March 29, 2018 / 3:04 PM / a month ago

EXCLUSIVE-Trump advisers urge him to leave biofuel reforms to Congress -sources

NEW YORK, March 29 (Reuters) - President Donald Trump’s advisers have urged him to let Congress take the lead in efforts to lower the cost of the nation’s biofuels policy for refining companies, and to use executive action only if lawmakers fail to make progress, according to three sources familiar with the discussions.

The recommendation underscores the difficulties the White House has faced in attempting to tweak the Renewable Fuel Standard, a decade-old law intended to help farmers and reduce fuel imports that has for years divided the corn and oil industries. The RFS requires refiners to cover the price of blending biofuels like corn-based ethanol into the fuel supply, creating a lucrative market for growers but a headache for refiners who say it costs them a fortune.

Trump’s White House has hosted a series of meetings in recent months between the key political constituencies aimed at finding executive- or administrative-level changes acceptable to both sides - including potentially capping the price of blending credits that refiners must acquire to prove compliance.

But the efforts exposed gaping divisions between the corn and oil lobbies, along with disagreements between integrated refiners like BP and ExxonMobil and merchant refiners like PBF Energy, over solutions.

That means any action by the White House will upset at least one faction of Trump’s base, according to the sources, who asked not to be named as they were discussing a confidential matter.

Two of the sources said that Trump had agreed to heed his advisers’ recommendation to leave the issue to Congress, while leaving open the option to act if Congress balks. The third source said it was not yet clear what Trump would do.

White House spokeswoman Kelly Love did not respond to a request for comment. Officials at the Environmental Protection Agency - which administers the RFS - and the U.S. Department of Agriculture also did not respond to requests for comment.

EPA head Scott Pruitt and Agricultural Secretary Sonny Perdue have been compiling a list of executive and administrative level options for Trump to consider to tweak the RFS, the sources said. The list would likely include caps on compliance credits and lifting summertime restrictions on the use of higher-ethanol blends of gasoline.

Shifting the issue to lawmakers would put the spotlight on Texas Republican Senator John Cornyn, who has been leading legislative efforts to reform the RFS. Cornyn’s office says it has been trying to win support from the corn and oil industries for a comprehensive reform bill that is still being drafted.

Underscoring the stakes, merchant refiner Philadelphia Energy Solutions filed bankruptcy in January, blaming the cost of compliance for their financial woes.

Reuters reported that other factors may also have played a role in the bankruptcy, including the withdrawal of more than $590 million in dividend-style payments from the company by its investor owners. (Reporting By Jarrett Renshaw; Editing by Richard Valdmanis and Bernadette Baum)

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