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UPDATE 1-EPA has received DOE input for 2018 small refinery waivers -sources

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WASHINGTON, May 1 (Reuters) - The Department of Energy has given the Environmental Protection Agency its scoring results for the 40 outstanding 2018 applications made by small refineries for waivers from U.S. biofuel laws, four sources familiar with the matter said on Wednesday.

The recommendations from the Energy Department are a crucial step in the EPAs process for weighing the exemption requests, which can save refineries millions of dollars in regulatory costs and have become the center of a bitter dispute between the rival oil and corn industries.

The U.S. Renewable Fuel Standard (RFS) is designed to help American farmers by requiring oil refiners to blend certain volumes of biofuels into their fuel each year, or purchase credits from those that do. But small refineries with a production capacity of 75,000 barrels per day or less can secure waivers if they prove that compliance would cause them financial harm.

Under President Donald Trump, the EPA has vastly expanded the number of waivers granted to refineries, angering Midwest farmers and their legislative backers who say the policy destroys demand for corn-based ethanol and other biofuels at a time they are already struggling.

For 2017, the Trump's EPA granted 35 exemptions to small refineries, without denying any applications, up from seven exemptions issued in the last year of the Obama administration, according to EPA data. That reduced the costs of credits that some refiners such as Valero Energy Corp, PBF Energy Inc and HollyFrontier Corp must buy in order to comply with the RFS, saving them hundreds of millions of dollars.

For 2018, there are a total of 40 petitions pending to obtain a small refinery waiver. Traders and market participants have been awaiting the decisions for months now.

"No decisions regarding 2018 SREs have been made," Michael Abboud, a spokesman for EPA said. "Many aspects of the decisions for exempting individual refineries are based on confidential business information."

DOE spokeswoman Shaylyn Hynes did not immediately respond to a request for comment. (Reporting by Humeyra Pamuk, Jarrett Renshaw and Chris Prentice Editing by Chizu Nomiyama)