Trump open to biofuel policy reform, senators say after meeting

By Susan Cornwell

WASHINGTON (Reuters) - U.S. President Donald Trump is open to reforming the country's biofuels policy if it can be done in a way that protects jobs in both the refining and agriculture industries, senators said on Thursday after a meeting with Trump on the issue.

Nine lawmakers had requested the meeting to argue that the Renewable Fuel Standard, or RFS, a law requiring refiners to blend increasing amounts of biofuels like corn-based ethanol into the fuel supply every year, was threatening to put refineries in their districts out of business.

The Trump administration had ruled in favour of Big Corn and against the refining industry in a series of decisions this year, with senators on both sides using parliamentary procedures like holds on administrative appointments to punish rivals.

Senator Ted Cruz of Texas, who led the lawmaker delegation, said Trump was open to a "win-win" solution.

"The group as a whole agreed with the president to reconvene next week and to expand the group and work together to find a (solution) that is a win for blue-collar workers, a win for jobs, but also a win for farmers at the same time," he told Fox News after the meeting.

Republican Senators Bill Cassidy of Louisiana and James Lankford of Oklahoma also said Trump expressed a desire to help refiners in a way that protected the interests of farmers, but that more discussions were needed.

"It was just a recognition that this is a more complicated problem and we're going to have to get everybody together from all sides," Lankford told reporters.

The White House said the meeting was productive and that Trump remained committed to the RFS, farmers and energy workers.

"He understands there are differing views on this issue, and the Administration looks forward to working with all the stakeholders toward a mutually agreeable path forward," White House spokesman Hogan Gidley said in a statement.

REFINERS SEEK CHANGES

The RFS was introduced more than a decade ago by President George W. Bush as a way to boost U.S. agriculture, slash energy imports and cut emissions, and has since fostered a market for ethanol amounting to 15 billion gallons a year.

Refiners oppose the RFS because they say it costs them hundreds of millions of dollars a year in blending and regulatory expenses while propping up demand for rival fuels. Refiners that do not have the facilities to blend biofuels must purchase credits, called RINs, from those that do and hand them into the EPA once a year.

A refining lobbyist briefed on Thursday's meeting said one possible solution discussed was capping the RINs - an idea that is opposed by the Renewable Fuels Association, the largest biofuel trade group.

The refining industry has requested tweaks to the policy in the past that would cut the annual volume targets for biofuels, allow ethanol exports to be counted against those targets, or shift the blending burden to supply terminals.

While the leadership of the EPA, which administers the RFS, had considered some of the changes, it ultimately rejected them under pressure from Midwestern lawmakers, and slightly increased biofuels volumes targets for 2018.

The meeting with Trump could set the stage for negotiations over legislation, but any measure would likely require cooperation from representatives of the corn belt. Republican Senator Chuck Grassley of Iowa said this week he was not invited to the meeting and called it "a waste of time."

Biofuels industry representatives did not attend the meeting.

Cruz has said he would block Iowa Agriculture Secretary Bill Northey's nomination to a key post at the U.S. Department of Agriculture until he gets a meeting about biofuels that includes all sides on the issue.

(Additional reporting by Jarrett Renshaw in New York and Steve Holland in Washington; Editing by Jeffrey Benkoe and Peter Cooney)