USDA Rural Energy and Ethanol Infrastructure Funding Released

By Cami Koons

Previously frozen funding from the U.S. Department of Agriculture’s Rural Development Office has been released, funding rural energy projects and infrastructure for selling ethanol-blended fuels at gas pumps. 

USDA Secretary Brooke Rollins announced this week that funding allocated through the Higher Blends Infrastructure Incentive Program, or HBIIP, and the Rural Energy for America Program, or REAP, will be released, though the latter program requires an adjustment to projects. 

HBIIP, which funds projects to upgrade rural fuel stations to sell ethanol-blended fuels, like E15, E85, and B20, at the pump, was released for 543 projects, totaling $537 million, in 29 states. More than $4.5 million of HBIIP cost-share grants were awarded to upgrade Iowa fuel stations in a January allocation of the program. 

Rollins made the announcement during her first official visit to Iowa while at Elite Octane, an ethanol facility in Atlantic. Iowa officials, including Gov. Kim Reynolds, Iowa Secretary of Agriculture Mike Naig, U.S. Sen. Joni Ernst, U.S. Rep. Mariannette Miller-Meeks and U.S. Rep. Zach Nunn were also in attendance.

Ernst, who pushed for HBIIP funding in the past and for expanded access to ethanol fuel blends, thanked Rollins for creating “certainty” for farmers and biofuel producers in Iowa. 

“I’ve worked hard to help develop and maintain HBIIP over the years to ensure that from Casey’s to your local mom-and-pop gas stations, retail store owners have the tools they need to deliver higher blends of biofuels at the pump, expanding access to homegrown fuels and choices for consumers,” Ernst said in a statement. “This is another example of how the Trump administration is putting our rural communities first.”

Rollins said the announcement was part of the president’s “commitment to America’s farmers, ranchers, and small businesses.” 

“Under the president’s leadership, we are moving away from the harmful effects of misguided climate policies like the Green New Deal,” Rollins said in a statement. “Instead, USDA will deploy energy investments that prioritize the needs of our rural communities.” 

On Jan. 14, USDA Rural Development announced a round of funding awards for REAP and HBIIP, with more than $5.6 million in grants benefitting Iowa businesses and communities. Nationally, USDA invested more than $3 billion in REAP projects and $323 million in HBIIP programs during the Biden-Harris administration. 

The latest round of funding, along with some previous rounds of the programs, was suspended by the Trump administration as part of the president’s day-one order to pause and evaluate programs established by former President Joe Biden’s Inflation Reduction Act. 

Iowa Renewable Fuels Association Executive Director Monte Shaw thanked Rollins for releasing the HBIIP funds and for noting the importance of the E-15, a fuel blend with a higher percentage of ethanol, in administration’s plan for “unleashing American energy.” 

“E15 is the only untapped, near-term market opportunity for American farmers and producers large enough to make a meaningful difference to today’s low prices,” Shaw said. 

IRFA and Attorney General Brenna Bird have urged congressional leaders to pass legislation that would permit the year-round sale of the fuel. A press release from USDA said the department is “aggressively exploring” ways to support the biofuels industry and to allow year-round E-15 sales. 

Ernst and U.S. Sen. Chuck Grassley were among 17 senators who signed a letter to the president Thursday urging permits for E-15 sales. 

“Utilizing American ethanol year-round is a direct solution to reinforcing our energy supply and reducing consumer costs, and the issuance of a nationwide waiver for the 2025 summer driving season is a clear path toward these shared goals,” the letter read.

REAP Released, but With a Catch

REAP has funded initiatives such as rooftop solar power on small rural businesses and farms, energy efficiency upgrades including new refrigeration at rural grocery stores, and other upgrades aimed at farm or rural business equipment. 

The USDA has said previously obligated recipients have 30 days, or until April 24, to submit revised project plans that eliminate any Biden-era climate mandates and Diversity, Equity, Inclusion, and Accessibility mandates embedded in previous proposals to receive the previously obligated funds. 

Andy Olsen, a senior policy advocate with Environmental Law and Policy Center, said the requirement means farmers and rural small businesses have to “jump through more hoops” at a time when they are “already struggling with high costs and uncertainty.” 

“This isn’t cutting red tape; it’s adding more,” Olsen said in a statement. “The USDA claims to deliver on commitments but these new rules could result in awarded grants being permanently frozen.”

The stated goals of the president’s executive order include revising, suspending, or rescinding programs that are “unduly burdensome” on oil, natural gas, coal, hydropower, biofuels, critical mineral, and nuclear energy resources. 

Solar energy is not mentioned in the order.

“The (Inflation Reduction Act) was marketed as a cure-all but delivered more bureaucracy than benefits for rural families,” said Rollins in the press release. “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.”

Olsen said the farmers and rural businesses already made investments into renewable energy upgrades after entering into agreements with USDA “in good faith.” 

“Farmers and rural small businesses want USDA to honor the commitments it already made,” Olsen said.

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