UPDATE 1-Trump administration eyes at least $300 million aid to refiners denied biofuel waivers -sources

(Adds details, background)

By Stephanie Kelly and Jarrett Renshaw

NEW YORK, Sept 16 (Reuters) - The Trump administration is considering at least $300 million in cash aid to U.S. oil refiners that are denied exemptions to U.S. biofuel blending laws for the 2019 compliance year, two sources familiar with the matter said.

Although the administration has yet to rule on the 2019 waivers, it has made an estimate for the amount of money it would provide in aid based on the number of facilities that applied for the exemptions but may now be considered ineligible because of a recent court ruling.

The move would help small refineries handle the cost of complying with the U.S. Renewable Fuel Standard, a law requiring they blend biofuels into their fuel mix or buy credits from those that do.

The Environmental Protection Agency, which has final say on waivers, did not immediately comment.

The financial relief could come from funds within the U.S. Department of Agriculture, five sources familiar with the matter said. It is not clear when the aid would be distributed.

Under the RFS, small refiners that can prove compliance would cause financial harm can apply for exemptions. The Trump administration has quadrupled the number of exemptions given to refiners, angering biofuel producers and farmers who say the waivers dent demand for their products.

The oil industry refutes that and says the cost of compliance is too expensive.

In January, an appeals court said President Donald Trump administration's expansion of the exemption program was illegal because waivers granted to small refineries after 2010 had to take the form of an "extension." Most recipients in recent years have not continuously received them.

Dozens of refiners applied for retroactive waivers to come into compliance with the ruling, but the administration this week rejected scores of those requests.

The aid would help compensate refiners that have been caught short by the ruling, the two sources said. (Reporting by Stephanie Kelly and Jarrett Renshaw; Editing by Chris Reese and Peter Cooney)

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