Proposed legislationwater and agThe agenda

FUEL Act

Fund for Uplands, Enterprise and Livestock

An Act relating to agricultural diversification, including by establishing an Iowa ag diversification fund for third-crop markets and pasture, ending the standing appropriation to the renewable fuel infrastructure fund, and providing for a ten-year agricultural diversification plan, making appropriations, and including effective date provisions.

Page one

The short version

What's broken, what the bill does, and what it costs, in plain English. If you read one thing, read this.

This isn't a bill against ethanol. It's a plan for what comes after the state's ethanol and biodiesel tax credits, which already end January 1, 2028, under current law.

Those credits pay gas stations for each gallon they sell of higher-ethanol gasoline and higher biodiesel blends. Stations claimed $50.2 million in the budget year that ended in June 2025, and the Department of Revenue expects $50.6 million to $57.9 million a year until they wind down. This spring the House voted 84 to 1 to extend the biodiesel credit. I wouldn't extend them without a replacement that's paid for. There isn't an easy way out of this situation without planning for a replacement first. It took us decades to get here, it will take some time to get out.

In 2025, Iowa farmers planted 23 million acres of corn and soybeans, and 120,000 acres of oats. Telling folks to just plant something different when the market isn't there does not work. Somebody has to clean it, store it and buy it first.

The FUEL Act (Fund for Uplands, Enterprise and Livestock) starts building that. State law sets aside $5 million a year for ethanol and biodiesel pump grants, though lawmakers mostly paid it from another fund. Starting July 1, 2028, $4.5 million of it goes each year to a new Iowa Ag Diversification Fund, and $500,000 pays for testing fuel at the pump. The fund pays for:

A third crop. Cleaning, drying, storage, processing and first buyers for oats, rye, barley, wheat and other food crops. Farmer-owned cooperatives go first.
Pasture. Cost-share for fence and livestock water, through our FAIR Act's grazing program or the state's existing cost-share. Southern Iowa ground was made for pasture and cattle.

The state hires Iowa State University by October 1, 2027 to write a ten-year plan for diversifying Iowa agriculture, due December 31, 2028. Every year the Department of Agriculture reports every grant, county by county.

The honest timing: the credits end January 1, 2028, and the fund's first money comes six months later, because our Pay As You Go Act skips this deposit for the year in between. This is the plan and the money, starting right after. Nothing replaces the credits on day one.

It leaves alone the rule that stations sell higher-ethanol gasoline, and the biodiesel plants' tax refund.

$4.5 million is small next to what's ending, and I won't pretend otherwise. It's a start, pointed the right way. I don't want the state telling you how to farm your land. I want state policy to stop propping up systems that leave our communities vulnerable, and start making it easier to earn an honest living farming and raising cattle.

That's the whole bill in brief. The rest of this page is the detail behind it, for anyone who wants to dig in.

See where it goes

Where the fuel pump money goes

How to read this Money starts on the left and flows right along the streams; the moving dots show which way. A thicker stream carries more. Point at or tap a box or a stream to see the amounts.

Same deposit, new jobs, starting six months after the fuel credits end. Lawmakers have skipped the general fund deposit in most years since it was created, so the Today side is what the law says, not what the fund has received. The two floors don't add up to the whole deposit: some goes to running the fund and the university's plan, and the rest goes where demand is.

The same numbers, side by side

The yearly deposit
Paid out of the pump fund this year
Floor for each use, not the whole split

Today

Set in state law each yearState general fund to Fuel pump grant fund
$5 million
Fuel testingFuel pump grant fund to Fuel testing
$500,000

Under this bill

Set in state law each yearState general fund to Iowa Ag Diversification Fund
$4.5 million
Fuel testingState general fund to Fuel testing
$500,000
The least third crops get in the first yearIowa Ag Diversification Fund to Third crop markets
at least $1.61 million
The least pasture gets in the first yearIowa Ag Diversification Fund to Fence and water on pasture
at least $1.61 million

The analysis

What it costs, and what we don't know yet

For anyone who wants the costs and the tradeoffs. Every figure is a range where the future is uncertain, and every one links back to where it came from.

The math

What it costs and who pays

The yearly deposit

Set in state law each year
$4.5 million
Fuel testing
$500,000

Floor for each use, not the whole split

The least third crops get in the first year
at least $1.61 million
The least pasture gets in the first year
at least $1.61 million

Under this bill, stream by stream. Each bar starts at zero, and they all share one scale. A pale band is a range; the analysis below says how it was built.

Nothing new from the general fund. State law already puts $5 million a year from the general fund into the renewable fuel infrastructure fund, which pays for grants to put ethanol and biodiesel tanks and pumps in at gas stations and fuel terminals (sections 159A.16 and 159A.17). This bill ends that deposit after the budget year that closes June 30, 2028. Starting July 1, 2028, it splits the same $5 million two ways: $4.5 million a year into the new Iowa Ag Diversification Fund, and $500,000 a year straight to the Department of Agriculture for testing motor fuel at the pump. Same source, same total.

