Fuel retailers, farmers find no compromise on biofuels bill

Gov. Kim Reynolds is proposing to require that most motor fuel sold in Iowa contain ethanol or biodiesel. (Creative Commons photo via Pxhere)

Fuel retailers and trucking groups criticized the latest version of a proposal to set state biofuel standards, clashing during a Thursday morning meeting with agriculture groups that support the bill.

“This bill, as written, is detrimental to the retail industry and consumers at large,” said Jason McDermott, owner of several Iowa convenience stores and the McDermott Oil Company.

Lawmakers plan to amend Senate File 549 to match a proposal in the House by Rep. Lee Hein, R-Monticello. The bill will require Iowa fuel retailers to sell E-15, gasoline with a 15% ethanol blend, by 2026.

Farming groups supported the proposal. Iowa is the nation’s top provider of both corn and ethanol, but much of Iowa’s ethanol is sold out of state. Mindy Larsen-Poldberg, director of government relations for the Iowa Corn Growers Association, said the group “enthusiastically and wholeheartedly” supported the bill.

“Without the E-15 offering that you are providing in this bill, many consumers of the state of Iowa will never have a chance to be able to purchase E-15,” she said. “We’re just providing more consumer choice in this bill.”

But fuel retailers said the bill’s mandate would be an undue burden on their businesses. Providing higher ethanol blends would require significant infrastructure updates, lobbyists said, a process that could cost up to $1 billion. Gas stations that are unable to make the necessary changes could continue to sell non-ethanol blends, but they would be allowed only to sell premium, high-octane fuel beginning in 2026.

“How does that happen in four and a half years? And what’s the return in investment?,” McDermott asked. “…We’re not going to sell any more gas, we’re moving from one product to another.”

Ken Kleemeier, vice president of fuels for Kum & Go, said the requirement to sell certain ethanol blends was a “government overreach,” especially as sales of ethanol blends are already on the rise in the state.

“What problem is this bill trying to solve?,” Kleemeier asked.

Lawmakers voted to move the proposal for consideration by the full committee. Bill leader Sen. Dan Dawson, R-Council Bluffs, emphasized that the bill was not necessarily fast-tracked, nor was it marked for a slow, legislative death.

“I understand there’s people on both sides that want this greased and punched all the way through, and there’s people on other sides that want this thing killed today,” Dawson said. “That’s not the purpose of this subcommittee.”

Dawson said lawmakers will look for a “pathway forward this year, or if this continues through the interim next year.” Republican leaders were similarly reserved in their forecasts for the bill as the legislative session nears its end. 

House Speaker Pat Grassley acknowledged that it would be a “difficult push” to find a compromise that works for all the shareholders.

“This issue seems to be a lot like the bottle bill,” he said. “We try to get to a place in which we find a good piece of legislation, trying to make some level of compromise with all groups involved, and it’s very difficult at the end of the day.”

Gov. Kim Reynolds told reporters Wednesday that she doesn’t plan to give up on the proposal if it doesn’t pass this session. Reynolds said she will convene all of the stakeholders before next year’s session to continue discussing the issues. 

“We should be partners in this. And so we will sit down at the table, and we’re going to try to figure (this) out and I’ve already talked to different stakeholders and have indicated this is my intent,” she said. “And let’s see what we can do and maybe come back next year in a unified position.”

Kathie Obradovich contributed to this story.