Two of the Republican Party’s biggest corporate allies — agribusiness and the fossil fuel industry — are waging an epic, if obscure, battle in the halls of Congress. And Big Oil, through its proxies in the Senate, has taken a hostage: Acting Environmental Protection Agency Administrator Andrew Wheeler.

After the Senate Environment and Public Works Committee advanced Wheeler’s nomination for permanent EPA chief on a party-line vote, a group of five senators issued a veiled threat to the nominee: Promise to rewrite regulations on renewable fuels that are more favorable to oil refineries, or forget about being confirmed.

It’s a fight without a decent resolution for any human being needing to breathe clean air or inhabit a sustainable planet. The prodigious amount of energy used in producing corn-based biofuels is not much cleaner than the energy from burning oil-heavy gasoline. The fight is more over who will get to earn more money in the final, dying days of dirty energy dominance. It’s also a preview of the kind of battles that the advocates of a Green New Deal will have as they take on entrenched incumbent industries who have been spending heavily, for years, to generate government favors they are loathe to see disappear.

The regulation at issue is called the renewable fuel standard, or RFS, which requires all gasoline sold in America to contain a minimum volume of renewable sources — which are dominated by corn-based ethanol. Big Ag wants the standard to be higher; Big Oil wants to be free from the corn burden.

The oil-backed senators are mimicking a tactic used previously by their colleagues representing corn-producing states, who successfully made a similar threat to a lower-level EPA official in 2017, in exchange for guarantees that refiners would be required to blend more ethanol into gasoline.

The biggest player of all in this debate is Trump confidant and corporate raider Carl Icahn, who remains under investigation for using his role as a White House deregulatory czar to try to tip the scales in favor of oil refiners, which would have benefited a refinery he owns to the tune of $200 million per year.

The behind-the-scenes fight is symptomatic of a growing trend in an increasingly corporate-controlled government. In the Second Gilded Age, senators have become little more than traffic cops, mediating the grievances of competing sets of business giants. And Wheeler, himself a former lobbyist for all sorts of energy companies, has gotten caught in the middle of the latest showdown.

The situation is made stranger by the fact that the hostage-takers — the oil-state senators seeking guarantees from Wheeler — have been winning under the Trump administration. Refiners have seen compliance costs for biofuel blending drop fourfold since 2017 and have benefited from a significant ramp-up in discretionary waivers from the EPA, including for Icahn’s refinery.

“These senators, and Icahn, are saying that right now, what you’re doing is fine, but we need a long-term solution to rid us of this obligation,” said Tyson Slocum, director of Public Citizen’s Energy Program and an adviser to the Commodity Futures Trading Commission. “What’s very interesting here is the continuing fight within the core Republican base, between Big Ag and Big Oil.”

One of the more arcane elements of the current rule is that oil refiners are responsible for making sure the rule is followed — not the gasoline wholesalers (or “blenders”). In regulatory-speak, this is known as the “point of obligation.”

If a refiner does not blend enough ethanol, they can purchase renewable fuel credits, known as renewable identification numbers, or RINs, from those who have over-blended, to comply with their obligation. It’s sort of a cap-and-trade system for biofuels, ensuring that the required amount is blended into the nation’s fuel supply.

Each side wants something from the RFS. Corn producers want the EPA to mandate higher levels of biofuel blending. In a midterm visit to Iowa, President Donald Trump approved a year-round “E15” ethanol mandate, requiring 15 percent of the product to be placed into gasoline. Under current law, ethanol blends are reduced in the summer, over concerns that E15 produces more smog (which corn producers, of course, contest). That regulation has yet to be finalized, and corn producers have lobbied heavily to complete the task.

Refinery interests simply want somebody else to do the blending, freeing them from either having to undergo the costly process of blending themselves, or purchase RINs to satisfy the regulation. If the point of obligation were shifted from refiners to gasoline wholesalers, it could save some refiners a fortune — particularly CVR Energy, the refinery company of which Icahn is the majority owner. CVR does not have the infrastructure to blend ethanol, and in 2016 it spent $205.9 million on RINs.

When Icahn received the formal title of White House special adviser on regulatory reform, in 2017 —without having to divest from any of his stocks — he got right to work. The Trump administration started floating that it would change the point of obligation. And an ethanol lobbying group suddenly struck a deal with Icahn: It would support a change in the point of obligation, in exchange for year-round E15. It even wrote the executive order with the policy update.