The fuel testing piece is there because the pump fund pays for it now, out of its balance. Lawmakers paid $500,000 for motor fuel inspection out of the pump fund for the budget year that started July 2025, in Senate File 646, and again for this one, in House File 2771, even though the general fund put nothing into the pump fund either year. State law already says fuel testing gets paid from state money not set aside for anything else (section 214A.14), which, in effect, means the general fund. So if we moved the whole deposit, then once the pump fund's balance ran out, fuel testing would land on the general fund at about $500,000 a year. That would be a new general fund cost. Paying it straight from the deposit keeps it out in the open and keeps the total where it is.

That's why the bill stays off the Pay As You Go Act's scorecard: it adds no new general fund cost, because it moves an existing appropriation. The scorecard counts what a bill adds to general fund spending or takes away in tax credits, and it can only trim what a bill creates. This bill creates new deposits and ends an old one of the same total, so there's nothing on net for the scorecard to count or trim.

When the money comes, and why

Here are the dates, plainly. The credits end January 1, 2028, under current law. This bill takes effect July 1, 2027, so the department can write rules and hire Iowa State University before the credits end: the contract for the ten-year plan has to be signed by October 1, 2027. The fund's first money comes on July 1, 2028, six months after the credits end. The plan is due December 31, 2028. Once money comes in, the bill pays for the plan, including what the university does under the contract before then. If lawmakers skip that first deposit, the payment waits.

That six-month gap is on purpose. Our Pay As You Go Act skips the fuel-pump deposit for the budget year that starts July 1, 2027, the same way lawmakers skipped it this year in Senate File 2484. This bill starts the year after, so the two bills never count the same dollars. After that skipped year the deposit comes back, split between the new fund and fuel testing, not pump grants. So when the credits end, there's a plan being written and money set in law for the July after. There isn't a replacement already running on January 1, 2028, and we don't say there is.

Each year, the new fund pays for:

Running it: up to five percent of the year's deposit.
Iowa State University's ten-year plan: up to $250,000 in total, paid once there's money in the fund.
Third-crop markets: at least forty percent of what's left. A grant pays up to fifty percent of a project's cost, and up to $250,000 for one project. The money is for cleaning, drying, storage, dehulling, milling and other processing of oats, rye, barley, wheat and food crops other than corn and soybeans, and for a first buyer setting up to buy those crops from Iowa farmers.
Pasture: at least forty percent of what's left, for fence and livestock water.
The rest goes where the demand is.

In the first year, third-crop markets get at least $1.61 million and pasture gets at least $1.61 million, even if running the fund and the plan both take their whole share. In a year with no plan to pay for, each gets at least $1.71 million.

The pasture money goes to the Department of Agriculture's soil conservation division. If the FAIR Act's grazing infrastructure cost-share fund exists, the money goes into it and follows the FAIR Act's rules: the state pays up to half the cost, there's a cap per person, and the producer signs a ten-year agreement to graze under a written plan. FUEL's money pays for fence and water only. The FAIR Act lets its fund spend a share on running the program, and this bill says none of FUEL's money goes to that, since FUEL already took its own share for running its fund. If the FAIR Act hasn't passed, the division pays it through the state's existing cost-share for permanent conservation practices (section 161A.73), which pays up to half the cost. That program doesn't list grazing fence or livestock water today, so this bill makes them eligible for this money, with the same ten-year agreement and grazing plan the FAIR Act asks for. Either way it's one program, not two.

The new fund sits in the part of state law that holds the Department of Agriculture's marketing programs (chapter 187). That chapter has its own fund for the Choose Iowa program, and the bill says that money can't be used here and this fund's money can't be used anywhere else.

Who pays: state taxpayers, the same as now. Who gives something up: stations and fuel terminals that would have applied for pump grants out of the deposit after June 2028. The fuel fund itself stays in law with whatever balance it has, and lawmakers can still put money into it from the state's infrastructure fund, the way they have in most recent years.

What Iowa spends on ethanol and biodiesel now, and what's already ending

Three state tax credits pay gas stations for each gallon they sell of gasoline with fifteen percent ethanol or more, short of flex fuel (section 422.11Y), of flex fuel (section 422.11O), and of diesel with at least eleven percent biodiesel (section 422.11P). A credit bigger than the station's tax bill is paid out as a refund. In the budget year that ended June 30, 2025, stations claimed $27.1 million for biodiesel, $17.6 million for the higher-ethanol blends and $5.5 million for flex fuel, $50.2 million together, according to the Department of Revenue. The cost swings from year to year: the same report puts the three at $34.6 million in the budget year that ended June 2023, and $17.9 million the year after. The department's forecast runs from $50.6 million to $57.9 million a year through the budget year that ends June 2029, including about $56 million in the one that ends June 30, 2027.

