CEDI Highlights
- The House passed a farm bill that affects solar funding not only in the Rural Energy for America Program (REAP), but in ALL USDA programs; one very specific issue needs fixing to allow farmers, small businesses, and rural communities to experience solar-driven prosperity.
- The acreage restrictions getting so much attention would not impact 95+% of REAP applicants; in fact the 5 acre allowance is reasonable, and an improvement over the Secretary of Agriculture’s 2025 memo announcing more severe restrictions.
- The Department wide ban on solar components from a foreign country or entity of concern is unreasonable, and would apply to many programs beyond REAP; it is duplicative of existing Treasury rules, and should be eliminated, or changed to simply require alignment with foreign entity restrictions already required in Section 48E for solar tax credits
- The bill makes additional changes to REAP, and separately requires the Department to conduct a study on the effects of solar developments on farmland
On April 30 th , the US House passed the Farm, Food, and National Security Act of 2026 (H.R. 7567, also known as the Farm Bill). It’s a very big bill, and it is clear that if or when the Senate takes it up, there will be significant changes, and a potentially protracted process. This means there is time for those who understand the prosperity benefits of locally-owned solar throughout rural America to communicate with their elected officials.
Congress should understand this rural solar prosperity opportunity is very real, and very large. Clean Energy Districts of Iowa and local member districts have provided technical assistance to hundreds of rural farms and small businesses, including dozens of REAP applicants. In Winneshiek county alone, for example (population under 20,000), we estimate over 800 customer-owned solar systems represent about $40 million invested, mostly through local contractors, and over $3 million (and rising fast) kept on local balance sheets every year. Those numbers matter in rural economies.
This rural solar prosperity engine should not be throttled by a new layer of USDA bureaucratic red tape discriminating against rural solar projects, when the IRS (as charged by this Congress and Administration) has already developed rules on imported solar components that already apply to most USDA funded projects (and can easily be applied to the remainder).
We’re focused here on the issue of USDA funding for solar in rural America, in the REAP program and otherwise. The most onerous aspect of the bill related to solar is not actually in the REAP section of the House bill, but a new and separate section of the energy title, and we address that first. For a deeper dive, read the relevant sections of the bill by following our specific links and page references at the end of this article.
The Ban on Most Imported Solar Components Needs Fixing
Title IX of the bill covers energy programs, and it adds a new section to the farm bill called “Limitation On USDA Funding For Ground-Mounted Solar Energy Systems”. This section includes two main policy elements:
- “The Secretary may not provide financial assistance for a project that would result in the conversion of covered farmland for solar energy production.” But, this restriction does not apply if the project:
- Results in the conversion of less than 5 acres of farmland, or
- Results in the conversion of less than 50 acres of farmland, if the majority of energy is for on-farm use, the project is approved by local government, and a conservation plan protects the future productivity of the farmland
- “The Secretary may not provide financial assistance for a project that procures a solar energy component” from a foreign country or entity of concern.
The first of those elements has received significant attention, and some level of confusion with a USDA memo released last August that announced severe solar restrictions in REAP.
In fact, the blanket farm bill exception of 5 acres proposed in the House bill is much less restrictive than multiple elements in the Department’s prior memo. Five acres can support up to about a one megawatt solar array, which is larger than at least 95 (probably 99) percent of REAP applications and funded projects. We find this exception – together with the 50-acre option that carries additional requirements – to be reasonable.
The onerous portion is the second policy element: the blanket prohibition on USDA financial assistance to solar projects that procure any components from foreign country or entity of concern. Since the majority of solar components today are produced in countries of concern (including China), this restriction will either significantly raise the cost of solar systems for REAP applicants (and other USDA
projects), and/or effectively deter most farmers and small businesses from even applying. It will also harm rural solar contractors by adding unmanageable red tape beyond the existing tax credit rules.
This policy proposal runs directly counter to both Congress’s own precedent, and the President’s Executive Order 14315. In that order, the President calls for ending taxpayer support for “energy sources and supply chains built in, and controlled by, foreign adversaries”, and gives the Secretary of the Treasury 45 days to “implement the enhanced Foreign Entity of Concern restrictions in the One Big Beautiful Bill Act.”
