A group of Republican US lawmakers has returned to an earlier idea for reforming biofuel policy that would prevent larger companies from winning exemptions from biofuel blend mandates, but with a new carve-out for refineries at risk of closing.
The US House of Representatives task force has been debating the thorny issue for months, hoping to arrive at a final bill that would limit so-called small-refinery exemptions and expand access to a cheaper gasoline blend that contains more ethanol. The council's latest plan, according to five people familiar with the plan and bill text seen by Argus, would restrict exemption eligibility to companies with no more than 75,000 b/d of total refining capacity starting in 2028.
The bill closely tracks a January proposal negotiated in large part by the American Petroleum Institute and ethanol advocates. That plan was removed from legislation to fund the government earlier this year amid backlash from some oil refiners. The House task force has more recently floated other ideas, including capping the annual impact of exemptions but letting various companies apply, but those plans failed to earn support from refiners and oil-friendly lawmakers.
The latest proposal, like earlier drafts, would allow year-round sales of gasoline blends containing 15pc ethanol (E15), which farm groups have pitched as a way to help corn growers and drivers alike. Regulators for years have taken emergency action to waive summertime E15 limits that prevent its sale in much of the US, but permanent access requires legislation.
The latest bill comes after President Donald Trump's administration last month set record-high biofuel quotas despite concerns from refiners that the mandates would spill into already-rising pump prices. Oil companies comply with the program by blending biofuels themselves or buying often-costly Renewable Identification Number (RIN) credits from those that do.
Refineries that process no more than 75,000 b/d of crude currently can apply for the annual hardship exemptions, which farm groups and biofuel refiners say hurts demand for their products. But under the latest proposal, only companies with 75,000 b/d or less of collective refining capacity across all their facilities could qualify for relief starting in 2028. Those refiners would win automatic 75pc exemptions from biofuel quotas.
That would reduce the pain of the mandates on smaller refiners like Ergon but would cut off larger companies that own smaller units, including oil majors like Chevron and mid-sized refiners like HF Sinclair and Par Pacific.
The proposal could soon be sent to the House Rules Committee in hopes that lawmakers agree to add it as an amendment to the Farm Bill, a major agricultural policy package historically adopted every five years, people close to the debate said.
'At-risk' refineries carve-out
The one notable addition to prior proposals is a special carve-out for "at-risk" small refineries, an effort from lawmakers to assuage oil company concerns that rising biofuel mandates threaten US refining capacity. Small refineries, including those that are part of larger companies, could request these special exemptions if they can prove that they are at an "imminent risk of closure" or that they are converting into a refinery that makes biofuels instead.
But that carve-out would be capped each year, starting at 150mn RINs in 2028, limiting the potential relief if multiple facilities warn they could soon idle. The Trump administration exempted nearly 1bn RINs from blend requirements for the 2024 compliance year.
Another holdover from earlier drafts is a provision compensating some unnamed small refinery owners for past compliance by returning to them special RINs that do not expire. A framework shared with Argus earlier this year, tied to an earlier E15 proposal, estimated regulators could give those companies 363mn special RINs under the provision.
The proposed reforms would make the program more predictable, after different presidential administrations have whipsawed from rejecting exemption petitions en masse to granting them generously. But lawmakers' past ideas have been received coolly by farm and oil interests alike, and there is no guarantee the latest plan will be added to larger legislation that could win passage in the closely divided Congress. Some Republicans in the US Senate, including agriculture committee chair John Boozman, support E15 but have been wary of limiting small-refinery exemptions.
