Policy

Renewable Fuel Foes and Backers to Meet Again at White House

Sen. Chuck Grassley, R-Iowa. (Bill Clark/CQ Roll Call file photo)

After failing to reach agreement Tuesday at a White House meeting of oil and corn state lawmakers as well as administration officials on possible changes to the nation’s renewable fuels program, lawmakers and President Donald Trump say they’ll try again as early as this week.

Iowa Republican Sen. Charles E. Grassley, a vocal defender of the biofuels industry, said following the meeting that “no win-win” situation was presented as promised by participants such as Sen. Ted Cruz, R-Texas, who opposes the program in its current form.

“Neither were any commitments or assurances made to change the RFS,” Grassley said in a later call with reporters. He added that a “win-win” would be if there was agreement to allow gasoline containing 15 percent ethanol, the so-called E15, to be sold year-round. 

Biofuels supporters had hoped at the Tuesday meeting, also attended by EPA Administrator Scott Pruitt, to push for wider sales of E15, which the agency prohibits between June 1 and Sept. 15 because the mixture has been found to contribute to summer smog pollution.

Iowa and other farming states are beneficiaries of the Renewable Fuel Standard, first created by Congress in 2005 and expanded in 2007, that requires the EPA to set increasing levels of agricultural products like ethanol to be included in the nation’s transportation fuels. The oil industry has complained that the program hurts consumers by increasing the cost of gasoline and hurts the industry by complicating the refining process and forcing some refiners that don’t handle biofuels to buy offsetting credits called Renewable Identification Numbers, or RINS.

The lack of consensus apparent at the White House meeting underscores how complicated it will be for RFS supporters and foes, including lawmakers from states where the oil industry is concentrated, to resolve their differences any time soon, especially in an election year.  

Cruz told reporters that Trump directed lawmakers to convene representatives from the ethanol and refinery industries for a meeting later this week at the White House to continue discussing the issue.

“The objective has been, and remains, to find a solution that stops skyrocketing RINs — which are made up regulatory licenses — from bankrupting refineries across the country and costing the jobs of tens of thousands of refinery workers, while at the same time benefiting corn farmers, and expanding the market for corn,” Cruz said.

Philadelphia story

Iowa Republican Sen. Joni Ernst, who also attended the discussions, said she hoped to rally biofuel industry representatives for a White House meeting as early as Thursday to argue against changes that could hurt farmers.

The Tuesday meeting came amid an intensifying battle over RINS, the credits purchased by oil refiners to comply with biofuel requirements under the RFS. 

Trump had called for the discussions after an oil refinery, Philadelphia Energy Solutions or PES, blamed its Chapter 11 bankruptcy on the high cost of RINS, which refiners can buy and sell in an open market.

PES has blamed its woes on a $218 million RIN obligation in 2017, an assertion agriculture-state lawmakers and the biofuels industry reject, saying instead that the company’s own poor management decisions led to its predicament.

“We’ve got one refinery that’s in trouble that is driving the whole thing to ruin the RFS,” Grassley said.

But Cruz, who is running for re-election, sided with PES, telling its employees on Wednesday that the RIN system is broken and needs to be fixed, and suggested capping their prices at 10 cents,  a proposal opposed by biofuel backers.

“The bottom line is that these changes will come at the expense of Iowans and farmers across the heartland,” Ernst said in a call with reporters to review the earlier White House meeting.

Cruz had held up the confirmation of Bill Northey, Trump’s nominee for undersecretary for trade and foreign agricultural affairs at the Department of Agriculture, over the lawmaker’s opposition to the RFS program.

But the Senate on Tuesday confirmed Northey by voice vote after Cruz agreed to release his hold when the meeting with the White House was convened.

Grassley’s tweeted his congratulations to Northey saying, “It took too long. ... You were used as an innocent tool [between] big oil [and] ethanol.”

Both Iowa lawmakers, Grassley and Ernst, agree that even though there was no assurance given by the White House to refiners that it would change the RFS, the fight is far from over as neither expect Cruz to back off.

“We support our biofuels, Cruz supports his big oil, so we’re going to fight this out,” Ernst told reporters.

Niels Lesniewski contributed to this report.

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