USDA Opens $90 Million in Federal Funds for Rural Fuel Retailers

$450 for biofuels retailers to be unleashed through Inflation Reduction Act
Biiofuel at the pump
Photograph: Shutterstock

U.S. Department of Agriculture’s Rural Business Cooperative Service has opened the application process for the first $90 million of $450 million in federal grants to increase biofuel availability at rural c-stores and other fuel companies.

Of the $90 million in Inflation Reduction Act funds to be awarded, $67.5 million is expected to be given to small, rural convenience stores, hypermarket fuel retailers, gas stations and to freight, rail and marine fleet facilities. About $18 million is expected to go to fuel distribution, such as terminal operations, depots and other midstream operations, and $4.5 million is earmarked for home heating oil distribution facilities, the USDA said.

The deadline for applications for the first $90 million from the Higher Blends Infrastructure Incentive Program is 4:30 p.m. Sept. 30.

The program aims to broaden the availability of higher blends of renewable fuels, such as E15 and B20, by helping small, rural companies, such as fueling stations and food-and-fuel retailers, afford the cost of replacing fuel dispensers and tanks through federal grant dollars.

“By expanding the availability of homegrown biofuels, we are strengthening our energy independence, creating new market opportunities and revenue streams for American producers, and bringing good-paying jobs and other economic benefits to rural and farm communities,” said USDA Secretary Tom Vilsack in a statement.

While many car manufacturers are ramping up production of electric vehicles,  the National Association of Convenience stores and other trade organizations representing branded fuel retailers see a future with more diversity in energy and fueling. Convenience-store executives have pointed out obstacles to investing in EV charging, including the possibility of new competitors entering the EV charging space and have sought a government cost-share for new infrastructure investments. The Inflation Reduction Act includes funds for alternative fuels, along with EV charging and hydrogen, to achieve President Joe Biden’s goals for reducing the carbon footprint. 

Among them is a goal of 100% zero-emissions for federal vehicles by 2035.  Petroleum fuel distributors, such as Sunoco, have noted the changing landscape for fuel in their reports to shareholders.

Other application windows are scheduled to open every 90 days through Sept. 30, 2024. The grants are designed to help businesses build and retrofit biofuel-related facilities and may fund up to 75% of total project costs, or up to $5 million, the USDA said. The deadlines for these upcoming grants, as announced July 1, are Dec. 31, 2023, March 31, 2024, June 30, 2024 and Sept. 30, 2024.

On June 26, the USDA announced 59 projects funded through a December 2022 Higher Blends Infrastructure Program grant application process. Federal cost-sharing grants went to biofuels projects in rural areas, including $1 million to Carmel Terminals in Carmel, New York, for new biodiesel storage tanks, $623,000 to Farmers Cooperative Oil Co. in Barnesville, Minnesota to replace E85 and B20 dispensers and ethanol storage tanks, and $510,000 Kimmes Enterprises LLC in Iowa to replace blended-fuel dispensers and ethanol storage tanks at gas stations. Fuel stations in Baxter, Burlington, Carroll, Cedar Falls, Chester, Kalona, Marento, Rockwell City, Waterloo and Van Horne received government funds for fuel pump and tank replacements.

The Higher Blends Infrastructure Incentive Program began in 2020 and has provided more than $77.8 million to date, according to a news announcement. New program changes announced with the availability of $450 in federal funds, include an increase in the percentage of federal funding to 75% of eligible project activities for smaller transportation fueling companies that own no more than 10 fueling stations, according to the USDA.

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