The U.S. ethanol industry is facing a major setback as the American Petroleum Institute withdraws support for legislation to allow year-round sales of higher blends of the corn-based biofuel throughout the country. 

The powerful oil lobby says it no longer backs a bipartisan bill spearheaded by Republican Sen. Deb Fischer of Nebraska that would allow for retail sales of higher blends of ethanol with gasoline, known as E15. The API's prior support had been heralded as a breakthrough in relations between Big Oil and the agriculture sector, which have spent most of the last couple decades in fierce lobbying battles over fuel policy. 

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In a letter to congressional leaders on Tuesday, API cited a list of recent developments that it sees as detrimental to petroleum refiners, including the new tax law heralded by President Donald Trump that bars U.S. fuelmakers from tapping a potentially lucrative tax credit if they use non-North American materials to make renewable fuel. The group also opposes how EPA recently handled E15 waivers in Midwestern states. 

A "more holistic approach" to E15 is needed that takes into account challenges faced by the market for liquid fuels, API said. 

In a statement to Agri-Pulse, Fischer's office said, “API made it clear in their letter that they still support year-round availability of E-15, which is also supported by the Trump administration.”

The API letter was reported earlier by Reuters. 

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