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Reports: Branstad jarred Trump into action on ethanol

Trump may increase biofuel mandate, head to Iowa to celebrate

President Donald Trump speaks during a June 11 visit to the Southwest Iowa Renewable Energy facility in Council Bluffs, where he formally announced a rule change allowing year-round sales of E15 fuel, which contains a higher percentage of ethanol. But Trump later angered some backers when he intervened to exempt 31 refineries from complying with the nation’s biofuel laws. (Kevin Lamarque/Reuters)
President Donald Trump speaks during a June 11 visit to the Southwest Iowa Renewable Energy facility in Council Bluffs, where he formally announced a rule change allowing year-round sales of E15 fuel, which contains a higher percentage of ethanol. But Trump later angered some backers when he intervened to exempt 31 refineries from complying with the nation’s biofuel laws. (Kevin Lamarque/Reuters)
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At a closed-door meeting last month at the White House, President Donald Trump looked increasingly alarmed as his top envoy to China — former Iowa Gov. Terry Branstad — delivered evidence of rising Farm Belt frustration over his biofuel policy and a stark warning: You’ve got a problem with farmers.

Branstad told the president that while farmers may have remained loyal to him despite the economic pain caused by the more than yearlong trade war with China, they would not stomach policies favoring the oil industry at their expense, according to four people familiar with the substance of the meeting.

The administration, he explained, was undermining Trump’s support in the election battlegrounds of Iowa and Wisconsin by freeing too many oil refineries from obligations to add corn-based ethanol to their fuel, according to the sources, who requested anonymity because they are not authorized to discuss deliberations.

At the nearly two-hour Aug. 19 meeting that also involved Trump’s top security and economy advisers, Branstad showed a map of counties that had flipped in Trump’s favor in 2016 but were now considered at risk in the November 2020 election. Branstad also listed quotes from Democratic presidential candidates assailing his biofuel policy as a betrayal of corn farmers, and headlines about ethanol plants closing across the Midwest, the sources said.

Branstad’s presentation shocked the Republican president, who previously was assured by his political advisers that he had Iowa “locked.”

Before the meeting ended, Trump already had dispatched his Cabinet members to come up with solutions to stem the farm anger, the sources said, setting off a chain reaction that the U.S. corn industry now hopes will mean fresh concessions to help farmers reeling from plunging crop prices and the loss of their biggest export market, China.

CORN VS. OIL

The previously unreported details of the meeting underscore the political bind Trump has found himself in as he looks to two of his most prized constituencies — Big Oil and Big Corn — to again propel him into the presidency next year.

It also shows how the biofuel debate has emerged as a volatile flashpoint as Trump tries to appease these competing interests.

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The Renewable Fuel Standard requires oil refiners to blend biofuels like corn-based ethanol into the fuel pool or pay a price. But it also allows the government to issue waivers to small refineries that can prove compliance causes a hardship. Smaller refiners say the mandate creates a high financial burden that threatens their plants, jobs and regional fuel supplies.

Trump’s Environmental Protection Agency has handed out 85 such waivers since he took office, up from 23 during the last three years of the Obama administration, saving the oil industry hundreds of millions of dollars but enraging the corn lobby, which argues it kills demand.

After a flurry of Cabinet meetings and phone calls that followed the meeting, Trump sent a tweet last week promising he was working on a “giant package” to make farmers “so happy.”

Trump was expected to meet with EPA and Department of Agriculture officials to discuss a proposal to increase the biofuel mandates by 1 billion gallons, or roughly 5 percent, for 2020.

But agricultural trade groups told the administration Friday that would still fall short of gaining their support, two different sources said.

An announcement is expected as early as next week, followed quickly by a Trump trip to Iowa to celebrate, two of the sources told Reuters.

Iowa’s Republican governor, Kim Reynolds, is helping to organize the rollout, the sources said.

The White House declined to comment on the matter, but said, “President Trump is committed to ensuring our country not only continues to be the agricultural envy of the world, but also remains energy independent and secure.”

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Branstad did not respond to requests for comment.

‘LET’S FIX THIS’

While corn and ethanol producers had largely blamed former EPA chief Scott Pruitt, an ally of the oil industry and critic of the biofuel mandate, for the initial expansion of the biofuel waiver program, Trump in early August personally gave his blessing to the agency to approve an additional 31 waivers to small refineries.

At one point in last month’s meeting, after Branstad drove home his point about farmers’ frustration, Trump called current EPA Director Andrew Wheeler, Energy Department head Rick Perry, and Agricultural Department head Sonny Perdue to say: “Let’s fix this, right now,” two sources said.

The renewable standard has been an economic boon for corn and soybean farmers in Iowa, the nation’s largest producer of ethanol.

Iowa’s ethanol industry accounts for some 34,000 jobs. The state is also critical because of its early placement in the national process of a nominating a presidential candidate.

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