Refinery-state senators look to block Trump from shifting renewable fuel obligation

FILE PHOTO: Ethanol biodiesel fuel is shown being pumped into a vehicle at a gas station in Nevada, Iowa

By Jarrett Renshaw

(Reuters) -Oil refinery-state lawmakers led by Senator Mike Lee, a Republican from Utah, will introduce legislation on Tuesday to block President Donald Trump from shifting renewable fuel blending obligations from small refineries to larger ones, according to draft legislation seen by Reuters.

The bill reflects the politically-divisive nature of the U.S. biofuels policy, which pits the country’s oil industry against the farm interests that underpin U.S. production of biofuels like corn-based ethanol.

At the heart of the current fight is whether larger refineries should be forced to make up for the biofuel blending requirements that small refineries avoid through federal exemptions. The Environmental Protection Agency has submitted a proposal on the issue for White House review, and its contents have not yet been made public.

“Punishing American energy producers who comply with the EPA’s made-up rules isn’t just unfair, it’s bad for everyday consumers. Americans will pay more at the pump and Utah’s refineries will suffer,” Lee said in a statement.

The biofuel fight adds another headache for Trump as he tries to keep Republicans united ahead of a possible government shutdown. Funding for federal agencies runs out at the end of the month, and the fight over small refinery exemptions is dividing GOP lawmakers just when Trump needs their support to pass his budget and avoid a shutdown.

The EPA recently cleared a backlog of more than 170 small refinery exemption requests dating back to 2016 — a sweeping move that is now forcing the White House to review how billions of gallons of biofuel blending obligations should be handled going forward.

The EPA offered the White House a preferred option to deal with the exempted gallons, as well as other options that will also be weighed during the review, Reuters reported. A decision is expected in the coming weeks.

The bill, titled the Protect Consumers from Reallocation Costs Act of 2025, would amend the Clean Air Act to prohibit the EPA from reallocating renewable fuel obligations. Republican Senators John Barrasso, of Wyoming, and Bill Cassidy, of Louisiana, are also sponsors.

(Reporting By Jarrett RenshawEditing by Marguerita Choy)