ap photo An E15 fuel sign sits on display during the Iowa Renewable Fuels Association meeting in 2014 in Altoona.

A new proposal by Gov. Kim Reynolds would require at least half of all gasoline pumps in the state to dispense fuel that contains 15% ethanol — a blend commonly called E15 — by 2026.

The governor’s bill was filed Monday in the Iowa House. It is a modified version of a similar proposal last year that would have required nearly all gasoline pumps to dispense blended ethanol fuels, similar to Minnesota’s requirements. House Study Bill 594 also has exceptions for fueling stations with older tanks and pipes that are unfit for the blends and up to $50,000 of state money to update each station.

“We’re going to fight for our farmers and our renewable fuels industry,” Reynolds said Tuesday at the Iowa Renewable Fuels Summit in Des Moines.

Gasoline fuel blends that contain 10% ethanol — or E10 — are the most widely sold for general transportation in the country. Some fueling stations also offer E15, but the fuel’s sales are restricted during summer months because regulators say it has a greater propensity than others to turn to vapor and pollute the air in hot weather.

A full switch from E10 to E15 in Iowa would result in the demand for an additional 61 million gallons of ethanol and $73 million of new income for the agriculture and biofuels industries, according to a recent study.

Lobbyists for convenience store operators and other fuel distributors signaled opposition to the new bill when it was considered Tuesday afternoon by an Iowa House subcommittee.

“This is not a market-based approach. … This is the government dictating,” said Marc Beltrame, of FUELIowa.

The fuel distributors are concerned about consumer demand for gasoline blends with higher percentages of ethanol, costs to upgrade their infrastructure — especially at stores in tiny communities — and the uncertainty that surrounds summertime E15 sales.

The U.S. Environmental Protection Agency enabled those sales in 2019 when it decided E15 deserves the same volatility waiver as E10, an exception created by the 1990 Clean Air Act. But last year, a federal appeals court sided with oil refiners that the EPA had overstepped its authority. The U.S. Supreme Court declined this month to consider an appeal to reinstate the summertime sales.

Technically, E15 can still be sold in the summer, but it has to be marketed for flex-fuel vehicles, which are less common and are compatible with E85. Summer fuel restrictions in Iowa go from June 1 to Sept. 15.

“The governor is currently considering all options including her authority to ask the EPA for a volatility waiver,” said Alex Murphy, a spokesperson for Reynolds.

Federal lawmakers from Iowa have also pledged to try to codify a waiver for E15.

The proposed state law “wouldn’t kick in until 2026, but it would require a solution to the summertime E15 issue,” said Grant Menke, director of market development for the Iowa Corn Growers Association. “There’s no getting around that.”

The House subcommittee moved the bill to allow consideration by the full Ways and Means Committee.

Governor’s bill would make E15 dominant fuel in state