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.
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.
An announcement issued by USDA Tuesday evening said program awardees would be contacted by the department to learn how they could revise their projects.
“This process gives rural electric providers and small businesses the opportunity to refocus their projects on expanding American energy production while eliminating Biden-era [Diversity, Equity, Inclusion and Accessibility] and climate mandates embedded in previous proposals. USDA Rural Development is informing awardees individually about this opportunity,” the release said.
USDA said processing would "resume immediately" if awardees indicated they didn't want to change their projects.
REAP, which has also received funding through farm bills, provides grants and loans for energy efficiency and renewable energy projects. New ERA, which was created with $9.7 billion in IRA funding, funds clean energy projects, including renewable power and carbon capture, for rural electric cooperatives. PACE received $1 billion from the IRA to provide partial loan forgiveness for renewable energy projects.
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. “We thank Secretary Rollins and the Trump administration for recognizing the importance of these programs and outlining next steps to release these funds.”
Justin Barnhart, an Ohio-based consultant who helps businesses to apply for the funding programs, told Agri-Pulse Wednesday he didn’t think the requirements would affect his clients. “In our case, we don't write grants for climate change or DEI,” he said.
He added, “They're going to want you to verify that it's not climate-based or DEI. So, we're just kind of waiting on direction of how we verify that.”
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.
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.
“I would say there's just a lot of unknowns, and to ask somebody to interpret an executive order and then rewrite their grant just leaves them with a lot of uncertainty,” Pingree said.
Her office will encourage recipients to revise their proposals wherever possible to comply with the USDA’s guidelines. But this will likely be a challenge, particularly for REAP grants exclusively focused on installing solar panels to lower energy costs.
Another challenge, she said is the timeline for rewriting these grant applications.
“This is brutal, these are very hard processes,” Pingree said of grant writing. She noted that staffing cuts at local USDA offices could also limit the level of technical assistance available to recipients.
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.
“I think that people that have agreements, that the government has signed, they should be honored and whatever that takes,” Boozman said. “It's okay to reevaluate and look, but if we have signed contracts that are not being fulfilled, USDA needs to do all they can to make sure those are honored.”
Sen. John Hoeven, a North Dakota Republican who chairs the Agriculture Appropriations Subcommittee, said USDA is trying to ensure that projects that “should get funded do, and that some that maybe shouldn’t won’t.”
Sen. Jerry Moran, R-Kan., welcomed USDA's intent to release funding. “This is a better outcome than what we had seen in regard to people who make financial commitments based upon an understanding they had federal funds coming."
Correction: The original headline of this post has been changed to make clear that USDA says updates to project proposals are voluntary.
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