New state law protects retailers' right to offer ethanol blends

By Holly Jessen | May 24, 2013

The Iowa state Senate and House of Representatives recently approved a state law to protect fuel retailers from petroleum industry efforts to restrict competition, allowing them the right to offer higher blends of ethanol and biodiesel. The next step is for the bill to go to the Governor’s office. “We would anticipate that it is likely that he would sign the bill,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

The legislation includes what IRFA is calling a retailer “bill of rights,” which seeks to prevent oil refiners from directly or indirectly limiting the ability of retailers to offer ethanol and biodiesel blends such as E15, E85 and B20. The bill prohibits new supply agreements from restricting fuels from other suppliers, restricting the installation of blender pumps or other equipment for higher blends, restricting advertisement of ethanol or biodiesel blends, restricting the locations where higher blends can be offered and restricting payment for biofuel blends to cash only.

“This legislation represents a solid step forward for higher ethanol blends, consumer choice, and the federal renewable fuel standard (RFS),” said IRFA President Rick Schwarck, CEO of Absolute Energy LLC, a 115 MMgy ethanol plant located on the Iowa-Minnesota border.  “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.”

The Petroleum Marketers and Convenience Stores of Iowa, a non-profit state trade association, also spoke out in support of the law in a press release. Lobbying efforts to pass the law were led by fuel distributors and retailers who wanted major oil refiners to be required to offer unblended gasoline and diesel so ethanol and biodiesel can be blended locally. “State lawmakers did great work protecting the interests of all Iowans and ensuring that we will be able to continue offering Iowa-produced fuels,” said Dawn Carlson, president of the organization.

Iowa modeled the legislation after a similar law passed in South Dakota in 2011. Ron Lamberty, senior vice president of the American Coalition for Ethanol, who was involved in that effort, told Ethanol Producer Magazine he thought the regulation was positive and that he hoped more states would enact similar laws. However, oil companies in South Dakota are still making it difficult for retailers that want to offer higher biofuel blends. For one thing, the oil companies are claiming that the law only applies to new contracts, not what they consider existing contracts, which are updated yearly with new volume numbers. “In reality, if it’s a branded station, they still hold a tremendous amount of hold against the station, and they aren’t shy at all about wielding their power,” he said.