After months of wrangling, Iowa lawmakers have passed a bill to require most gas stations to offer gasoline with higher blends of ethanol at the pump, as Gov. Kim Reynolds seeks to bolster the state’s biofuels industry.
The bill would require gas stations and other fuel retailers to offer gasoline with 15% ethanol, known as E15, beginning in 2026. That would greatly expand the availability of E15, which is currently available at a fraction of Iowa’s gas stations and truck stops.
“This legislation is good for Iowa,” said the bill’s Senate floor manager, Sen. Waylon Brown, R-Osage. “The legislation opens new markets for Iowa’s ethanol — cleaner, greener renewable fuel.”
More:Here’s what to know about E15, its cost, safety and importance to Iowa
Speaking to reporters Tuesday, Reynolds praised the bipartisan vote. She is expected to sign the bill, which is one of her legislative priorities.
“It’s a lower cost of fuel,” she said. “As we’re seeing skyrocketing gas prices — check the price at the pump. It’s a good deal. And it’s environmentally friendly. So it checks about every box that we’re looking for.”
Extensive negotiations, broader waivers helped lead to a deal
House lawmakers passed a version of the bill in early February, but the measure had languished in the Iowa Senate until this week. The final version of the legislation includes a more robust waiver process that senators estimate will allow hundreds of Iowa gas stations to opt out.
More:President Joe Biden in Iowa OKs more ethanol use to cut gas prices, pitches plan to improve rural America
Republican senators said they wanted to ensure the requirements wouldn’t be financially harmful to smaller, rural gas stations. Those stations might have fewer pumps or older equipment that wasn’t built for the higher ethanol blend.
An annual report published by the Iowa Department of Revenue found sales of E15 and higher ethanol blends accounted for about 6.1% of all gasoline sales in the state in 2021, or about 87 million gallons. Just over 300 gas stations in Iowa reported selling E15 in 2021. That represents about 17% of the 1,744 gas stations that reported their sales to the state last year, although the department report estimated there could be more than 3,000 potential retail fuel stations in Iowa.
There are several ways for retailers to receive exemptions from the E15 requirement. Gas stations without compatible equipment are exempted, and a retailer can either submit a waiver describing why its equipment can’t support the higher ethanol blend or hire someone to inspect its facility and certify that it can’t meet the requirement.
The Senate changed the bill this week to add another exemption. The bill now allows any gas station that sells less than 300,000 gallons of gas per year to receive a waiver from the E15 requirement if the station’s owner owns 10 or fewer gas stations and the station hasn’t previously sold E15.
There were 575 gas stations in Iowa that sold less than 300,000 gallons of gas in 2020, according to data provided by Senate Republican staff, accounting for about 5.8% of the gasoline sold in the state that year.
Three senators voted no on the bill: Sens. Joe Bolkcom, D-Iowa City, Jim Carlin, R-Sioux City, and Dennis Guth, R-Klemme. The two Republicans spoke during floor debate to say they oppose the government mandating the types of fuel gas stations have to sell.
“I do support E15 in every way that I can, but I don’t think it’s the government’s job to use their big club to make things happen,” Guth said.
Every Senate Democrat except Bolkcom supported the legislation. Sen. Kevin Kinney, D-Oxford, called it “a step in the right direction for Iowa.”
“This legislation supports our rural farmers,” Kinney said. “It also supports the people working in our biofuels industry.”
The Senate version also changed the legislation to provide a more generous cost-sharing for smaller gas stations that want to upgrade their equipment using the state’s Renewable Fuel Infrastructure Program.
For stations that sell less than 140,000 gallons of gas each year, the state will pick up 90% of the cost, and the retailer will pay 10%. For those that sell between 140,000 and 450,000, it would be a 75%-25% split. For any gas stations that sell more than that, the cost is split 70%-30%, as it is under the current program.
“There’s a difference between a high-volume station having the capital to make an investment in something like that versus a small station that might not have as much capital,” said Sen. Dan Dawson, R-Council Bluffs. “So we definitely wanted to kind of change the cost share in that program a little bit to help out those small retailers.”
The bill also includes a range of tax credits and incentives and requires any new or upgraded fuel infrastructure to be compatible with E85, or gasoline with 85% ethanol, and B20, which contains at least 20% biodiesel, starting next year.
More:Here’s why Iowa Gov. Kim Reynolds applauds President Joe Biden’s E15 announcement
This year’s legislation was Reynolds’ second effort to pass legislation promoting E15 and higher biodiesel blends. A much broader proposal last year fell victim to fighting between fuel retailers, transportation groups and renewable fuel producers.
Monte Shaw, executive director of the Iowa Renewable Fuels Association, called the bill “a victory for Iowa consumers” in a statement Tuesday.
“Every person in Iowa deserves the choice of higher blends like E15 and B20,” he said. “It’s also a victory for Iowa leadership as this legislation is already being looked at by other states as a model for how to promote access to lower-cost, cleaner-burning fuels.”
Bill’s passage comes weeks after President Joe Biden announced year-round E15
Iowa’s ethanol industry also received a boost earlier this month from President Joe Biden, who used a visit to a Poet ethanol plant near Menlo to announce he will lift restrictions on the summer sale of E15 this year.
E15 is currently banned in several states from June 1 to Sept. 15 because it is believed to contribute to smog during warmer weather. Ethanol supporters say those claims are unfounded, adding that total emissions with E15 are less than E10 and gasoline with no renewable fuel.
Biden announced the change in an effort to offer consumers options for cheaper gas prices, which have hovered around historic highs in recent months. But the change is expected to be in effect only this year and not be permanent.
Still, Reynolds said the waiver helped ease some concerns for lawmakers who were worried about the summertime ban.
“I appreciated the waiver for this summer,” she said. “So that was really critical for some of the legislators as they were looking at this.”
Reynolds has said she is working with other Midwestern governors to find a way for E15 to be offered year-round permanently.
“I’m working with a big cohort of Midwestern states,” she said. “I actually hope to send the final request to the administration this week. So we’re really close.”
Des Moines Register reporter Ian Richardson contributed to this article.