OMAHA (DTN) -- USDA is telling rural electric cooperatives, small businesses and farmers that the department is releasing potentially billions for rural energy projects, provided grant and loan recipients rewrite the purpose of their funding to fit the Trump administration's energy goals.

After months of freezing funds for the Rural Energy For America Program (REAP), Empowering Rural America (New ERA) and Powering Affordable Clean Energy (PACE) programs, USDA issued a news release late Tuesday stating Agriculture Secretary Brooke Rollins "will release previously obligated funding" under REAP and PACE.

"This announcement underscores the Trump administration's commitment to rural communities -- including the farmers, ranchers, and small businesses at their core -- and their essential role in building a stronger, more energy secure America," USDA stated.

Like conservation funds, renewable energy funding from the Inflation Reduction Act (IRA) was frozen when the Trump administration came into office in late January and ordered a review of all programs. Companies with contracts to help producers receive REAP funding have been forced to furlough workers because of contract freezes over the past two months. Federal funding also has been tied up as federal judges have ordered the Trump administration to release funds, but the administration has appealed those rulings.

For REAP and PACE, the Department of Agriculture is stating grant recipients "will have 30 days to review and voluntarily revise their project plans to align with President Trump's Unleashing American Energy Executive Order issued on Jan. 20, 2025."

USDA wants grant applicants to remove any language related to diversity, equity, inclusion and accessibility, or "harmful DEIA" language, as well as remove any language associated with removing greenhouse gas emissions, or "far-left climate features," as USDA stated in its announcement.

Applicants will have to answer questions and provide a narrative about how their project supports President Trump's energy goals.

"This process gives rural electric providers and small businesses the opportunity to refocus their projects on expanding American energy production while eliminating Biden-era DEIA and climate mandates embedded in previous proposals," USDA stated. "USDA Rural Development is informing awardees individually about this opportunity. Respondents will be asked to answer several questions and provide a short narrative description of any proposed changes."

USDA added, "This updated guidance reflects a broader shift away from the Green New Deal and the so-called Inflation Reduction Act (IRA) and toward practical energy investments that prioritize the needs of rural communities."

Rollins said in the news release, "President Trump made tackling America's energy emergency a top priority from day one, and this review allows rural energy providers and small businesses to realign their projects with that mission. We're ensuring these investments support U.S. energy production while putting America's farmers, ranchers, and rural businesses first."

USDA's decision requires farmers, businesses and their energy contractors to rewrite grant applications that had already been approved for funding, but Rollins said the effort will reduce bureaucracy.

"The IRA was marketed as a cure-all but delivered more bureaucracy than benefits for rural families," Rollins said. "This course correction puts those investments back to work to support President Trump's vision for energy independence and sets rural America on a path to lasting prosperity."

USDA did not say what would happen to REAP, New ERA and PACE recipients who do not revise their initial grant applications.

DTN reached out to USDA seeking clarification about the release of funds and which projects would be required to rewrite their applications, but did not receive an immediate response.

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.

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.

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.

In that same January funding announcement, the Biden administration also approved $526 million in partially forgivable loans under the PACE program for 26 projects across 16 states and tribes. Funding was announced for projects such as solar power and battery storage systems. USDA in the Biden administration had provided $1.6 billion for rural energy projects under PACE.

Also see, "Small Businesses and Farmers in Financial Limbo as Funding Standoff Continues," https://www.dtnpf.com/…

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

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