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May 6, 2010Client Alert

USDA Funds Available To Increase Production and Use of Renewable Energy

On May 4, 2010, the United States Department of Agriculture (“USDA”) announced they are seeking applications to increase the production and use of renewable energy sources. Funding is available from four USDA Rural Development renewable energy programs authorized by the Food, Conservation, and Energy Act of 2008 (“Farm Bill”). The funding for these programs seeks to increase investments in technologies that will reduce reliance on fossil fuels, benefit the environment and create green jobs. In addition, these programs are designed to improve the economic stability of rural communities, businesses, farmers, and ranchers and improve the quality of life in rural America. A brief summary of each of the four programs is described below.

Rural Energy For American Program (“REAP”): The REAP provides funds to farmers, agricultural producers and rural small business owners to purchase and install renewable energy systems and make energy efficiency improvements. REAP is composed of several types of grants and guaranteed loan programs. Eligible projects include grants and loans for the development/construction/installation of renewable energy systems such as wind turbines, solar, geothermal, biomass, anaerobic digesters, hydroelectric, and ocean or hydrogen systems. Grant and loan funding may also be used for the purchase of energy-efficient equipment to add insulation and improve heating and cooling systems. In addition, grants are available for conducting energy audits, conducting renewable energy development assistance and conducting renewable energy feasibility studies. USDA is accepting REAP applications for grants and loan guarantees through June 30, 2010. More information on how to apply for funding is available, click here.

In addition to REAP, the USDA is also accepting applications for three other renewable energy programs as outlined below. Under all three programs, applications will be accepted for biorefineries that produce transportation fuels that meet the Renewable Fuel Standard or are currently undergoing an appeal to the US Environmental Protection Agency for inclusion in the Renewable Fuel Standard, or that produce non-transportation renewable energy that results in a reduction in greenhouse gases.

BioRefinery Assistance Program (“BAP”): The BAP provides guaranteed loans to develop and construct commercial-scale biorefineries, or to retrofit existing facilities using eligible technology for the development of advanced biofuels. The amount of a loan guaranteed for a project under this program cannot exceed 80 percent of total eligible project costs. Applications must be received between May 6, 2010 and August 4, 2010. More information on how to apply for funding is available, click here.

Repowering Assistance Program (“RAP”): The purpose of RAP is to provide financial incentives to biorefineries in existence on June 18, 2008, the date the 2008 Farm Bill was enacted. The RAP is designed to encourage the use of renewable biomass as a replacement fuel source for fossil fuels used to provide process heat or power in the operation of eligible biorefineries. The Agency will determine the amount of payments to be made to a biorefinery based on the quantity of fossil fuel a renewable biomass system is replacing, the percentage reduction in fossil fuel used by the biorefinery, and the cost effectiveness of the renewable biomass system, economic benefit to the community, and the potential to improve the quality of life in rural America. Applications must be received between May 6, 2010 and July 20, 2010. More information on how to apply for funding is available, click here.

Bioenergy Program for Advanced Biofuels (“BPAB”): The BPAB works to support and ensure expanding production of advanced biofuels by providing payments to eligible advanced biofuels producers. Advanced biofuels are derived from renewable biomass, other than corn kernel starch. These include cellulose, sugar and starch, crop residue, vegetative waste material, animal waste, food and yard waste, vegetable oil, animal fat, and biogas (including landfill gas and sewage waste treatment gas). This program is an important part of achieving the Obama administration's goal to increase biofuels production and use. The Agency will authorize up to $40 million in funding for this program for fiscal year 2010. Applications must be received between May 6, 2010 and July 6, 2010. More information on how to apply for funding is available, click here.
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