By James Berreth 

Editor in Chief 

A federal program that has helped thousands of farmers and rural businesses install solar panels, improve energy efficiency, and reduce utility costs is at the center of a new legal fight over the Trump administration’s changes to federal renewable energy policy. 

The Environmental Law & Policy Center and Earthjustice filed a lawsuit on Sept. 28 challenging changes made by the U.S. Department of Agriculture to the Rural Energy for America Program, commonly known as REAP. The lawsuit argues that USDA unlawfully changed eligibility requirements and applied some of those changes to farmers and businesses that had already applied for – and in some cases had been selected to receive – federal funding. 

The dispute took on added significance two days later. 

On Sept. 30, the USDA published a final rule substantially restructuring REAP. Under the new system, projects generally must be completed and operational before applicants seek a grant. Applicants will be required to provide actual energy production or savings data, including 12 months of post-installation information and comparable pre-installation data. The USDA described the change as a way to reduce risk, simplify the program, and base awards on demonstrated performance. 

The new rule also prohibits REAP grants for ground-mounted solar and wind projects installed on federally defined cropland. Solar and wind systems that cannot document historical energy use comparable to their generating capacity are also ineligible, as are systems containing components made in countries classified by the federal government as foreign adversaries. The changes represent a significant shift for a program that has become an important source of renewable energy financing in rural America – particularly across the Midwest. 

Congress created the program’s predecessor in the 2002 Farm Bill, and it was consolidated into REAP through the 2008 Farm Bill. Congress subsequently reauthorized the program in the 2014 and 2018 farm bills. 

REAP provides federal grants and loan guarantees to agricultural producers and rural small businesses for renewable energy systems and energy-efficiency improvements. Historically, eligible technologies have included solar, wind, biomass, geothermal, and small hydroelectric projects, while efficiency projects have included heating and cooling systems, insulation, lighting, refrigeration, and irrigation equipment. 

Over its first 20 years, the program helped finance more than 22,000 renewable energy and energy-efficiency projects, according to the Environmental Law & Policy Center. A National Sustainable Agriculture Coalition analysis found that between 2014 and 2025, REAP invested more than $4.8 billion through more than 19,000 grants and loan guarantees. Those projects were associated with more than $14.7 billion in total rural investment. 

Because REAP recipients typically contribute their own money toward projects, the coalition estimated that each dollar provided through a federal REAP grant generated about $8.72 in overall project spending. 

Congress dramatically expanded the program through the 2022 Inflation Reduction Act, which provided approximately $2.025 billion in additional REAP funding through 2031. The USDA initially estimated the money could support renewable energy and energy-efficiency projects at more than 41,500 farms and small businesses. 

Between 2023 and 2025 alone, REAP funding supported 6,822 projects and generated an estimated $2.75 billion in rural economic development, according to Earthjustice and ELPC. The USDA reported that projects supported through the program generated or saved enough energy in 2024 to power more than 300,000 homes. 

According to the USDA award data analyzed by groups challenging the administration’s changes, approximately 68% of REAP grant and loan-guarantee awards between 2011 and the first quarter of 2025 went to solar projects. 

For farms and rural businesses, those installations can serve a different purpose than utility-scale solar developments. A farmer, grain operation, or small manufacturer, for example, can install panels to offset electricity used by the operation rather than develop a commercial solar farm selling electricity onto the grid. 

The USDA itself has historically described REAP as a way of increasing private-sector renewable energy production while reducing energy demand and lowering energy costs for agricultural producers and rural businesses. But the Trump administration has raised concerns that federal renewable-energy subsidies can encourage the conversion of productive agricultural land to solar development. 

Agriculture Secretary Brooke Rollins announced new restrictions in August 2025, saying the USDA would no longer use federal money to support solar panels on productive farmland or projects using solar components manufactured by foreign adversaries. She argued that subsidized solar developments can increase competition for agricultural property and make land more expensive for farmers. The administration also restricted REAP guaranteed loans for certain ground-mounted solar projects and eliminated priority points previously available to some REAP grant applications involving renewable energy.  