All three are repealed January 1, 2028, under current law. That date isn't new. Lawmakers moved the higher-ethanol credit's end date from January 1, 2026, to January 1, 2028, in Senate File 657 last year. The cost won't stop on that day, because a station claims a year's credit on the next year's tax return. The department expects $50.6 million in claims in the budget year that starts July 2028, all of it after the repeal and the same year this fund gets its first $4.5 million, and about $4.3 million the year after.

Biodiesel plants get a separate refund of the sales tax they pay, at four cents for every gallon they make in Iowa, up to a yearly cap for each plant (section 423.4). It also ends January 1, 2028. The Legislative Services Agency counts eight producers that get it. We didn't find a published yearly total for it.

None of those end dates is this bill's doing, and this bill doesn't move them. A statute can't stop a future Legislature from extending a credit, so the bill doesn't pretend to. What it can do is start the plan before the credits end, set the money in law for the July after, and hand lawmakers a plan to follow by the end of that year.

The pump grants: in the eighteen budget years that ended in June 2024, the state awarded $53.5 million for 1,314 pump and tank projects, according to a Department of Revenue study built on Department of Agriculture records.

Open questions

What we don't know yet

We can't say how many acres of oats, rye or other third crops this fund will add, or how many cattle it will put on grass. No one can know that before the grants are made. That's why every recipient reports what it bought from Iowa farmers, and why the department reports fence and water by county.

We can't say what ending the credits will do to the price of corn or soybeans. The same Department of Revenue study found that biofuel prices and crop prices tend to move together, and that the research it reviewed disagrees about whether biofuels push up food prices. I don't claim the credits' end will cost farmers, and I don't claim it won't. The university's plan has to look at it.

Iowa farmers planted 190,000 acres of oats in 2023, and 120,000 in 2025. I don't know why it fell, and I don't blame it on ethanol.

I haven't measured how much of the corn grown around here goes to ethanol, or where the nearest ethanol plants buy it, so I don't say.

The state already has a general grant program for adding value to Iowa farm products (section 187.321), and this bill's fund sits in the same chapter of law. That program names no crop and sets no grant terms in law, and we didn't find a published list of what it has paid for. The third-crop program is written for one job, so it can't drift.

Who gives something up

The tradeoffs

Biofuel and farm groups will oppose it. This spring the House voted 84 to 1 for House File 2785, which would keep the biodiesel credit going until 2033, and 83 to 2 for House File 2786, which would raise the biodiesel plants' refund and keep it going until 2031. Neither got a Senate vote. Lobbyists for the Iowa Soybean Association, the Iowa Biodiesel Board, Truckstops of Iowa and the Iowa Institute for Cooperatives registered for the credit bill. The Iowa Renewable Fuels Association, the Iowa Farm Bureau Federation, the Iowa Soybean Association, the Iowa Biodiesel Board and Cargill were among those that registered for the refund bill. A registration is a filing, not proof of what anyone believes, but those are the groups that will show up. Extensions aren't free: the Legislative Services Agency put the biodiesel credit extension at $26.2 million for the budget year that starts July 2029, rising to $30.2 million by the one that starts July 2032, and the refund bill at $8.4 million to the general fund for the year that starts July 2028, plus a separate loss to the fund that pays for school buildings. What I'd do instead of a fight: leave the rule that stations sell higher-ethanol gasoline alone (section 214A.32), leave the refund on its current schedule, and put the fuel groups at the table for the university's plan, which has to look at retailers and biofuel plants by law. And if lawmakers want to extend a credit anyway, the extension should say it's subject to the Pay As You Go Act's scorecard, so it's covered by real savings or trimmed.

$4.5 million is small. Next to the $50.6 million to $57.9 million a year the credits are expected to cost until they wind down, it doesn't replace what's ending. The Department of Revenue's forecast already assumes the credits end, so that money isn't sitting there for anyone to spend. What I'd do instead of pretending: treat this as the first step, let the university's plan say what the next steps cost, and put those costs through the regular budget and the scorecard where voters can see them.

The money comes six months after the credits end. On January 1, 2028, the plan is being written but no grant has been paid. That's the price of not counting the same dollars twice with the Pay As You Go Act. The university's plan rides on that first deposit too: the contract is signed by October 1, 2027, but the bill pays for it only when there's money in the fund. If lawmakers skip the July 1, 2028 deposit, the plan waits, and I haven't asked the university whether it would start on that promise. What I'd do instead of leaving a gap: have the department write its rules and take applications before the money lands, so grants go out soon after. And if lawmakers skip that first deposit, pay the university out of the department's regular budget that year, so the plan doesn't stall.

