UPDATE 2-Trump wades deeper into biofuel debate with second meeting

(Adds comments from Sen. Grassley and group of Democrats)

NEW YORK, March 1 (Reuters) - U.S. President Donald Trump on Thursday will gather rivals from the oil and corn industries for the second time this week as the administration seeks elusive common ground on reforms to the nation's controversial biofuels law.

The meetings come amid rising concern in the White House over the current state of the U.S. Renewable Fuel Standard (RFS), a law requiring refiners to mix biofuels such as corn-based ethanol into their fuel that has increasingly divided two of Trump's most important constituencies. Philadelphia Energy Solutions (PES), a refining company in the key electoral state of Pennsylvania, last month blamed the regulation for its bankruptcy.

Republican Senators Chuck Grassley and Joni Ernst of corn-producing state Iowa, along with Republican Senators Ted Cruz and Pat Toomey of refining states Texas and Pennsylvania, will be in attendance on Thursday, according to two sources familiar with the planning of the event.

A number of companies also will be represented. Executives from refiners Valero Energy Corp, Delta Air Lines' Monroe Energy, and PBF Energy Inc will be there along with a union representative from the bankrupt PES, the sources said. The biofuel industry will be represented by officials from major producers POET and Green Plains Inc , along with others, the sources said.

Trump will be joined by U.S. Environmental Protection Agency head Scott Pruitt and Interior Secretary Ryan Zinke, who will be sitting in for U.S. Agriculture Secretary Sonny Perdue as he attends events in California, they said.

Cruz's office and POET confirmed attendance to Reuters. Representatives for the other parties, including the White House, either did not respond or declined to comment.

A meeting earlier in the week, which was smaller, ended with Grassley and Ernst calling the White House efforts to help refiners cope with the regulation a threat to farmers and vowing to fight proposed changes.

A refining industry executive close to the discussions said he did not expect a breakthrough at Thursday's talks either.

"This must have been what it was like to be a Texan at the Alamo looking for a back door out," he said.


Under the RFS, refiners must cover the costs of blending increasing volumes of biofuels such as ethanol into the nation's gasoline and diesel each year. To prove compliance with the program, they have to acquire credits called RINs, either by earning them through blending or by buying them.

The price of RINs has surged in recent years, meaning refiners without blending facilities have faced higher costs.

At Tuesday's meeting, Grassley and Ernst were asked to consider accepting a proposed ceiling on the price of RINs in exchange for a concession to the ethanol that would allow broader sales of higher-ethanol gasoline blends.

Ahead of Thursday's meeting, Grassley's office released a January letter to the EPA seeking information and reminding the agency of its previous comments on RFS. Among other things, Grassley pointed out the EPA's previous opinion that the credits costs are captured in refining margins and are not harmful to refiners.

The EPA never responded to the Grassley letter, the senator said.

A group of 10 Senate Democrats led by Minnesota's Amy Klobuchar also issued comments ahead of the meeting, calling on Trump to reject changes sought by refiners and protect the RFS. " The RFS is an effective driver of economic development. It has strengthened agriculture markets and created hundreds of thousands of jobs in the new energy economy, and driven economic growth in rural communities across the country, the senators wrote.

Perdue on Wednesday tried to calm fears among farmers that Trump is trying to reform the RFS in way that hurts the industry.

"I can tell you Trump stands with corn farmers, biofuel farmers and the RFS," Perdue told an audience at the Commodity Classic in Anaheim, California, according to a recording heard by Reuters. "I stand with him and with you." (Reporting by Jarrett Renshaw Editing by Bill Trott and Steve Orlofsky)