April 15, 2011
On Thursday, April 14, USDA issued an Interim Final Rule (IFR) for the Rural Energy for America Program (REAP) which is effective immediately. USDA is taking public comments on the IFR until June 13, 2011.
NSAC appreciated the IFR ranking priority for funding to small farms. NSAC also approves of the rule’s extending REAP funding to non-rural areas, if the applicant for funding is an agricultural producer. This provision addresses some of NSAC’s concerns about REAP money going to non-rural areas and could give a boost to local food initiatives in those urban areas which can accommodate farming.
We were disappointed to see that the IFR did not make non-profit entities eligible to conduct energy efficiency audits and renewable energy development assistance. In addition, the IFR did not streamline the applications for smaller pre-certified equipment such as wind turbines and solar panels. With pre-certification, this equipment should not have to go through lots of hoops in the application process. This smaller equipment can also provide more flexibility for on-farm energy generation.
In addition, NSAC is extremely concerned about the USDA initiative to use REAP, a Farm Bill program, as the source to pay 25-percent of the costs of flexible fuel pumps at gas stations. Last week, Secretary Vilsack announced the initiative for USDA to pay some of the costs for 2,000 pumping systems each year over the next five years. At a cost of $120,000 per pump, this initiative could suck up a large portion of REAP funding. REAP is designated in the farm bill for renewable energy systems and energy efficiency grants and loans.
The IFR gives the pumps a high priority for funding. The immediate recipients of this largess will be the large oil companies that blend ethanol with gasoline. It would be better policy to use funding from gasoline taxes to fund the pumps rather than draw on the USDA budget, which has already taken disproportionate hits in the appropriations process. With a policy debate well under way about transforming ethanol tax credits spending into infrastructure support, it makes no sense to us to take farm bill resources dedicated to a different purpose and use it to layer on upfront blender pump subsidies before the tax credit debate plays itself out.
The IFR was accompanied by a Notice of Funding Availability for FY2011 funding for all components of REAP. In the legislation funding FY2011 for the remainder of the fiscal year, REAP funding was cut to $75 million, almost 25-percent below its FY2010 level.
The FY2011 NOFA covers all REAP grant and loan programs, with the following due dates for applications and funding amounts:
• For renewable energy system feasibility study applications: June 30, 2011 (approximately $20 million available).
• For energy audits and renewable energy development assistance applications: June 30, 2011 (approximately $2.8 million).
• For renewable energy system and energy efficiency improvement grant applications; guaranteed loan only applications; and combination grant and guaranteed loan applications : June 15, 2011 (approximately $52 million).
USDA is setting aside $14 million of the funding for renewable energy system and energy efficiency projects for grants of $20,000 or less. In addition, this year, the Agency is allocating funding to the states for a competitive grants process within the state for grants for renewable energy systems and energy efficiency improvements. All grants not funded in this process will compete with grants from other states in a final National grant competition.
Applications for REAP FY2011 funding should be submitted to Rural Development State Offices. A list of Rural Development State Energy Coordinators, with contact information, is available here.