Lawmakers have skipped this deposit most years. The deposit was created for the budget year that started July 2021. For four straight budget years starting July 2022, lawmakers suspended it and paid $10 million a year into the pump fund from the state's infrastructure fund instead, according to the Legislative Services Agency and, for the year that started July 2025, House File 1039. This year Senate File 2484 set it at zero, and we found no infrastructure fund money in its place. The Pay As You Go Act skips it one more year. So the law says $5 million a year, but the general fund has rarely paid it. If future lawmakers would have kept skipping it, this bill is a real choice to spend that money, and a future Legislature can skip the new fund's deposit the same way. What I'd do instead of hiding that: vote every year to make the deposit, and make anyone who wants to skip it say so on the record.

The pump fund was already getting squeezed. It gets no general fund money this year, and the Pay As You Go Act would skip next year too, both before this bill does anything. We haven't found a published figure for its balance. Fuel testing has been paid out of that balance. What I'd do instead of letting fuel testing ride on a grant fund: pay for it openly every year, which this bill does with $500,000 straight from the deposit.

Stations lose a source of grant help. The state has awarded pump grants to stations in Albia, Lovilia, Moravia, Centerville, Bloomfield and Eddyville, according to the Department of Agriculture's award list. Those grants helped stations put in the equipment the state's higher-ethanol rule asks for. With no new general fund deposit after June 2028, that help shrinks to whatever balance the fund keeps and whatever lawmakers choose to add from the infrastructure fund. What I'd do instead: keep the waivers already in that law, and have the university's plan say what retailers still need, so lawmakers can fund it from the infrastructure fund, the way they did for four years, if the need is real.

A grant doesn't create a market. A cleaning line or a mill still needs farmers who grow the crop and buyers who want it. What I'd do instead of paying for equipment and hoping: pay first buyers to set up, put farmer-owned cooperatives first, and make every recipient report what it actually bought. If those reports show the money isn't reaching farmers, I'd move it to the use that is, starting with the pasture side, which has the same reports by county.

One subject. The bill creates a fund, ends a deposit, pays for fuel testing, orders a plan and adds to a cost-share program. It's titled as agricultural diversification, and every part serves that. What I'd do instead if a court or the Legislature sees two subjects: split the pasture money out and send it with the FAIR Act, which already has a fund for it.

The draft text

The draft bill language

For legislators, reporters and anyone who wants the legal wording. This is our draft, written the way Iowa bills are written, so you can see exactly what we mean. If I'm elected, the Legislature's nonpartisan drafting office, the Legislative Services Agency, writes the version that gets filed, and the wording will change. Page one and the costs above are the commitment.

Read the draft bill language

Proposed legislation

A BILL FOR

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

Section 1. NEW SECTION. Iowa ag diversification fund —— third-crop markets and pasture. This section joins subchapter III of chapter 187.

