On October 1, 2026, the US Department of Agriculture (USDA) published a final rule overhauling the Rural Energy for America Program (REAP), which took effect on October 16. Unfortunately, rather than improving REAP, this new rule flips the script on how the program has benefited small farmers, turning it into a program that drives farm consolidation by disproportionately benefiting the wealthiest farm businesses. 

Created in the 2002 Farm Bill, REAP offers grants and guaranteed loans for farmers, ranchers, and rural small businesses to install renewable energy systems and make energy efficiency improvements. Since its inception, REAP has been a popular, bipartisan program with a strong focus on smaller farmer-owned projects, including solar, more efficient grain dryers, irrigation pumps, and cooling systems. 

Following an earlier Executive Order seeking to shift federal funding support away from renewable energy, USDA stopped processing pending REAP applications on March 31, 2026. In April, USDA rescinded the program’s funding notice, telling applicants mid-process that they would have to reapply under whichever new rules were promulgated to reflect the Executive Order. This ongoing uncertainty and disruption to the program have undermined the trust between farmers, rural businesses, and USDA, and the new rules published this month do little to rectify that.  

What is in the final rule?

One of the biggest changes to REAP in the final rule is a reversal of structure: previously, farmers were able to apply for grants prior to starting a project, giving them confidence they would receive federal support before investing in the new technology. Under the new rule, however, farmers must now pay the full cost of a project up front, run it for a year, and then compete for a grant with no guarantee of an award. Additionally, new eligibility rules narrow which farms are able to apply. These changes turn REAP into a program that benefits the operations that already have the most resources. Any farm or rural small business that cannot afford to front the full cost of a project and wait more than a year for a grant that is not guaranteed is shut out of the program, including beginning farmers, farms operating on thin margins, and small family farmers. 

Additionally, this new rule appears to be in conflict with REAP’s statute in multiple ways and to exceed USDA’s authority as delegated by Congress, particularly in its changes to what projects can be funded and in turning REAP into a reimbursement program for completed projects. Congress wrote the program to fund proposed projects and was unambiguous that solar and wind are eligible for REAP. The legality of this new rule, or lack thereof, is an outstanding question that may be tested.

This blog post highlights the most notable components of the new rule and the National Sustainable Agriculture’s (NSAC) recommendations for how the rule should be altered to return to a program that benefits most farmers and small rural businesses. 

Project Eligibility

• Projects must be fully built and operational for at least one year. A project must have been completed 12 – 24 months before the application period (12 – 36 months for the first application window). Applicants must provide 12 months of actual energy production or savings as part of the application. Under the old rules, farmers applied before building.
• New solar and wind requirements. Ground-mounted solar and wind systems on cropland are no longer eligible, and REAP can no longer fund retrofits of existing solar and wind systems on cropland. Solar and wind systems that cannot document commensurate historical energy usage are not eligible. Solar and wind systems consisting of any component made in a country named as a foreign adversary are not eligible, though systems installed before October 1, 2026 are exempt. 
• Must be in a rural area. Projects must be located in areas that have a population of no more than 50,000 inhabitants and are not in urbanized areas contiguous and adjacent to a city or town with more than 50,000 inhabitants. Previously, agricultural producers were eligible for projects in non-rural areas if it was tied to an agricultural production operation. 
• Project exclusions. Stand-alone battery storage or adding storage to an existing renewable energy system, EV chargers, trailer-mounted systems, and energy efficiency upgrades in new construction are ineligible. 

Applicant Eligibility

• Narrower definition of “agricultural producer.” A farm is now only considered eligible if it is a for-profit business that is wholly owned by an individual and/or their immediate family, every owner works in the day-to-day operation, and the majority owner earned at least 50% of their income from the farm in the most recent calendar year. An individual and their spouse are considered one owner. Tribal businesses wholly owned by a Tribe are eligible, with their own path to qualifying as an agricultural producer.
• Only Highest-Level Owners may apply and are limited to one application a year. The entity applying cannot have any other entity that owns or controls it, like a subsidiary. Each owner gets one application for either a renewable energy system or energy efficiency application per fiscal year and can only receive one award per fiscal year. Applicants that had pending applications before REAP processing was stopped in March 2026 may apply again, but must follow the new rules. 
• Financial tests. Applicants must have a ratio of current assets to current liabilities of at least 1:1. Applicants must have a positive cash flow in the most recent fiscal year. Applicants must have enough revenue to cover the project’s operation, maintenance, and debt for its useful life. 
• Rural small businesses must be certified by the Small Business Administration(SBA). Businesses will need an active SBA profile. 
• Individuals are ineligible. Sole proprietorships can apply, but applicants must be organized under state, tribal, or federal law. 
• Must be an existing business. Applicants must have been a profitable business for at least 12 months before the project period. They must additionally own the system and have owned or leased the site since 12 months before the project period and through the final payment.

