US farm groups say uncertainty about how President Donald Trump's administration will resolve a backlog of requests to exempt small refineries from biofuel blending mandates could upend federal plans to dramatically increase renewables in the US fuel supply.
Under the Renewable Fuel Standard, the Environmental Protection Agency (EPA) requires oil refiners and fuel importers to blend biofuels into road fuels or buy Renewable Identification Number (RIN) credits from those who do, with oil refiners that process 75,000 b/d or less eligible to request full exemptions. There are nearly 200 requests for these waivers outstanding covering 10 compliance years that the Trump administration could struggle to resolve.
While EPA last month proposed record biofuel blending volumes for 2026 and 2027, that long backlog has tempered biofuel advocates' enthusiasm about the pending program updates. "The potential to undermine those volumes is massive," ethanol trade group Growth Energy senior vice president Chris Bliley said Friday on a Bloomberg Intelligence webinar.
EPA in Trump's first term handed out exemptions like "Halloween candy", National Oilseed Processors Association chief executive Devin Mogler said. The new Trump administration is unlikely to pursue a similarly aggressive approach, but "I do think that they recognize they have to grant some of these" exemptions, he said.
EPA under former president Joe Biden rejected waiver requests en masse, but multiple federal courts faulted the administration's logic and struck them down. Any administration taking a similarly blunt approach rather than considering the nuances of individual applications would invite similar legal scrutiny.
The threat to biofuel groups is not just whether EPA grants waivers but whether the agency takes steps to compensate newly-exempt refiners that might have already spent tens of millions of dollars blending biofuels or buying credits. EPA in recent rules has estimated future exemptions when calculating the percentage of biofuels obligated refiners must blend but has not done so with retroactive waivers, making the agency's policy around past-year waivers especially important.
A group of small refiners met with EPA in May to ask not just for broad relief from past-year mandates but also for the agency to issue active RINs for any refiners that already complied, according to documents obtained by Argus through a Freedom of Information Act request.
If exemptions are granted and surrendered RINs can be used again, Trump's ambitious targets for biofuel usage would effectively become "meaningless", said Clean Fuels Alliance America regulatory affairs director Kate Shenk. Growth Energy's Bliley said the potential for these "carryover RINs" to flood the market is his biggest concern.
Panelists were optimistic that EPA would provide clarity soon. The agency wants to finalize new blend mandates before November and has said it plans to communicate its approach to exemptions beforehand. Still, uncertainty over the next few months could temper recently bullish sentiment among traders about future biofuel demand.
Soybean and soybean oil prices, recently elevated, could "come back down because everyone's waiting for this answer", said FGS Global partner and former Archer Daniels Midland lobbyist Anthony Reed.
