance program delivery and 
customer service for the Rural Energy for America Program (REAP). This 
notice presents the opportunity for the Agency to provide its responses 
to the public comments received on the final rule and to confirm the 
final rule as published.

DATES: As of February 28, 2022, the effective date of the final rule 
published

[[Page 10939]]

April 27, 2021, at 86 FR 22304, is confirmed as July 26, 2021.

FOR FURTHER INFORMATION CONTACT: Sami Zarour, Program Management 
Division, U.S. Department of Agriculture, 1400 Independence Avenue SW, 
Washington, DC 20250-3201; telephone (202) 720-9549; email: 
[email protected].

SUPPLEMENTARY INFORMATION: 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, 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.
    On July 14, 2020, at 85 FR 42494, the Agency promulgated 7 CFR part 
5001, the OneRD guaranteed loan regulation, which combined four Agency 
guaranteed loan program regulations, including REAP, into one 
comprehensive guaranteed loan processing and servicing regulation. The 
final rule being confirmed amends 7 CFR part 4280, subpart B 
accordingly to remove references to the guaranteed loan provisions of 
REAP as these references have become superfluous in light of the 
promulgation of 7 CFR part 5001. Furthermore, program modifications 
required by the Agriculture Improvement Act of 2018 (2018 Farm Bill), 
as well as provisions that have been previously published via funding 
opportunities in Federal Register publications, have been incorporated 
into this final rule to eliminate the need for annual notification and 
to enhance program delivery.

Summary of Comments and Responses

    RBCS invited comments on the final rule published on April 27, 
2021, in the Federal Register (86 FR 22304). RBCS received twenty-eight 
(28) comments from five commenters. The commenters were: The American 
Biogas Council (ABC), Agriculture Energy Coalition (AgEC), Ebenezer 
MGMT, LLC, Environmental Law & Policy Center (ELPC) and CROPP 
Cooperative (CROPP). The Agency's responses to the 28 comments, of 
which six (6) were duplicative, are as follows:
    Comment 1: Both the ABC and the AgEC believe the March 31 grant 
application deadline creates a barrier to a timely transition between 
the grant process and project initiation for companies who want to 
partner with farms to produce biogas. As grant application reviews 
typically last a few months, and applications are not guaranteed to be 
successful, small businesses are often forced to delay capital outlays 
for construction until a grant is awarded. By the time the grant is 
awarded, it is usually summer, and the awardee has missed out on a 
significant portion of construction season and faces unnecessary 
challenges securing labor and equipment that is already obligated to 
projects that began in the spring. Thus, these projects are often 
delayed until the following year. For companies who want to partner 
with farms to convert manure or other organic materials into biogas, 
this nine-month delay is too frequently an impediment initiating a 
reciprocal business relationship between small farms and small biogas 
companies. Additionally, the ABC and the AgEC feel the current practice 
requires that projects seeking a REAP grant as well as participation in 
the loan guarantee program complete a combination application. Coupling 
these separate paths together creates a significant obstacle to small 
and mid-size applicants because lenders often do not count potential 
REAP grant funding among a borrower's assets. Specifically, in the loan 
application process, some companies rely on REAP grant funding to 
demonstrate the viability of the projects for which they are seeking 
loans. Lenders are typically less likely to approve loans when the 
applicant is relying on uncertain federal grant funding to demonstrate 
the viability of the project. The result is an increased rate of loan 
denials for small businesses. If, however, loan guarantee applicants 
were allowed to begin that process with grant funding already in-hand, 
their proposed projects would present as more stable to lenders.
    Agency response: Applications for REAP assistance can be filed any 
time during the year and once a complete application is filed it can be 
processed and readied for competition. The receipt of program funds to 
make awards are contingent upon the federal budget process. 
Historically, the Agency has received REAP funds in January. REAP 
grants are typically very competitive given the limited amount of grant 
funds available. The Agency must meet the statutory provision of 
obligating no less than 20 percent of REAP funds for grants 
applications requesting $20,000 and less by June 30. Therefore, the 
Agency utilizes an October 31 deadline for these grants so that the 
statutory provision can be met each year. The Agency has also adopted a 
single deadline (March 31) for grant applications requesting more than 
$20,000 to ensure that there is a fair and transparent process for 
competition across the nation.
    Furthermore, the Agency desires to fund applications that are 
shovel ready and can be completed when REAP funding is awarded. As 
such, part of the application requirements is to demonstrate how the 
project will be financed and that those funds, both grant, loan and 
other are available. The Agency acknowledges that grant funds are much 
more competitive than guaranteed loan funds and it can take longer to 
process the volume of grant applications received compared to 
guaranteed loan applications.
    Comment 2: Ebenezer MGMT, LLC stated that the final rule ``was 
published April 27th with an effective date of July 26th. USDA released 
a NOSA published 11/25/2020 that substantially changed how applications 
are reviewed and scored, with no comment period. The final program due 
date each year is currently March 31st. All proposed changes to 
procedure or scoring should occur or become effective on the day 
following the final due date for applications.
    Applicants submit applications throughout the year, after reading 
current rules and with guidance from USDA staff. All applicants have an 
expectation of consistency. To make changes mid-year puts some 
applicants at a disadvantage to others. It requires enormous amounts 
additional staff time to rescore or gather additional information when 
changes are made mid-year. By announcing ahead of time that the changes 
would occur each April 1st. Applicants would be better served; and 
state staff could manage their workload more efficiently.''
    Agency response: REAP applications can be filed at any time during 
the year which makes it difficult to find an ideal time to initiate 
program changes. The Agency ensures that all applicants are afforded 
the same opportunity to supplement application materials as necessary 
when program changes are initiated after complete applications have 
been filed.
    Comment 3: ABC and AgEC both raised the same concerns that the 
scoring criteria do not properly support project diversity and 
commercial yet underserved renewable technologies. ABC and AgEC are 
both very supportive of REAP and its broad reach. However, they are 
concerned that several elements

