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Lasting compromise on biofuels eludes Trump

Trump jokes he's spent more time on ethanol than China and Iran

By Jennifer A. Dlouhy, Jennifer Jacobs and Josh Wingrove

Global disputes over trade and nuclear weapons have consumed plenty of President Donald Trump’s time and attention -- but a narrow, domestic clash over U.S. biofuel policy may be giving those issues competition.

Trump has held more than a half dozen meetings and helped broker at least three near-deals on U.S. ethanol and biodiesel mandates since he moved into the White House. Despite the intense Oval Office negotiations, a lasting compromise between warring oil and biofuel interests has eluded the commander-in-chief. And now his patience may be wearing thin.

Trump joked to people at one recent White House meeting on the topic that he had spent more time on ethanol than on both China and Iran, according to people familiar with the matter. The people asked not to be identified describing a private meeting.

The quip perhaps betrayed Trump’s frustration with the ongoing biofuel policy fight, which pits two of his favored constituencies, agriculture and energy interests -- as well as several swing states -- against each other.

Advocates for corn-based ethanol and soy-based biodiesel say the Environmental Protection Agency has too eagerly granted oil refineries waivers exempting them from mandates compelling them to use the renewable fuels. Oil industry allies, at the same time, have implored the administration to keep issuing the waivers and rein in the costs of tradeable credits they use to prove they’ve fulfilled annual blending quotas.

One White House official complained to lobbyists that the president was tired of dealing with the issue at a meeting last week, according to a person familiar with the exchange.

Long-Running Issue

Trump was pulled into the issue even before he took office, as billionaire investor, then-refinery owner and later unpaid presidential regulatory adviser Carl Icahn in August 2016 complained about a “rigged” marketplace for the renewable fuel credits. He helped vet Trump’s nominees to lead the EPA and eventually tried to craft his own compromise with biofuel supporters.

In the spring of 2018, Trump presided over months of negotiations -- ultimately reaching a pact in June that promised to simultaneously boost ethanol and keep refining costs in check. Within days, the plan fell apart, following fierce criticism from Iowa’s two Republican senators, Chuck Grassley and Joni Ernst.

Now, Trump is trying again, after warnings that an uproar in Iowa and other politically important farm states over refinery waivers could haunt him at the ballot box next year. Refining executives from Valero Energy Corp. and Marathon Petroleum Corp. pressed their case with Trump last week. A day later, Corn Belt senators and ethanol producer Archer-Daniels Midland Co. made their own arguments in a meeting with the president.

Trump already promised a “giant package” of changes he boasted would make farmers happy while keeping oil refineries in business. But it looks like he’ll have to get through at least one more meeting first. More senators -- this time from states with big refining interests -- are seeking an audience with the president this week.

To contact the reporters on this story:
Jennifer A. Dlouhy in Washington at jdlouhy1@bloomberg.net;
Jennifer Jacobs in Washington at jjacobs68@bloomberg.net;
Josh Wingrove in Washington at jwingrove4@bloomberg.net
To contact the editors responsible for this story:
Alex Wayne, John Harney
© 2019 Bloomberg L.P.
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