By Jarrett Renshaw and Siddharth Cavale
WASHINGTON/NEW YORK, June 4 (Reuters) - Supporters of a long-stalled push to expand nationwide sales of higher-ethanol E15 gasoline are pursuing an uphill strategy to get the measure through a divided Senate, the last big hurdle before the policy lands on President Donald Trump's desk for signing.
Their plan, according to interviews with industry representatives, is to attach the provision to a bigger, must-pass bill, while ensuring it includes enough concessions
to the refining industry to keep them from blocking it.
"This is a complicated, unwieldy process that is very unpredictable. Any change needed to gain support from one group risks losing support from another," said one industry executive, who requested anonymity to discuss private negotiations.
The approach underscores the long odds facing the proposal in a chamber where energy policy remains tightly linked to regional agriculture, refinery protections and intraparty divides, and where success is expected to hinge on layered negotiations rather than an up-or-down vote.
The House of Representatives narrowly passed the E15 measure in May, exposing regional and ideological divides likely to shape the Senate debate. Support came from Midwestern Republicans and farm-state Democrats who are keen to see more demand for corn-based ethanol, while fiscal conservatives, refinery-state lawmakers and some environmental groups opposed it over costs, fuel standards and emissions concerns.
SENATE'S 60-VOTE HURDLE LOOMS
Those divisions are likely to be even more consequential in the Senate, where supporters must assemble 60 votes to overcome a filibuster threshold, forcing a broader and more fragile bipartisan coalition and intensifying the scope of negotiations.
"Getting that 60% vote is a tall ask. There are a lot of Senate holdouts at the moment," said Drew Monroe, vice president at Capstone LLC, which advises refineries, fuel marketers and hedge fund clients.
If supporters fail to secure the votes, or if they accept any changes to the House bill language, the legislation would need to return to the House for approval, potentially unraveling the delicate coalition that has gotten it this far.
MULTI-TIERED STRATEGY
With no clear majority for standalone passage, biofuel advocates are working to attach the E15 provision to larger, unavoidable legislation, according to Monroe.
The Farm Bill is widely viewed as the most viable legislative vehicle, they said, even though it already faces significant partisan disagreements over key aspects including nutrition assistance and farm subsidies.
Another potential option is the appropriations bill, according to Geoff Cooper, the chief executive of the Renewable Fuels Association, which represents biofuel producers.
Behind the scenes, supporters are also working to win over Republican senators including John Barrasso and John Boozman, whose support is viewed as pivotal but contingent on protections for in-state refining interests that dislike biofuel blending obligations.
SMALL REFINERY EXEMPTIONS IN FOCUS
The senators are seeking assurances that small refineries can continue to be exempted from the nation's biofuels blending laws if those obligations impose financial hardship, the sources told Reuters.
Some senators from refining states oppose a provision in the current E15 proposal that would grant refining companies whose plants average 75,000 bpd of throughput or less certain exemptions from meeting U.S. biofuel blending mandates. They argue that this threshold would exclude the vast majority of the industry, which is made up of large integrated energy firms that own several individual refineries.
Representatives for Barrasso and Boozman did not respond to requests for comment.
Supporters of the E15 provision also anticipate Democratic demands on other policy issues that could turn the effort into a broader policy bargaining chip, according to aides familiar with the discussions. Some Democrats have begun quietly compiling potential negotiating demands, recognizing that a core bloc of Republicans is eager to secure the ethanol policy change.
Senators from both farm and refinery states are negotiating potential adjustments to the SRE language to find a middle ground, according to the RFA's Cooper.
Options under consideration include adjusting the 75,000 barrel-per-day eligibility threshold for exemptions and revisiting the degree to which larger refiners should be required to blend more to make up for exempted volumes, he said.
Cooper said if efforts to get E15 passed through the Senate fail this session, supporters will try to squeeze it into future legislation like the 2027 appropriations bill.
"That would be the fallback if we’re not able to get this included in something sooner," Cooper said. "But we certainly want to have this done before the end of September."
(Reporting by Jarrett Renshaw in Washington and Siddharth Cavale in New York; Editing by Matthew Lewis)