1. For purposes of this section, and notwithstanding section 187.102, unless the context otherwise requires:
a. “Agricultural producer” means a person who produces crops or livestock in this state.
b. “Division” means the division of soil conservation and water quality of the department.
c. “Financial assistance” means a grant made under subsection 5.
d. “First purchaser” means a person in this state that buys a third crop from the agricultural producer who grew it.
e. “Fund” means the Iowa ag diversification fund created in subsection 2.
f. “Grazing infrastructure” means any of the following, installed to manage livestock grazing on pasture in this state:
(1) Permanent perimeter or interior fence, including fence that keeps livestock out of streams, ponds, or timber.
(2) Livestock watering facilities, including tanks, pipelines, wells, spring developments, and pumps that supply water to livestock on pasture.
g. “Grazing plan” means a written plan for grazing the pasture served by the grazing infrastructure that meets the prescribed grazing conservation practice standard of the natural resources conservation service of the United States department of agriculture in effect for this state.
h. “Small grain” means oats, rye, barley, or wheat.
i. “Specialty crop” means a crop, other than corn or soybeans, that is grown for human food.
j. “Third crop” means a small grain or specialty crop grown in this state.
2. An Iowa ag diversification fund is created in the state treasury under the control of the department. The fund shall consist of any moneys appropriated by the general assembly for purposes of this section and any other moneys that are lawfully available to the department. Moneys in the fund are appropriated to the department to administer this section, and shall not be used for any other purpose. Moneys in the choose Iowa fund created in section 187.201 shall not be used for the purposes of this section. Notwithstanding section 12C.7, interest or earnings on moneys in the fund shall be credited to the fund. Notwithstanding section 8.33, moneys in the fund that remain unencumbered or unobligated at the close of each fiscal year shall not revert but shall remain available for expenditure.
3. There is appropriated from the general fund of the state to the Iowa ag diversification fund for the fiscal year beginning July 1, 2028, and for each fiscal year thereafter, the sum of four million five hundred thousand dollars.
4. Moneys in the fund shall be used as follows:
a. The department may use not more than five percent of the moneys appropriated to the fund for a fiscal year for its administrative costs.
b. From any moneys in the fund, and subject to the availability of moneys in the fund, the department shall pay the cost of the plan required by subsection 7, which shall not exceed $250,000 in total. The payment may include the cost of work performed under the contract required by subsection 7 on or after the effective date of this Act.
c. Of the moneys appropriated to the fund for a fiscal year that remain after paragraphs “a” and “b”, the department shall use not less than forty percent for the third-crop markets program under subsection 5, and shall transfer not less than forty percent to the division for grazing infrastructure under subsection 6. The department shall allocate the rest between subsections 5 and 6 according to the demand for each.
d. Other moneys in the fund, including interest, earnings, and moneys that remain available from a previous fiscal year, shall be used for the purposes of paragraph “b” and subsections 5 and 6.
5. a. The department shall establish a third-crop markets program to provide financial assistance for any of the following:
(1) Buying, building, or installing equipment or facilities in this state to clean, dry, sort, store, dehull, mill, or otherwise process a third crop.
(2) Developing a market for a third crop as a first purchaser, including testing, receiving, contracting with agricultural producers, and marketing a product made from the third crop.
b. Any of the following is eligible for financial assistance under this subsection for a project in this state:
(1) A cooperative.
(2) A first purchaser.
(3) A group of agricultural producers.
(4) Any other person.
c. Financial assistance under this subsection shall not exceed fifty percent of the cost of a project, or $250,000 for a project, whichever is less.
d. In awarding financial assistance under this subsection, the department shall give priority to both of the following:
(1) A cooperative a majority of whose members are agricultural producers.
(2) A project that buys a third crop from agricultural producers who grow it in rotation with corn or soybeans, so that the third crop adds a crop to that rotation.
e. A person receiving financial assistance under this subsection shall sign an agreement with the department to report to the department, each year for three years after the award, each third crop it bought from agricultural producers in this state, the quantity of each, the number of agricultural producers it bought from, and the acres those producers report planting to supply it.
6. a. Moneys transferred to the division under subsection 4 shall be used only as cost-share for establishing grazing infrastructure.
b. If a grazing infrastructure cost-share fund has been created in chapter 161A, the division shall deposit the moneys in that fund, and the moneys shall be used and administered in the same manner as other moneys in that fund, except that moneys deposited under this paragraph shall be used only for cost-share payments and shall not be used for, or counted in determining the amount available for, the costs of administering that fund.
c. If no fund described in paragraph “b” has been created, the division shall allocate the moneys as financial incentives under section 161A.73, subsection 1, paragraph “a”. For purposes of moneys allocated under this paragraph, all of the following apply:
(1) Grazing infrastructure is a permanent soil and water conservation practice. Replacement of an existing fence is eligible only if the complete fence is replaced.
(2) A person receiving moneys shall sign an agreement with the division to maintain the grazing infrastructure and to graze the pasture it serves under a grazing plan for at least ten years. A person who violates the agreement shall repair or replace the grazing infrastructure or repay the moneys received.
7. a. By October 1, 2027, the department shall contract with Iowa state university of science and technology to prepare a ten-year Iowa agricultural diversification plan. The plan shall do all of the following:
(1) Identify the markets, storage, and processing needed for agricultural producers to grow third crops profitably in each region of this state, including southern Iowa.
(2) Identify ways to expand livestock grazing on pasture, including on land converted from row crops.
(3) Assess how the repeal of the tax credits provided in sections 422.11O, 422.11P, and 422.11Y and the corresponding credits provided in section 422.33, and of the refund provided in section 423.4, subsection 9, affects agricultural producers, retail dealers, and biofuel producers in this state.
(4) Recommend state policies and funding, with an estimated cost for each, and measurable goals for each of the ten years of the plan.
b. In preparing the plan, the university shall consult with agricultural producers, cooperatives, first purchasers, retail dealers, biofuel producers, the division, and soil and water conservation districts, and shall take public comment.
c. The university shall submit the plan to the governor and the general assembly by December 31, 2028. The department shall publish the plan on the department’s internet site.
8. By January 15 of each year, beginning January 15, 2030, the department shall submit a report to the general assembly, and publish it on the department’s internet site, stating all of the following for the previous fiscal year:
a. Each award of financial assistance under subsection 5, by recipient, county, third crop, and amount.
b. The information reported to the department under subsection 5, paragraph “e”.
c. The moneys transferred under subsection 6, and, as reported by the division for those moneys, by county, the number of cost-share agreements, the amount of cost-share moneys paid, the feet of fence and number of watering facilities established, and the acres of pasture served.
d. The moneys used under subsection 4, paragraphs “a” and “b”.
e. The balance of the fund at the close of the fiscal year.
9. The department shall adopt rules pursuant to chapter 17A to implement and administer this section.