Project Requirements

• At least 75 percent must be cost-shared.  The grant can cover no more than 25% of project costs. Previously, funds from the Inflation Reduction Act allowed for grant support up to 50%. A REAP grant and a REAP guaranteed loan together cannot exceed 75% of project costs. 
• Project periods. The project period would start at the first allowable cost incurred, can last no more than 24 months, and end no later than 30 days after installation. The project period must end 12 – 24 months before the application (12 – 26 months for the first application window).  
• Limits on energy production and storage. Total energy production is limited to 120% of annual energy consumption for 12 months before project installation. A storage system cannot exceed 100% of the size of the paired renewable energy system. 

Application Process

• Online portal. USDA states they will launch a new online application portal. Only complete applications are accepted, and applications cannot be modified after they are submitted. 
• New scoring system. After evaluating for completeness, eligibility, and risk, applications will be scored on merit. A new scoring criteria awards up to 90 points based on energy per grant dollar (0-25 points), share of energy replaced or saved (0-20 points, with 0 points awarded for anything above 109%), prior awards (15 points if never funded, 5 if no award in past 2 years), Simple Payback (0-10 points with full points for payback under 10 years), impact (5 points for three non-owner employees, 5 for being a critical community service), and environmental benefits (5 points). USDA may then offer 10 additional points set by their own priorities. Points for disadvantaged communities have been removed.
• Applications requesting $20,000 or less. These applications compete for reserved funds and are funded in rank order until the reserve runs out or scores drop below 40 points. 
• Applications above that threshold. There are no longer state competitions. The single highest-scoring application from each state is funded first, and the top two are funded if more than $100 million is available. Then the remaining applications are funded in rank order until funds run out or scores drop below 40 points. 

Reporting and Documentation

• Measured performance. Because REAP now requires a project to be fully built and operational, applications must include 12 months of measured energy production or savings and 12 months of energy data from before installation. 
• Documentation. Documentation requirements are heavier for the application process, though post-award reporting requirements are lower due to the project having already been built for at least 12 months. Documentation requirements include proof of project and site ownership/control, country of origin information for solar and wind components, certification from a licensed engineer, copies of relevant agreements (including for interconnection, power purchase, offtake, lease, financing, and maintenance), contractor records, and financial records. 

Comment Period

USDA finalized this rule without a notice-and-comment period, claiming that grant programs are exempt from that process. The rule therefore took effect October 16 without public feedback. USDA still opened a comment period and will be accepting comments until November 2, 2026, but only to inform future guidance or rulemaking. It remains vitally important that farmers and advocates weigh in on the impact of changes to this program. 

While we support efforts to reduce burden on producers who apply and protect the program from bad actors, NSAC strongly opposes the implementation of the rule, which does not follow Congress’s intent in its authorizing statute and puts REAP out of reach for most producers. NSAC supports the following:

• Let farmers apply before they build. USDA frames this change as a response to stakeholders, but it simply shifts risk away from the agency and onto the farmers themselves. USDA acknowledges that applicants will not know whether they will receive federal support when they invest in a system. REAP was so popular because it helped farmers invest in on-farm renewable energy and energy efficiency upgrades that cut their costs and made them more energy independent. But very few small farmers can front the full cost of an energy project without any guarantee of support. Unfortunately, that means this program will now leave behind the very farmers it should serve best. 
• Better support working family farms. The narrower definition of agricultural producers and the financial tests put a particular burden on small family farms. About 86% of US farms have household incomes of less than $250,000 and, on average, nearly 90% of that income comes from off-farm sources. Requiring a majority of household income to come from farming excludes the vast majority of small family farms.   The rule also caps grants at 25% of project costs, but the Inflation Reduction Act funding allows grants of up to 50%. USDA should use that flexibility for IRA funds that remain.
• Give farmers flexibility. USDA should consider the incredibly varied operations that apply for the program. Additionally, overly burdensome and expensive requirements for producers, such as component sourcing requirements and documentation on country of origin information, will make certain projects completely inaccessible for most producers. This means that, rather than blanket restrictions on solar, wind, and energy storage, USDA supports producers in choosing energy options that work best for their operations. Additionally, applicants who were mid-process when processing stopped in March should be provided a workable path forward under the rules that existed when they applied.
• Provide transparency. USDA should remain transparent about how the program is functioning, including how many applications were pending when processing stopped in March, how much IRA funding for REAP remains, and continuing to publish the results of award rounds, including who received awards. 

Comments can be submitted on the Federal Register.