By Jarrett Renshaw
NEW YORK (Reuters) - U.S. President Donald Trump will review a list of potential changes to the nation's renewable fuel laws at a meeting with members of his cabinet on Monday, two sources said, as biofuels groups warned against any action that would weaken ethanol demand.
Trump in recent months has waded deep into the controversial issue of reforming the U.S. Renewable Fuel Standard, a 2005 law requiring refiners to blend increasing amounts of biofuels into their fuel pool each year, or buy credits from those who do.
Merchant refiners like Valero and PBF Energy pulled Trump into the debate, arguing that complying with the regulation has grown too costly and will kill off the types of blue-collar jobs Trump had promised to defend.
But Trump's efforts to reform the law have been met by fierce opposition from corn farmers and ethanol producers who are quick to remind the president that he also vowed to preserve the RFS during corn-belt campaign stops.
Monday's meeting will include Environmental Protection Agency chief Scott Pruitt and Agricultural Secretary Sonny Perdue. Pruitt heads into the meeting under pressure from lawmakers to resign over allegations he broke ethics rules by renting a room in a Washington condo owned by the wife of an energy industry lobbyist.
Pruitt and Perdue have spent the last several weeks compiling a list of options for Trump to consider on the RFS, ranging from more aggressive tactics like capping the prices of blending credits, called RINs, to lifting seasonal restrictions on high-ethanol gasoline sales.
"A waiver or cap on RIN prices would fundamentally undermine the Renewable Fuel Standard and deal a massive blow to rural America," Iowa Republican Senator Chuck Grassley said in a statement on Friday.
In recent weeks, advisers have urged Trump to let lawmakers tackle the issue, and only use the threat of executive action to coerce them to make it a priority.
Iowa farmers and biofuel groups sent a letter to Grassley and fellow Iowa Republican Senator Joni Ernst on Friday, urging them to reach out to Trump to express their anger.
"Any Administration action to waive or cap RINs will be viewed as nothing less than a declaration of war on rural America and a complete abdication of his repeated promises to protect the RFS,” said the letter, orchestrated by the Iowa Renewable Fuels Association.
Biofuel groups are also frustrated with the administration over reports that the EPA was exempting small refineries from the program, including three owned by one of the nation's largest refining companies, Andeavor.
(Reporting by Jarrett Renshaw; editing by Tom Brown)