The funds being provided through the Biofuel Infrastructure Partnership (BIP) will be invested to add 5,000 pumps at over 1,400 fueling stations across the country.
The investment in expansion of infrastructure will increase the supply of higher blends of ethanol such as E15 and E85 which can be used as vehicle fuels.
It will more than double the number of stations that offer intermediate blends of ethanol in the country, thereby reducing dependency on foreign oil and costly fossil fuels.
The BIP will expand markets for farmers and support rural economic growth, while creating new jobs.
US Agriculture secretary Tom Vilsack said: "The quality and geographic diversity of the applications, backed by supportive state and private partners, demonstrate the strong demand across the country for cleaner, more affordable fuel.
"The Biofuel Infrastructure Partnership is one approach USDA is using to aggressively pursue investments in American-grown renewable energy to create new markets for US farmers and ranchers, help Americans save money on their energy bills, support America’s clean energy economy, cut carbon pollution and reduce dependence on foreign oil and costly fossil fuels."
Last year, the US exported over $2bn worth of ethanol last year, becoming the world’s largest exporter of ethanol.