[[Page 10940]]

of the scoring criteria outlined in Sec.  4280.121 ``Scoring RES and 
EEI grant applications'' risk continued limits on the diversity of 
applicants and technologies supported by the program.
    ABC and AgEC are concerned that ``the following scoring criteria 
risk further inhibiting underserved renewable technologies for REAP 
grants, such as biogas systems and distributed wind:
    (1) ``The quantity of energy generated or replaced per grant dollar 
requested'' is a key scoring criterion outlined in the final rule. 
While efficient use of program funds is a worthwhile objective, this 
criterion favors the most established renewable energy technologies 
over underserved technologies.
    (2) The emphasis on ``energy replaced'' also favors technologies 
with the best economics based on energy alone, pushing toward 
technology that has penetrated the market more successfully to date, 
rather than underserved technologies that may support additional 
environmental and economic benefits and also might accommodate the 
specific needs of the applicant. For example, a significant component 
of the economic value of biodigesters comes from reduced manure 
disposal costs. This underserved technology would be at a disadvantage 
relative to an energy-only project.
    (3) The criteria for ``energy saved'' also favors technologies with 
the highest economic efficiency in today's market, limiting diversity.
    (4) Awarding points for firm letters of credit for cost share 
favors those with access to capital, rather than marginalized 
communities or borrowers. Because one of the objectives of REAP is to 
support economic development and to strengthen rural communities, 
ensuring access to all eligible members of the rural community should 
be reflected in the final rule.
    (5) Awarding points for firms already in the market poses a 
potential barrier against new entrants and marginalized communities. 
Strengthening rural communities should include efforts to support 
fledgling businesses rather than place them at a disadvantage to their 
peers.
    (6) REAP is solely concentrated on energy production and does 
consider any of the environmental aspects of digesters. The qualities 
include preventing the emissions of methane, recycling of nutrients, 
cleaning and recycling of water or protecting water quality, requesting 
carbon by reusing nutrients. All of these elements are part of the 
reasons that farmers want to use digesters but none of them are taken 
into consideration by the current REAP scoring system. Given the USDA's 
renewed focus on fighting climate change, we, again, urge USDA to 
update its scoring criteria to include not only aspects of energy 
generation but also aspects of GHG emission reduction and environmental 
savings.''
    Agency response: The Agency acknowledges that technology diversity 
is important. In fact, the Administrator has added discretionary points 
for underserved technology for the past several years in an effort to 
diversify the REAP portfolio. In response to the six individual issues 
raised, the Agency submits the following:
    ISSUE 1: This criterion is evaluating the energy savings/generation 
impact of the dollars being invested in the project. The installation 
cost is one variable, but the amount of the request is a second 
variable. Some technologies may have lower installation costs, but the 
amount of the request is defined by the applicant.
    ISSUES 2 and 3: RBCS acknowledges the concerns raised. REAP has 
always looked at only direct project benefits such as kWh/BTU's saved/
generated or by-products. The Agency is open to further discussion on 
additional project benefits; however, the Agency is concerned about how 
alternatives could be quantified and valued in a fair manner to ensure 
consistent program delivery.
    ISSUE 4: The Agency removed financial need from the program in 
2014. The Agency's goal is to participate in projects that are shovel 
ready to ensure timely and prudent investment of REAP program dollars. 
Commitment of funds demonstrates project support, backing, and a higher 
probability of project completion.
    ISSUE 5: The Agency is assuming this concern is related to the five 
(5) points for existing businesses. The points for an existing business 
were added to strengthen opportunity for main street businesses as 
opposed to creating a barrier for new entities. REAP has a primary 
focus on energy generation and savings.
    ISSUE 6: The current scoring criteria does award up to five (5) 
points for environmental benefits. The concern is being raised that 
more emphasis should be placed on GHG emission reduction and 
environmental savings, including water, etc. The Agency acknowledges 
the importance of environmental benefits and will consider how the 
priority system could place more value on such benefits.
    Comment 4: ABC expressed concerns the provisions outlined in Sec.  
4280.121(h) ``State Director and Administrator priority points'' 
providing discretionary points to underrepresented technologies, 
geographic diversity, and underserved populations are a great step in 
the right direction, and ABC strongly supports this, but they are 
concerned that the points are insufficient to offset the criteria 
favoring lowest cost technologies and certain applications outlined 
above.
    Agency response: While the Agency appreciates the comment, the 
Agency will continue to apply State Director and/or Administrator 
points in order to meet the objectives of the program. The Agency is 
open to further discussion on additional project benefits, however, the 
Agency is concerned about how alternatives could be quantified and 
valued in a fair manner to ensure consistent program delivery.
    Comment 5: Ebenezer MGMT, LLC states that ``Administrator points 
should not be available in the pooling rounds of competition. The State 
Directors have an intimate knowledge of their states and the needs of 
residents. The Administrator does not have this knowledge and should 
not have the ability to add 10 points to an application score. All 
funding determinations at the National Office should be by initial 
score alone. If Administrator points are used, the Administrator should 
state what conditions will receive additional points at the beginning 
of each fiscal year. Historically it appears the National Office has 
skewed results to penalize states proficient in utilizing the program; 
eliminating the Administrator points would alleviate this problem.''
    Agency response: The concern regarding awarding Administrator 
points for national office competition is acknowledged. However, the 
competition is a national competition and the Administrator has 
discretion to apply additional points to support administration goals 
and objectives from a national perspective. Recent application of 
Administrator points has focused on underserved technology to diversify 
the national portfolio and assisting projects located in distressed 
communities.
    Comment 6: CROPP requested an adjustment to the scoring criteria to 
accommodate local utility net-metering restrictions, specifically in 
scoring criteria #2 (quantity of energy replaced), sub-criteria 2a 
(energy replacement) and #6 (simple payback). CROPP believes this 
decreases the competitiveness of their producer applications and put 
producers at a disadvantage. Producers are disadvantaged by these 
criteria due to the net-metering limitations imposed

