(Reuters) – The Trump administration plans to appeal a federal court decision that called into question a program exempting small oil refineries from the nation’s biofuel blending laws, three sources familiar with the matter said on Thursday.
The move comes after a major push from senators representing oil states, who said the program was essential for keeping refineries – and the jobs they provide – afloat. The administration had previously aimed to respond to the court decision by scaling back the waiver program.
White House economic adviser Larry Kudlow told Senator Chuck Grassley of Iowa that the administration had decided to appeal the ruling, two of the sources said. The third source said only that the administration had reached the decision to appeal.
A White House spokesman declined to comment.
A spokeswoman for the Environmental Protection Agency, which administers the nation’s biofuel policy, did not immediately respond to a request for comment.
The plan marks the latest twist in the U.S. biofuel program, which has driven a wedge between the oil industry and Big Corn – two crucial political constituencies for President Donald Trump as he seeks re-election in November.
The 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 2017.
In January, the 10th U.S. Circuit Court of Appeals cast doubt on the program, saying the EPA overstepped its authority by granting those waivers because the RFS requires them to take the form of “extensions” after the year 2010, and none of the refineries had received them in the previous year.
The bulk of waivers granted to refineries by the EPA in recent years do not meet that standard.
Farm and biofuel industry groups sent a statement on Thursday urging Trump not to appeal the decision.
“We cannot stress enough how important this decision is to the future of the rural economy and to President Trump’s relationship with leaders and voters across the heartland,” the group said.
American Petroleum Institute spokesman Scott Lauermann called for a solution that repeals or reforms the RFS, but did not provide comment on Thursday’s news.
Oil-state senators have said that if the court’s opinion were applied nationally, only two refineries would qualify for waivers.
The EPA is expected to make an announcement on the program by early next week.
Reporting by Stephanie Kelly in New York; Editing by Richard Valdmanis and Peter Cooney