Ted Cruz pulls Donald Trump away from ethanol

Key senators left a White House meeting Tuesday with no concrete resolution on the future of federal ethanol policy, but critics of the Renewable Fuel Standard suggested that they are slowly pulling President Trump to a deal that will benefit the oil industry.

Tuesday’s sit-down was the latest in a series meetings over the fuel standard, the law that requires the blending of ethanol with gasoline. Sen. Ted Cruz, Texas Republican, has been leading the charge to weaken the law. He said it is crushing some oil refiners financially.

Throughout his campaign, President Trump expressed unwavering support for the Renewable Fuel Standard, which has become a major part of economies in Iowa and elsewhere in the Midwest.

But Mr. Cruz and other crusaders against ethanol believe they may be swaying the president.

“This morning, we had a very positive and productive meeting on fixing the broken [ethanol] system. I commend President Trump for bringing the two sides together and for leaning in hard to find a win-win solution that benefits both Iowa farmers and blue-collar refinery workers,” Mr. Cruz said after the meeting, which included top administration officials and pro-ethanol senators such as Chuck Grassley and Joni Ernst, both Iowa Republicans.

“We made real progress, and, with the president’s leadership, I believe we are close to solving the problem,” Mr. Cruz said.

The immediate takeaway from the meeting was that it allowed Mr. Cruz to lift a hold he had placed on Bill Northey, who had been nominated to a top position at the federal Agriculture Department. The senator had refused to allow Mr. Northey’s nomination to proceed until he got a meeting with the president, Mr. Grassley, and other stakeholders.

The Senate unanimously approved Mr. Northey on Tuesday.

Senators said the president wants to convene another meeting this week with ethanol industry leaders and those in the oil refining sector, though it’s unclear when a policy decision could come down. No firm agreements of any kind were reached Tuesday.

“They had a productive meeting,” White House press secretary Sarah Huckabee Sanders told reporters.

Ethanol supporters say Mr. Cruz and his allies are making desperate attempts to weaken the Renewable Fuel Standard and that the argument that the law is harming oil refiners simply isn’t true.

Mr. Cruz and others cite Philadelphia Energy Solutions in making their case. The East Coast refinery declared bankruptcy this year and blamed the Renewable Fuel Standard, but Mr. Grassley and others say the company was poorly managed and was scapegoating ethanol to cover its own failures.

“We’ve got one refinery in trouble and driving the whole thing to ruin the ethanol industry,” Mr. Grassley told reporters on a conference call following the meeting.

“I think they’re just grasping at straws,” said Ms. Ernst, referring to Mr. Cruz and others arguing against ethanol.

The specific issue at play is renewable identification numbers, or RINs, which act as compliance certificates to ensure gallons of gasoline are blended with the federally mandated levels of ethanol. Each gallon is assigned a number when blended.

But refiners like Philadelphia Energy Solutions, which don’t have the infrastructure to blend themselves. They must buy RINs on the open market, where prices have skyrocketed in recent years.

Ethanol supporters say the solution is to allow more blending, therefore bringing more RINs into the market and theoretically lowering the price. Mr. Cruz and others want to implement caps on RIN prices.

Whatever the solution turns out to be, senators say, officials in the White House don’t seem to be in total agreement about how they want to move forward. Although Mr. Trump has been a strong supporter of the Renewable Fuel Standard, Environmental Protection Agency Administrator Scott Pruitt has been a strong critic.

Mr. Pruitt reportedly backed off major reductions to the standard last fall after Mr. Trump intervened.

“There’s a lot of disagreement out there” in the administration, Ms. Ernst said.