[[Page 10941]]

by utilities. Those net-metering limits restrict the size of a RES an 
agriculture producer can install and thereby preclude producers from 
gaining the maximum scorable points.
    ``Net metering restrictions that limit the size of a RES that a 
farmer can install are pervasive from coast-to-coast across nearly all 
electric utility providers. Farmers should not be at a REAP 
disadvantage simply because their utility restricts the size of a RES; 
it is largely out of their hands and represents a scoring-criteria that 
should be rectified.''
    Agency response: The Agency acknowledges the concern that net-
metering can lead potential REAP applicants to design smaller systems; 
however, the Agency has no control over state or utility net-metering 
limitations.
    Comment 7: ``AgEC and ABC as a member of AgEC has received 
considerable support from the agriculture community and representatives 
in Congress for bolstering underserved and nascent renewable 
technologies to help ensure continued development and penetration into 
the marketplace, especially through a reserve of funds for these 
technologies. To that end AgEC would propose an addition to ``Sec.  
4280.121 Scoring RES and EEI grant applications.''
    Specifically, AgEC and ABC would propose adding section (i) at the 
end: ``(i) Notwithstanding the scoring rules above, no less than 15% of 
funding for a competition shall be awarded to nascent and/or 
underserved renewable [commercial] technologies separately from the 
remainder of the competition(s), on an annualized basis.''
    A complimentary definition in ``Sec.  4280.103 Definitions'' would 
include ``Nascent and underserved (or underused) renewable 
technologies. Nascent and underserved/underused technologies are those 
renewable energy technologies that have received less than 10 percent 
of program funding support in the last three years.''
    AgEC and ABC also continue to advocate for a grants reserve fund 
for underserved renewable technologies, to support these technologies 
in achieving cost and scale.''
    Agency response: The Agency continues to support the requirement 
for technology to be commercially available to be eligible for REAP 
assistance. The Agency has and continues to apply State Director and 
Administrator points to underserved technology in efforts to diversify 
the REAP portfolio. The commenters propose reserving a set amount of 
funds to facilitate the selection of underrepresented technologies. The 
REAP statute does not provide the flexibility to establish reserve 
funding. If such a provision came to fruition, careful planning must 
occur to ensure that REAP projects continue to realize benefit. The 
current program contains state allocated and national competitions for 
funding and also includes a set-aside of funds (reserve of funds) for 
$20,000 or less applications for renewable energy systems and energy 
efficiency. If funds are subdivided further to represent each under-
represented technology for state allocations, grant requests would need 
to be smaller. It is likely that a state would not be able to fully 
utilize its allocation as any remaining funds after the subdivision 
would be below the minimum required grant amount. Additionally, any 
administrative burden costs to implement another reserve must be 
included in the planning.
    Comment 8: ``AgEC and ABC believe a robust loan guarantee component 
of REAP remains important as well.
    AgEC and ABC greatly appreciates USDA's efforts under the OneRD 
program to remove regulatory barriers to make it easier for private 
lenders to use USDA programs and invest in rural America.
