February 26, 2018 / 7:53 PM / 10 months ago

Farm groups urge Trump not to weaken U.S. biofuel policy

FILE PHOTO - U.S. President Donald Trump holds a discussion about school shootings with state governors from around the country at the White House in Washington, U.S. February 26, 2018. REUTERS/Jonathan Ernst

(Reuters) - U.S. farm groups urged President Donald Trump in a letter on Monday not to weaken the nation’s biofuels policy requiring corn-based ethanol to be blended into gasoline, calling it a critical engine of rural American jobs.

Trump is due to meet with senators and cabinet members on Tuesday to discuss potential tweaks to the law, called the Renewable Fuel Standard, that would help oil refiners who have increasingly complained the program costs them a fortune.

“As you meet this week to discuss these issues, we ask that you not entertain proposals that would undermine the purpose and intent of the RFS,” according to the letter, signed by the heads of six farm groups, including the National Corn Growers Association and the American Farm Bureau Federation.

“Any action that seeks to weaken the RFS for the benefit of a handful of refiners will, by extension, be borne on the backs of our farmers,” according to the letter, a copy of which was seen by Reuters.

The RFS requires oil refiners to cover the cost of blending increasing amounts of ethanol and other biofuels into the nation’s fuels each year. The policy was adopted during President George W. Bush’s administration to help farmers, cut petroleum imports and lower pollutant emissions.

Under the program, refiners must earn or purchase biofuel blending credits called RINs to prove that they are complying. As biofuels volume quotas have increased over the years, so have prices for the credits – meaning refiners that must buy them are facing rising costs.

Oil refiner Philadelphia Energy Solutions (PES), which employs more than a thousand people in Philadelphia, declared bankruptcy last month and blamed the regulation for its demise. Reuters reported other factors may also have played a role in the company’s bankruptcy, including the withdrawal of more than $590 million in dividend-style payments from the refinery by its investor owners.

Trump is due to discuss potential changes to the RFS on Tuesday with Republican Senators Ted Cruz of Texas, Chuck Grassley and Joni Ernst of corn state Iowa, along with Environmental Protection Agency Administrator Scott Pruitt, Agriculture Secretary Sonny Perdue, and potentially Energy Secretary Rick Perry, according to sources familiar with the matter.

While a handful of proposals will be considered, the sources said, past efforts to change the RFS have been stymied by strong opposition by corn lobbyists.

Writing by Richard Valdmanis; Editing by Cynthia Osterman

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