USDA Releasing Frozen Rural Energy Funds — With Stipulations

By Ryan Hanrahan

Agri-Pulse’s Philip Brasher, Rebekah Alvey, and Noah Wicks reported Wednesday that “the Agriculture Department is lifting a freeze on clean energy funding programs but giving awardees 30 days to modify their proposals to remove climate and DEI considerations and bring the projects in line with the Trump administration’s policy for increasing U.S. energy production.”

“The action addresses three programs, all of which received funding through the Inflation Reduction Act climate law: the Rural Energy for America (REAP), Empowering Rural America (New ERA) and the Powering Affordable Clean Energy (PACE) programs,” Brasher, Alvey and Wicks reported. “A USDA notice sent to awardees and obtained by Agri-Pulse on Wednesday laid out ways recipients could ‘better address President Trump’s January 20 Executive Order Declaring a National Energy Emergency.'”

“‘Changes may include the removal of harmful DEIA project features, using more affordable and effective energy sources, including technologies to increase energy production, storage and improve customer service, or any other change that will help the recipient organization play their part in increasing American identification, leasing, development, production, transportation, refining, and generation capacity of energy and critical minerals, while providing affordable service to their customers,’ the notice says,” according to Brasher, Alvey and Wicks’ reporting.

“An announcement issued by USDA Tuesday evening said program awardees would be contacted by the department to learn how they could revise their projects,” Brasher, Alvey and Wicks reported. “USDA said processing would ‘resume immediately’ if awardees indicated they didn’t want to change their projects.”

What Each Energy Grant Program Entails

Progressive Farmer’s Chris Clayton reported Wednesday that “REAP provides grants and loans to farmers and small businesses for developing renewable energy projects in rural areas or adding energy efficiency improvements. The IRA provided $2 billion for REAP through fiscal year 2031 and increased the maximum grant size and potential share from the federal government for projects as well. According to the National Sustainable Agriculture Coalition, REAP helped fund 6,822 projects since 2023. The largest states for funding in 2023-24 were Pennsylvania, Minnesota, Illinois, Iowa and Michigan.”

“The New ERA program was funded from $9.7 billion in the IRA set aside mainly for rural electric cooperatives loans to build out renewable energy infrastructure with specific language on ‘zero-emission systems’ and carbon capture programs,” Clayton reported.

“Just before the Trump administration took over, USDA in January announced $5.49 billion in grants and loans for 28 ‘clean energy’ projects under the New ERA program across 21 states. Cooperatives awarded funds to expand hydro, wind and solar power projects,” Clayton reported. “At the time, USDA stated it had awarded approximately $9 billion of the IRA dollars for New ERA, which translated to $14.5 billion in total grants and loans for renewable energy projects across 35 states.”

Biodiesel Magazine’s Erin Voegele reported that “funding for other USDA programs allocated through the IRA remains on hold, including funding for various climate-smart agriculture programs.”

How Organizations and Lawmakers are Responding

Brasher, Alvey and Wicks reported that “the National Rural Electric Cooperative Association welcomed the end of the funding pause.”

“‘These programs provide important tools for co-ops to invest in their systems, unleash American energy and help meet skyrocketing energy needs,’ NRECA CEO Jim Matheson said in a release,” Brasher, Alvey and Wicks reported. “‘We thank Secretary Rollins and the Trump administration for recognizing the importance of these programs and outlining next steps to release these funds.'”

But “the Trump administration ‘can’t change the rules of the game well into the second half. This is the definition of an arbitrary and capricious catch-22,’ the statement said,” according to Brasher, Alvey and Wicks’ reporting.

“Rep. Chellie Pingree, D-Maine, said it looks like USDA was not specific about what grant recipients should look for and revise in their proposals,” Brasher, Alvey and Wicks reported. “She said New ERA and PACE grants in her district have been used to convert electric co-ops in rural areas to renewable energy. She said it’s unclear at this point if the revisions aim to stop the co-ops from converting to renewable energy, or if recipients will just need to remove certain ‘code words’ like climate, diversity or underserved community.”

“Senate Agriculture Committee Chairman John Boozman, R-Ark., told Agri-Pulse on Wednesday he thinks USDA unfreezing and evaluating these funds is a step in the right direction,” Brasher, Alvey and Wicks reported.