    Yet it is vital that energy efficiency and renewable energy systems 
find full support under the consolidated program.
    We urge USDA to ensure that the availability of OneRD funding is 
clearly communicated under all REAP funding opportunities, and urge 
REAP program officers to support grant applicants in obtaining 
complimentary loan funding where appropriate.
    In addition, we would urge a new category of loan guarantee of 90% 
for distributed generation projects of less than $1,000,000. This would 
serve to support smaller-scale, and smaller businesses and/or 
individual applicants in the market.
    Distributed generation is an important public policy area that the 
Administration wants to help for all of the myriad benefits it 
provides, including local economic development, localized energy 
production and ownership, grid and community resilience, and energy 
security (ex., much harder to succeed in cyber-attacks against millions 
of small solar and distributed wind installations)''.
    Agency response: The Agency appreciates the comment and will 
continue to amplify the availability of REAP guarantee funding in our 
external communication strategies. We understand the importance of 
distributed generation projects and will continue to finance them under 
the REAP guaranteed loan and grant programs. The 2018 Farm Bill 
specifically outlines how REAP funds should be used (i.e., technical 
assistance, small grants, energy efficient equipment and systems, 
etc.). Changes to the 2018 Farm Bill would be needed to create a new 
category of loan guarantees for distributed generation projects.
    Comment 9: AgEC and ABC believe it is ``incumbent upon USDA to 
properly staff the Rural Development mission area for better 
implementation of REAP and related energy or bioeconomy programs such 
as 9003. We would urge USDA to look at this further, hire and train as 
needed, and continue to communicate to Congress the importance of a 
robust staffing budget to efficiently support the administration of 
important programs.''
    Agency response: Thank you for the comment, the Agency recognizes 
the importance of proper staffing and training.
    Comment 10: AgEC and ABC ``urge USDA again to further streamline, 
and simplify the REAP applications process across the board, but with a 
particular emphasis on lower cost grant applications for individual 
farmers and others. This is an issue we've raised for years.
    We recognize the vital importance of due diligence, and agency 
fiduciary responsibilities, but the arduous applications process is 
inhibiting equity and opportunity in ag based energy. For example, some 
prospective applicants have to hire consultants, paying over $1,000 for 
an under $20,000 grant application for the hope of an award. The time 
that it takes, the cost, can have a ``chilling effect'' on program 
participation.
    As Congress increasingly looks at REAP as a climate change and 
rural economic development program worthy of greater funding, the 
stakes grow as to program application simplification. More REAP funding 
in conjunction with a more streamlined approach will equal greater 
success, in terms of lowered costs to constituents, greater energy 
production, deployment of renewables and energy efficiency 
investments.''
    Agency response: The Agency continues to look for additional 
efficiencies while remaining compliant with federal grant requirements. 
The updated rule adopts certifications related to applicant 
eligibility, modifies the feasibility study requirement, lessens the 
technical report requirements, and streamlines the annual reporting 
process.
    Comment 11: The ELPC believes ``REAP's complex application burden

