Faced with a rural rebellion, the Trump administration announced a plan Friday that promises to restore demand for billions of gallons of renewable fuel lost through granting waivers to oil refiners.

Under the plan, the U.S. Environmental Protection Agency says that it will begin accounting for demand for corn-based ethanol and soybean-based biodiesel in 2020 that was lost when the administration granted small refiners exemptions from a federal mandate.

That mandate, called the Renewable Fuel Standard, outlines how many gallons of ethanol and biodiesel refiners must blend into the nation's fuel supply each year.

The current corn ethanol requirement is 15 billion gallons. But since taking office, the Trump administration has granted 85 waivers to oil refineries, freeing them from 4 billion gallons of that requirement.

Gov. Kim Reynolds praised President Trump, saying renewable fuels is "critical to a healthy ag economy in Iowa and across the nation."

For subscribers:Iowa farmers welcome Trump decision, but question if it can reopen closed ethanol plants

"By protecting the RFS, President Trump demonstrated his commitment to rural America and the American farmer," Reynolds said in a statement.

The oil industry warned the plan, which must must go through a formal rule-making process, likely would see substantial legal challenges.

"Let’s not sugar coat it," said LeAnn Johnson, who represents the Small Refiners Coalition. "Ethanol mandates are being raised because a handful of corn-state senators have extorted it from the president using election-year politics."

The waivers have been a major blow to farmers at a time when they are already experiencing reduced demand for agricultural products because of trade wars with China, Mexico, Canada and other countries.

In a statement issued Friday, the EPA said that under its plan, it will seek comments on actions "to ensure that more than 15 billion gallons of conventional ethanol be blended into the nation's fuel supply." But it did not specify how many gallons will be restored beginning next year.

The renewable fuels industry hoped EPA would require at least 1 billion gallons be replaced annually. But a senior EPA official said Thursday that before the agency decides, it will gather public comment on how it should account for small refinery exemptions.

The waivers have killed demand for 1.4 billion bushels of corn used for ethanol and 825 million bushels of soybeans that provide the oil for biodiesel, industry leaders say.

The administration outlined the proposal Thursday night in calls with lawmakers and industry leaders.

U.S. Sen. Chuck Grassley, an Iowa Republican, said in a statement that President Trump's plan "will fix EPA's exemption process and help farmers and biofuels producers going forward.

"President Trump has made clear that he is an ally of corn and soybean farmers as well as ethanol and biodiesel producers," he said. "This announcement is great news for Iowa, the Midwest and the entire country."

Monte Shaw, the Iowa Renewable Fuels Association's executive director, said the administration plans to use a three-year rolling average of exemptions to calculate how much demand is lost through waivers.

Shaw said the group will work to "ensure that a 15-billion-gallon RFS will actually be a 15-billion-gallon RFS.

"If that is accomplished, the integrity of the RFS will have been restored," he said in a statement.

Iowa Republicans have lobbied fiercely for an ethanol fix. In September, Grassley, Reynolds and U.S. Sen. Joni Ernst met with Trump and other administration leaders, urging them to restore the gallons the administration waived.

Ernst said Thursday night the renewable fuels mandate "is essential to the livelihoods of folks across the state."

"Our message was clear: Uphold the RFS," she said in a statement. "The president is following through on his commitment."

Iowa Democrats also have pushed the administration to restore waived gallons.

“The president is selling farmers a bill of goods, coming out here saying he's going to increase (renewable fuel demand), and out the back door, shut off our ability" to sell ethanol, U.S. Rep. Cindy Axne said last month.

On Thursday, Axne and U.S. Sen. Amy Klobuchar, a Democratic presidential candidate from Minnesota, sent a letter to U.S. Agriculture Secretary Sonny Perdue requesting that his agency assess the economic damage from waivers.

Trump also has met with congressional leaders representing oil-rich states such as Texas and Louisiana, raising questions about which side he would favor.

Political and renewable fuel leaders have said the Trump administration has failed to follow the law that requires the oil industry to use at least 15 billion gallons of corn-based ethanol a year.

Grassley said last month he wanted the plan in writing. The EPA "can waive all the small refinery waivers" it wants, he said. "Just make sure we get 15 billion gallons."

The renewable fuels industry has told the EPA that reallocating too few gallons is as bad as failing to restore them at all.

Nearly 30 U.S. ethanol and biodiesel plants have closed either temporarily or permanently because of the exemptions. Four are in Iowa.

The plan unveiled Friday also calls for removing potential barriers for gasoline with 15% ethanol, called E15, and expanding infrastructure such as retail pumps that provides greater access to higher biofuel blends.

It also calls for greater transparency in the market for credits used by refiners to show compliance with the federal mandate.

The action outlined in the plan will become a supplemental document to the 2020 biofuels requirement. It's required to be filed by Nov. 30.

The move could help Trump rebuild support among Iowa farmers, many of whom were angry over the administration's waivers.

Ethanol production consumes about 40% of the nation's corn supply.

Trump tweeted in August that "a giant" ethanol package could be coming soon.

"The Farmers are going to be so happy when they see what we are doing for Ethanol," the president tweeted.

Some Iowa farmers have said they felt betrayed by the president, who visited the state in June to announce his administration's approval of year-round use of E15, which had been curtailed in summer because of air quality concerns.

Farmers and ethanol leaders warned Trump that the small refinery exemptions could reverse the E15 gains.

The EPA can grant exemptions from the Renewable Fuel Standard to small, financially distressed oil companies. But biofuel advocates say the agency has been awarding them to giants such as ExxonMobil and Chevron Corp.

This week, Kelly Nieuwenhuis, president of the Siouxland Energy Cooperative board, said cutting demand for renewable fuels hurts more than Iowa.

"This biofuels industry is a huge part of our economy," Nieuwenhuis said, adding that Minnesota, Illinois, Missouri and other farm states are hurt, too.

"If the (Renewable Fuel Standard) isn't abided by ... the trickle-down effects will be major," he said.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457.

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