American Soybean Association Welcomes USDA Rule Approving Value-Added Farming for Biofuels Tax Credit

The American Soybean Association applauded the U.S. Department of Agriculture for publishing the Regenerative Feedstock Rule, which provides a framework for farmers to enhance the value of biofuel feedstock crops like soybeans by employing voluntary conservation practices. The final Regenerative Feedstock Rule will supplement forthcoming final tax guidance for the 45Z Clean Fuel Production Credit and increase the credit value for biofuels produced from feedstocks grown using covered conservation practices.

“ASA applauds Secretary Rollins and USDA for finalizing the Regenerative Feedstock Rule, which will unlock a new premium soybean market by empowering farmers to produce value-added biofuel feedstocks using on-farm conservation practices,” said Scott Metzger, ASA President and farmer from Williamsport, OH. “Domestic markets, bolstered by biomass-based diesel industry expansion, improve basis and expand a reliable, local customer base for our soybeans. Soybean farmers fought hard to improve 45Z to support domestic market growth for U.S. soy, and for the first time ever, the USDA Regenerative Feedstock Rule will ensure that the 45Z biofuel tax credit will not only benefit biofuel producers, but the farmers who produce homegrown regenerative biofuel feedstocks.”

ASA has strongly supported the work of USDA to develop the Feedstock Carbon Intensity Calculator as part of the final rule so that farmers may realize the value-added potential of their crop. ASA appreciates USDA for honoring the commitment to solicit farmer feedback on the new tool, which included individual farmer beta testing and demonstrations at our annual trade show.

Regenerative agriculture practices covered by the rule include cover crops and conservation tillage. According to USDA, 70% of U.S. soybean farmers already employ at least one of these regenerative practices.

Last year, the Working Families Tax Cuts Act made two critical improvements to the 45Z Clean Fuel Production Credit that were championed by ASA:

1. Removing a provision that arbitrarily penalized agricultural biofuel feedstocks based on farming practices overseas and
2. Establishing a North American ringfence to ensure the tax credit benefits fuels produced and sourced from our region rather than incentivizing imports that displace U.S. soybean oil. ASA is urging Treasury and IRS to swiftly finalize 45Z tax guidance that incorporates the improvements.

The domestic biomass-based diesel industry is poised for significant growth this year, with expanded capacity to process an additional 140 million bushels of soybeans expected by the 2026 harvest.

Investments in the biofuel value chain are largely the result of actions taken by the Trump Administration and Congress, including the statutory improvements to 45Z, strong renewable volume obligations released by EPA earlier this year, and today’s publication of the USDA Regenerative Feedstock Rule.

While the final Regenerative Feedstock Rule will expand economic opportunities for farmers located near biofuel production, current traceability standards will prevent farmers in other regions from accessing the benefits. ASA encourages USDA to address this regional disparity as work continues to enhance and expand the rule in the future. ASA will continue working with the administration to complete the final tax guidance for the 45Z Clean Fuel Production Credit and increase the credit value for biofuels produced from feedstocks.