Iowa law ensures retailers' rights to offer higher biofuel blends

The Iowa legislature passed H.F. 640 on May 22, legislation that protects retailers from Big Oil efforts to restrict competition by guaranteeing local retailers the right to offer the ethanol and biodiesel blends of their choice, such as B20 biodiesel.

The Petroleum Marketers and Convenience Stores of Iowa (PMCI) said of the news that Iowans and the state’s economy will benefit from the legislation, protecting the long-standing practice of locally blending biofuel products. Fuel distributors and retailers led lobbying efforts to pass the new law requiring major oil refiners to offer Iowa businesses unblended gasoline and diesel, so they can locally blend ethanol and biodiesel products manufactured in Iowa.

In Iowa, retailers and distributors have been selling various blends of ethanol and biodiesel to customers. As the federal renewable fuels standard (RFS) mandates higher sales of renewable fuels, Iowa marketers will continue to play a vital role in supporting the RFS and doing its part to make renewable fuels available to customers. 

“This legislation helps Iowa farmers, Iowa businesses and Iowa consumers by maintaining competitive fuel prices and promoting the state’s leadership position in biofuel production,” said Dawn Carlson, president of PMCI. “Petroleum retailers in Iowa have led the way in renewable fuels blending and marketing for more than 30 years. Last night, state lawmakers did great work protecting the interests of all Iowans and ensuring that we will be able to continue offering Iowa-produced fuels.”

The legislation includes a section that the Iowa Renewable Fuels Association says amounts to a retailer “Bill of Rights,” preventing oil refiners’ supply agreements from directly or indirectly limiting the ability of local retailers to offer the ethanol and biodiesel blends they choose. The provision was based on a law enacted in South Dakota in 2011 and addresses specific, anticompetition provisions from actual refiner supply agreements. As a result, new supply agreements will not be allowed to restrict a number of things, including fuels from other suppliers, installing blender pumps, using current equipment from offering higher biodiesel and ethanol blends, ethanol or biodiesel blends from being advertised, the locations where a retailer may offer the higher blends (such as under a canopy), or payment for higher blends to cash-only.

“This legislation represents a solid step forward for higher ethanol blends, consumer choice, and the federal RFS,” stated IRFA President Rick Schwarck, who is also CEO of Absolute Energy, a 115 MMgy ethanol refinery. “I find it ironic that Big Oil consistently claims that retailers don’t want to sell higher ethanol blends like E15, yet they use every trick in the book to prevent retailers from offering E15. In fact, the American Petroleum Institute fought tooth and nail to try to keep these retailer protections out of the bill. This bill tears down one part of Big Oil’s bogus blend wall in Iowa.”

Iowa has 12 biodiesel facilities with the capacity to produce nearly 315 million gallons a year.