That Act, of course, was passed by the current Congress, and the IRS has since developed the rules to implement Congress’s intent, and to fulfill the President’s order. These rules cover the Clean Electricity Investment Tax Credit (section 48E), which nearly all REAP solar applicants will also be utilizing, and so covered by.
Rather than creating a new layer of bureaucratic red tape by asking USDA to require solar component certification paperwork and review, there are two options Congress could make to easily fix this portion of the farm bill:
- Just eliminate entirely the policy item referring to solar components and foreign entities, because virtually all REAP applicants will already be covered by the existing Congressional and Presidential intent as expressed in the IRS section 48E tax credit rules, or
- If Congress is concerned that some applicants may skirt the existing rules by not pursuing the tax credits, then this policy element could simply establish that all applicants/awardees for USDA financial assistance must follow the relevant Treasury rules for section 48E tax credits
It is important to note that this onerous policy element is not only relevant to REAP. It applies to ALL USDA financial assistance programs. This would include solar projects funded through conservation programs and rural development housing programs.
This reality compounds the potential bureaucratic nightmare of tasking the USDA with developing and implementing a set of solar component rules entirely separate from existing Treasury rules. This Congress and Administration have already dealt with the issue, and need not open it again.
REAP-Specific Program Changes
The REAP section of the bill does include a number of modest changes, but they are less directly related to solar energy.
The bill adds “the potential of the proposed program to meaningfully improve the financial conditions of the agricultural producer or rural small business” to the list of grant selection criteria for organizations applying for funds to provide technical assistance to potential grant and loan applicants.
The bill adds agricultural cooperatives with fewer than 2,500 employees to those eligible to apply for REAP grants and loans, along with agricultural producers and rural small businesses.
The bill raises the maximum amount of loan guarantees from the current $25 million to $50 million. We find this to be unhelpful if the result may be to divert limited REAP funds from family farms and small businesses to few large businesses and projects.
The bill calls for a “streamlined application process” within each of the funding tiers. This would be helpful, if effectively implemented.
The bill requires that outreach, technical assistance, and education be provided to grant recipients related to “integrating renewable energy projects on land shared with crops or livestock”. The promotion of agrivoltaics is a good thing, but the 5 acre limit for unrestricted solar on farmland will effectively preclude the funding of innovative multi-purpose solar plus agriculture projects at scale.
The bill reserves 10% of annual program funds to “provide grants to support projects using underutilized renewable energy technologies”. This will likely provide a boost to all renewable energy technologies other than solar, including geothermal, wind, and possibly battery storage.
The bill directs the agency to ensure that “there is diversity in the types of projects approved … to ensure that as wide a range as possible of technologies, products, and approaches are assisted.” This is not a bad goal, though in practice (together with the other issues discussed above) it will likely result in the de-emphasizing of solar project applications in the ranking. This runs counter to the newly added goal of “improving the financial conditions of the agricultural producer or rural small business”, as solar is far and away the most economically beneficial renewable energy technology for most farms and rural small businesses.
Solar Study, Bill Language, and Comparison to Current Law
The energy title also includes a new section requiring the Secretary to conduct a study “on the effects of solar panel installations on the conversion of covered farmland out of agricultural production”. This type of study can of course produce whatever results the authors believe sponsors want to hear, but we encourage readers to study the content and language of this section. The authors of this section ask many reasonable questions about the potential best practices to ensure solar enhances natural resource values, and to assess the opportunity for solar to co-exist with livestock and cropping systems – a practice referred to as “shared solar” which is also often referred to as agrivoltaics.
The history and text of the bill can be found here. If you open or download the pdf version from that page:
- Title IX – Energy runs from pages 625-657
- The REAP program is section 9007 on pages 636-641
- The “solar study” is section 9014 on pages 642-646
- The “Limitations On USDA Funding For Ground Mounted-Solar Energy Systems” is section 9012,
pages 647-650.
The Congressional Research Service provides a very helpful comparison of H.R.7567 to the current law here (click on Title IX, Energy in the contents).
Posted: May 7, 2026
