Trump Will Loosen Ethanol Rules, Aiding Anxious Farmers Ahead of Midterm Elections

WASHINGTON — When President Donald Trump visits Iowa on Tuesday, he will unveil a pro-ethanol perk aimed at soothing corn and soybean farmers in the heartland made anxious by his decision to impose tariffs on China, a move that kicked off a trade dispute with a major buyer of American agricultural products.

The trip to Council Bluffs, Iowa, which comes on the heels of campaign rallies in Minnesota and Kansas, is part of Trump’s efforts to help Midwestern Republicans facing tight midterm election races this November because of a backlash to his trade policies. Lawmakers acknowledged that the plan — which will include lifting a federal ban on summer sales of higher-ethanol blends of gasoline, something the industry has long sought — will be critical to assuaging farmers in Iowa and elsewhere who have grown deeply worried about the falling prices of corn and soybeans.

“There is anxiety about the president’s program on putting on tariffs,” said Sen. Chuck Grassley, R-Iowa, though he noted the administration’s successful renegotiation of a trade deal between the United States, Canada and Mexico has allayed some of those worries.

Still, he said that for farmers, the ethanol announcement “would be a big boost not only because of the anxiety of tariffs but because we’re having another record corn crop and that naturally drives down prices.” Grassley has long pushed to allow the sale of higher-ethanol-blend gasoline in summer months. The restrictions have been in place out of concerns that burning more ethanol in hot weather contributes to smog.

Political observers said Tuesday’s rally — where Trump is also expected to take another victory lap celebrating the elevation of Brett Kavanaugh to the Supreme Court, and praise Grassley’s role, as chairman of the Judiciary Committee, in shepherding the nominee through the Senate — is a good moment to show gratitude to Iowa’s Republicans.

Steffen Schmidt, a professor of political science at Iowa State University, said he doesn’t see Trump’s ethanol announcement as a direct reward for Grassley’s support, but rather as a sign of the mutually beneficial relationship that has emerged between the president and the powerful seven-term senator.

“Trump is basically recognizing that deregulation, which has been part of everything he has been doing since he was sworn in, also applies to agriculture,” Schmidt said. “And so why not do it for the guy who helped keep the pillars from crumbling in the coliseum on the nomination process of the Supreme Court?”

Under the plan, according to a senior administration official who spoke on the condition of anonymity to discuss the policy before it was formally announced, Trump plans to lift a ban that has traditionally run from June through September on selling gasoline that is blended with 15 percent ethanol. The anti-smog measure, which was imposed in 2011, has been previously criticized by Trump as “ridiculous.”

The president will direct the Environmental Protection Agency to write a rule allowing the blended fuel to be sold year-round. The rule, which will have a public comment period, will be fast-tracked in order to be finalized before next summer’s driving season, the White House official said.

According to the White House, Trump will also move to make it easier for the oil industry to comply with federal rules requiring it to either blend ethanol into its products or buy credits. Nevertheless, the oil industry — which vehemently opposes lifting the summertime ban because it could weaken the industry’s market share — has come out strongly against the plan.

The American Petroleum Institute, the country’s largest oil and gas lobbying group, issued a statement that called lifting the summertime ban “ill-advised.” A bipartisan group of 20 oil-state senators also wrote a letter to Trump arguing that a “one-sided approach” to the Renewable Fuel Standard, which requires that refiners blend increasing amounts of ethanol and other biofuels into the nation’s gasoline and diesel supply, is “misguided.”

Led by Sen. James Inhofe, R-Okla., the lawmakers argued that lifting the summertime ban would “hurt millions of consumers whose vehicles and equipment are not compatible with higher-ethanol gasoline, and risk worsening air quality.”

The tension between farmers and the oil industry over ethanol has been a running theme throughout the Trump administration. Scott Pruitt, the former administrator of the EPA, clashed with Grassley and other corn-state Republicans for granting small oil refineries waivers from the Renewable Fuel Standard.

Pruitt resigned in July amid ethics scandals, but the loss of support among key Midwest Republicans is widely believed to have hastened his departure.

Grassley, for his part, said he views Trump’s announcement as working to fulfill a presidential campaign promise to support the ethanol industry. “Every once in a while every politician has to reinforce their campaign promises,” he said.