Sec. 2. Section 159A.17, Code 2026, is amended by striking the section and inserting in lieu thereof the following:

159A.17 Appropriation.

1. For the fiscal year beginning July 1, 2021, and ending June 30, 2022, and for each fiscal year thereafter through the fiscal year ending June 30, 2028, there is appropriated from the general fund of the state to the renewable fuel infrastructure fund created in section 159A.16 the amount of five million dollars.

2. For the fiscal year beginning July 1, 2028, and for each fiscal year thereafter, there is appropriated from the general fund of the state to the department of agriculture and land stewardship the sum of five hundred thousand dollars, for purposes of the inspection of motor fuel, including salaries, support, maintenance, and miscellaneous purposes.

Sec. 3. EFFECTIVE DATE. This Act takes effect July 1, 2027.

EXPLANATION

The inclusion of this explanation does not constitute agreement with the explanation’s substance by the members of the general assembly.

This bill relates to agricultural diversification.

IOWA AG DIVERSIFICATION FUND. The bill creates an Iowa ag diversification fund under the control of the department of agriculture and land stewardship (department), in the programs subchapter of Code chapter 187 (Choose Iowa Act), and appropriates four million five hundred thousand dollars to it from the general fund each fiscal year, beginning with the fiscal year that begins July 1, 2028. The fund’s money may be used only for this program, and the choose Iowa fund under Code section 187.201 (choose Iowa fund) may not pay for it. The department may use up to five percent of each year’s appropriation to run the fund, and pays for the plan described below from any money in the fund, when money is available, up to $250,000 in all, including costs under the plan’s contract after the bill takes effect. Of the rest of each year’s appropriation, at least forty percent goes to third-crop markets and at least forty percent goes to cost-share for grazing infrastructure on pasture. The department divides the remainder according to demand.

THIRD-CROP MARKETS. The bill creates a third-crop markets program. The department may award financial assistance to a cooperative, a first purchaser, a group of farmers, or any other person, for a project in this state, for equipment and facilities to clean, dry, sort, store, dehull, mill, or process oats, rye, barley, wheat, and crops other than corn and soybeans grown for human food, and for developing a market as the first buyer of those crops from the farmers who grow them. An award may pay up to fifty percent of a project’s cost, up to $250,000 per project. Priority goes to cooperatives whose members are mostly farmers and to projects that add a crop to a corn or soybean rotation. A recipient reports for three years what it bought from Iowa farmers and from how many.

PASTURE. The department transfers the pasture share to the division of soil conservation and water quality, to be used only as cost-share for permanent fence and livestock watering facilities on pasture. If a grazing infrastructure cost-share fund has been created in Code chapter 161A, the money goes into that fund and follows its rules, except that none of it pays for running that fund. If not, the division pays it as cost-share for permanent practices under Code section 161A.73 (voluntary establishment of soil and water conservation practices), treating grazing fence and livestock water as eligible practices for this money, and requires a ten-year agreement to maintain them and to graze the pasture under a written plan meeting the federal prescribed grazing standard.

TEN-YEAR PLAN. By October 1, 2027, the department contracts with Iowa state university to prepare a ten-year Iowa agricultural diversification plan, covering the markets, storage, and processing third crops need in each region of the state, ways to expand grazing, how the scheduled repeal of the ethanol and biodiesel retail tax credits and the biodiesel production sales tax refund affects farmers, retailers, and biofuel producers, and recommended policies, costs, and goals. The plan is due December 31, 2028.

ANNUAL REPORT. Each January, the department reports every award, what recipients bought from Iowa farmers, the fence and watering facilities paid for by county, its administrative costs, and the fund’s balance.

RENEWABLE FUEL INFRASTRUCTURE FUND. The bill strikes Code section 159A.17 (appropriation) and inserts a version that ends the standing general fund appropriation of five million dollars a year to the renewable fuel infrastructure fund after the fiscal year ending June 30, 2028. Beginning with the fiscal year that begins July 1, 2028, it instead appropriates five hundred thousand dollars a year from the general fund to the department for motor fuel inspection, which recent appropriations have paid from the renewable fuel infrastructure fund. With the four million five hundred thousand dollars a year to the Iowa ag diversification fund, the general fund appropriation stays five million dollars a year. The renewable fuel infrastructure fund and its programs remain. The bill does not change the ethanol and biodiesel retail tax credits or the biodiesel production refund, which current law repeals on January 1, 2028, or the requirement that retail dealers sell higher-ethanol gasoline.

The bill takes effect July 1, 2027.

Sources

Where every number comes from

For anyone checking our work. Each figure with the site it came from and the day we checked it, and each law the bill cites.

