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U.S. EPA puts 2021 biofuel blending mandate proposal on hold indefinitely, sources say

FILE PHOTO: The Environmental Protection Agency headquarters is seen in Washington, D.C., U.S., January 19, 2020. REUTERS/Lucy Nicholson

NEW YORK (Reuters) - The U.S. Environmental Protection Agency has put on hold indefinitely a proposal for the amount of biofuels refiners must blend into their fuel next year, two sources familiar with the matter said.

Many anticipated the proposal would come out in late June or early July. The EPA was expected to lift biofuel blending obligations in 2021 to 20.17 billion gallons, from 20.09 billion this year, two sources previously told Reuters.

The EPA had no comment.

Under the Renewable Fuel Standard, refiners must blend billions of gallons of biofuels into the nation’s fuel pool, or buy credits, known as RINs, from those that do. Small refiners that prove the obligations cause them financial harm can apply for exemptions to the rules.

Producers of biofuels - made from plant feedstocks like corn - and farmers say the exemptions hurt demand for their products. The oil industry refutes that and says the mandates are too expensive.

The debate over blending obligations has taken on a new urgency after plummeting fuel demand because of the coronavirus pandemic and stay-at-home orders devastated profits for both oil refiners and ethanol producers.

In recent days, the battle between the oil and corn lobbies has centered in Congress. Senator Ted Cruz from Texas, an oil-producing state, and Senator Joni Ernst from Iowa, the top ethanol-producing state, have each said they will block the nomination of an EPA official over biofuel policy.

Cruz said he would not allow Doug Benevento’s nomination for EPA deputy administrator to move forward until the EPA brings stability to rising RIN costs. Ernst said she wanted the administration to make clear how it would handle refiners’ requests for retroactive exemptions to blending mandates.

Reporting by Stephanie Kelly; Editing by Chizu Nomiyama and David Gregorio

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