The USDA just made it way harder for farmers to get grants for solar

Rules published Thursday essentially end federal grants that thousands of American farmers have long relied on to build revenue-generating solar systems on their land.

The Trump administration’s changes to the Rural Energy for America Program (REAP) are its latest attempt to block solar development even as the nation’s energy demands skyrocket. Started by the 2008 Farm Bill, REAP helps farmers and rural small businesses install renewable energy and make efficiency improvements.

Up until now, REAP has allowed farms to build arrays that generate more power than they use, helping farmers not only slash their own utility bills but also earn revenue by selling clean energy back to the grid. The new provisions prevent grants for renewables that generate more than a farm’s own energy needs, as well as projects on cropland or those with components from ​“foreign adversaries.” The nonprofit Environmental Law & Policy Center says that last provision ​“sweeps in much of the global solar supply chain.”

Under the new rules, farmers must wait until their array has been in operation for a year before even applying for a REAP grant. Previously, awards were made before construction began, though recipients had to pay for the project up front and then get reimbursed by REAP. That change means farmers will have to make big investments without any certainty of receiving reimbursement.

The new rules also cap grants at a quarter of the project cost; under the Biden-era Inflation Reduction Act, REAP grants could pay for half.

While some of the new limitations also apply to wind, clean energy and farmers’ advocates are most concerned about the impact on solar since more than two-thirds of REAP grants have historically gone to solar.

The program revisions affect not just future grants but also those that have already been awarded but not yet disbursed. Some farmers had already invested in solar with the expectation of a reimbursement they now may never see.

REAP attacks spark lawsuit

The new rules are the culmination of a series of setbacks REAP has faced under the Trump administration. The president’s day one executive order targeting programs funded by the Inflation Reduction Act froze $911 million in REAP dollars. Those funds were released a few months later, but grantees received confusing invitations to voluntarily change their proposals to be more in line with administration priorities.

Then, a REAP application period scheduled to open in July 2025 was canceled. In August 2025, the U.S. Department of Agriculture, which runs REAP, announced a halt to funding for solar on ​“productive farmland” and solar panels ​“manufactured by foreign adversaries.”

In April, the department announced that no further REAP grants would be awarded until new rules were in place. Farmers and businesses that had applied for — and even been promised — REAP funds were told they would have to reapply under the new rules.

A handful of these farmers, along with solar developers and advocates, sued the Trump administration this week, three days before the new rules were announced. The lawsuit alleges that changes made to the REAP program over the past year — and now enshrined in the rules — hurt businesses and violate Congress’ directive to promote renewable energy in agriculture, as outlined in multiple Farm Bills authorizing REAP funding.

Two categories of plaintiffs are represented in the lawsuit, explained Michael Youhana, senior associate attorney for Earthjustice, which filed the lawsuit along with the Environmental Law & Policy Center.

“There are those harmed by the retroactive application of this new policy,” including farmers who had applied and even been granted REAP funding, then told they had to reapply, Youhana said.

“Another category is prospective injury,” he continued, describing it as ​“anyone hoping to apply for funding, maybe in the earlier stages of planning a solar system to be sited on their farm, as well as solar development companies that operate in rural communities whose market has now been shrunk by these arbitrary and illegal changes in the rules.”

Since REAP is a reimbursement-based program, farmers have already invested in solar projects that might not otherwise have been financially viable, in expectation of receiving funds. 

The lawsuit plaintiffs include an Illinois family promised almost half a billion in REAP funds — to install solar to power grain driers — that they never received.

“They have paid basically all of the costs up to this point for constructing these two solar projects, based on correspondence with USDA that they would be reimbursed at the end of the construction process,” said Youhana. ​“They were shocked like so many other farmers … when all of a sudden they found out their grants would not be disbursed, with a new set of rules coming down the pike.”

Iowa farmer Ed Heishman spent over $250,000 on a rooftop solar array in hopes of getting over $100,000 in REAP funds that he had applied for, the lawsuit notes. Heishman is a member of the Iowa Farmers Union, which is a plaintiff in the lawsuit.

Plaintiff Wolf River Electric, a Minnesota solar developer, says it lost substantial business and had to lay off a staff member because of the REAP clawbacks. The suit names other solar developers that have lost business too, and a consulting firm that had to lay off its entire staff.

What now?

The administration published the final rules without going through the usual public comment period, invoking an exemption for grant-making programs, according to the Environmental Law & Policy Center. A public comment period now runs through Nov. 2, though the rules take effect in 15 days, before that period is over.

Courts have already shot down some of the Trump administration’s attempts to roll back clean energy incentives. Last month, for example, federal judges in two separate cases blocked the administration’s termination of the $7 billion Solar for All program, which funds solar for low-income and tribal communities.

In June, a federal court for the District of Columbia — where the REAP lawsuit was also filed — ruled against the Trump administration’s tax code changes that make it harder for wind and solar projects to access incentives.

Youhana is hopeful the REAP lawsuit could mean relief for farmers who have already applied for funding, as well as force a change in the rules going forward.

The lawsuit asks the court to order the government to continue processing applications already in the queue under the former rules, and to declare the administration’s actions on REAP unlawful. While the lawsuit was filed before the new rules were released, the arguments also apply to them, Youhana said.

“The spigot is closed for a lot of solar projects and now wind projects, too,” said Youhana. ​“The hope is if our lawsuit is successful, the spigot will open again and people will be able to apply for funding under rules similar to, if not identical to, the rules that existed before — that were not hostile to solar.”