President Donald Trump will allow year-round sales of renewable fuel with blends of 15 percent ethanol as part of an emerging deal to make changes to the federal ethanol mandate.
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Republican senators and the White House announced the deal Tuesday after a closed-door meeting, the latest in a series of White House sessions on ethanol.
The Environmental Protection Agency currently bans the 15-percent blend, called E15, during the summer because of concerns that it contributes to smog on hot days. Gasoline typically contains 10 percent ethanol. Farm-state lawmakers have pushed for greater sales of the higher ethanol blend to boost demand for the corn-based fuel.
Iowa Sen. Chuck Grassley called the agreement good news for farmers and drivers alike, saying it would increase ethanol production and consumer choice at the pump.
Texas Sen. Ted Cruz said the deal will save the jobs of thousands of blue-collar workers at refineries in Texas, Pennsylvania and other states.
"Terrific final decision from @POTUS meeting," Cruz tweeted. "This is a WIN-WIN for everyone."
The decision allowing E15 to be sold year-round will provide "relief to refiners" and "protect our hardworking farmers and refinery workers," White House spokeswoman Lindsay Walters said. "The president is satisfied with the attention and care that all parties devoted to this issue."
Trump met Tuesday with Grassley, Cruz, Iowa Sen. Joni Ernst and Pennsylvania Sen. Pat Toomey, as well as EPA Administrator Scott Pruitt and Agriculture Secretary Sonny Perdue.
The EPA oversees the decade-old Renewable Fuel Standard, commonly known as the ethanol mandate, which sets out how much corn-based ethanol and other renewable fuels refiners must blend into gasoline. The program's intent was to address global warming, reduce dependence on foreign oil and bolster the rural economy by requiring a steady increase in renewable fuels over time.
The mandate has not worked as intended, and production levels of renewable fuels, mostly ethanol, routinely fail to reach minimum thresholds set in law.
Environmental groups criticized the deal, saying it would worsen air pollution during summer months.
"Waiving clean-air standards at the behest of one favored industry would not only set a precedent for bad policy, it could cost lives," a coalition of environmental groups said in a statement.
Ernst said allowing year-round sale of E15 "will drive up domestic ethanol production and consumption" while helping to "maintain already low prices" for fuel credits that oil refiners must buy if they can't blend ethanol into their fuels.
She and Grassley also said they were encouraged that the Trump administration will take a closer look at "hardship" waivers that have been granted to small refineries, a practice they say has hurt biofuels and undermined the RFS.
The EPA has reportedly granted a waiver to a refinery owned by billionaire Carl Icahn, a former Trump adviser, as well as other small refineries. The agency has not disclosed which refineries received the waivers, saying it did not want to reveal private business information.
Cruz said the president also agreed to consider his proposal to include fuel credits for ethanol that is produced domestically and exported. The proposal is meant to make it easier for the industry to meet annual sales volumes required under the renewable-fuel mandate.
"This is good for farmers, refiners and America," Cruz said in a statement.
But the Renewable Fuels Association, an industry group, said allowing exports to qualify for RFS compliance could dramatically reduce domestic demand and result in retaliatory trade barriers from countries that import U.S. ethanol.
The group's president, Bob Dinneen, called the export idea a "disgrace" and said ethanol producers and farmers would bear the brunt of any retaliatory tariffs.
Associated Press writer Ken Thomas contributed to this story.