Trump Administration Weighs High-Ethanol Fuel Waiver to Placate Farmers

by Jarrett Renshaw and Chris Prentice (Reuters) The Trump administration is considering allowing the sale of a higher ethanol fuel blend in the summer, a source familiar with the issue said, a move that would placate corn growers worried about the future of U.S. biofuels policy.

Trump has tried in vain over the past several months to broker a deal between “Big Oil” and “Big Corn” over the issue, and has faced mounting pressure from lawmakers in the Midwest who are concerned that he will weaken domestic demand for ethanol at a time farmers are already facing a potential trade war with China that could hurt export demand for corn and soybeans.

Sources had told Reuters this week that Trump was temporarily suspending his consideration of a refining industry-backed proposal to cap prices for blending credits, an idea that the biofuels industry has opposed as damaging to farmers.

But in the meantime, the administration is considering moving forward with plans to allow for the ethanol industry’s long sought waiver to sell gasoline containing 15 percent ethanol in the summer, instead of the usual 10 percent blend, the source familiar with the issue told Reuters on Wednesday.

On Monday, Trump acknowledged farmers may bear the brunt of the economic harm if China retaliates against Washington’s threat of tariffs, noting that “we’ll make it up to them”. READ MORE

Excerpts from Politico's Morning Energy: Sources tell Pro's Eric Wolff that a possible rule allowing expanded sales of higher blends of ethanol in gasoline is in the works. EPA has begun to lay the groundwork on the move, showing just how close ethanol producers and their allies in Congress are to winning administrative approval for year-round sales of 15 percent ethanol in all states. USDA has been pushing EPA to move forward with the E15 waiver, but any waiver would draw strong opposition from the oil industry, likely setting up a challenge in court. It is unclear however if the work at EPA was to build up some background info to help inform administration officials' pending decisions on the waiver, or if staff had been ordered to write a proposal, Eric reports.

- EPA responded that the agency "has been awaiting a clear outcome from the ongoing RFS discussions with the White House, USDA and Congress before making any final decisions or developing any associated regulatory actions," spokeswoman Liz Bowman said in a statement.

Sonny speaks: Meanwhile, Agriculture Secretary Sonny Perdue told Sen. Roy Blunt on Wednesday that he agrees with Midwestern lawmakers' assessment that EPA is misusing economic "hardship" waivers to exempt large oil refineries from meeting biofuel blending requirements under the RFS. Read more from Pro's Catherine Boudreau.

Excerpts from The Messenger: ... (Calhoun County farmer and chairman of the board of Western Iowa Energy Bill) Horan was invited to speak first (at a meeting three weeks ago), and he made his pitch for expanded sale of E15 ethanol. He said Trump didn’t initially seem to know what E15 ethanol is. The president also seemed surprised to learn that corn is grown in every state of the nation, Horan added.

He said Trump then asked Pruitt if it was possible to sell E15 year-round. He recalled Pruitt replying, “Mr. President, I believe we can.”

The meeting continued, but Cruz interrupted twice, according to Horan. He said each time, Ernst stopped him by saying “Ted, stop it” and reminding her fellow senator that he had already had his chance in previous meetings to argue his position.

“It was kind of interesting,” Horan said. “She opened her mouth and it was a lieutenant colonel that came out.”

According to Horan, later in the meeting Trump again asked Pruitt if more E15 ethanol sales were possible. Pruitt responded that he would have to consult attorneys.

“That was his sign that he wasn’t going to help us at all,” Horan said. READ MORE