USDA Faces Lawsuit as Farmers Challenge REAP Solar Funding Restrictions
U.S. farmers and solar groups sued USDA over new REAP restrictions, arguing that canceled funding is leaving farms exposed to major energy investments.
Farmers, agricultural businesses and solar energy groups filed a federal lawsuit against the USDA on September 28, challenging restrictions imposed on solar projects through the Rural Energy for America Program, or REAP. The case, filed in Washington, D.C., alleges that the department unlawfully changed eligibility standards and applied some policies to projects already submitted or selected for federal support. The dispute matters for U.S. agriculture because REAP has become an important tool for farms seeking to lower electricity costs and finance renewable-energy investments, particularly as input costs continue to pressure operating margins.
The plaintiffs include farmers and organizations representing agricultural and solar interests, including the Iowa Farmers Union and RENEW Wisconsin. Attorneys from the Environmental Law & Policy Center and Earthjustice argue that USDA's changes conflict with congressional requirements governing REAP and violate federal administrative law. Those claims remain allegations and have not been decided by the court. The plaintiffs are asking the court to invalidate the revised solar policy and require USDA to process affected applications under the rules that were in place when those applications were received.
On-farm solar installations have become part of the debate over USDA's Rural Energy for America Program as farmers challenge new restrictions on REAP funding."
REAP restrictions put farm solar investments under scrutiny
REAP provides financial assistance to agricultural producers and rural small businesses for renewable-energy systems and energy-efficiency improvements. USDA itself has described the program as a mechanism for helping producers lower energy costs, generate income and strengthen operational resilience. In March 2026, however, USDA's Rural Business-Cooperative Service announced that no further REAP grant awards would be made until new regulations were in effect, while guaranteed loans would continue. USDA said the changes were intended to align the program with the administration's energy, national-security and fiscal priorities.
The financial consequences are at the center of the litigation. Book Family Farms in Dixon, Illinois, had been selected for $446,000 in REAP funding for two solar arrays totaling 429 kilowatts, according to the plaintiffs. They say USDA later canceled that funding after applying its revised policy. The complaint also highlights farmers and rural businesses that committed capital to equipment, engineering and construction based on expected federal reimbursement. For commercial farms, that uncertainty can affect capital planning at a time when producers are already managing volatile commodity prices, elevated input costs and tighter margins.
Solar panels installed on U.S. farmland highlight the growing role of renewable energy in agriculture as farmers challenge USDA restrictions on REAP funding for on-farm projects.
The broader dispute involves how solar development should fit within U.S. agricultural policy. USDA officials have argued for protecting productive farmland and reducing federal support for renewable-energy projects they view as inconsistent with administration priorities. The land-use picture, however, is more complex. USDA Economic Research Service research estimated that solar and wind facilities directly affected about 424,000 acres in 2020, less than 0.05% of the nation's 897 million farmland acres. The same research found that more than 70% of large-scale rural solar development studied between 2012 and 2020 occurred on agricultural land.
For producers, the case extends beyond the debate over solar panels. Its outcome could influence how federal agencies handle previously submitted applications when program priorities change, as well as how farmers assess the reliability of government incentives before making long-term capital investments. REAP intersects with broader farm bill debates over energy, rural development and the use of agricultural land. With electricity demand and farm operating costs remaining important management concerns, the court fight puts federal renewable-energy policy squarely into the financial planning decisions of U.S. farms and rural businesses.
