Politics & Policy

How Cruz Crushed Ethanol

Cruz campaigns in Johnston, Iowa, in December. (Scott Olson/Getty)

‘There’s an Iowa way of doing this, and the rest of the candidates did it the Iowa way,” Majda Sarkic, a spokeswoman for the pro-ethanol group America’s Renewable Future, told National Review days before the Iowa caucuses.

All of the candidates except Ted Cruz, that is. In a highly unusual move for a man who sought, and ultimately won, the support of Iowa caucus-goers, Cruz didn’t court, kowtow to, or bow down before King Corn. From the time they arrived in the Senate eyeing a presidential run three years ago, he and his advisers have known that his opposition to the Renewable Fuel Standard (RFS), which requires gasoline to contain a minimum level of ethanol, would cause him headaches in Iowa. But as early as the state’s agricultural summit last May, he signaled that he would play to win the state on his own terms.

How did he pull it off? Yes, the Republican party has grown less tolerant of crony capitalism and government subsidies in the Obama era. And, yes, only a fraction of Republican voters in Iowa turn out to caucus — a generally quite conservative fraction at that. So Cruz knew that there was a limit to how much harm he could do himself by writing the issue off.

“If ethanol was your issue — if you’re essentially saying it is more important to consider my taxpayer-funded gravy train than it is to limit the size and scope of government, create economic growth, nominate a candidate who has moral character, who might inspire the country . . . if that’s what you were voting on, you were never going to vote for Ted Cruz,” says Steve Deace, the Iowa-based talk-radio host who endorsed Cruz early on.

RELATED: Refusing to Kiss King Corn’s Ring in Iowa

But if Cruz wrote off the ethanol lobby, and he did — “We asked him to fill out our questionnaire, we invited him multiple times to visit plants, we tried working with his campaign, and really they did not communicate back,” says Eric Branstad, the president of America’s Renewable Future and the son of long-time Iowa governor Terry Branstad —  he also managed to change the subject and promise Iowans something no other candidate would. With the help of a few key allies and a host of research, he began to tell the state’s voters about another arbitrary government regulation that was holding the ethanol industry back: the Environmental Protection Agency’s (EPA) so-called “blend wall.” And he swore he’d do away with it if elected.

It was Iowa representative Steve King and an ethanol-industry executive, Dave Vander Griend, who brought the blend wall to his attention. Vander Griend, the CEO of Kansas-based ICM, which engineers and constructs ethanol plants, had requested meetings last fall with several Republican candidates. Cruz and Ben Carson were the only ones who responded to him. Cruz, he says, “didn’t just smile and give lip service. He wanted to understand what the issue was with the RFS,” and he assigned staff members to research the matter.

Cruz knew that there was a limit to how much harm he could do himself by writing the issue off.

In his meeting with Cruz, Vander Griend ticked off all of the EPA regulations that were hampering the ethanol industry. “I went through a whole list of a half a dozen things that were limiting the ability of our industry to grow,” he says. Chief among them was the fact that the RFS serves as both a floor and a ceiling for corn-ethanol production, and that without it, more ethanol would enter the marketplace. He says that Cruz, who had already introduced legislation to phase out the RFS, understood that “in order for the RFS ever to be sunsetted, these limits have to be removed.”

On the campaign trail in Iowa, Vander Griend began popping up alongside Cruz, and his concerns became part of the senator’s stump speeches.

EDITORIAL: Principle over Politics in Iowa

Last Saturday, just two days before voters would caucus, Cruz arrived at Darrell’s Place in the town of Hamlin, population 252. Darrell’s Place sits in the middle of the state’s famous cornfields, a 90-minute drive from the state capital of Des Moines. The family-owned restaurant is as Iowan a place as one will ever see: It serves an award-winning tenderloin sandwich, and you can get a cheese on rye — Darrell’s favorite — for 75 cents.

#share#Cruz drew a crowd of about 200, or about 80 percent of the town. When he turned to take questions from the crowd, a 60-something gentleman clad in a t-shirt and suspenders raised his hand. Referring to Cruz as “Mr. President,” he asked him for his views on the RFS. “Let me give you my broader view on energy,” Cruz said. “As the gentleman noted, I don’t think Washington should be picking winners and losers, and there should be no mandates or subsidies for anybody.” A few audience members offered tepid applause, and Cruz pressed on, pleading guilty to having put forth legislation that would do away with the RFS, before pivoting to the blend wall.

RELATED: Ted Cruz’s Long Road to Iowa Victory

“There is a far more important government regulation for ethanol than the RFS. And that is what’s called the EPA’s blend wall. . . . And as president, I intend to tear down the EPA’s blend wall.”

“Hot damn!” a gentleman shouted from the back of the room.

“You’re way ahead of us,” Cruz responded. “Now, what does that mean?” What followed was an explanation that owed much to Vander Griend, who used many of the same details when interviewed by NR:

That means it would be legal to sell mid-level ethanol blends, things like E-25 and E-30. That in turn would allow automakers to sell cars with engines optimized for E25 and E30. Now, these are not new engines — they sell these cars now in Europe and South America. They don’t sell them in America because it’s illegal to buy the fuels to power those cars. 

Now, how big a consequence is allowing mid-level ethanol blends for the ethanol industry? Earlier today on our bus tour, somebody who joined us was an individual named Dave Vander Griend. Dave has built more than half of the ethanol plants in the state of Iowa. Dave makes his entire living, his entire livelihood, from building ethanol plants. There is nobody in the state of Iowa that knows more about ethanol than Dave Vander Griend. Dave has estimated that lifting the EPA blend wall could result in ethanol increasing its market share by 60 percent.

The crowd, standing in the middle of miles of cornfields, erupted in cheers as Cruz concluded that “by lifting the blend wall, by getting rid of an arbitrary government regulation, we can enable ethanol to expand its market share dramatically with no government mandate, no subsidy, no dependence on Washington.”

#related#In 2000, John McCain chose not to campaign throughout Iowa because he believed his opposition to the RFS would do him in with voters. The last two Republican caucus winners before Cruz, Rick Santorum and Mike Huckabee, both supported the mandate. The industry did its best to maintain that tradition this time around. America’s Renewable Future dispatched an RV to trail Cruz around the state. And last month, Governor Branstad, who has historically stayed neutral in the caucuses, attacked Cruz for opposing the RFS, saying that, “I think it would be a big mistake for Iowans to support him.”

Donald Trump used the issue to mount a last-minute attack on Cruz, too. “Your ethanol business, if Ted Cruz gets in, is going to be wiped out within six months to a year. It’s gonna be gone,” Trump told a Waterloo, Iowa, crowd on Monday morning.

But one of the ethanol industry’s leading executives had already helped Cruz explain why that wasn’t the case, perhaps redefining “the Iowa way” for future Republican presidential contenders in the process.

— Eliana Johnson is Washington editor of National Review. Brendan Bordelon is a political reporter at National Review.

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