Washington roundup: U.S. is said to favor Midwest corn farmers in biofuels quota

The Trump administration will propose a requirement that refiners use 15 billion gallons of conventional renewable fuels in 2018, while lowering targets for advanced alternatives that oil refiners have described as unattainable, according to people familiar with the decision.

The move would strike a delicate balance on federal renewable fuel requirements by delivering a modest win to Midwest corn farmers supplying the bulk of traditional ethanol at the expense of companies producing next-generation alternatives, according to the people, who asked not to be named because the levels haven’t been formally announced.

The Environmental Protection Agency is set to propose requiring 4.24 billion gallons of advanced biofuel in 2018, down from 4.28 billion gallons this year. That would include 238 million gallons of cellulosic biofuel, a drop from the current 311 million-gallon requirement. Cellulosic ethanol, typically made from corn stalks, switchgrass and other materials, has been commercialized at a slower pace than its supporters had hoped for.

The 15 billion-gallon quota for conventional renewable fuel is the highest allowed under federal law for that category, which is mostly fulfilled by corn starch-based ethanol. It also mirrors the current 2017 requirement.

The EPA proposal represents the Trump administration’s first foray into the politically treacherous territory of the Renewable Fuel Standard, a program mandating biofuels in gasoline and diesel fuels that Congress established in 2005. The program is loathed by oil producers and refiners but embraced by farmers, public officials and biofuel producers in the Corn Belt states, such as Iowa, which play an outsized role in U.S. presidential contests.

President Donald Trump promised to support ethanol while campaigning for president and he reiterated that position in a speech in Iowa last month. The ethanol industry is “under siege,” but the Trump administration is saving it, the president told a crowd in Cedar Rapids.

Independent refiners without upstream oil production and substantial downstream fuel-blending infrastructure, including billionaire Carl Icahn’s CVR Energy Inc., declined on the news of the proposed quotas. CVR fell 3.7 percent to $21.31 at 1:21 p.m. in New York, the steepest decline in two weeks.

Regulators track compliance with the mandates using credits known as renewable identification numbers, which reflect each gallon of biofuel blended into U.S. gasoline and diesel. The credits tracking 2017 ethanol consumption targets jumped 3.5 percent to 74 cents apiece Wednesday, on pace for the steepest one-day gain since June 8.

The administration’s decision to keep conventional biofuel targets intact sets up a clash with oil refiners, which had argued a 15 billion-gallon requirement would exceed a 10 percent “blend wall,” or the amount that can be easily blended into the fuel supply.

According to a May forecast from the U.S. Energy Information Administration, motor fuel demand is set to climb to about 143.5 billion gallons in 2018 from about 143 billion in 2017. Given that forecast, if the conventional renewable fuel quota were fulfilled entirely by ethanol, the fuel would represent 10.5 percent of total projected gasoline consumption. Most gasoline sold in the U.S. is E10, or 10 percent ethanol. Refiners can turn to other fuels, including renewable biodiesel, to help meet the target.

The American Petroleum Institute, which represents oil producers and refiners, had asked the EPA to set lower quotas that would reflect about 9.7 percent of projected gasoline demand; some refiners had pushed a lower 9.5 percent.

The ethanol industry counters that the government explicitly allowed vehicles built after 2001 to use 15 percent ethanol, and many vehicles can run on an 85 percent blend. Gasoline containing 15 percent ethanol is available in about 800 filling stations nationwide, according to Growth Energy, a coalition of biofuel producers.

The unavoidable tension between oil producers and Corn Belt interests is why why Kevin Book, managing director of Washington-based ClearView Energy Partners LLC, calls the program a “nightmare” for Republicans.

“It divides the Republican Party like almost no other policy in energy because it takes several very strongly Republican constituencies and pits them against each other,” Mr. Book said in an interview.

The proposed decline in advanced biodiesel targets reflects top EPA officials’ concerns that an earlier, internal proposal would encourage refiners to import ethanol from Brazil and biodiesel from Argentina. At the behest of U.S. biodiesel producers, the government is separately investigating whether imports from Argentina and Indonesia are benefiting from unfair subsidies and being sold at prices below production costs.

Under federal law, the EPA has until Nov. 30 to issue final biofuel quotas for 2018.

Congress asked the EPA to dictate specific annual quotas, but the agency has limited authority to waive the statutory goals and set lower targets. And the breadth of the EPA’s leeway is in doubt, as a federal court weighs a biofuel industry lawsuit challenging the agency’s waivers issued under former President Barack Obama.

White House pay gap

The pay gap between male and female White House staffers has more than tripled in the first year of the Trump administration, according to an analysis by economist Mark Perry of the American Enterprise Institute.

The median female White House employee is drawing a salary of $72,650 in 2017, compared to the median male salary of $115,000. "The typical female staffer in Mr. Trump's White House earns 63.2 cents per $1 earned by a typical male staffer," Mr. Perry writes.

The 37 percent gender pay gap in Mr. Trump's White House is more than double the 17 percent gender pay gap nationally. According to the Pew Research center, the Trump White House gender gap is wider than the national gender pay gap stood in 1980.

Other news outlets have reported smaller Trump White House pay gaps. But those outlets calculated the pay gap using average, rather than median salaries. Averages are often skewed by outliers at the high and low ends of the income spectrum, making them less reliable for understanding what a "typical" worker makes.

"To be as statistically accurate as possible, almost all reports on pay differences by gender compare median wages, income, or salaries and not differences in average (mean) pay," the AEI's Mr. Perry writes.

Mr. Trump's gender pay gap is also up sharply from the 11 percent gender pay gap in the last year of the Obama White House, according to Mr. Perry's calculations. In Mr. Obama's first year, the gender pay gap was about 16 percent, according to an earlier Wonkblog analysis. It peaked at 18 percent in 2014.

Voter data request

Mr. Trump’s election integrity commission should be allowed to collect voter information, the administration argued, opposing a lawsuit challenging the panel’s work as infringing on privacy rights.

Since it only asked for publicly available data there is no risk, according to the filing. The Electronic Privacy Information Center sued July 3 to halt the information gathering, saying the commission overreached because it didn’t assess whether it might violate individuals’ privacy rights before going to the states and the District of Columbia.

“The public interest weighs against emergency injunctive relief,” the Justice Department said in a filing Wednesday in federal court in Washington. “The voter data that EPIC seeks to enjoin the Commission from collecting is already made publicly available by the states.”

The Washington-based group had asked U.S. District Judge Colleen Kollar-Kotelly to halt the information gathering until the Presidential Advisory Commission on Election Integrity meets its obligations, and to order destruction or return of any data already collected.

As of Wednesday, at least 40 secretaries of state had either rejected the request or said that state law did not permit them to share all of the requested data.

Landmark climate lawsuit

A trial date has finally been set for a groundbreaking climate-change lawsuit being brought against the federal government after multiple hurdles in the past year threatened to prevent it from moving forward. Last week, U.S. Magistrate Judge Thomas Coffin ordered that the trial begin Feb. 5, 2018.

The order also permitted three fossil fuel industry trade associations, who had voluntarily joined the case last year as intervening defendants, to withdraw at their own request. This means the final showdown will take place only between the original plaintiffs and defendants - 21 youths, between ages 9 and 21, and the federal government, which they claim has violated their constitutional right to a healthy climate system by supporting the production of fossil fuels and emission of greenhouse gases. While originally filed against the Obama administration, the Trump administration has now assumed the defense by default.

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