Show every source

Figures

$5 millionThe yearly general fund deposit to the renewable fuel infrastructure fund that state law sets.legis.iowa.govchecked 2026-10-02
$50.2 millionWhat the three retail fuel tax credits cost in the budget year that ended June 30, 2025.revenue.iowa.govchecked 2026-10-02
$27.1 millionBiodiesel blended fuel tax credit claims, budget year that ended June 30, 2025.revenue.iowa.govchecked 2026-10-02
$17.6 millionE15 plus gasoline promotion tax credit claims, budget year that ended June 30, 2025.revenue.iowa.govchecked 2026-10-02
$5.5 millionE85 gasoline promotion tax credit claims, budget year that ended June 30, 2025.revenue.iowa.govchecked 2026-10-02
about $56 millionDepartment of Revenue forecast of the three retail fuel credits, budget year ending June 30, 2027.revenue.iowa.govchecked 2026-10-02
about $4.3 millionDepartment of Revenue forecast of the three retail fuel credits, budget year beginning July 1, 2029, the second full budget year of trailing claims after their repeal.revenue.iowa.govchecked 2026-10-02
$34.6 millionWhat the three retail fuel tax credits cost in the budget year that ended June 30, 2023.revenue.iowa.govchecked 2026-10-02
$17.9 millionWhat the three retail fuel tax credits cost in the budget year that ended June 30, 2024.revenue.iowa.govchecked 2026-10-02
$50.6 millionLow end of the Department of Revenue's yearly forecast for the three retail fuel credits, budget years 2026 through 2029.revenue.iowa.govchecked 2026-10-02
$57.9 millionHigh end of the Department of Revenue's yearly forecast for the three retail fuel credits, budget years 2026 through 2029.revenue.iowa.govchecked 2026-10-02
84 to 1The Iowa House vote on House File 2785, extending the biodiesel blended fuel tax credit.legis.iowa.govchecked 2026-10-02
83 to 2The Iowa House vote on House File 2786, raising and extending the biodiesel producer sales tax refund.legis.iowa.govchecked 2026-10-02
$26.2 millionLSA estimate of what extending the biodiesel credit would cost the general fund in the budget year beginning July 1, 2029.legis.iowa.govchecked 2026-10-02
$30.2 millionLSA estimate of what extending the biodiesel credit would cost the general fund in the budget year beginning July 1, 2032.legis.iowa.govchecked 2026-10-02
$8.4 millionLSA estimate of what House File 2786 would cost the general fund in the budget year beginning July 1, 2028.legis.iowa.govchecked 2026-10-02
eightBiodiesel producers that receive the state's sales tax refund, per LSA.legis.iowa.govchecked 2026-10-02
1,314Renewable fuel infrastructure program projects, state budget years 2007 through 2024.revenue.iowa.govchecked 2026-10-02
$53.5 millionRenewable fuel infrastructure program grants, state budget years 2007 through 2024.revenue.iowa.govchecked 2026-10-02
Albia, Lovilia, Moravia, Centerville, Bloomfield and EddyvilleSouthern Iowa towns on the Department of Agriculture's list of pump grant awards from the renewable fuel infrastructure program.iowaagriculture.govchecked 2026-10-02
$10 millionWhat lawmakers paid each year into the renewable fuel infrastructure fund from the Rebuild Iowa Infrastructure Fund while the general fund deposit was suspended.legis.iowa.govchecked 2026-10-02
$500,000Appropriated this year from the renewable fuel infrastructure fund for motor fuel inspection.legis.iowa.govchecked 2026-10-02
23 millionIowa acres planted to corn and soybeans in 2025.nass.usda.govchecked 2026-10-02
120,000Iowa acres planted to oats in 2025.nass.usda.govchecked 2026-10-02
190,000Iowa acres planted to oats in 2023.nass.usda.govchecked 2026-10-02

