OMAHA (DTN) -- As rural energy costs continue to climb, USDA has halted grant applications for the Renewable Energy for America Program (REAP) while the department rewrites program rules to comply with an executive order by President Trump last year aimed at cutting subsidies for renewable energy projects.

A popular program, REAP provides grants and loans to farmers and small businesses in rural communities to improve energy efficiency and reduce their long-term energy costs.

In a stakeholder announcement on Tuesday, USDA announced the department would update its regulations on REAP to comply with Trump's Executive Order from last July called, "Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources." USDA stated there would not be any further REAP grants "until the new regulations are in effect." Once new rules are finalized, USDA stated the department would issue a new funding notice "and any applicants who previously submitted an application will have the opportunity to reapply."

The Trump administration announced in March 2025 it would unfreeze previously obligated REAP funds awarded under the Biden administration, but USDA officials have not awarded any new REAP grants since taking office. While grants have been halted, USDA stated in its notice that the department would continue to accept applications for REAP guaranteed loans.

USDA added, "These changes reflect our commitment to ending the massive cost of providing taxpayer handouts for unreliable energy sources and follows Administrative priorities of energy dominance, national security, economic growth, and the fiscal health of the nation."

Environmental and small-farm organizations criticized the decision to freeze REAP grants until new rules are written.

"As the nation struggles with rising energy costs, USDA just announced its failure to implement an existing program specifically designed to help farmers and rural small businesses save on energy costs," said Matt Ohloff, a policy advocate for Environmental Law & Policy Center. "REAP is a popular program that has received bipartisan support for over 20 years and has a long track record of success. Failing to implement this program is only creating more hardship and uncertainty for farmers and rural small businesses."

The National Sustainable Agriculture Coalition also pointed out farmers are facing increased financial pressures and REAP is focused on reducing energy costs.

"At a moment when farmers and rural small businesses face converging financial pressures, bringing the Rural Energy for America Program to a standstill only increases that pressure. Countless small businesses have invested significant time and resources in this popular, bipartisan program to reduce their energy costs. USDA should implement the REAP program as quickly as possible and provide more clarity on when farmers can expect the program to resume," said Richa Patel, an NSAC policy specialist.

Agriculture Secretary Brooke Rollins last year announced USDA would not use taxpayer dollars to fund solar projects that displace farmland. Yet REAP funds small-scale projects that would be large enough to take farmland out of production for power generation.

The House version of the farm bill, which has yet to see a floor vote, includes language that would allow USDA Rural Development funds for solar panels on five acres without any restrictions, or allow solar on up to 50 acres if most of the power generated is used on the farm.

Trump's executive order issued last July criticized "so-called 'green' subsidies" for displacing "affordable, reliable, dispatchable domestic energy sources" as well as compromising the grid. The order also argues renewable energy threatens national security by relying heavily on foreign supply chains. "Ending the massive cost of taxpayer handouts to unreliable energy sources is vital to energy dominance, national security, economic growth, and the fiscal health of the Nation," the executive order stated.

REAP has historically been a small loan program funded in the farm bill, but the program received $1.7 billion under the Inflation Reduction Act in 2022 that included allowing for grants of up to 50% of total project costs.

Under the Biden administration, farmers and rural business owners who wanted to build renewable energy systems such as wind, solar, biomass, and methane digesters, could receive up to $1 million for their projects. USDA held quarterly grant awards in 2023 and 2024 for such projects.

To qualify, a farmer had to show at least 50% of their gross income was derived from agriculture. Small businesses had to be located in communities with fewer than 50,000 people and show their net worth was under $15 million.

In October 2024, the Biden administration provided $126 million in REAP grants for 654 renewable energy projects across 39 states along with Puerto Rico and Guam. A large number of those grants involved installing solar on barns, poultry houses and other small businesses. Some of the grants also allowed farms to install more energy-efficient irrigation systems such as replacing diesel engines with electric motors.

Meanwhile electricity costs nationally have risen by nearly 10% in the past year, driven in part by the development of heavy energy usage tied to the explosion of data centers across the country. Diesel prices also have spiked 46% since the war in Iran began at the end of February.

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

Follow him on social platform X @ChrisClaytonDTN

(c) Copyright 2026 DTN, LLC. All rights reserved.