The Farm Security and Rural Investment Act of 2002 (the Farm Bill) established the Renewable Energy Systems and Energy Efficiency Improvements Program under Title IX, Section 9006. This section directs the Secretary of Agriculture to make loans, loan guarantees, and grants to farmers, ranchers and rural small businesses to purchase renewable energy systems and make energy efficiency improvements. Congress provided nearly $23 million to fund the program in each of fiscal years 2003-2006.
The Secretary of Agriculture delegated the responsibility for this program to the Business and Cooperative Programs within the Rural Development Mission area of U.S. Department of Agriculture.
The USDA anticipates that this program will help farmers, ranchers and rural small businesses reduce energy costs and consumption and help the nation meet its energy needs. The program will also help support and stimulate rural economic development by helping agricultural producers and rural small businesses create new sources of income, to create new jobs, and to create new uses for agricultural products and wastes.
Some key provisions of the program are: Applicants may qualify for a grant, a guaranteed loan, or a combination of both. Grant request must not exceed 25 percent of the eligible project costs. Renewable energy grants can range from $2,500 to $500,000. Energy efficiency grants can range from $1,500 to $250,000. Projects under $200,000 total project costs qualify for a simplified application process. Loan guarantees can be for up to 50% of total eligible project costs. Guarantees can range from $5,000 to $10,000,000 per project. Projects can qualify for combined grant and loan guarantee, but the grant portion is still subject to the above limits and combined funding assistance cannot exceed 50% of total eligible project costs. In the first three years of the 9006 program, USDA has awarded a total of 435 grants totaling $66.7 million to agricultural producers and rural small businesses in 36 states. In addition, the first two loan guarantees were awarded at the end of fiscal year 2005 for $10,100,000.
USDA published the final rule for this program, 7 CFR Part 4280, on July 18, 2005.
!!!!!!!!!!!! NEWS FLASH !!!!!!!!!!!!!
LAS VEGAS, Feb. 22, 2006 – Agriculture Secretary Mike Johanns announced today the availability of $176.5 million in loan guarantees and almost $11.4 million in grants to support investments in renewable energy and energy efficiency improvements by agricultural producers and small businesses. Johanns also highlighted that Energy Secretary Samuel W. Bodman today announced $160 million in cost-shared funding over three years to construct up to three biorefineries in the United States.
“The availability of these funds will further the Bush Administration’s goal to increase renewable energy from domestic sources, reducing our dependence on imported oil and strengthening our economy,” Johanns said during keynote remarks at the Renewable Fuels Association’s 11th Annual National Ethanol Conference. “These loans and grants advance USDA’s comprehensive energy strategy announced last December to help farmers, ranchers and rural businesses mitigate the impact of high energy costs and develop long-term solutions.”
In his State of the Union Address, President Bush announced the Advanced Energy Initiative, which requests $2.1 billion to develop new technologies and alternative sources of energy to help diversify and strengthen our nation’s energy mix. “By applying the talent and technology of America,” President Bush said during the State of the Union, “this country can dramatically improve our environment, move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past.”
The American Competitiveness Initiative is a multi-agency commitment to ensure that America remains competitive in the global marketplace. It will invest $5.9 billion in FY 2007, and more than $136 billion over the next 10 years to increase investments in research and development, strengthen education in math and science, and encourage entrepreneurship and innovation.
In addition, the President’s FY 2007 budget proposal for USDA includes more than $250 million each year in fiscal years 2006 and 2007 for renewable energy and energy efficiency projects through Rural Development’s loan and grants programs, as well as a core investment of $85 million for USDA’s energy-related projects. This funding includes resources to support renewable energy research and demonstration projects and additional efforts to support energy development and transmission across public lands.
The Renewable Energy and Energy Efficiency loan and grant program was established under Section 9006 of the 2002 Farm Bill to encourage agricultural producers and small rural businesses to create renewable and energy efficient systems. A total of 435 grants totaling $66.7 million have been awarded in 36 states since the program began and in 2005, for the first time, renewable energy loan guarantees were made under the program. One guarantee, for $10 million, was combined with a Business and Industry guarantee to help fund construction of a 20-megawatt biomass electrical generating plant in Arizona. That plant will use wildfire damaged timber along with waste from a nearby paper mill as a fuel source. Grants have been awarded to fund a wide range of wind, solar, biomass, geothermal and conservation technologies.
Under the program, the maximum amount of a loan guarantee made to a borrower is $10 million. For renewable energy systems, the minimum grant request is $2,500 and the maximum is $500,000. For energy efficiency improvements, the minimum grant request is $1,500 and the maximum is $250,000. Rural development grants under the program will not exceed 25 percent of the eligible program costs and a combination of grants and guaranteed loans will not exceed 50 percent.
Applications for grants must be completed and submitted to the appropriate USDA Rural Development state office postmarked no later than May 12, 2006. Guaranteed loans will be awarded on a continuous basis. Applications are due to the National Office for funding consideration by July 3, 2006. Any guaranteed loan funds not obligated by August 1, 2006, will be made available for competitive grants. For more information refer to the announcement in the February 13, 2006 Federal Register or contact any state Rural Development office. Information is also available on the web at: < >http://www.rurdev.usda.gov/rbs/farmbill/index.html.
Johanns also highlighted Energy Secretary Samuel W. Bodman’s announcement of $160 million solicitation as part of President Bush’s Biofuels Initiative, which will lead to the use of non-food based biomass, such as agricultural waste, trees, forest residues and perennial grasses in the production of transportation fuels, electricity and other products. Accelerating research to make “cellulosic ethanol” cost-competitive by 2012 offers the potential to displace up to 30 percent of our nation’s current fuel use. For more information on the Department of Energy’s $160 million for the development of biofuels and renewable energy, visit: < >http://www.doe.gov.
More information on President Bush’s Advanced Energy Initiative is available at: < >www.whitehouse.gov/stateoftheunion/2006/energy/.
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