[[Page 10942]]

has been often discussed and is a drag on program success. It's 
important to note that the application burden has the effect of skewing 
the program towards those with the financial wherewithal to hire 
application writers and consultants and away from those with the most 
need.
    Over the years, the USDA has taken steps to simplify the REAP 
application process. Most recently, the USDA expended great effort to 
simplify the application process for guaranteed loans and adopted 
innovative solutions for the OneRD Guarantee Loan Initiative. ELPC 
supports REAP simplification efforts and encourages USDA to expend a 
similar level of effort to simplify the application process for grants 
as the agency applied to OneRD. The USDA has demonstrated an ability to 
substantially revise and simplify the loan guarantee portion of REAP 
and should now apply as much effort to simplifying the majority of the 
program.
    With new attention focused on REAP as a key USDA climate program it 
is more important and pressing than ever that the agency take strong 
action to simplify the REAP grant application process.''
    Agency response: The updated rule adopts certifications related to 
applicant eligibility, modifies the feasibility study requirement, 
lessens the technical report requirements, and streamlines the annual 
reporting process. The Agency continues to look for additional 
efficiencies while remaining compliant with federal grant requirements 
and the REAP statute which mandates three tiers of applications.
    Comment 12: Ebenezer MGMT, LLC commented that in ``4280.103 
Definitions, Small business means (A) Number of employees If Number of 
Employees is the SBA criteria to determine eligibility. Tax returns or 
annual receipt information should not be required as part of the 
submission. Tax returns are not needed for any other portion of 
applications that are under $200,000 in size. Tax returns should not be 
required if not needed for eligibility or scoring.''
    ``4280.103 Definitions, Small business means (B) Calculation of 
annual receipts Requiring 5 years of annual receipts information is 
excessive. Current rule utilizes three years. The extra paperwork and 
time spent accumulating and reviewing will not add substantially to any 
changes in eligibility. Rule does not state what types of records are 
required to document; it is hoped tax returns would not be the only 
source of documentation that could be used.''
    Agency response: The Agency agrees that employee numbers can be 
verified using means other than tax returns and this is consistent with 
existing Agency policy. The Agency is bound to use the SBA definitions 
which have moved to a 5-year average. The alternative size standard may 
also be used. Please note that the new rule allows for certification of 
eligibility without providing all documentation to streamline the 
application process. If the Agency determines that the application 
needs additional documentation to support the applicant's eligibility, 
the Agency will accept tax return information, financial statements or 
other means that support the income or employee numbers.
    Comment 13: Ebenezer MGMT, LLC commented that ``the current DUNS 
(UEI) and System for Awards Management process continues to be slow and 
onerous on applicants. Applicants need to register in SAM.gov which 
most recently revised the website making the site less user friendly 
than the past, if there are problems the applicant must contact the 
Federal Service Desk or the Defense Logistics Agency depending on what 
stage the registration is in, making the process for the applicant 
difficult and cumbersome. These agencies have little knowledge of 
agriculture and the types of businesses and structures they use. 
