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Advisers have urged Trump to instead let Congress tackle the
biofuel reforms, but use the threat of administrative action to
help rival lawmakers come together and solve the intractable
issue.
The U.S. Renewable Fuel Standard (RFS) has created reliable
demand for corn farmers in the nation's heartland, but merchant
refiners like Valero Energy Corp say the costs to comply with
the program have taken a huge financial toll.
The largest and oldest U.S. East Coast refinery, Philadelphia
Energy Solutions, filed for bankruptcy in January, blaming its
financial woes on the biofuels program and drawing Trump into
the debate over fears of blue-collar job losses in the
politically important state of Pennsylvania.
Trump's efforts to reform the program have angered lawmakers and
farmers from red states like Iowa and Nebraska and U.S. oil
majors that do not mind if their competitors struggle, leaving
the president little safe political ground to maneuver.
The White House has hosted a series of meetings in recent months
in an attempt to change the decade-old RFS, which requires
refiners to cover the price of blending biofuels like corn-based
ethanol into the fuel supply, creating a lucrative market for
growers but a headache for refiners who say it costs them a
fortune.
Changes considered included potentially capping the price of
blending credits that refiners must acquire to show compliance
with the law. But the effort exposed gaping divisions between
the corn and oil lobbies, along with disagreements between
integrated refiners like BP Plc and Exxon Mobil Corp and
merchant refiners like PBF Energy Inc, over solutions.
But any action by the White House would upset at least one
faction of Trump's base, according to the sources, who asked not
to be named as they were discussing a confidential matter.
“This seems like the logical place to land, given all the
unrest,” said one of the sources.
Two of the persons said Trump had agreed to heed his advisers'
recommendation to leave the issue to Congress, while leaving
open the option to act if Congress balks. The third source said
it was not yet clear what Trump would do.
White House spokeswoman Kelly Love did not respond to multiple
requests for comment. Officials at the Environmental Protection
Agency - which administers the RFS - and the U.S. Department of
Agriculture also did not respond to requests for comment.
EPA head Scott Pruitt and Agricultural Secretary Sonny Perdue
have been compiling a list of executive and administrative-level
options for Trump to consider to tweak the RFS, the sources
said. The list would likely include caps on compliance credits
and lifting summertime restrictions on the use of higher-ethanol
blends of gasoline.
Two sources said the White House would likely make an
announcement on its plans in the next two weeks.
Shifting the issue to lawmakers would put the spotlight on U.S.
Senator John Cornyn, the Texas Republican who has been leading
legislative efforts to reform the RFS. Cornyn's office says it
has been trying to win support from the corn and oil industries
for a comprehensive reform bill that is still being drafted.
Last year, independent refiners and billionaire Carl Icahn, who
owns refining company CVR Energy, sought to convince the
administration to overhaul the rule unilaterally.
Icahn came under fire for those efforts during a brief period
when he was advising Trump, as he attempted to broker a deal
with the biofuels industry to change the rule.
(Reporting by Jarrett Renshaw; Editing by Richard Valdmanis and
Matthew Lewis)
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