Agriculture Secretary Brooke Rollins announced a long-awaited rule aimed at enabling farmers to capitalize on regenerative agriculture practices like cover crops through biofuel markets.
“Today’s USDA’s Regenerative Feedstock Rule puts farmers, not Washington bureaucrats, in the driver’s seat," Rollins said in a statement Thursday night.
The framework will connect regenerative agriculture practices to new markets within the biofuel supply chain for corn, soybeans, sorghum and spring canola, USDA said.
“Farmers who choose to implement regenerative practices will have new opportunities to earn premium prices, lower their input costs, improve soil health, and strengthen the long-term profitability of their operations," she said.
The White House Office of Management and Budget completed review of the rule Thursday. USDA's announcement came shortly after President Donald Trump signed an executive order aimed at promoting precision ag techniques and speeding up approval of new pesticide active ingredients.
The rule is expected to be folded into the Treasury Department’s guidance for the Clean Fuels Production Tax Credit, more commonly known as 45Z. The value of the credit is based on the carbon intensity, or CI score, of a fuel's entire production chain, replacing a previous flat $1-a-gallon credit. In other words, the smaller the greenhouse-gas footprint to make a renewable fuel, the higher the credit value.
The incentive is aimed at boosting domestic production of low-carbon biofuels including corn-based ethanol and biodiesel made from soybeans. It stems from the Biden administration, though the GOP-led Congress last year changed it in ways that won widespread approval from the ag industry.
Still, a major question has been how farmers will be able to benefit from growing low-carbon crops that are then used to make the biofuels incentivized by 45Z. Just days before President Donald Trump was sworn into his second term in January 2025, former Ag Secretary Tom Vilsack unveiled proposed “climate smart” guidelines that he suggested being folded into 45Z.
When Treasury came out with proposed 45Z rules in February, there was no path outlined for growers to monetize regenerative practices like no-till farming and precision use of fertilizer. Instead, the department indicated regen ag would ultimately be embraced but didn't provide a timeline.
Iowa farmer Mitchell Hora, founder of soil health company Continuum Ag, a soil health data company, told Agri-Pulse that while more details are needed, he’s thrilled to see momentum on the rule.
“Thank you to President Trump and Secretary Rollins for continuing to advocate for farmers and help see 45Z through after four years that farmers have been waiting for this this regulation,” Hora said. “45Z could be game changing for family farms."
Hora added that he's encouraged and looks forward to seeing more details, yet expressed concern that the USDA statement says crops will be tracked based on "mass balance chain-of-custody standards, including traceability and record keeping.
"That does give me pause and worry for the livestock industry, but we'll wait and see what the rules say," he said.
Chain of custody refers to the physical tracking of a product and its traits from the field to the fuel tank. Hora and others have pushed for a “book and claim” accounting model that separates the physical product from its regenerative traits.
In March, Sen. Joni Ernst, R-Iowa, and Rep. Mariannette Miller-Meeks, R-Iowa, led a letter to the Trump administration stressing that farmer participation under 45Z should be structured using a "book-and-claim” framework.
"This approach ensures farmers can generate value from lower carbon practices without requiring the physical delivery of grain to a specific biofuel facility," the lawmakers said. "A mass balance system, by contrast, would force acres to compete and create unnecessary challenges for farmers located far from biofuel facilities or those who rely on grain for livestock feed."
Other aspects of the rule include field-level quantification of crop-specific carbon intensity, auditing and verification requirements, and regenerative agriculture practice standards for covered feedstock crops, USDA said.
The department also said it's releasing an updated USDA Feedstock Carbon Intensity Calculator "to help producers quantify regenerative practices such as cover crops, and improved nutrient management, and conservation tillage -- including no-till and reduced tillage. Producers can use the resulting reports when marketing eligible feedstocks to participating biofuel producers."
"This is exactly what President Trump’s America First agenda looks like: empowering farmers and ranchers, supporting rural communities, driving lower input costs, improving farmer profitability, advancing regenerative agriculture, and helping Make America Healthy Again," Rollins said.
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