The U.S. Department of Agriculture published final rules Thursday that cut the Rural Energy for America Program's grant share from 50 percent of project cost — the level set under the Inflation Reduction Act — to 25 percent, and bar grants for renewable systems that generate more power than the applicant farm consumes. The rules also exclude projects sited on cropland and any project using components from "foreign adversaries," a provision the Environmental Law & Policy Center says "sweeps in much of the global solar supply chain."

The changes hit solar hardest. More than two-thirds of REAP grants have historically gone to solar projects, which until now could be sized above farm load so growers could sell surplus generation back to the grid.

The reimbursement mechanics changed too. Under the previous structure, USDA made awards before construction; farmers financed projects up front and recovered costs through the reimbursement-based program. The new rules require an array to operate for a full year before a farmer can even apply. That forces capital outlay with no certainty of recovery, and at half the previous federal share.

Retroactivity compounds the exposure. The revisions apply not only to future grants but to awards already made and not yet disbursed. USDA had frozen $911 million in REAP funds under the president's day-one executive order targeting Inflation Reduction Act programs; the department released those dollars months later, but invited grantees to voluntarily rework proposals toward administration priorities. A REAP application window scheduled for July 2025 was canceled. In August 2025, USDA halted funding for solar on "productive farmland" and for panels "manufactured by foreign adversaries." In April, the department announced no further REAP grants would be awarded until new rules were in place, telling applicants — including some already promised funds — to reapply.

The exposure is concrete in the plaintiffs' docket. An Illinois family was promised roughly half a billion dollars — the source cites "almost half a billion" — in REAP funds for two solar projects powering grain driers and, per Earthjustice senior associate attorney Michael Youhana, "have paid basically all of the costs up to this point" based on USDA correspondence indicating reimbursement at construction's end. Iowa farmer Ed Heishman, a member of the Iowa Farmers Union, spent over $250,000 on a rooftop array in anticipation of more than $100,000 in REAP funds he had applied for. Plaintiff Wolf River Electric, a Minnesota solar developer, reports lost business and a layoff; the suit names other developers that lost business and a consulting firm that laid off its entire staff.

Earthjustice and the Environmental Law & Policy Center filed the lawsuit three days before the rules dropped, in the U.S. District Court for the District of Columbia. It names two categories of plaintiffs: "those harmed by the retroactive application of this new policy," including farmers granted funding then told to reapply, and those facing "prospective injury" — "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," Youhana said. The suit argues the changes violate Congress's directive, across multiple Farm Bills authorizing REAP since the 2008 Farm Bill created the program, to promote renewable energy in agriculture. It asks the court to order processing of queued applications under the former rules and to declare the administration's REAP actions unlawful.

The rulemaking itself may face procedural challenge. The administration skipped the customary public comment period, invoking an exemption for grant-making programs, according to the Environmental Law & Policy Center. A comment window now runs through Nov. 2, but the rules take effect in 15 days — before it closes.

Courts have already checked related rollbacks. Last month, federal judges in two separate cases blocked termination of the $7 billion Solar for All program. In June, the D.C. federal court — the same district hearing the REAP case — ruled against tax code changes restricting wind and solar access to incentives.

"The spigot is closed for a lot of solar projects and now wind projects, too," Youhana said. "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."

The near-term milestones are fixed: rules take effect in 15 days; comments close Nov. 2; and the D.C. court's response to the plaintiffs' request to resume processing queued applications under prior rules will determine whether already-built rural solar capacity — and the developer market around it — recovers its federal cost share.