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President Donald Trump speaks to guests during a visit to the Southeast Iowa Renewable Energy ethanol facility on June 11, 2019 in Council Bluffs, Iowa. Scott Olson/Getty Images News/Getty Images North America
President Trump speaks during a visit to the Southeast Iowa Renewable Energy ethanol facility on June 11, 2019, in Council Bluffs, Iowa.

Trump defends government's power to waive biofuel requirements

At issue is decision by the 10th Circuit Court of Appeals invalidating waivers exempting 3 refineries from biofuel blending requirements.

By Jennifer A. Dlouhy, Mario Parker and Jennifer Jacobs

President Donald Trump has decided to defend in court the U.S. government’s power to broadly waive biofuel requirements for many oil refineries.

The decision to appeal a federal court ruling imperiling those exemptions follows an intervention by Attorney General Bill Barr and an intense pressure campaign by oil-state senators, including Ted Cruz, a Texas Republican. The plan was described by five people familiar with the matter who asked for anonymity before a formal announcement.

At issue is a January decision by a three-judge panel of the 10th Circuit Court of Appeals in Denver invalidating waivers exempting three refineries from requirements to blend biofuel into gasoline and diesel. Federal law authorizes those waivers for small refineries facing an economic hardship.

Yet the judges said the law also limits that relief to refineries getting “extensions” of previous waivers and pointed out that none of the three refineries at issue had “consistently received an exemption” in previous years.

The appeal plan would mark a reversal for the White House, where top officials as recently as a week and a half ago had planned to accept the ruling and apply it nationwide. That approach would have meant just a handful of U.S. refineries -- no more than seven -- would be eligible for the exemptions.

Previous Trump administration decisions on biofuel policy have been upended amid fierce lobbying.

But this move would be a victory for oil companies and their allies on Capitol Hill, who argued the waivers are essential to preserve the economic health of refineries and blue-collar jobs at the facilities. They have raised the specter of layoffs and plant closures in Wyoming, Texas and the political battleground state of Pennsylvania -- warning the White House in recent days that if the administration didn’t fight the ruling, there could be repercussions for the president on Election Day in November.

Oil industry advocates argued to administration officials that the court’s interpretation defies federal law that says refineries may seek relief “at any time,” conflicts with longstanding EPA practice and is at odds with a separate ruling by the 4th Circuit.

The Trump administration has until the end of Monday to appeal the ruling en banc -- asking the full 10th Circuit to consider the case. Even without the administration joining in, refiners involved in the case are expected to seek a rehearing.

An appeal would be a blow to producers of corn-based ethanol and soybean-based biodiesel, who have complained the Trump administration too freely handed out the waivers and undermined a 15-year-old federal law mandating the use of those plant-based alternatives. Biofuel allies have also warned Trump of political fallout -- in farm states, such as Iowa.

Nine biofuel and agriculture advocacy groups, including the Renewable Fuels Association and National Biodiesel Board, warned an appeal “would be viewed as a stunning betrayal of America’s rural workers and farmers.”

“We cannot stress enough how important this decision is to the future of the rural economy and to President Trump’s relationship with leaders and voters across the heartland,” the organizations said in a joint statement Thursday night.

To contact the reporters on this story:
Jennifer A. Dlouhy in Washington at jdlouhy1@bloomberg.net;
Mario Parker in Washington at mparker22@bloomberg.net;
Jennifer Jacobs in Washington at jjacobs68@bloomberg.net
To contact the editors responsible for this story:
John Harney
© 2020 Bloomberg L.P.
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