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Illustration: Rebecca Zisser / Axios

Ethanol is hot like it's the Iowa caucuses. It may be October in an off-cycle year, but President Trump is suddenly facing unusually intense pressure from Midwestern politicians and ethanol companies to keep his campaign promises on this issue.

Driving the news: Environmental Protection Agency administrator Scott Pruitt assured a group of corn-state lawmakers in an unusually detailed letter last week that he won't alter a federal mandate that requires refineries to blend biofuels — mostly corn ethanol — into the nation's gasoline supply. The EPA was considering changing certain parts of the mandate at the behest of oil-industry lobbying — but backed off under pressure from seven Midwestern Republican senators and ethanol companies.

Why it matters: Most casual observers know about corn ethanol in the context of politics: it's produced in Iowa, whose caucus kicks off America's presidential races. Trump vowed over and over to support the ethanol industry and its 12-year-old federal mandate.

The big picture: Trump has bigger problems on his plate with Congress, namely passing bills on higher priority issues like tax reform and health care. He needs GOP support everywhere he can get it. Ethanol battles flare up, but can be resolved comparatively easy given their parochial nature.

Midwestern GOP senators, led by Iowa's two Republican senators Joni Ernst and Chuck Grassley, threatened to hold up Trump's nominees unless they got Pruitt to back down on changes oil refineries were asking for. Committee votes on several top EPA nominees were delayed until this week because of the kerfuffle. Trump told Pruitt in a phone call late last week he needs to keep Grassley happy, according to multiple people familiar with the call.

"If he satisfies the refineries, then he's going to go back on the president's promise and hurt rural America," Grassley said in an interview last week. "Even though he's acting in good faith to thread the needle and go down the middle, it's pretty impossible to make that miracle come out."

What's next: The EPA faces a Nov. 30 deadline to issue quotas for how much biofuels refineries must blend into the gasoline supply. Iowa Gov. Kim Reynolds, a Republican, visits Washington this week and has meetings planned with Vice President Mike Pence and Pruitt. The oil refining industry will also be scrambling to respond to last week's machinations.

"In a moment of weakness I'll tell you what I'm really thinking," Chet Thompson, president and CEO of the American Fuel and Petrochemical Manufacturers, which represents oil refineries, said on Friday. "It's frankly been very embarrassing to watch the administration bend its knee to its will to king corn and these handful of senators."

Thompson said he anticipates allies of his industry aren't going to stay quiet for long. "This all happened quickly and I do think it took people a bit by surprise," Thompson said.

Fights du jour

Grassley and other Midwestern politicians have been worried over the last several months about three related but distinct possible changes to the mandate. Each of the revisions would benefit some refineries struggling to comply with the mandate. Ethanol backers say the changes are unnecessary and worry they would open the floodgates to broader rewrites, and possibly a wholesale repeal.

  1. The agency in late September said it was considering cutting the levels of biodiesel and other advanced biofuels the mandate requires.
  2. The EPA was also considering a request by refineries, including Valero Energy Corporation and Monroe Energy (owned by Delta Airlines), to allow exported biofuels to count toward domestic quotas.
  3. The agency has been considering a request by some refineries to broaden the category of companies that must show compliance with the law.

Pruitt assured the group of Midwestern senators in his letter late Thursday that he won't follow through on any of these, with final regulatory announcements expected by Nov. 30.

"This really represents the first major pushback by ethanol — it was well coordinated, strong and effective," said Bob McNally, president of the Rapidan Energy Group and former adviser to then-President George W. Bush. "The ethanol empire strikes back."

Why this all matters less to most drivers: The oil boom of the last decade, which has made complying with the law more difficult, has also lowered gasoline prices. This has made any ethanol impact on gas prices — up or down — almost unnoticeable, McNally said.

Go deeper

Acting Capitol Police chief: Phone logs show Jan. 6 National Guard approval was delayed

Pittman at a congressional tribute for fallen officer Brian Sicknick. Photo: Erin Schaff-Pool/Getty Images

Acting U.S. Capitol Police chief Yogananda Pittman testified on Thursday that cellphone records show former USCP chief Steven Sund requested National Guard support from the House sergeant-at-arms as early as 12:58pm on Jan. 6, but he did not receive approval until over an hour later.

Why it matters: Sund and former House sergeant-at-arms Paul Irving clashed at a Senate hearing on Tuesday over a dispute in the timeline for when Capitol Police requested the National Guard during the Capitol insurrection.

Manhattan prosecutors reportedly obtain millions of pages of Trump's tax records

Photo: Al Drago/Bloomberg via Getty Images

The Manhattan district attorney is now in possession of millions of pages of former President Trump's tax and financial records, CNN first reported, following a Supreme Court ruling that allowed prosecutors to enforce a subpoena after a lengthy legal battle.

Why it matters: Trump fought for years to keep his tax returns out of the public eye and away from prosecutors in New York, who are examining his business in a criminal investigation that was first sparked by hush-money payments made by Trump's former fixer Michael Cohen during the 2016 election.

Dion Rabouin, author of Markets
4 hours ago - Economy & Business

The digital dollar is now high priority for the Fed

Illustration: Aïda Amer/Axios

The U.S. is starting to get serious about a central-bank-backed digital currency, with recent comments from top officials laying out the strongest support yet.

Driving the news: On Tuesday Fed chair Jerome Powell told Congress that developing a digital dollar is a "high priority project for us," but added that there are "significant technical and policy questions."