REAP guide

REAP highest-level owner rule explained

Last updated October 2, 2026. Reflects USDA's October 1, 2026 final rule.

Under the October 1, 2026 REAP rule, only the top entity in an ownership chain can apply. The applicant must be the Highest-Level Owner, meaning no other entity owns or controls it, or it must be wholly owned by an Indian Tribe. (7 CFR §4280.104; §4280.120(a)(6)) Each Highest-Level Owner, together with the entities its individual owners own, gets one application and one award per federal fiscal year. (7 CFR §4280.120(a)(8); §4280.133(c))

What "highest-level owner" means

The rule defines a Highest-Level Owner as an applying entity that "does not have any other entity that owns or controls it." (7 CFR §4280.104) In plain terms, if a company or other entity sits above your business and owns or controls it, your business is not the Highest-Level Owner.

The rule does not define "controls" in more detail, and it does not say how trusts, estates, or other holding arrangements are treated. If your ownership includes any of these, confirm with your State Energy Coordinator before you apply.

Examples USDA gives

The rule discussion lists three examples of what USDA considers a Highest-Level Owner (rule discussion, Federal Register 2026-20178):

Following the same definition, an LLC that is owned by another LLC is not the Highest-Level Owner, because another entity owns it. (7 CFR §4280.104) The owning LLC may be the one that has to apply, if it meets the rest of the eligibility rules. (7 CFR §4280.120(a))

Why USDA added this rule

USDA says it limited eligibility to Highest-Level Owners so that certain entities do not get a disproportionate share of the available funds, and to make its eligibility reviews simpler (rule discussion, Federal Register 2026-20178).

You must own the system and own or control the site

Every applicant must own the renewable energy system or energy efficiency improvement that is the subject of the project. It must also own or control the project site. (7 CFR §4280.120(a)(6))

This ownership must be in place at least 12 months before the Project Period begins. It must continue through the time you apply and until USDA disburses the final payment. (7 CFR §4280.120(a)(6)) The Project Period is the time when project costs are incurred, and it can be no more than 24 months. (7 CFR §4280.104)

In its discussion of conflicts of interest, USDA lists a site lease between a Highest-Level Owner and its wholly owned subsidiary, for the purpose of carrying out the project, as an exception to the transactions that can involve a conflict of interest (rule discussion, Federal Register 2026-20178). The codified conflict of interest section does not repeat this example. (7 CFR §4280.106) If your land sits in a separate entity, ask your State Energy Coordinator how USDA will treat the lease.

One application and one award per year

• USDA will accept no more than one application each federal fiscal year from each Highest-Level Owner and the entities owned by its individual owners. (7 CFR §4280.133(c))
• An application for a specific project can be submitted only one time per federal fiscal year. (7 CFR §4280.133(c))
• USDA will approve no more than one award each federal fiscal year from each Highest-Level Owner and the entities owned by its individual owners. (7 CFR §4280.120(a)(8))
• Highest-Level Owners may not apply using a different entity they own in whole or in part. (7 CFR §4280.120(a)(8))
• Each corporation or business wholly owned by an Indian Tribe is counted on its own for these limits. (7 CFR §4280.120(a)(8); §4280.133(c))
• A federal fiscal year runs from October 1 to September 30. (7 CFR §4280.104)

USDA's example: if two people own a corporation, USDA will accept only one application from that corporation. It will not accept more applications from the corporation or from other entities those two people own, including sole proprietorships (rule discussion, Federal Register 2026-20178). The same example is given for awards. USDA says the old rule allowed one renewable energy application and one efficiency application per year, and the new limit is meant to spread funding more widely (rule discussion, Federal Register 2026-20178).

So if you own a farm and also own a separate shop or other rural business, those businesses share one application per year. Pick the project that scores best. Our score estimator can help you compare.

Ownership rules for agricultural producers

To apply as an Agricultural Producer, the business must be a for-profit organization that produces, or has the legal right to harvest, an agricultural commodity. (7 CFR §4280.104) It must also have one of two ownership structures. (7 CFR §4280.104)

Immediate Family means people closely related by blood, marriage, or adoption, or who live in the same household. The rule lists a spouse, domestic partner, parent, child, sibling, aunt, uncle, grandparent, grandchild, niece, or nephew as examples. (7 CFR §4280.104)

What this means in practice, based only on the definition:

• A farm LLC owned by a parent and their adult children can fit the family ownership structure, if every owner works in the operation and the income test is met. (7 CFR §4280.104)
• A farm business with any owner who is not the individual or their Immediate Family does not fit the family ownership structure. (7 CFR §4280.104) It may still qualify as a Rural Small Business if it meets that definition. (7 CFR §4280.120(a)(4))
• A family owner who does not take part in day-to-day labor, management, or field operations would keep the business from meeting the Agricultural Producer definition. (7 CFR §4280.104)

Rural Small Business applicants have a separate test. They must keep an active SBA profile in SAM.gov and show up as a small business in SBA's Small Business Search. (7 CFR §4280.120(a)(2)) See who qualifies for the full list.

Quick check before you apply

1. Is any company, LLC, or other entity listed as an owner of your business? If yes, the business above it may be the one that must apply. (7 CFR §4280.104; §4280.120(a)(6))
2. Does the applying business own the system, and own or control the site, going back at least 12 months before the project started? (7 CFR §4280.120(a)(6))
3. Do you or your co-owners own other businesses that might also apply this fiscal year? Only one application is allowed across all of them. (7 CFR §4280.133(c))
4. If applying as an Agricultural Producer, are all owners family members who work in the operation, and does the majority owner meet the 50% income test? (7 CFR §4280.104)

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Not sure how your ownership chart fits? CGF can review it with you.

Related guides

• The 2026 REAP final rule: full overview
• REAP old vs. new rules
• REAP foreign adversary rule
• REAP grant amounts

This page explains the REAP final rule published October 1, 2026 (USDA final rule, Federal Register 2026-20178 (Oct. 1, 2026)). It is not legal advice. USDAREAPGrant.com is an independent website operated by Cleaner Greener Future LLC. It is not USDA. For an official answer on your ownership structure, contact your State Energy Coordinator or see USDA Rural Development.