The Capitol Roundup
The past couple weeks have been eventful under the Golden Dome in Des Moines. Clerks have gone home because they are no longer receiving pay and legislators are serving now on their own dime. There are some key policy differences between the House and the Senate left to iron out, so we are going into “overtime.” This week a couple of key policy items have been negotiated , passed by both chambers, and are now heading to the governor’s desk. Agreements were found on the two key issues of the ethanol and unemployment policies.
The “E15 access bill” has been one of the governor’s top priorities for the past couple of years. In 2021 a version of the bill passed out of the House, but died in the Senate. Some work was done in the off-season, and the House passed a version immediately when session started up this year. The Senate wanted to see improvements with some concepts of this bill again this year. To say that society is sensitive about “mandates” is an understatement because of the Covid era, and conservatives in the Capitol are extra sensitive as well. The final bill is a mix of mandates and incentives.
The compromise between the House and the Senate landed on broadening how many gas stations could qualify to be exempt from having to upgrade their infrastructure as well as providing more incentives to them if they decided to upgrade in order to sell E15. Roughly 1/3 of gas stations can be exempt from upgrading with the new bill if they choose.
If a gas station chooses to upgrade their infrastructure, they will still have to pay a little money, but it’s not nearly as much as it was during the start of these conversations. If a gas station sells under 140,000 gallons annually, they can qualify for a grant that will pay for 90 percent of the cost. A station that sells 140,001-450,000 gallons can qualify for a grant that covers 75 percent of the cost. Any station that sells more than that can qualify for a grant that covers 70 percent of the cost. Gas stations certainly now have a decision to make if they don’t have adequate infrastructure to sell E15.
Some can opt out of the program if they are small enough, but some might be in a bind due to a competitor down the road that will be able to sell gas cheaper if they have already complied and are ready to sell E15 due to tax credits they will receive. This scenario has been labeled as a backdoor mandate by some because an exempt gas station may be forced to close or upgrade due to the loss of business to a competitor. This is why many of us expressed some concerns with the bill.
Fuel is a complex issue. The market has been manipulated for a long time for both the biofuel and oil industries. I wish I could push the reset button so that the free market could do its thing in this area, but that reset button doesn’t exist for energy policy. Since I can’t push the reset button and have to deal with this market as is, I supported the bill on the Senate floor this week. I expect this issue will likely be back in front of us again someday and I will continue to have conversations on how to balance the needs of fuel retailers and the desire to expand the use of ethanol.
This bill was a challenge for me because I’m pro-ethanol but hesitant to support any new mandates. I am hopeful the agreement found on this bill will create momentum to get school choice passed by the House.