Obtaining the SAM registration is the biggest roadblock to applicant 
participation in the program. Simply put, the process is not set up for 
grant purposes. Since USDA Rural Development NRCS does not require 
DUNS/SAM registration for their grant programs; REAP should also be 
exempt for any requirement.''
    Agency response: The Agency acknowledges the concerns with the SAM 
registration process but must require SAM registration in accordance 
with 2 CFR part 25. The 2 CFR part 25.110(c)(2)(iii) allows recipients 
a 30-day window after award to complete their registration in exigent 
circumstances.
    Comment 14: Since the guarantee program components have been 
removed from the regulation; Ebenezer MGMT, LLC questions ``why such 
excessive financial information is required. This is a grant program; 
other than to prove eligibility and ability to operate; additional 
information should not be required. For a simple solar installation or 
energy efficiency installation when a feasibility study is not 
required; the financial information adds nothing to the grant review 
process. The financial information would be important for a guarantee 
review; however, for a grant program it is unnecessary and a waste of 
staff time to review. Nothing is gained by having the additional 
information.''
    Agency response: The statute requires more documentation for 
applications with larger project costs. Financial statements are used 
by staff to review the financial stability of the applicant entity and 
to ensure the viability of the proposed project. A risk evaluation is 
required for grants as noted in 2 CFR 200.206(b).
    Comment 15: ELPC commented that ``REAP benefits should be available 
to all in agriculture, including historically underserved and 
disadvantaged farmers. We welcome Secretary Vilsack's commitment to 
addressing historical discrimination against Black Farmers by USDA. 
This commitment should include REAP.
    ELPC supports awarding State Director and Administrator priority 
points for applications from unserved or under-served socially-
disadvantaged groups. These points should be required across the 
country, so the USDA ensures equity in the program, with increased 
attention, outreach and education. USDA should engage in specific 
outreach to these communities to help them learn of program 
availability and benefits and to assist in the application process.''
    Agency response: The Agency agrees with the commentor and continues 
to look for ways to diversify program participation. REAP is a pilot 
program for the Justice40 Initiative where at least 40 percent of 
overall benefits from Federal investments in climate and clean energy 
go to disadvantaged communities.
    Comment 16: ELPC states that ``to substantially simplify the REAP 
program, the USDA should adopt a rebate program to broadly deliver 
energy savings and clean energy savings. A REAP rebate would cover pre-
approved technologies that cut energy costs and carbon pollution. This 
could be applied to grants under $20,000 to ease access to the program 
and facilitate more rapid deployment of energy efficiency and renewable 
energy systems in rural communities.
    Such approaches are used in some state energy programs and they 
provide funding on a first-come, first-served basis. Adopting a rebate 
program would help the USDA address several program priorities, 
including simplification, improving equity and providing broader 
geographic coverage.''
    Agency response: The REAP statute does not provide flexibility to 
administer a rebate or other payment program. As such, the Agency can 
only administer grant and guaranteed loan program funding.
    Comment 17: ``ELPC encourages the USDA to enable dual or combined

