The headquarters of the United States Environmental Protection Agency (EPA) in Washington, D.C., U.S., February 18, 2025. REUTERS/Kent Nishimura/File Photo

By Jarrett Renshaw

WASHINGTON (Reuters) -The U.S. Environmental Protection Agency on Friday began clearing a backlog of requests from small oil refineries for exemptions from the nation's biofuel laws, which refiners had for years argued caused them financial hardship.

The agency said it had granted 63 of the requests and denied 28, with 77 receiving partial approvals.

The scores of approvals mark a win for some small U.S. refiners who said they were hurt financially by the federal mandate to blend biofuels like ethanol into the country's fuel supply. But the long delay may also make the approvals a bitter pill for others, whose requests have now become so old that a waiver is worthless.

The approved exemptions amounted to about 5.34 billion RINS - the tradable compliance credits generated by blending biofuels into the nation's fuel pool - accrued across multiple years, according to data posted to the EPA's website.

But because RINS only have a two-year lifespan, only 1.39 billion can still be used for compliance and retain any value, according to the EPA announcement.

Under the Renewable Fuel Standard, U.S. refiners must blend billions of gallons of biofuels such as ethanol into the nation's fuel or buy RINS generated by those that do. Small refiners can ask for waivers if they can prove the obligation would cause them financial hardship.

The backlog in requests accumulated over years of political and legal wrangling spanning multiple administrations.

Prior to Friday's decisions, there were 204 pending applications dating back to 2016. There are now just 13 undecided, according to the EPA data.

The EPA told lawmakers on Friday that it plans to issue a supplemental rule for the 2026 and 2027 compliance years, according to a source familiar with the discussion.

Reuters reported on Thursday that the supplemental rule would address whether larger refiners need to make up for exempted gallons in a reallocation process.

The supplemental rule is expected late next week, sources familiar with the planning told Reuters. The EPA declined to comment.

(Reporting By Jarrett Renshaw and Richard V; Editing by David Gregorio, Susan Heavey, Jan Harvey and Edmund Klamann)