Farm Groups Warn Trump: Refinery Exemption Plan Could Crush Corn Belt Economy

A coalition of U.S. farm and biofuel groups is urging President Trump to reject a White House-backed plan that would significantly expand small-refinery exemptions under the Renewable Fuel Standard, warning that flooding the market with waivers could weaken rural economies already stretched thin after a record 2025 harvest. The administration is expected to decide on the exemption expansion before the end of August, according to people familiar with the matter.

The dispute centers on the Renewable Fuel Standard, which requires refiners and fuel importers to blend specified amounts of renewable fuel into the nation's fuel supply or buy Renewable Identification Number credits, known as RINs, to demonstrate compliance. As reported by Reuters, the administration has considered roughly doubling refinery exemptions from about 950 million credits to as many as 1.8 billion credits. Small refineries producing 75,000 barrels per day or less can seek relief from their annual blending obligations if they demonstrate disproportionate economic hardship, a threshold defined under Section 211(o)(9) of the Clean Air Act, according to the Environmental Protection Agency.

The coalition pressing Trump to curb the plan includes the National Farmers Union, Growth Energy, and the Renewable Fuels Association, the same report notes. Those groups warned that exemptions above levels the EPA anticipated in its March rule setting 2026 and 2027 blending requirements would decimate the demand signal that rule was meant to create. They said the consequences of excess exemptions would be severe and immediate, potentially reducing demand for corn and soybean oil and even causing biofuel markets to collapse.

Ernst Calls Plan a Handout to Big Oil

Iowa Republican Senator Joni Ernst has become one of the most vocal critics of the potential expansion, according to the same account. She said oil companies would gain cash from the exemptions while farmers would lose out and consumers would get nothing in return.

“Handout to big oil falsely marketed as relief at the pump,” Ernst said, describing the plan in blunt terms. She argued that lowering gas prices does not come from taking American-made biofuel off the market, adding that the exemptions would crush demand for corn and soybeans just as Republicans work to retain control of Congress in November's midterm elections.

Credit Prices Already Sliding on Exemption Rumors

Markets have already reacted to the prospect of a larger waiver program. D6 conventional ethanol RIN prices fell to approximately $1.75 per credit in late August, dropping 34 cents in a single day, as traders anticipated the EPA issuing exemptions totaling up to 1.8 billion credits, according to Finimize. Traders were anticipating weaker demand for biofuels overall, and the refinery waiver expansion sent renewable fuel credit prices sharply lower even before any final decision was announced, the Reuters report notes. Granted exemptions remove exempted gallons from the market unless the obligation is later reallocated elsewhere.

Oil refiners and farmers disagree about whether consumers ultimately pay more when renewable fuel credit prices rise, a dispute at the heart of the broader RFS fight. The White House has said it aims to tame gasoline prices that rose during the war with Iran, per people familiar with its thinking, while deferring specific questions about the exemption plan to the EPA, which did not immediately respond to requests for comment.

Corn Belt's Stake in the Outcome

The agricultural sector's alarm reflects how dependent Midwestern farm economies have become on biofuel blending mandates. U.S. fuel ethanol production hit a record 16.49 billion gallons in 2025, pushing the national average ethanol blend rate in gasoline to a record 10.51 percent, according to the Renewable Fuels Association. Domestic ethanol biorefineries consumed roughly 5.6 billion bushels of corn from that record 17-billion-bushel harvest — about one-third of the nation's crop — adding an estimated $2.25 per bushel in value to farm commodities, per RFD-TV. That processing capacity is concentrated across Corn Belt states including Iowa, Nebraska, Illinois, Minnesota, and South Dakota.

History gives farm groups reason for concern. During President Trump's first administration, the EPA granted 31 and 35 small-refinery exemptions in 2018 and 2019 respectively, up from a baseline of seven continuous waivers, a jump biofuel trade groups estimated erased more than 4 billion gallons of renewable fuel demand, according to the National Farmers Union.

Legal Fights Shape What EPA Can Do

The legal landscape around these waivers has shifted repeatedly in recent years. In 2021, the Supreme Court ruled 6-3 in HollyFrontier Cheyenne Refining v. Renewable Fuels Association that small refineries may petition for hardship exemptions at any time, even if their exemption coverage had lapsed in prior years, with Justice Neil Gorsuch writing for the majority that the Clean Air Act imposes no continuous yearly exemption requirement.

More recently, the D.C. Circuit ruled in April that the EPA acted unlawfully when it denied a 2024 exemption based on a refinery exceeding the 75,000 barrel-per-day threshold in prior years, vacating that denial, according to Sidley Austin. Separately, consolidated litigation in REH Co., LLC v. EPA is now challenging the agency's 2025 decisions on roughly 191 small-refinery exemption petitions, with refiners arguing the EPA used an overly restrictive scoring matrix and biofuel groups arguing waivers were improperly granted, per Frantz Ward LLP.

Congress has also weighed in. Lawmakers introduced H.R. 1346 earlier this year, which would cap small-refinery exemption relief at 75 percent of blending obligations and permanently disqualify any refining company whose aggregate daily production exceeds 75,000 barrels per day in 2026 or later, according to Turner, Mason & Company. Whether that bill or the pending appellate rulings ultimately produce a stable framework for these waivers remains an open question.

The current fight follows White House moves earlier this year to ease gas rules more broadly. Hoodline reported in March that the administration directed the EPA to issue temporary emergency waivers allowing year-round E15 sales to counter pump prices driven by the Iran conflict, and in April covered congressional push for permanent E15 access tied to the same exemption debate. With the administration's decision expected before the end of the month, farm-state lawmakers and biofuel producers are watching closely to see whether the White House sides with refiners or with the rural economies that supply the corn and soybeans behind the nation's biofuel supply.