The U.S. Department of Agriculture's decision last year to effectively end grants and loans for solar projects through its Rural Energy for America Program violated federal law and should be reversed, according to a lawsuit filed in federal court on Sept. 28, 2026. The legal challenge, brought by Earthjustice, the Environmental Law & Policy Center, and Wolf River Electric, a solar installer, argues that the policy shift has unlawfully denied rural communities access to clean energy funding. The groups contend the move was particularly damaging to farmers and small businesses that had already received project approvals and begun construction based on federal assurances.
Between 2011 and early 2025, nearly 70% of REAP grant and loan guarantee awards supported solar projects, according to the lawsuit. In August 2025, Agriculture Secretary Brooke Rollins announced the department would no longer provide taxpayer funding for solar panels on productive farmland or permit panels manufactured by foreign adversaries in USDA projects. Through the Inflation Reduction Act in 2022, Congress allocated $820.3 million for REAP in fiscal year 2022 and another $180.3 million annually through 2027, with unused funds available until Sept. 30, 2031. In March 2026, the department began formalizing the changes through rulemaking, and by April it had rescinded a previously issued funding notice and stopped processing all REAP grant applications.
Internal USDA emails reveal department officials struggled to justify the policy's underlying claims. When asked to back up assertions that subsidized solar farms made farmland more expensive and less accessible for farmers, the Rural Business-Cooperative Service administrator wrote, "let's let the comms shop find . . . the rationale behind their statistics," while another staffer expressed hope that program staff could "drum up something." The plaintiffs argue that "cash-strapped rural communities have been denied the benefits of additional cheap, reliable, and environmentally beneficial solar power during a period in which energy prices have reached historic highs." The lawsuit claims the USDA told all applicants — including those already selected for funding — they would need to reapply under new rules before receiving money.
The legal challenge argues the USDA's actions violate the Administrative Procedure Act by contradicting congressional intent and imposing retroactive requirements. The plaintiffs say the policy is "arbitrary and capricious" partly because it doesn't advance the department's stated goals, noting that "although defendants try to justify the Anti-Solar Policy as a break for taxpayers, the REAP loan guarantee program historically has cost the taxpayer nothing while generating government revenue." The complaint emphasizes that farmers and rural business owners who invested time and money completing applications under previously announced criteria, and who spent tens of thousands of dollars on construction based on USDA assurances of eligibility, now face steep financial losses. The lawsuit represents the latest legal battle over the Trump administration's push to limit renewable energy while promoting fossil fuels, following recent court decisions overturning EPA cuts to its $7 billion Solar for All program.