When it comes to the E15 debacle, it’s not just the U.S. Environmental Protection Agency that’s a problem. Now we can add in the U.S. Department of Agriculture and its planned big-money subsidies.
The USDA announced it is providing $100 million in grants to 21 states to build infrastructure that will greatly increase the availability of intermediate blends of ethanol — namely E15 — by virtually doubling the number of gas stations pumping out the fuel. According to the USDA, the grants will be provided through its Biofuel Infrastructure Partnership program. It will, along with matches from private and state resources, support 4,880 pumps at more than 1,400 stations.
"The BIP is one approach USDA is using to aggressively pursue investments in American-grown renewable energy to create new markets for U.S. farmers and ranchers,” Secretary of Agriculture Tom Vilsack said. The USDA’s Farm Service Agency received applications requesting more than $130 million, outpacing the $100 million that is available.
If you are a dealer in any of these states, the chance that your customers will misfuel their boats is about to rise. The states set to receive grants are Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Michigan, Minnesota, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Texas, Virginia, West Virginia and Wisconsin. Florida is scheduled to receive support for the most pumps (892), followed by Minnesota (620), two of the nation’s biggest boating states.
Trust fund set to expire
Meanwhile, speaking about gas, the Highway Trust Fund is running out of funds again. Spending is outpacing revenues because the fund was expanded beyond its original purpose of building and maintaining the interstate highway system. It now funds some non-highway projects. In fact, during the last six years, Congress has covered shortfalls in the Highway Trust Fund to the tune of $62 billion in "patches" from the Treasury’s general fund via a bunch of “continuing resolutions.”
The trust fund money comes primarily from federal taxes on gas and diesel, currently 18.3 cents and 24.3 cents per gallon, respectively. Despite $34 billion in annual revenues from these taxes dedicated to pay for the Interstate Highway System, there are three obvious reasons why the trust fund can’t make it on its own. They are: inflation (the gas tax hasn’t been increased since 1993); the diversion of funds to non-highway use (the Mass Transit Account); and poor government policies like the archaic Davis-Bacon Act (requires top wages on federally funded or assisted contracts).
This year, Highway Trust Fund spending is projected to hit $52 billion. The highway account will spend $44 billion and the mass-transit account will top $8 billion for a combined deficit of $13 billion. With each continuing resolution, Congress hasn’t been able to come up with a multiyear funding bill, so they keep kicking the can down the road by adding general fund money to cover the highway fund’s deficit spending.
In the next few weeks, lawmakers will face another deadline of Oct. 29 to keep the fund up and running after approving an $8 billion transfer of general funds last July for three month to keep the fund up and running.
As you likely recall, the marine industry follows all actions on the Highway Trust Fund closely because it includes provisions that direct the federal gas tax boaters pay into the Sport Fish Restoration and Boating Safety Trust Fund reflecting their off-highway fuel consumption.