President Donald Trump's executive order temporarily allowing tax-exempt, off-road diesel on U.S. highways defers 24.4 cents per gallon in federal excise tax, but the move has done little to quiet a parallel fight between independent oil refiners and ag-based biofuel producers over the Renewable Fuel Standard.

Trump signed the order Monday night, removing enforcement of the dyed-red diesel rule that prevents off-road fuel from powering highway vehicles. The Fueling American Jobs Coalition, representing independent oil refiners, praised the step and immediately asked the administration and Congress for more.

"We encourage the administration and Congress to build on this policy and work to advance another option to provide immediate relief on diesel costs: adjusting and reforming the federal biofuel mandate, which has been adding 30 to 40 cents per gallon to gasoline and diesel fuel costs," FAJC said Tuesday.

What do refiners want EPA to reject?

FAJC's central ask: Trump should reject an EPA proposal to reallocate small refinery exemptions (SREs) that were granted for 2025. Reallocation "has the effect of permanently increasing the ethanol mandate, driving up the cost of producing gasoline and diesel, and increasing prices at the pump for consumers in the process," the coalition said.

SREs under the RFS give regulatory relief to refiners processing less than 75,000 barrels per day if compliance would cause "disproportionate economic hardship." The exemption process has split both major parties and the oil industry itself; litigation over SREs has reached the Supreme Court.

EPA in late August said it would grant more exemptions than it signaled in March, when the agency set the most robust biofuel-blending targets in the RFS's two-decade history. The agency's current SRE proposal represents 1.76 billion Renewable Identification Numbers (RINs), versus roughly 990 million initially indicated.

How does EPA plan to offset the blow?

The agency said it will reallocate 100% of the difference between projected and actual exempted 2025 volumes into Renewable Volume Obligations for this year and next. It sent the proposed reallocation plan to the White House budget office last week and has committed to a final rule before month's end.

The American Soybean Association has put a dollar figure on what failure would cost: absent reallocation, biomass-based diesel demand would fall by 500 million gallons and soybean farmers would lose almost $1 billion in revenue.

"While granting more SREs for 2025 than expected has caused disruption, the declaration of intent to reallocate all of the additional exempted volumes calmed markets," ASA chief economist Scott Gerlt wrote last week. "Continuation of this calm is dependent on quickly moving through a supplemental rulemaking process."

What are biofuel producers saying?

Clean Fuels Alliance America, the biodiesel trade group, frames the conflict as energy supply versus oil-industry profits.

"President Trump established this year's record RFS volumes with the explicit goal of massively increasing our nation's energy supply and securing U.S. energy dominance," said Kurt Kovarik, the group's vice president of federal affairs. "Refiners, by contrast, are responding to the global fuel shortage by pocketing record profits and doling out dividends to shareholders."

Iowa Renewable Fuels Association Executive Director Monte Shaw warned that missing the October deadline would damage credibility.

"Missing the October deadline would send the wrong message at the wrong moment," Shaw said Tuesday. "Any delay would create unnecessary uncertainty and call into question the reallocation commitment. We don't want to see biofuels plants go back offline."

Renewable Fuels Association CEO Geoff Cooper cited wholesale price data to rebut the refiner argument.

"FAJC needs to pull its head out of the sand. Ethanol with a RIN credit attached is selling for $1.25 per gallon less than gasoline at wholesale terminals," Cooper said. "And where E15 is available today, it is typically selling for 20-30 cents per gallon less than E10."

Where does the farm bill fit?

The Senate Agriculture Committee's farm bill, approved last month, bundles year-round, voluntary E15 sales with a revamp of the SRE process. The language is narrower than an E15 bill the House passed in May but still draws fire from smaller refiners.

"Members of the Senate should reject the farm bill language that would serve to lock in higher costs through permanent reallocation of small refinery exemptions," FAJC said.

University of Illinois ag economist Scott Irwin said he expects EPA to act on the reallocation.

"It's now been pretty widely reported that President Trump basically decided how this current battle in the RFS was going to be determined," Irwin said. "He said that farmers were not to be harmed by these additional SREs, and the only way they can't be is by 100% reallocation."

EPA's final reallocation rule, expected before month's end, will test whether the administration's biofuels-friendly RVOs can survive the SRE fight without the supplemental rulemaking the soybean and ethanol groups say markets now require.