Trump EPA Waives Refiners From Biofuel-Blending Mandate
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The Trump administration granted some oil refineries exemptions from mandates requiring them to blend renewable fuels into gasoline and diesel, while delaying a critical decision over how much other oil companies will be forced to pick up the burden.
The decision by the Environmental Protection Agency applies to 38 small refineries that had requested waivers from annual blending quotas, according to a statement Aug. 22.
The EPA said it had granted full exemptions to 63 refinery petitions for biofuel-blending waivers while issuing 77 partial exemptions, with actions dating to 2016. At the same time, it denied 28 petitions for relief and cast seven aside as “ineligible.”
The EPA’s ruling on small refinery exemptions — the first under the new Trump administration — will affect costs for oil companies in complying with the U.S. biofuel-blending mandate. Biofuel producers say it also threatens to curb demand for their products — as well as the corn and soybean crops used to make them — at a time when farmers have seen trade disputes limit their export markets.
The issue presents a major test for President Donald Trump and two loyal segments of his political base: oil and agriculture. While some farming and fossil-fuel interest had increasingly aligned on biofuel policy, that relationship has been tested by the EPA’s ambitious June proposal that oil refiners blend record amounts of biofuels into gasoline and diesel in 2026 and 2027.
The agency is forestalling the thorniest decisions about the exemptions, delaying a verdict on whether and how to force bigger refineries to compensate for the waivers given to smaller facilities for the 2023-24 period. That so-called reallocation plan will determine the potential impact on biofuel demand undergirded by the federal quotas.
The EPA said it would propose redistributing quotas for 2023 and later years but it did not plan to reallocate volumes from 2016 to 2022. The proposal will be advanced for interagency review “in the near future,” the EPA said, with the goal of seeking “to balance” the goals of the nation’s biofuel mandate in supporting the production of renewable fuels while also “taking into account economic impacts, following the law and ensuring opportunity for stakeholder comment.”
The EPA argued that biofuel demand wouldn’t be affected by its decision on older refinery waivers covering quotas through 2022, since credits used to prove compliance with the targets generally remain valid for two years.
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Results were mixed for many refineries. For instance, a Delek US Holdings Inc. unit won full grants for a Tyler, Texas, facility covering 2021, 2022 and 2024, but only a partial grant for 2023. Delek shares were up 5% as of 12:17 p.m. in New York, paring an earlier gain of 13%.
Wynnewood Refining Co., a subsidiary of CVR Energy Inc., won full grants for its facility in Newcastle, Wyo., for 2021, 2022 and 2023, but was denied for 2024. The company’s Wynnewood, Okla., facility secured a partial grant for 2022, 2023 and 2024. CVR rose 5.6%, trimming an earlier jump of 8.4%.
How to address small refinery exemptions is a question that has challenged past administrations too. One reason the Trump EPA is contending with a backlog of refinery exemption requests is because former President Joe Biden delayed decisions on the contentious issue.
It’s not clear if the Aug. 22 ruling will resolve the legal uncertainty that has been hanging over the program for years. Refineries that were denied relief are likely to challenge those rejections in federal court. And any oil companies asked to take on their biofuel-blending burden may fight that decision, too.
The U.S. has been setting biofuel-blending quotas for more than a decade under a 2005 federal law known as the Renewable Fuel Standard. But small refineries can be granted waivers if they demonstrate “disproportionate economic hardship.”
Under the program, each gallon of ethanol or biodiesel mixed into transportation fuels generates credits — so-called renewable identification numbers, or RINs — that oil refiners use to meet their federal blending obligations. Those that don’t generate enough credits on their own — sometimes because they don’t have enough blending infrastructure — can buy RINs to fulfill the annual targets.
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Biofuel producers argue that the approval of too many exemptions without forcing bigger refiners to pick up the slack could reduce overall demand for their product and push down the price of these compliance credits in the next several months.
Diesel and ethanol producers have long argued that reallocation is essential to preserve the integrity of the nation’s biofuel program. But large refiners have warned that any move to force them to absorb waived biofuel requirements could strain their own ability to comply, push RINs higher and boost gasoline prices.
