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Small U.S. refiners vow to sue EPA if it fails to issue 2018 waiver rulings in 60 days

WASHINGTON, July 17 (Reuters) - Small U.S. refineries plan to sue Environmental Protection Agency (EPA) in 60 days, if the agency by then fails to issue its decisions on 2018 petitions for waivers from the nation's biofuel laws, refiners said in a letter on Wednesday.

The waiver program, which exempts small refiners in financial turmoil from their obligation to blend ethanol into gasoline, have been a source of contention between the rivaling corn and oil industries since U.S. President Donald Trump ordered a review of it after hearing complaints from farmers.

Since Trump took office, the EPA has more than quadrupled the number of waivers it has granted to refiners, saving the oil industry hundreds of millions of dollars, but enraging another key constituency - corn growers - who claim the move threatens ethanol demand. Refiners dismiss the argument.

The small refinery coalition represented by LeAnn Johnson in its letter said the EPA is required to act on a petition within 90 days after receipt and that it also failed to issue decisions on the outstanding 40 petitions for 2018 by March 31, 2019, which it said was the compliance deadline.

"This letter ... provides notice of our intent to sue in federal court 60 days after delivery of this letter ... The small refinery owners, however, urge the administrator to issue the 2018 decisions as soon as possible, so it will be unnecessary to file suit," it said.

Industry sources have told Reuters in recent weeks that 2018 SRE decisions were nearly finalized before Trump intervened and demanded a review. Since then, EPA, along with Department of Agriculture have been scrambling to come up with a solution.

The Department of Energy provided the EPA its scoring results for the 40 outstanding 2018 applications in late April, sources told Reuters.

The Renewable Fuel Standard, a more than decade-old regulation that is aimed at helping farmers and reducing U.S. dependence on oil, has been at the heart of a major rift between the oil and corn lobbies, leaving Trump struggling to find a balance between the two important constituencies as he eyes a bid for re-election next year.

(Reporting by Humeyra Pamuk Editing by Susan Thomas)

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