[[Page 10943]]

applications and awards under the Energy Audits and Renewable Energy 
Development Assistance (EA/REDA) subprogram as much as possible in 
program application and administration. This change would allow grant 
recipients to apply for and receive grants for providing both energy 
audits and renewable energy development assistance. Importantly, the 
enabling legislation does not call for separation.
    This change will improve EA/REDA continuity from learning with 
energy audits to acting with investments for energy savings and 
renewable energy production. Energy audits, in themselves, do not 
result in energy changes but with follow through in development advice 
more action is likely. Facilitating dual EA and REDA awards will help 
move projects forward in the development pipeline from problem 
identification to understanding options and implementing solutions.
    As regards a specific program change mentioned in the draft rule, 
we encourage the USDA to allow for ``funding to train individuals to 
become qualified to perform EA or REDA assistance'' in those cases 
where the applicant has already demonstrated they have ``experienced 
resource providers at time of application.'' Especially in this 
economy, organizations need to address inevitable turnover in staff 
over time. This change also helps states to build REAP capacity by 
growing the ranks of energy experts.
    ELPC supports the ``minimum score of 40 points to compete for EA/
REDA funding'' for the purpose of maintaining program quality.''
    Agency response: The Agency allows an applicant to apply for one EA 
and one REDA in a fiscal year so that both tasks may be undertaken by 
the same entity; however, separation allows for an easier way to track 
project impacts. For example, the Agency could verify if EEI 
applications for a particular state increased in future years as a 
result of having EA audit services. Furthermore, the EA component 
requires that 25 percent of the cost of the energy audit be paid by the 
ag producer or rural small business where the REDA component does not 
have a similar requirement. Separation allows the Agency to easily 
track that this requirement is met for EA projects. The Agency has 
limited funding for EA/REDA and wants to ensure that funds are used for 
services that directly support rural small businesses and ag producers 
rather than professional development for the recipient organization to 
train auditors.
    Comment 18: ``ELPC supports State Director and Administrator 
priority points for applications including under-represented 
technologies. But the USDA needs to take steps beyond point scoring to 
diversify technology support.
    The USDA has taken steps in the past to increase technology 
diversity in determining REAP awards. The USDA employed a 
``normalization'' process developed by the National Renewable Energy 
Laboratory (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 process, 
however, was abandoned after it became burdensome.
    The USDA should implement a simpler approach with a grants reserve 
fund as described by the Ag Energy Coalition to maintain technology 
diversity among major energy types such as solar, wind, biomass, energy 
efficiency, hydropower, etc. In implementing the grants reserve fund 
and to the extent adequate applications are available, the agency 
should apply a minimum score of 40 points or more, as used elsewhere in 
program administration.''
    Agency response: The Agency acknowledges that there are other ways 
beyond scoring to maintain technology diversity. However, with limited 
staffing resources, it would be difficult for the Agency to complete 
the normalization process and still meet statutory obligation 
deadlines. Limited staff resources and the program's continued growth 
challenges the Agency's ability to add another layer of complexity in 
processing applications.
    Comment 19: ELPC states that ``in the 2016 the USDA released a 
report, USDA Building Blocks for Climate Smart Agriculture and 
Forestry. The Building Blocks report identified REAP as a key USDA 
program for addressing climate change. In Congress, REAP is often 
regarded as a key program for reducing carbon pollution from the 
agricultural sector and is included in legislation to scale up the 
program.
    The USDA needs to act now to increase the emphasis on environmental 
benefits of the REAP program, beginning with increasing the share of 
program points attributed to environmental benefits. For example, 
scoring should increase for projects that provide non-energy 
environmental benefits such as water conservation and protection.
    With the growing climate crisis, the agency also needs to act now 
to develop practice and standards for carbon pollution reduction by 
technology that reflect modern science on life cycle impacts of each 
technology. This is urgent and requires USDA action as soon as 
possible.''
    Agency response: The Agency acknowledges this concern and is 
exploring environmental project benefits via the Justice40 Initiative.
    Comment 20: CROPP commented that ``the revised RES residential 
language will significantly limit program access and increase the 
application burden experienced by small and mid-size family farms; 
farms owned and operated by a single-family unit that resides on the 
farm. The majority of CROPP Cooperative's nearly 1,800 farmer-members 
live and work on the same property that comprises the family farm. The 
final rule's revised RES residential language does not specify what 
``greater degree of documentation'' will be required for a RES project 
where a residence is closely associated with an agriculture operation 
to ensure that 50 percent or greater of energy generated by the RES 
will benefit the farm.
    Providing no explanation of the ``greater degree of documentation'' 
required could prove costly and time consuming, especially for small to 
mid-size farms, and may require professional services above and beyond 
that which is typically provided by a RES installer/vendor.
    CROPP Cooperative uses a residential audit to verify if 50 percent 
or greater of energy generated by the RES, will benefit the farm. It is 
not clear if a residential audit satisfies the intent of the rule 
change.
    More generally, this continually elevated residential-use 
prohibition seems a distraction and does not seem to recognize the 
dynamic of many family-run businesses which may have home offices or 
connected facilities.''
    Agency response: The updated rule removes the ``certification 
only'' option for projects. All other processes remain the same with 
the goal of ensuring sufficient documentation that 50 percent or more 
of the proposed energy to be generated will benefit the agricultural 
producer or rural small business. The Agency has been requiring 
clarifying documentation on this provision for some time. The Agency 
did not intend to add burden by removing the ``certification only'' 
option. Instead, it was intended to facilitate consistency in 
processing applications while ensuring there is adequate file 
documentation that 50 percent or more of the projected renewable energy 
will benefit the agricultural producer or rural small business. The 
residential audit should be acceptable to meet the requirement provided 
it clearly establishes the amount of historical energy consumed

