Iowa B5 legislation draws heated debate

By Ron Kotrba | March 23, 2010
Today, 90 percent of Iowa's over-the-road haulers and diesel pickup truck drivers who pull into retail stations to refuel do not have the option of purchasing biodiesel blends, said Monty Shaw, executive director of the Iowa Renewable Fuels Association. "In Iowa, biodiesel is locked out of the infrastructure," Shaw told Biodiesel Magazine. "That's what this bill, Senate File 464, is all about," he said, referring to the controversial piece of state legislation that seeks to mandate a B5 blend in all the diesel fuel sold in-state.

In early March, a number of false or misinformed reports were circulating that said the biodiesel bill was dead. Randy Olson, director of the Iowa Biodiesel Board, used the word "erroneous" to describe those reports. Olson testified before the House Agriculture Committee on March 1 in favor of the proposed Iowa Biodiesel Fuel Quality Standard measure, or SF 464, which passed the state Senate with bipartisan support last year-by a margin of more than 30 votes-and now awaits House committee approval before a vote on the House floor can occur. As the legislation gets closer to a vote, debate over the measure has heated up tremendously.

One of the major opposition groups to the mandate is so-called consumer advocacy group, Iowans for Consumer Fuel Choice. The group is funded by the Petroleum Marketers and Convenience Stores of Iowa, the American Petroleum Institute, the Iowa Motor Truck Association and the teamsters, among other conventional anti-biofuel groups. One of the ICFC's arguments against an Iowa biodiesel mandate is that state mandates are unnecessary when we have a federal mandate. "State mandates will corrupt the free market system and place unnecessary burden on Iowa consumers and Iowa retailers," said Delia Meier, senior vice president for Iowa 80 Truck Stop and an ICFC representative. This argument, however, does not take into consideration that obligated parties under the revised renewable fuels standard will use biodiesel produced in Iowa to sell into population centers where diesel demand and terminal throughput is high-not in Midwest states such as Iowa.

Another anti-mandate tactic employed by ICFC is continued reference to Minnesota's diesel fuel costs and technical issues surrounding its state mandate, which increased from B2 to B5 on May 1, 2009. ICFC stated that a mandate in Iowa will raise diesel prices as it has in Minnesota, by 7.5 cents a gallon. "I'd love to see that study," Shaw said, adding that those numbers are not accurate. "The numbers they use leave out some important facts such as RIN (renewable identification number) values, wholesale prices, and different state taxes." Shaw said the IRFA's study showed that when all factors were considered, a very different result was obtained. "We found that in Minnesota, from May 1, 2009, when the state went to from B2 to B5, to Dec. 31, when the federal tax credit lapsed-less state tax differences-diesel fuel was actually cheaper in Minnesota than in Iowa by about a tenth of a cent per gallon. So some of these pricing claims are just [inaccurate]."

The supposed higher fuel costs from a B5 mandate in Iowa spurred the ICFC to state in a March 1 release that, "Representatives from the Iowa Motor Truck Association warn that more than 75 trucking companies have said if forced to buy biodiesel in Iowa, they will purchase their fuel outside the state," even though Iowa borders Minnesota and Illinois where strong biodiesel mandates are in place. Brenda Neville, president of the IMTA, said, "Bypassing Iowa retailers is not an empty promise. Motor carriers typically use an onboard computer program to help plan travel routes and identify the most cost effective refueling options. Given fuel capacity to travel as many as 1,200 miles per tank, drivers can easily opt to refuel elsewhere."

Decker Trucking, which participated in the Two Million Mile Haul-a biodiesel performance study that included carriers, original equipment manufacturers and biodiesel producers-has reportedly changed its stance on biodiesel now that a mandate looms. Decker told Biodiesel Magazine in 2007 that it was going to help promote the use of biodiesel in the trucking industry, and that it had used the fuel with positive results.

"The main thing is we need to get credible information out there to the people [of the fleet industry and media], and not just the rumors or false information that has been circulating in the market," said Dale Decker in the 2007 article. "We're going to get [the information] out there and tell people what we're actually finding. Once people get our truthful and accurate information from our test to make a decision, it's a no-brainer."

Nevertheless, the trucking company sent a very negative letter to the IMTA last month, saying that biodiesel did not perform well in cold weather, that its lubricating benefits were minimal and that the fuel was not cost effective. Renewable Energy Group Inc. of Ames, Iowa, which also participated in the Two Million Mile Haul, put out a letter that catalogued all of the positive comments Decker has made in support of biodiesel in recent years, asking "What's Changed?"

Another aspect of SF 464 is bumping up the retail tax credit from incentivizing a B2 and higher retail blend to B10 and higher retail blends, to avoid giving a tax credit to the proposed mandated blend of B5. The bill's language reads: "The amount of the tax credit is three cents multiplied by the total number of gallons of biodiesel fuel designated as B10 or higher."
"If we want to keep a biodiesel industry in Iowa," Shaw said, "then we need to pass this bill."
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