Laws cited

chapter 187The Choose Iowa Act: the Department of Agriculture's programs for marketing Iowa farm products, including the Choose Iowa fund, dairy and value-added grants and food purchasing. Subchapter III holds its programs. Section 1 of the bill joins subchapter III. legis.iowa.gov
187.102Definitions for chapter 187. "Fund" there means the Choose Iowa fund, "financial assistance" is support to an eligible business, and "located in" is a test of where a business's employees are. The bill sets its own meanings for "fund" and "financial assistance", notwithstanding this section, and does not use "located in". legis.iowa.gov
187.201The Choose Iowa fund, whose money is appropriated to the department for the chapter's programs. Two 2026 Acts rewrite its subsection 3 (Senate File 2465 to "this chapter", House File 2357 to "subchapter III"), so the bill says outright that Choose Iowa fund money is not used for the new fund's purposes. legis.iowa.gov
422.33The corporate income tax, including the corporate versions of the retail fuel tax credits. The bill's plan has to assess their repeal along with the individual income tax versions. legis.iowa.gov
187.321The value-added agricultural grant program, created in 2024 "to identify, evaluate, and support projects and services that add value to agricultural commodities produced on Iowa farms". It names no crop and sets no grant terms. legis.iowa.gov
12C.7Interest on public funds. The bill keeps the new fund's interest in the fund, notwithstanding this section.legis.iowa.gov
8.33Unspent appropriations revert at year end. The bill keeps the new fund's money from reverting, notwithstanding this section.legis.iowa.gov
chapter 17AThe Iowa Administrative Procedure Act, under which the department adopts rules.legis.iowa.gov
chapter 161ASoil and water conservation, including the soil and water conservation districts and the state's cost-share programs.legis.iowa.gov
161A.73Voluntary establishment of soil and water conservation practices. Subsection 1, paragraph a: cost-share for permanent practices such as terraces, grassed waterways and critical area planting, up to fifty percent of the cost. Subsection 3 pays for fence that keeps livestock out of forest land. Neither lists fence or water for grazing pasture. legis.iowa.gov
159A.16The renewable fuel infrastructure fund. It pays for grants to put ethanol and biodiesel tanks and pumps in at gas stations and biodiesel terminals, keeps its interest, and does not revert at year end. legis.iowa.gov
159A.17The standing appropriation of five million dollars a year from the general fund to the renewable fuel infrastructure fund, beginning July 1, 2021.legis.iowa.gov
214A.14"There is hereby appropriated out of any funds in the state treasury not otherwise appropriated funds sufficient to pay the expenses incurred as authorized by this chapter." Chapter 214A covers motor fuel, including the department's fuel testing (214A.22). Money not otherwise appropriated is, in practice, the general fund. So if the pump fund stopped paying for fuel testing, this standing appropriation would put it on the general fund. The bill pays it from the old deposit instead. legis.iowa.gov
422.11OThe E-85 gasoline promotion tax credit for retail dealers, sixteen cents a gallon, refundable. Subsection 8: "This section is repealed January 1, 2028." legis.iowa.gov
422.11PThe biodiesel blended fuel tax credit for retail dealers, five, seven or ten cents a gallon for blends of B-11 and up, refundable. Subsection 8: "This section is repealed January 1, 2028." legis.iowa.gov
422.11YThe E-15 plus gasoline promotion tax credit for retail dealers, nine cents a gallon for E-15 and higher blends short of E-85, refundable. Subsection 9: "This section is repealed January 1, 2028." Senate File 657 (2025) moved that date from January 1, 2026. legis.iowa.gov
423.4Sales and use tax refunds. Subsection 9: a biodiesel producer gets back sales and use tax it paid, at four cents a gallon of biodiesel produced in Iowa, on up to twenty-five million gallons a year per plant. Paragraph e: "This subsection is repealed January 1, 2028." legis.iowa.gov
214A.32The E-15 access standard: a retail dealer must sell E-15 from at least half of its gasoline dispensers (one, if it has only one), or from at least one if it has not put in a new gasoline tank since January 1, 2023, with waivers and exceptions in the sections that follow. The bill does not change it. legis.iowa.gov
SF 24842026 enrolled bill, signed. Division IV, Sec. 12 set the general fund appropriation to the renewable fuel infrastructure fund under section 159A.17 at zero for the fiscal year beginning July 1, 2026. legis.iowa.gov
HF 27712026 agriculture and natural resources appropriations, enrolled. Sec. 3 appropriates $500,000 from the renewable fuel infrastructure fund to the Department of Agriculture for motor fuel inspection for the fiscal year beginning July 1, 2026. legis.iowa.gov
HF 10392025 Rebuild Iowa Infrastructure Fund appropriations, enrolled. Appropriated $10 million from that fund to the renewable fuel infrastructure fund for the fiscal year beginning July 1, 2025, in lieu of the general fund deposit under section 159A.17, which it set at zero for that year. legis.iowa.gov
SF 6462025 agriculture and natural resources appropriations, enrolled. Sec. 3 appropriates $500,000 from the renewable fuel infrastructure fund to the Department of Agriculture for motor fuel inspection for the fiscal year beginning July 1, 2025. legis.iowa.gov
HF 27852026 bill, as introduced: moves the repeal of the biodiesel blended fuel tax credit from January 1, 2028 to January 1, 2033. Passed the House May 2, 2026, referred to Senate Ways and Means, no further action. Not law. legis.iowa.gov
HF 27862026 bill, as introduced: raises the biodiesel producer sales tax refund from four to five cents a gallon and moves its repeal from January 1, 2028 to January 1, 2031. Passed the House May 2, 2026; in the Senate it was attached to Senate File 2503 with no further action. Not law. legis.iowa.gov
SF 6572025 tax credits bill, enacted as 2025 Iowa Acts, chapter 136, approved June 6, 2025. Division XXI moved the repeal of the E-15 plus gasoline promotion tax credit from January 1, 2026 to January 1, 2028. legis.iowa.gov