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Statement of Need: Changes are needed to the regulation for the program known as the Rural Energy for America Program (REAP), due to the changes required by the 2008 Farm Bill. The program was previously called the Renewable Energy Systems and Energy Efficiency Improvement program and was created by the 2002 Farm Bill. In addition to the change in the title of the program, several regulatory changes are needed for REAP as outlined above. These changes are required to comply with current statutes. The program was implemented utilizing a notice of funding availability in FY 2009. Permanent regulation is required to implement the program in 2010.

Summary of the Legal Basis: The Rural Energy for America program was authorized by the Food, Conservation, and Energy Act of 2008, which made available $55,000,000 in mandatory funding for 2009, $60,000,000 mandatory funding for 2010, $70,000,000 mandatory funding for 2011 and 2012. The Farm Bill authorized to be appropriated $25,000,000 in discretionary funding for each fiscal year 2009 through 2012. The program provides for grants and guaranteed loan for renewable energy systems and energy efficiency improvements, and grants for feasibility studies and energy audit and renewable energy development assistance. The purpose of the program is to reduce the energy consumption and increase renewable energy production. The regulations are an administrative and a legislative initiative.

Alternatives: There is no alternative to issuing a proposed regulation, which allows the public an opportunity to provide comments on the program requirements. Permanent regulations are required to provide funding in 2010.

Anticipated Costs and Benefits: The only costs, aside from contractor costs, are internal costs associated with the promulgation of the proposed rule. The Agency is confident that the regulations contain sufficient safeguards to mitigate any risk associated with a proposed rule and would be a benefit to the agency as well as potential applicants considering applying for payments under this program. Benefits accruing to the publishing from a proposed rule would be attributable to the opportunity of public comments which are believed to improve program implementation and impact.

Risks: The proposed action does not mitigate risk to the public health or safety or to the environment.