OMAHA (DTN) -- Electricity prices and other energy costs keep rising, but USDA has severely restricted one of the biggest tools farmers and small rural businesses have had to produce solar power on their farms to offset costs, according to a new lawsuit.

Farmers in Iowa, Illinois and Wisconsin, along with solar energy groups, filed a lawsuit Monday in the U.S. District Court for the District of Columbia, suing USDA and department officials over changes to the Rural Energy for America Program (REAP) that plaintiffs argue were done to effectively block funding for nearly all on-farm solar projects.

The farm and renewable energy groups are represented by attorneys for Earthjustice and the Environmental Law & Policy Center.

The lawsuit alleges USDA violated the Administrative Procedure Act by taking actions that conflict with farm bill statutes spelling out how USDA should administer REAP. USDA's actions directly affected farmers and others who followed USDA's guidelines when applying for REAP funds and had their projects approved. The lawsuit argues USDA abused its agency discretion in awarding REAP funds and undermined the overall goals of the program set by Congress.

The lawsuit asks the court to vacate USDA's "anti-solar" policies and require the department staff to again process applications under rules in place when they were submitted, as well as fund farmers who had their grants or loan awards rescinded retroactively.

REAP was set up to provide loans and grants to farmers and rural businesses specifically to fund renewable energy projects and energy efficiency upgrades on their operations.

According to the lawsuit, 68% of REAP awards were used for solar projects from 2011 through the first quarter of 2025.

"REAP funding for solar projects is in high demand because many farmers and rural businesses rely on federal support to help cover the upfront costs to install solar systems, which provide income and energy cost savings over their useful installed lives," the complaint states.

AFTER EXECUTIVE ORDER, USDA CHANGED SOLAR POLICIES

President Donald Trump signed an executive order in July 2025, "Ending Market Distorting Subsidies for Unreliable, Foreign-Controlled Energy Sources." Trump's order focused on renewable energy tax credits through the Treasury Department and programs at the Department of the Interior but does not mention USDA programs.

Still, USDA leaders cited the order to direct Rural Development to reduce taxpayer support for "green" energy, declaring solar and wind as "unaffordable and unreliable" sources of power that are "controlled by foreign adversaries."

In August 2025, USDA announced it would change REAP's rules for loans and grants to restrict eligibility for certain solar projects. New restrictions capped ground-mounted solar photovoltaic systems at 50 kilowatts, while also tightening eligibility for projects that could not document historical energy use, projects on certified cropland, and systems using components from designated foreign adversaries. The department also changed how solar projects would be treated in scoring REAP grant applications.

Agriculture Secretary Brooke Rollins declared at the time that the department had blocked the use of taxpayer dollars to build solar projects on prime farmland. Rollins also argued that solar projects were making farmland less available to young farmers.

"We are no longer allowing businesses to use your taxpayer dollars to fund solar projects on prime American farmland, and we will no longer allow solar panels manufactured by foreign adversaries to be used in our USDA-funded projects," Rollins said in a news release.

Rollins has repeatedly argued that solar farms occupy too much farmland. However, a 2024 USDA study found that utility-scale solar and wind projects directly affected about 424,000 acres in 2020, less than 0.05% of the nation's 897 million acres of farmland.

The plaintiffs counter that solar operations can diversify a farmer's income and generate as much as 13 times the revenue per acre as crops, "providing (farmers) with a degree of financial stability, and helping them prevent the conversion of agricultural land to other uses."

Asked about the lawsuit by DTN, USDA's press office maintained that food production was hindered by solar farms developed during the Biden administration.

"During the last administration we saw solar farms consume fertile farmland that should be feeding America. Those days are over. USDA will not actively participate in repurposing farmland historically used to sustain this country's abundant food supply," USDA's press office stated.

Records obtained through a Freedom of Information Act (FOIA) request also showed the administrator of USDA's Rural Business-Cooperative Service, which oversees REAP, suggested that USDA's press office develop some justification for the department's claims, writing, "let's let the comms shop find … the rationale behind their statistics." A USDA public affairs specialist wrote she hoped program staff could "drum up something."

USDA's Rural Development website continues to list "small and large solar generation" along with wind power as options for how REAP funds can be used.

Last March, USDA announced it would issue a rulemaking to formalize its policies restricting solar projects. Meanwhile, USDA also paused all new REAP grant applications.

USDA last issued a notice of funding opportunity for REAP in 2024 under the Biden administration.

Groups filing the litigation argue that USDA's policy thwarts Congress's intent to promote renewable-energy projects on farms and in rural communities.

FARMERS CITE LOST FUNDING

Among the plaintiffs is the Iowa Farmers Union. The lawsuit states that at least two IFU members lost eligibility for reimbursement for completed REAP projects when USDA announced it would retroactively apply its solar policies and would not process any pending REAP applications. A REAP consultant involved in preparing REAP applications also alleges the new policies cost the company $470,000 in expected revenue from 55 REAP clients and forced the company to lay off its entire staff.

Last year, Iowa Farmers Union member Ed Heishman was informed by USDA that staff would not process his funding application for a $128,032 REAP grant award. Heishman, who raises corn, soybeans and hogs, had been notified that USDA received his application and he subsequently invested in a $256,000 rooftop solar project that would generate 139 kilowatts of power.

Other plaintiffs include Iowa Solar Energy Trade Association, New York Solar Energy Industries Association, RENEW Wisconsin, Solar United Neighbors, Wolf River Electric, Clean Power Consultants and David Loney Consulting.

Book Family Farms in Dixon, Illinois, applied for REAP funds in March 2023 for two separate solar projects to offset the costs of a grain dryer. The farm was selected for $446,000 to build two solar arrays that would generate a combined 429 kilowatts of power. The projects were approved in late 2023 and early 2024. The family began working on those projects, but USDA then canceled its funding on March 31 this year after applying the department's new solar policy retroactively, according to the lawsuit.

In their lawsuit, groups state USDA's new 50-kilowatt standard is too small for a commercial farm operation. A solar array that size, for instance, is likely too small to offset the power needed for a grain storage and drying operation.

In May 2025, USDA's budget documents championed REAP's work, citing that its renewable energy projects in 2024 alone had generated or saved enough energy to power more than 300,000 homes. The report cited products such as a poultry operation in Baldwin, Georgia, that installed 1.5 megawatts of solar on six vacant acres. The project helped generate more than $176,000 a year in income and more than 2.2 megawatts of power, enough to power 204 homes.

FARM BILL DEBATE AND REAP

The House version of the farm bill, passed earlier this year, would limit USDA funding for solar projects that convert 5 acres or more of farmland, or 50 acres if a majority of the energy produced is being used on-farm and the project has support from a local government entity. The House farm bill also would restrict funding for solar components manufactured in countries such as China. The bill also calls for a national study on the impacts of solar arrays on farmland.

The Senate version of the farm bill -- which has passed committee, but not the full Senate -- does not include any similar solar restrictions. At some point, the House and Senate Agriculture Committee leaders will have to reconcile their versions of the legislation, which will likely happen following the November election.

Also see, "USDA Halts REAP Grant Applications as Rising Energy Costs Squeeze Farmers," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on social platform X @ChrisClaytonDTN

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