(Reuters) - The Trump administration has decided to drastically scale back the U.S. Environmental Protection Agency’s program exempting small oil refineries from the country’s biofuel regulations after a court case cast doubt on the legitimacy of the program, according to a person familiar with the matter.
The agency, meanwhile, is discussing the possibility of instituting a cap or other restrictions on the price of biofuel blending credits, called RINs, that refiners must acquire to show compliance with the biofuel regulations, two other sources said. Such a move would serve as compensation to the oil industry if the lucrative waiver program went away.
The sources said the possibility of price controls was discussed in an EPA meeting earlier this week with officials from the White House, the Department of Energy, and the Department of Agriculture, but it was unclear if the administration would ultimately adopt the idea.
An EPA spokeswoman did not immediately respond to a request for comment.
The potential changes mark the latest twist in the controversial U.S. biofuel program, which has driven a wedge between the oil industry and Big Corn – two crucial political constituencies for Republican President Donald Trump as he seeks reelection.
The U.S. Renewable Fuel Standard requires refineries to blend billions of gallons of biofuels such as ethanol into the country’s fuel pool, or buy credits from those that do, something that has created a valuable market for corn but which refiners say is too costly.
Since the adoption of the RFS, the EPA has granted waivers to small refiners exempting them from their obligations if they prove compliance would cause them financial distress. The Trump administration has roughly quadrupled the number of exemptions since it took office.
In January, the U.S. Court of Appeals for the 10th Circuit cast doubt on the program, saying the EPA overstepped its authority to grant several waivers in the states where it has jurisdiction because the refineries had not received exemptions the previous year.
The court said the RFS wording requires that any exemption granted to a small refinery after 2010 must take the form of an extension.