The Hagstrom Report

Agriculture News As It Happens

Vilsack announces blender pump aid


Agriculture Secretary Tom Vilsack today announced a program to provide funding for installation of blender pumps at gas stations around the country, winning praise from ethanol pumps.

“Flex-fuel pumps will give Americans a choice to purchase domestically produced renewable transportation fuels,” Vilsack said. “USDA’s energy programs are helping to build a clean energy economy, while creating green jobs here at home and making our nation more energy secure in the long-term.”

The Obama administration has set a goal of installing 10,000 flexible fuel pumps nationwide within five years. The federal Rural Energy for America Program (REAP) will provide grants and guaranteed loans to retailers to help install up to 10,000 flex fuel pumps across the country.

Agriculture Undersecretary for Rural Development Dallas Tonsager noted in a speech to the National Farmers Union last month that USDA did not have a program to help construction of blender pumps, and that he would have to adapt another program. This announcement appears to fulfill that goal.

USDA did not say in a news release exactly how much the grants and loans would be, but said a notice on the program would be published in the Federal Register soon. But according to a memo USDA sent to the ethanol industry, approximately $70 million in budget authority is available for fiscal year 2011 and the notice will be published in the Federal Register next Friday.

A USDA source said today flex fuel pumps in REAP are subject to the same standards as any other REAP-eligible activity, meaning rural small businesses must be in non-metro areas of 50,000 population or less, adding that there is no set-aside for flex-fuel pumps.

The source also said the 2008 farm bill provides $55 million for fiscal year 2009, $60 million for fiscal year 2010, and $70 million for fiscal years 2011 and 2012. It also authorizes additional funds of $25 million per year, from fiscal year 2009 through 2012.

The program will cover 25 percent of eligible project costs for grants, the source said, with 75 percent of eligible project costs for guarantees. USDA participation is limited to a maximum of 75 percent total.

According to the memo, obtained by The Hagstrom Report, the program provides financial assistance to agricultural producers in any area and to rural small businesses through:
  • Grants and guaranteed loans for renewable energy systems, energy efficiency improvements, and flexible fuel pumps;
  • Grants for renewable energy system feasibility studies; and
  • Grants for energy audits, and renewable energy development assistance.

The memo said that the Federal Register notice will change REAP in the following ways:
  • Include grants and guaranteed loans for flexible fuel pumps that dispense blended liquid transportation fuel as an important component of the government’s strategy for encouraging the use of renewable fuels.
  • Increase REAP participation in projects to 75 percent of eligible project costs. Increase the maximum guaranteed loan to $25 million.
  • Remove U.S. citizenship requirements, which the agency has determined is in the best interest of increasing the use of renewable energy systems and energy efficiency improvements.
  • Modify the rural area requirement for projects proposed by agricultural producers to allow such projects to be located in non-rural areas.
  • Clarify how the agency addresses changes in equipment for energy efficiency improvements for determining eligible project costs. Eligible costs for energy efficiency improvements that are increasing the capacity of equipment will be limited to the capacity of the existing equipment.
  • Revise the definition of Tribal enterprises to allow such enterprises to remain eligible if they are operated in a manner consistent to the Department of Interior’s regulation governing the establishment of Section 17 Corporations.

Growth Energy, which represents operators of ethanol plants, and the Renewable Fuels Association praised the announcement.

“We commend President Obama and Secretary Vilsack for recognizing the need to move this nation off our dependence on foreign oil, create jobs here in the U.S. and improve our environment,” said Growth Energy CEO Tom Buis.

“The program announced today accelerate our progress toward energy independence and getting our economy going again,” Buis said. “Every flex fuel pump we install will help make our country more energy independent and more secure, all while giving consumers a choice at the pump that includes domestic, renewable ethanol.”

RFA President and CEO Bob Dinneen said the announcement “will go a long way toward providing American drivers across the nation with more choice at the pump.”

“Ethanol, whether E10 or mid-levels blends and E85 for flex-fuel vehicles, helps lower the cost of a gallon of gasoline, reduces this nation’s dependence upon foreign oil, and supports American jobs with an American-made product,” Dinneen said.

In its news release, USDA noted that most gasoline sold in this country contains 10 percent ethanol, and that there are 8 million to 8.5 million flexible fuel vehicles on U.S. roads, or 3 percent of approximately 250 million vehicles. Only 2,350 fueling stations out of 167,800 stations nationwide offer E85, which is 15 percent ethanol, the agency said.