Sources say that the US will rule on biofuel waivers but large oil refiners might need to wait.

Two sources familiar with Trump's plans say that the administration will rule as soon as Friday on a backlog of requests for relief from U.S. Biofuel Laws from small oil refiners. However, it will defer a decision as to whether or not larger refiners are required to compensate by increasing their own biofuel blend.

Sources said that the U.S. Environmental Protection Agency will announce Friday its decision on 195 small refinery exemption applications pending since 2016. According to one source briefed about the decisions, the rulings won't be a big win for small refiners. They will also include partial denials.

Source: The administration will also issue a supplemental regulation as soon as next week, seeking public comments on whether large refiners are required to make up for exempted gallons through a process called reallocation.

The way the administration handles exemption requests and reallocation issues could have a significant impact on the oil and agriculture industries. It will affect the prices of commodities, from soybeans and corn to renewable diesel and gasoline.

In the past, numerous exemptions without reallocation of renewable blending credits have caused prices to fall for corn-based biofuel and soybean-based biofuel.

Requests for comments from the White House and EPA were not answered.

The U.S. Renewable Fuel Standard (RFS) requires refiners either to blend biofuels such as ethanol into their fuel pool, or buy tradable credits known as RINs from refiners that do. If they can demonstrate financial hardship, small refiners may be able to petition the EPA for an exemption.

There is a growing backlog of requests at the EPA, which dates back to years. This is due to political indecision as well as legal wrangling between multiple administrations. The agriculture and oil industries both want a resolution.

By granting exemptions, without requiring other refiners make up the difference, the credit supply increases and the price of their products falls.

The EPA has been urged by biofuel and farm groups to limit exemptions. They also want other refiners forced to compensate for the gallons that were exempted.

Oil industry is a booming business.

Strongly opposed

Reallocation is not supported by the government, which argues that it would create an unfair playing field.

The EPA announced earlier this year it would require larger refiners make up for future exempted gallons. However, it was silent about how it would handle exempt gallons resulting from the dozens backlogged requests.

Sources said that the supplemental rule would include a variety of options to see how the market might react. (Reporting by Jarrett Renshaw, Editing by Chizu Gregorio and David Gregorio).

(source: Reuters)