[[Page 10944]]

by the residence to allow for the calculation of historical business 
energy use from total energy consumption.
    Comment 21: CROPP would like an adjustment to $20,000 or Less 
Funding Pool.
    ``With nearly 15 years' experience with REAP applications, we 
believe that increasing the maximum award request in the smaller 
project funding pool is long overdue and will significantly increase 
program access and accelerate renewable energy projects in rural areas.
    Currently, the average small to mid-size Organic Valley dairy 
requires a 40kW-50kW RES to offset 100% of the farm's non-renewable 
energy consumption. Our estimation is a solar array to service this 
energy need is in the range of $130,000-$150,000, which would exceed 
the threshold of maximum allowed cost-share in the $20,000 funding 
pool. We recommend increasing the maximum award request to $40,000 in 
the smaller project funding pool. A simple adjustment for inflation 
since the program's start would validate an increase and be more 
reflective of the overall needs of farmers and rural businesses in this 
category of need. It is our experience that RES in the 40kW-50kW range 
do not receive support in the larger, unrestricted funding pool. This 
pool is typically obligated to a very small number of large RES 
projects.''
    Agency response: The Agency has concern that fewer projects would 
be funded by the suggested change. The $20,000 or less maximum award 
request limitation would require a statutory change.
    Comment 22: CROPP says it has been their experience that 
``significant delays (12+ months) in the obligation of funds at the 
state level is impacting project success and farmer interest in the 
program. Historically, the obligation of funds has been within a 
timeframe of three to six months. Within the previous two years, we 
have seen the obligation timeframe extend to 12+ months.
    Administrative delays need to be addressed to ensure that project 
bids and farmer costs remain timely and relevant to avoid significant 
unexpected cost and installation burdens. It is unacceptable to expect 
an applicant to maintain contractual obligations that extend out as far 
as a year, as material and labor costs, as well as service 
availability, fluctuate sometimes monthly.''
    Agency response: Obligation of funds is tied to annual application 
and statutory obligation deadlines. October 31 is the application 
deadline for grant requests of $20,000 or less that wish to compete for 
the first half of the state allocation of set-aside funds. March 31 is 
the application deadline for grants requests of $20,000 or less that 
wish to compete for the second half of the state allocation of set-
aside funds. March 31 is also the deadline for all other REAP 
applications regardless of the size of the grant request. Complete and 
eligible projects with completed environmental reviews are able to 
compete for funding. Applicants should contact Agency staff early in 
the process to discuss application requirements including the 
environmental review process.
    The Agency appreciates the interest of the American Biogas Council, 
Agriculture Energy Coalition, Ebenezer MGMT, LLC, Environmental Law & 
Policy Center and CROPP Cooperative with regard to the Rural Energy for 
America Program final rule and thanks them for their submissions. The 
Agency confirms the rule without change.

Karama Neal,
Administrator, Rural Business and Cooperative Service.
[FR Doc. 2022-03884 Filed 2-25-22; 8:45 am]
BILLING CODE 3410-XY-P