By Jarrett Renshaw
Aug 27 (Reuters) – President Donald Trump and top U.S. officials discussed on Wednesday a plan to shield the Farm Belt from an expected expansion of waivers of biofuel laws, which his administration is considering as a way to lower gasoline prices during the Iran war, two people familiar with the meeting said.
The administration is considering a plan that would increase biofuel quotas for the 2027 calendar year by roughly 500 million gallons to offset any damage caused by the soon-to-be-announced exemptions for smaller refineries, two separate sources told Reuters. The administration has not made a final decision on the additions, the sources said.
The debate revives one of the most contentious energy disputes of Trump’s first term, when broad refinery exemptions drew fierce opposition from Midwestern farmers and ethanol producers while benefiting and winning support from oil refiners.
The issue has resurfaced at a time when the administration has sought to bring down fuel costs during the war with Iran while avoiding a backlash from rural voters ahead of November midterm elections.
The White House is backing a plan to significantly expand the divisive small refinery exemption program, according to the sources, provoking backlash from the U.S. Farm Belt.
They said the administration wants to tame surging gasoline prices to help Trump’s fellow Republicans retain control of Congress in November’s midterm elections.
The prospect of a large expansion of refinery waivers had traders anticipating weaker demand for biofuels, sending prices for renewable fuel credits, known as RINs, sharply lower.
Oil refiners and farmers have long argued over whether consumers ultimately pay more when renewable fuel credit prices rise.
A coalition of farm and biofuel groups urged Trump on Thursday to reject any waiver expansion, warning that a surge in exemptions for small refineries would hurt rural America by undercutting demand for crops and renewable fuels.
In a letter to Trump, the groups, including the Renewable Fuels Association, Growth Energy and the National Farmers Union, said the administration should keep exemptions for the 2025 compliance year in line with the volumes the Environmental Protection Agency assumed when it set the nation’s biofuel blending requirements for 2026 and 2027.
The administration is considering roughly doubling the size of the exemptions, from 990 million credits to as many as 1.8 billion, sources have told Reuters. A decision is expected before the end of August.
The groups warned that granting exemptions well above the levels anticipated by the EPA would “decimate the demand signal” created by the agency’s March rule setting the 2026 and 2027 renewable volume obligations, or RVOs.
“The consequences would be severe and immediate,” the groups said, warning that excess exemptions could cause biofuel markets to collapse and reduce demand for corn and soybean oil.
A White House official said the Trump administration “will make a decision that is best for consumers, farmers, and energy supply chains.” The EPA did not immediately respond to requests for comment.
The Renewable Fuel Standard requires refiners and fuel importers to blend specified amounts of renewable fuel, such as ethanol and biodiesel, into the U.S. fuel supply or buy RINs to demonstrate compliance.
Small refinery exemptions allow some plants to avoid some or all of those obligations if they can demonstrate economic hardship. When the administration grants waivers, the exempted fuel volumes are effectively removed from the market unless the obligation is later reallocated.
Trump and agency heads discussed a plan that would restore the lost gallons from the exemptions in future biofuel quotas, which are set annually. It was unclear exactly how they planned to do so.
Senator Joni Ernst, a Republican from Iowa, has criticized the potential expansion of the exemptions, telling Reuters in a statement that it is “a handout to Big Oil falsely marketed as relief at the pump.”
“You don’t lower gas prices by taking American-made biofuel off the market, and these exemptions will crush demand for corn and soybeans while padding the pockets of refiners already making record profits. Farmers lose, consumers get nothing, and oil companies rake in the cash,” Ernst said.
(Reporting by Jarrett Renshaw; Editing by Timothy Gardner, David Gregorio and Deepa Babington)
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