The debate carries particular significance in the Midwest as federal data obtained and analyzed by ELPC found Illinois received more than $140 million in REAP grants beginning in 2014, while Minnesota, Iowa, Michigan, and Ohio also ranked among the 10 states receiving the most grant funding during the period covered by the analysis. 

Inflation Reduction Act funding also flowed heavily into the region, and an analysis by the National Sustainable Agriculture Coalition found Iowa received about $42.1 million in IRA-funded REAP grants between 2023 and 2025, while Michigan received approximately $41.6 million. Only Pennsylvania received more, at approximately $48.1 million. 

That geographic concentration means changes to REAP could have an outsized effect on Midwestern agricultural producers, renewable energy contractors, and rural businesses. 

One of the plaintiffs in the new lawsuit is Minnesota-based Wolf River Electric. The company said it has worked with more than 300 customers affected by REAP funding and has designed eight solar and battery-storage projects for tribal partners. “REAP funding can determine whether a rural or tribal business builds the project it needs, reduces its size, or cannot proceed at all,” Wolf River Electric CEO and co-founder Vladimir Marchenko said in a statement released by Earthjustice. 

The dispute escalated March 31 when USDA announced that it would stop making additional REAP grant awards while the department rewrote the program’s regulations. The suspension applied to applicants that did not have a fully executed financial assistance agreement. The USDA said applicants would be permitted to reapply after new regulations were adopted while guaranteed loans continued during the freeze.  

The USDA said the changes were intended to comply with President Donald Trump’s executive order titled “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources.” The department said the overhaul reflected administration priorities involving national security, economic growth, energy policy, and federal spending. 

The USDA’s current REAP website states that grant applications are not being accepted, although guaranteed loan applications may still be submitted. 

The Sept. 30 final rule establishes the framework USDA intends to use when grant funding resumes. Among its most consequential changes is a move toward what USDA calls a “post completion, performance validated model.” Instead of seeking REAP assistance before completing a project, applicants generally would construct and operate a project first and then apply using documented information about its actual performance. 

That change could become another major point of contention because farmers and small businesses may have to assume more upfront financial risk before knowing whether they will receive federal assistance. 

The lawsuit filed by Earthjustice and ELPC focuses in part on what the groups say is the USDA’s retroactive application of its policy changes. 

One example involves Book Family Farms in Dixon, Illinois. According to Earthjustice, the farm was informed in late 2023 and early 2024 that two solar projects totaling 429 kilowatts had been selected for approximately $446,000 in federal funding. The family then began work on the projects. Earthjustice says the USDA informed the farm more than two years later that the new policy would apply to its projects and that the previously approved funding would be canceled. 

The lawsuit asks a federal court to invalidate the USDA’s new solar restrictions and require the department to process previously submitted REAP applications under the rules in effect when those applications were received. 

The “USDA doesn’t get to encourage farmers to invest in renewable energy under one set of rules, let them spend their own money relying on those rules, and then rewrite those rules once they’ve already invested,” Earthjustice attorney Michael Youhana said in announcing the lawsuit. 

The USDA, however, says the changes are intended to return the program’s focus to appropriately sized renewable energy systems serving farms and rural businesses rather than larger solar developments. In its Sept. 30 rule, the department said some stakeholders had expressed concerns that large ground-mounted solar projects were increasing land prices, displacing productive cropland, or generating substantially more energy than a participating business actually needed. The USDA said the new restrictions are intended to protect agricultural land, support domestic manufacturing, and ensure renewable systems are appropriately sized for the farms and businesses receiving assistance. 

The new regulations do not eliminate solar from REAP entirely, but instead, they substantially narrow which solar projects can qualify. Ground-mounted solar on cropland is prohibited, systems must meet historical-energy-use requirements in certain circumstances, and solar projects containing components from designated foreign adversaries are generally barred. 

That distinction is important because it places the legal dispute not simply over whether the USDA can eliminate solar funding, but over how much authority the executive branch has to narrow a congressionally created renewable energy program, and how those changes can be applied to applicants that relied on earlier rules. 

For farmers and rural businesses caught between those policies, the outcome could determine whether projects planned under the old REAP system receive federal assistance – and what they will have to do to qualify for assistance in the future.