USDA Overhauls Rural Energy Grants; FTA Seeks Comment on Transit Capital Process

USDA Restructures REAP as a Post-Completion, Performance-Validated Program

The Rural Business-Cooperative Service (RBCS), within USDA's Rural Development mission area, has issued a final rule with comment period overhauling the Rural Energy for America Program (REAP), which governs grants to agricultural producers and rural small businesses for purchasing and installing Renewable Energy Systems or making Energy Efficiency Improvements. The rule is effective October 16, 2026, and amends 7 CFR 4280.

The most fundamental change is structural: under the new REAP framework, projects must already be fully built and operational before an applicant ever applies. Applicants then submit actual energy production or savings data for the prior 12 months, alongside 12 months of pre-installation data. The agency describes this as a shift to a "post completion, performance validated model," in which all Renewable Energy System and Energy Efficiency Improvement awards are based on actual documented output, energy savings, costs, and system performance — rather than projected figures evaluated before construction.

The agency states that the current regulation is perceived as complicated and burdensome for the average person or business to understand, often causing applicants to hire grant writers and contractors to apply and administer funding, which the agency says further reduces their opportunities for economic prosperity. The rule removes bottlenecks such as the technical merit review clearance process from the agency's purview and replaces state-level competitions with a single national scoring and selection process. Multilocation projects and specific application of certain technologies are now ineligible. The agency states that, combined with a planned online application portal, these changes will significantly decrease burden for applicants by shortening application length and review times.

The rule also reflects policy directives cited in the document: it supports Executive Orders 14154 ("Unleashing American Energy") and 14156 ("Declaring a National Energy Emergency"), the May 2025 USDA Farmers First Policy, and the National Farm Security Action Plan. Consistent with those directives, the revised rule focuses REAP support on appropriately scaled, on-farm renewable energy systems, and explicitly excludes large or utility-scale solar developments. The rule excludes projects that involve prohibited components from foreign adversary nations, as defined by 15 CFR 791.4. The agency states that stakeholders raised concerns that large ground mount solar projects were contributing to artificially inflated land prices, displacing productive cropland, and exceeding a business's actual energy needs. By limiting oversized ground mount installations and protecting cropland, the agency states it is safeguarding farmland, preventing market distortions, and ensuring REAP funds directly benefit rural producers and small businesses.

RBCS notes that because REAP is a grant program, this rule is not required to undergo notice-and-comment rulemaking under the exception in 5 U.S.C. 553(a)(2) for matters relating to grants, but that it has provided a comment period regardless, which may help RBCS in considering any future guidance or rulemaking. The Agency will publish a Notice of Funding Opportunity providing additional details on application procedures, funding priorities, and how applications will compete. REAP is described as a competitive grant program in which projects compete based on score, and funding to support all eligible applications is not guaranteed. Subpart B was last updated April 27, 2021 and confirmed on February 28, 2022.

FTA Proposes Comprehensive Overhaul of Capital Investment Grants Policy Guidance

The Federal Transit Administration (FTA) is soliciting public comment on proposed revisions to its policy guidance for the Capital Investment Grants (CIG) program. The CIG Policy Guidance covers CIG project types and the full CIG process from project initiation to construction grant award. Comments must be received on or before November 16, 2026; late-filed comments will be considered to the extent practicable.

FTA states that it is proposing a comprehensive update to the CIG Policy Guidance to streamline the CIG process, improve accountability of CIG project sponsors, and improve overall readability of the guidance. Pursuant to 49 U.S.C. 5309(g)(5), FTA must publish policy guidance on the discretionary CIG program each time the agency makes significant changes to the CIG review and evaluation process and criteria. The CIG Policy Guidance complements FTA's CIG regulations at 49 CFR part 611, which set forth the process grant applicants must follow to be considered for discretionary funding, and the procedures and criteria FTA uses to rate and evaluate CIG projects.

The proposed revisions incorporate suggestions FTA received in response to a Request for Information published on August 19, 2025 (90 FR 40463). FTA received comments from 22 unique respondents in response to that RFI. The most recent prior update to the CIG Policy Guidance occurred in November 2025 (90 FR 50886), which revised the methodology for evaluating the environmental benefits of CIG projects consistent with certain Executive Orders signed by the President in early 2025 and DOT Order 2100.7 (January 29, 2025). FTA states it did not publish a comprehensive update at that time due to the urgent need to address the environmental benefits methodology.

A central proposed change involves reorganizing the format of the guidance document. Previous versions were structured with self-contained, stand-alone chapters outlining requirements for each CIG category — New Starts, Small Starts, and Core Capacity — and "bundles" of CIG projects. FTA states this format resulted in duplicative information across CIG categories and a lengthy document that created a burden for project sponsors when navigating it. The proposed revision reorganizes information by major program element or process — Introduction, Program Overview, Process, Evaluation and Rating, and Bundles of CIG Projects — and consolidates common program characteristics while identifying unique requirements within individual sections.

Critically, FTA states that when the final CIG Policy Guidance is published on the FTA website it is to be effective immediately; no grandfathering will be allowed for any projects currently in the CIG pipeline. The proposed guidance is available for download through regulations.gov and on the FTA website at transit.dot.gov.

What to Watch

• October 16, 2026 — REAP final rule takes effect; the new post-completion, performance-validated application model becomes operative under 7 CFR 4280.
• November 16, 2026 — Deadline for public comments on FTA's proposed CIG Policy Guidance revisions.
• Forthcoming — USDA RBCS will publish a Notice of Funding Opportunity with additional details on REAP application procedures, funding priorities, and competition criteria.
• Forthcoming — FTA will publish a final CIG Policy Guidance on its website, effective immediately upon publication with no grandfathering for projects in the pipeline.

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