A Biofuel Policy Fight Might Just Sink Pruitt

A Biofuel Policy Fight Might Just Sink Pruitt
A deluge of political scandals hasn't sunk EPA Administrator Scott Pruitt. But a wonky debate over the nation's biofuel policy just might.

(Bloomberg) -- A deluge of political scandals hasn’t sunk EPA Administrator Scott Pruitt. But a wonky debate over the nation’s biofuel policy just might.

Republican Senator Chuck Grassley bluntly warned last month he would call for Pruitt’s resignation if the Environmental Protection Agency continued exempting small oil refineries from a mandate to use renewable fuels such as ethanol made from corn, a staple crop in his home state of Iowa.

When Pruitt moved to do what Grassley wanted -- with a plan that would force larger refineries to make up for the waivers by using more biofuel -- he sparked an intense, angry uproar among oil executives and allied lawmakers who telephoned top Trump administration officials to complain. Their not-so-subtle message: Pruitt’s job was on the line.

Pruitt’s long-term tenure at the helm of the EPA was already in doubt, as lawmakers, the White House and federal investigators look into allegations of ethical lapses, abuses of power and questionable spending.

Pruitt faces scrutiny over his costly travel, the $43,000 installation of a soundproof phone booth in his office and his penchant for enlisting aides to run personal errands (including contacting the chief executive officer of Chik-fil-A Inc. to pursue a franchise for Pruitt’s wife and trying to buy a second-hand mattress from the Trump International Hotel in Washington).

President Donald Trump has generally stood by Pruitt, praising his efforts to roll back Obama administration environmental regulations while acknowledging he is " not happy" with Pruitt’s personal lapses. Yet even with the president’s public support, the allegations intrude, providing rhetorical fodder to critics of EPA regulatory shifts and leverage to lawmakers pushing particular policy outcomes.

Warning From Cruz

During the biofuel policy skirmish, at least one aide to Senator Ted Cruz made an explicit threat, warning administration officials that if the EPA didn’t back off the plan, the Texas Republican would seek Pruitt’s resignation.

Other top congressional Republicans -- including House Majority Whip Steve Scalise of Louisiana, Senator Jim Inhofe of Oklahoma, Pruitt’s home state, and Senator Pat Toomey of Pennsylvania -- also protested the proposal. The lawmakers all have significant refining interests in their states, including facilities owned by HollyFrontier Corp., Valero Energy Corp. and Exxon Mobil Corp.

The interactions were described by people familiar with the encounters who sought anonymity to describe the private conversations. Representatives for Cruz did not immediately respond to emails seeking comment.

"That issue brought together the entire spectrum of the oil refining industry," said Frank Macchiarola, a group director at the American Petroleum Institute. "The refining industry was unified."

The backlash worked. After the outcry, Pruitt agreed to abandon the plan as part of a proposed biofuel regulation -- at least for now.

The episode underscored how the cloud of allegations and ethical questions hovering over Pruitt are affecting his day-to-day work on intricate environmental policy, limiting his room to maneuver on sensitive issues. That includes the Renewable Fuel Standard, a 13-year-old mandate that pits oil refining and agricultural interests against each other in a zero-sum contest over gasoline market share.

Phone Booth and Mattress

"Forget the secret phone booth, Chik-fil-A and the mattress, the story is the RFS," said Tristan Berne, an analyst with the independent research firm Capital Alpha Partners LLC. "He managed to put himself in a sort of tug-of-war -- and he’s the rope."

The Renewable Fuel Standard has long been politically treacherous terrain; now, it’s even more fraught.


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