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UPDATE 5-Trump open to biofuel policy reform, senators say after meeting

(Adds White House statement, paragraphs 8-9, detail about
capping credits, paragraph 13)

By Susan Cornwell

WASHINGTON, Dec 7 (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 favor 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)

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