REGIONAL—A bill is advancing through the Iowa Legislature that would require fuel retailers statewide to change their biofuel standard to E15, a bipartisan mandate that has some industry groups apprehensive.
House File 859 would create a timeline for Iowa gas stations to begin offering the higher-ethanol gasoline mixture, a bump from the E10 blend.
It originated from a bill introduced by Gov. Kim Reynolds after her Condition of the State address in January, and it has a companion bill in the Iowa Senate.
“The goal was to get more biofuels in the state of Iowa,” said Rep. Lee Hein (R-Monticello). “At the federal level, it seems like biofuels aren’t getting their fair shake. In a nutshell, we’re trying to get the fuel stations to move from E10 to the E15, and it should be a cheaper product.”
Hein is the chair of the Ways and Means Committee, which he said has put in extra work to make sure the new policies are a win for as many groups as possible.
Ranking member Dave Jacoby (D-Coralville) agreed with that description, but added on April 13 that the bill needed “a little more time at the table.” Later that day, two amendments were added to the bill to address concerns of small and independent retailers.
“It actually is a bipartisan bill. We’re actually working together,” Jacoby said. “The phrase I hate the most in this building is ‘work in progress’ but that’s what it is.”
Getting more ethanol products to market has been statewide focus for years as Iowa is the highest biofuel-producing state in the country.
POET Biorefining — a South Dakota-based company with plants in six Iowa towns, including Ashton — has pushed for higher-ethanol blends to be made more widely available, especially after the travel industry is rebounding from the coronavirus pandemic.
Biofuels support more than 37,000 jobs statewide, according to the Iowa Renewable Fuels Association. POET public relations director Jessica Sexe said the legislation would “insulate” those workers.
“Creating more demand for biofuels creates more demand for grain,” Sexe said. “It’s really a no-brainer; we support this bill. We need to see it go through. It will help to protect the industry.”
Rep. Dennis Bush (R-Cleghorn) noted that “edges have softened considerably,” which have led him to planning a yes vote when the bill comes to the floor. He normally makes a point of not getting tied up with policy outside his committees but said House File 859 is “the one I have been watching” as a farmer and longtime biofuel supporter.
At the Capitol, he said, there has been lots of talk about making sure the bill meets everyone’s concerns.
“I know that the authors of that bill have spent hours and hours with parties from all sides in a room together, trying to reach a consensus on how to go forward,” Bush said. “They’ve put, really, a lot of work into this bill.”
As for Jacoby, the Democrat had his own way of describing the bipartisan spirit.
“There’s probably less people pissed off now.”
Not universal support
Some are not in an amiable mood about House File 859. Opponents of the bill include large gas station retailers as well as fossil-fuel extractors such as Koch Industries.
By requiring locations to offer a new product, new equipment and tanks eventually will have to be purchased.
Casey’s government relations director Doug Beech said the total cost to Iowa gas stations could be as high as $800 billion.
“We’ve got 480-something stores. We would have to add costs to meet this mandate. If there’s a cost, we’ve got that expense,” Beech said. “Consumers will have that cost with higher gas prices, and less choice.
There are 12 Casey’s stores in N’West Iowa, according to the company website.
Beech stopped short of asserting that locations would close if the bill was passed, but John Maynes did not. As regulatory affairs manager for FUELIowa — a fuel industry advocacy group — Maynes said the $800 billion price tag will “put stations out of business.”
He also said House File 859 would hurt consumers in two ways, first by limiting what people can buy and second with an inevitable price hike.
“This bill has been championed as a bill for consumer choice yet it mandates what products can and cannot be sold,” he said.
Maynes then articulated the second issue he sees with the policy.
“All this comes back to cost,” he said. “As cost is pushed onto these retailers — you know, in the business world — those costs have to be passed on to consumers.”
E15 sales were already on the rise in Iowa. The state revenue department reported that even though the coronavirus pandemic led to an 11 percent drop overall in biofuel sales last year, the higher ethanol blend grew by 26 percent.
Supporters of House File 859 want to push that adoption pace, and lawmakers have tried to improve the situation for shops by offering financial incentives to ease the change. Up to 70 percent of the cost, capped at $50,000, is eligible to be reimbursed by the state pending review from the Department of Natural Resources.
Beech and Maynes took issue with politicians who champion the “free market” but support a bill they say restricts commercial liberty.
“It seems the consistency isn’t quite here, right?” Beech said. “It’s ‘we believe in the free market unless it advantages us,’ which is kind of hard for us to believe. In our industry, we believe in the free market, and if these other folks don’t, I guess they have to square that with their other beliefs.”
“Our industry has firsthand knowledge on how to grow biofuels in the future, and it’s through infrastructure and investment,” Maynes added.
The corporate reps maintained that they want biofuels — including E15 — to succeed, but they think the state policy would disadvantage them.
“We don’t want to put any small retailer out of business,” Hein said. “On the flip side of that, we believe a lot of the stores are coming to the point where their tanks need to be replaced.”
The committee chair also said that some exemptions have been added to the policy, which can be determined on a case-by-case basis, but that it’s “time for updated infrastructure.”
“What I’m hearing is that people don’t like mandates,” Hein said. “I don’t like being told what to do, but I’m not aware of any bill that isn’t a mandate to somebody.”