Amusingly, the Renewable Fuels Association, which reached the deal with Icahn, includes the renewable division of Valero Energy, the oil giant which, like Icahn, owns refineries that cannot blend ethanol.

This all eventually blew up in Icahn’s face. Senate Democrats demanded an investigation into whether Icahn violated conflict of interest laws. Under criticism, Icahn resigned from his White House adviser position in August 2017. By November, the U.S. attorney in the Southern District of New York had subpoenaed Icahn for “information pertaining to … Mr. Icahn’s activities relating to the Renewable Fuels Standard and Mr. Icahn’s role as an advisor to the President.”

This would all be terrible for Icahn if he hadn’t profited handsomely from his meddling. The trading price for RINs has dropped from 90 cents after Trump’s election in November 2016 to 20.5 cents today. One reason for that is that the EPA has been rapidly handing out “financial hardship waivers” to refiners to exempt them from the point of obligation requirements, including to Icahn’s CVR Energy in April 2018.

We don’t know precisely how many waivers the EPA has granted, because the agency initially kept that information secret. But Reuters has reported that 29 refineries across the country received them in 2018, including such financially strapped companies as Exxon Mobil. That’s up from just seven waivers in 2015, and it translates into sharply lower demand for RINs, causing the price to drop. (Icahn was also shorting the market for RINs, profiting off the plummeting prices.)

The hardship waivers have led to reduced ethanol blending overall — 2.25 billion fewer gallons annually, according to one report. The EPA says its hands are tied by court rulings to give hardship waivers to “small refiners” who cannot afford blending or RINs. Corn producers are not buying it, arguing that such actions throw the biofuels market into chaos. “There’s no good reason multibillion-dollar oil refining giants should be able to skirt the law,” Sen. Chuck Grassley, R-Iowa, told Reuters in December.

These developments, however, have made it a good time to be a refiner, though it’s a temporary solution, Slocum said. “[Refiners] accurately understand that these low RIN prices are not a given going forward.”

With Wheeler seeking confirmation as permanent EPA director, both Big Oil and King Corn saw a point of leverage. Wheeler’s confirmation hearing was suffused with talk of this relatively minor renewable fuels issue.

Corn-state senators, like Mike Rounds, R-S.D., demanded clarity on finalizing the year-round E15 rule — Wheeler committed to finalizing the rule by summer — while hitting the EPA on hardship waivers. “I don’t think the intent of Congress was that [hardship waiver granting] reduces the total amount of ethanol that is actually being marketed,” Rounds said. Republican Sens. Joni Ernst of Iowa and Kevin Cramer of North Dakota also pushed Wheeler on ethanol.

Meanwhile, oil-state senators pushed back. “Corn is not the only stakeholder in this program,” bellowed Sen. James Inhofe, R-Okla., despairing of real-world costs borne by refiners. “There is growing concern the administration is only listening to one side of the argument and that those arguments are not based on actual real-world conditions.”

The near-term issue is that the EPA must regularly reset how many gallons of biofuels the market is required to produce, based on market conditions. Wheeler said in his testimony that the agency would propose a reset sometime in February.

After the hearing, the oil lobby escalated the fight. Five Republican senators — Texas’s Ted Cruz, Louisiana’s Bill Cassidy and John Kennedy, Pennsylvania’s Pat Toomey, and Utah’s Mike Lee (Utah has a couple major refineries within its borders) — wrote a letter to Wheeler on February 11. “As we continue to evaluate your nomination to be Administrator,” the Senators wrote, “it is important that we have a better understanding of your views and approach to administering the RFS (renewable fuel standard). … [W]ithout an adequate proposal to meaningfully lower the regulatory burden of Renewable Identification Numbers (RINs), we will have serious concerns with your nomination.”

There was no need to read between the lines. The oil-state senators want Wheeler to lower that reset to reduce costs on refiners, or they will vote no on his confirmation. They also want him to continue issuing hardship waivers to refiners, without reallocating the waived amounts to nonexempted refiners. And they asked for an unspecified “reform” of the RIN market to prevent manipulation (which represented some rare interest from Republicans in market manipulation of any kind).