WASHINGTON — President Donald Trump scanned the Rose Garden on Wednesday as he looked to recognize lawmakers there for his signing of a veterans health care bill.
When he got to Sen. Joni Ernst, R-Iowa, he couldn’t help alluding to his rejection of a proposed overhaul of federal ethanol requirements known as the Renewable Fuel Standard. Those changes were fiercely opposed by Midwest biofuel producers.
“I did you a good favor for the farmers yesterday, right?” Trump told Ernst. “We love the farmers. Right, Joni?”
Seated in the audience, Ernst nodded in response. On Twitter, she thanked the president for upholding a promise to “stand up for farmers.”
Indeed, Trump’s decision not to sign off on the changes had biofuels producers and their Capitol Hill allies breathing a sigh of relief.
“I thank President Trump for helping farmers by rejecting once and for all a proposal that would have ... really hurt ethanol,” Sen. Chuck Grassley, R-Iowa, told reporters.
Iowa and Nebraska are the No. 1 and 2 ethanol-producing states.
Earlier in the week, before the plan’s collapse, Grassley had said that Environmental Protection Agency chief Scott Pruitt had “betrayed the president” with his actions.
Midwest grain farmers were particularly dismayed about an effort to include ethanol exports to count toward domestic requirements.
Despite months of negotiations, the Trump administration has struggled to find a balance on a contentious issue that divides two of the president's key constituencies: Midwest farmers and refiners in Pennsylvania. On the campaign trail in 2016, Donald Trump promised to support ethanol, a pledge embraced by farmers who grow the corn used to produce it.
Refiners' concerns generally center on the cost of compliance credits known as renewable identification numbers, or RINs, which they use to prove they have satisfied annual biofuel quotas. Even without formal changes, news reports about potential alterations to the mandate have caused the value of RINs tracking ethanol blending to plummet to a five-year low.
The ethanol industry and its Capitol Hill allies have complained bitterly about EPA’s aggressive use of small refinery waivers in ways they say are not justified and are helping destroy demand for ethanol.
And the EPA still has not lifted summertime restrictions on the sale of E15 blends.
So while news the president wasn’t taking action this week came as a relief to ethanol producers, they weren’t ready to pop Champagne corks.
“Our head didn’t get chopped off last night but our body is still getting riddled with bullets in the form of small refinery exemptions and the E15 Band-aids aren’t being applied,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.
The deal that was contemplated reportedly would have included the long-sought year-round E15 sales, but the industry saw that as more than outweighed by the export provisions.
“We want year-round E15 sales — we’ve been working on that for years,” Shaw said. “But not at the cost of ripping the heart out of the Renewable Fuel Standard."
The debate is likely to continue. The politics of the issue can shift along with gasoline prices. And some refiners that have been seeking lower compliance costs for years are unlikely to stop pushing for changes, leveraging the concerns of organized labor to help make their case.
The United Steelworkers said Wednesday that inaction by the White House "threatens thousands of jobs."
"The president has heard the voices of hard-working union refinery workers that helped elect him," said Frank Maisano, a founding partner of Bracewell's Policy Resolution Group, who works with refiners. "We fully expect the president will deliver a common sense, win-win plan that provides new markets and opportunities for ethanol advocates and much-needed relief for refinery workers."
Even as farm state lawmakers have raised their voices against any move undermining the RFS, they have trained their ire much more on Pruitt than the president, a theme that continued to hold Wednesday.
“I think I want to be more anti-Pruitt on this than I want to be anti-Trump,” Grassley said. “At the end of the day, you got to remember Trump kept his promise to the farmers by rejecting a plan that would have been a net negative for ethanol.”
This report includes material from Bloomberg.
