September 26, 2019 / 6:09 PM / a month ago

Trump's impeachment battle could delay biofuels deal: industry sources

NEW YORK (Reuters) - U.S. biofuel industry sources said on Thursday they were concerned that an impeachment inquiry against President Donald Trump could delay a pending deal on biofuels policy that is meant to boost demand for corn-based ethanol and biodiesel.

U.S. President Donald Trump spaeks to reporters after arriving aboard Air Force One at Joint Base Andrews, Maryland, U.S. September 26, 2019. REUTERS/Jonathan Ernst

Two weeks ago, Trump met with biofuel officials, farm- and oil-state senators and oil refining executives to hash out the details of a “giant package” related to ethanol that he had promised in August. While the groups seemed to be on the cusp of an agreement, Trump now finds himself mired in an intensifying partisan fight that could monopolize his attention for weeks, if not months.

“It seems his interest has waned,” one industry source familiar with the White House deliberations on the issue said, citing what he called a lack of movement in recent days. Another industry source who had been receiving briefings on the White House deliberations said he would not be surprised if the package was on hold indefinitely due to the impeachment inquiry, launched this week.

Trump made the promise after the Environmental Protection Agency (EPA) in August granted 31 oil refiners exemptions to biofuel blending requirements, outraging farmers and ethanol producers that say the exemptions are hurting them financially.

The agriculture industry has said the waivers add pain to growers already suffering from lost foreign markets due to the U.S. trade war with China.

Farmers on a call with media on Thursday implored the Trump administration to reach a deal soon to make up for the exemptions.

“Many farmers are losing patience with the president, and he has to rein in his EPA right now or there will be political consequences to that because of the economic damage we’re suffering,” said Ron Heck, an Iowan soybean farmer.

Trump is keen to maintain the support of the agriculture industry, a crucial constituency leading into next year’s presidential election.

Corn farmers and ethanol producers say the Trump administration’s broad use of the refinery exemption program undermines demand for ethanol and point to several biofuels plants that have halted production in the last few months.

The oil industry says the exemptions help ensure that small refiners stay in business by freeing them of their obligation to earn or purchase blending credits and have no impact on the amount of ethanol they use.

Trump waded into negotiations for a compromise over blending mandates earlier this month to appease the two sides involved - Big Corn and Big Oil - that have for years clashed over biofuels policy.

Following the meetings, however, the White House released no official details on a deal, leaving the two sides wondering what will happen next ahead of a November deadline to finalize U.S. Renewable Fuel Standard (RFS) mandates for 2020.

The RFS requires oil refineries to blend biofuels, such as corn-based ethanol, into their fuel or purchase the credits, called Renewable Identification Numbers, or RINs, from those that do.

However, the EPA can grant waivers from the regulation to small refining facilities of 75,000 barrels-per-day or less, if they can prove that compliance would cause them disproportionate economic hardship.

Democratic presidential candidates including Senator Cory Booker and Mayor Pete Buttigieg this week have criticized the Trump administration’s broad use of small refinery waivers.

“Farmers and producers have been forced to the brink under Trump,” Montana Governor Steve Bullock, another presidential hopeful, said on Wednesday.

Reporting by Stephanie Kelly, Editing by Rosalba O'Brien

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