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Trump pulls plug on biofuels compromise

Iowa senators rejoice while refinery interests fume

President Donald Trump speaks during an event on tax policy in the Rose Garden of the White House in Washington, D.C., on April 12, 2018. CREDIT: Bloomberg photo by Al Drago
President Donald Trump speaks during an event on tax policy in the Rose Garden of the White House in Washington, D.C., on April 12, 2018. CREDIT: Bloomberg photo by Al Drago

President Donald Trump, yielding to pressure from farming states and agreeing to suspend changes to U.S. biofuel policy, now is being criticized by another constituency important to him — the main union for oil refinery workers.

The United Steelworkers, the largest industrial union in North America representing refinery workers, said the president’s decision leaves in place a costly regulation that puts at risk thousands of the types of blue-collar jobs Trump promised to preserve.

“Inaction by the Trump administration now threatens the livelihood of thousands of East Coast refinery workers and tens of thousands of related jobs throughout the Northeast,” the union said in a statement Wednesday.

On Tuesday, Trump had told Midwestern lawmakers he would drop a proposal to tweak the Renewable Fuel Standard to cut costs to refineries, saying he understood the move would hurt farmers, sources familiar with the matter said.

Sens. Chuck Grassley and Joni Ernst, both Iowa Republicans, praised Trump for abandoning the deal.

The White House was poised to announce proposed changes this week after hosting months of difficult negotiations between representatives of Big Oil and Big Corn.

The deal would have eased pressure on the refining industry by allowing biofuels exports to count toward the annual volumes quotas. But is also would have expanded sales of high-ethanol gasoline in a concession to biofuels producers.

Oil refiner Pennsylvania Energy Solutions had blamed its bankruptcy this year on the cost of complying with the fuel standard, and other refining companies in the region have said they are also struggling.

The American Petroleum Institute, which represents big oil and gas companies like Exxon Mobil and Chevron Corp, said it was pleased the deal collapsed because it would prefer a broader “comprehensive legislative reform.”

“Ethanol and oil & gas don’t see eye to eye on the RFS, but in this case we agree that it’s good news that this proposed deal collapsed,” said Frank Macchiarola, Group Director of Downstream and Industry Operations at API.

The rule requires oil refiners to mix increasing volumes of biofuels including ethanol into fuel each year, and to prove compliance by earning or acquiring blending credits and handing them in to the Environmental Protection Agency.

The law has helped corn farmers by creating a 15-billion-gallon-a-year market for ethanol, but refining companies have complained that compliance costs are too high and threatens jobs.

The White House and the EPA did not respond to requests on Wednesday for comment.

Trump telephoned Ernst on Tuesday afternoon to tell her he would drop the plan. Trump had asked if farmers could support the deal, and she responded “no,” according to sources briefed on the call. He later called Grassley, one of the most vocal advocates of the biofuel industry, the sources said.

Both senators cheered the decision on Twitter.

“@realDonaldTrump has said he loooovves the farmers! #Iowa is feeling that love today, as the President just assured me he ‘won’t sign a deal that’s bad for farmers!’ Thank you Mr. President,” wrote Ernst.

Trump, in a bill signing Wednesday at the White House, appeared to give a nod to the move when he addressed Ernst. “Where’s Joni? I did you a good favor for the farmers yesterday, right? We love the farmers, right Joni? Good, good, I’m glad it worked out,” he said.

Pressure from merchant refiners like PBF and Valero to reform the program already had eased in recent weeks as the EPA took unilateral steps, handing out waivers to small facilities exempting them from the biofuel rules.

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In response, Grassley and Ernst have ratcheted up pressure on EPA chief Scott Pruitt — stopping just short of calling for his resignation.

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