By Jarrett Renshaw and Siddharth Cavale
WASHINGTON/NEW YORK, Aug 26 (Reuters) - The White House has asked federal environmental regulators to allow the nation’s small oil refineries to blend less biofuels into their gasoline and diesel than initially projected as part of the administration’s efforts to ease pump prices, according to two administration officials.
Such an outcome would please the oil industry, but trigger a backlash in the Midwest where agricultural interests have fought ferociously
for strong biofuel mandates to support the country's farmers.
Under federal law, refiners are required to blend tens of billions of gallons of biofuels like corn-based ethanol into the country’s fuel pool or buy renewable blending credits, called RINs, from those that do. Each gallon of biofuel produced generates RINs. But smaller plants can apply for waivers if they demonstrate the requirements put them in financial hardship.
The U.S. Environmental Protection Agency (EPA) is reviewing 34 such requests and has projected approving enough waivers to cover around a billion RINs of biofuel blending obligations this year. A decision, the EPA said on Friday, is expected by the end of this month.
The White House has asked the EPA in recent meetings, however, to waive a higher volume than that, the two sources told Reuters, asking not to be named. The push is being driven by senior White House adviser Stephen Miller, members of the administration's Energy Dominance Council and other policy advisers concerned about high energy costs, the sources said.
Several oil and biofuel industry representatives briefed by the administration on the matter told Reuters they expected the EPA to ultimately approve anywhere between 1.2 and 1.8 billion RINs in Small Refinery Exemptions.
That would cut meaningfully into overall biofuel blending mandates for the year, which the EPA had set at a record 26.81 billion RINs for 2026.
The EPA told Reuters that it is not being directed by the White House on which waiver requests should be approved or denied, and added that no decisions have yet been made.
Representatives of Stephen Miller did not respond to a request for comment. The White House, which encompasses the Energy Dominance Council, deferred comments to the EPA.
The issue revives one of the most contentious battles from the first Trump administration when the EPA significantly expanded the exemption program to assuage the refining industry, but angered the Farm Belt in the meantime.
POLITICAL CALCULATION
The push from top Trump administration officials to expand the program reflects rising concerns about high gasoline prices since the U.S. conflict with Iran interrupted Middle East oil exports through the Strait of Hormuz. Those pump prices are a potential liability for Trump's fellow Republicans leading into the November midterm elections.
Refiners argue that high biofuel blending obligations raise the price of gasoline by imposing higher operating costs. But biofuel advocates reject that argument and say ethanol lowers fuel prices by pumping up supply volumes with a relatively cheap additive.
The Trump administration has already made several other moves to reduce energy costs, including releasing emergency oil stockpiles and waiving certain anti-smog regulations for gasoline during summer months, but fuel prices remain stubbornly above $4 a gallon.
The question of expanded biofuel waivers has already raised the hackles of agricultural backers in the Farm Belt eager to get ahead of the EPA decision.
On Tuesday, the attorneys general of Iowa, South Dakota and Missouri sent a letter to EPA Administrator Lee Zeldin urging him to reject broad refinery waiver requests, arguing that recent glowing refining industry earnings reports undermine claims that refiners are suffering economic hardship.
"The refineries want to have their cake and eat it, too," the letter said.
Senator Chuck Grassley of Iowa said on X on Monday: "I sure hope the Trump admin won’t give small refinery exemptions at a near record level. Would only help petroleum refiners making record profits."
The prospect of large-scale exemptions, meanwhile, has already hit RIN prices, which plunged to their lowest level in more than four months on Monday.
The American Soybean Association said high exemptions could eliminate around 500 million gallons of biodiesel and renewable diesel demand and cost soybean farmers about $1 billion in lost revenue.
(Reporting by Siddharth Cavale in New York and Jarrett Renshaw in Washington; Editing by Alistair Bell)
