By Chris Prentice, Jarrett Renshaw and David Shepardson

NEW YORK, July 5 (Reuters) – The U.S. government on Wednesday proposed to reduce the volume of biofuel required to be used in gasoline and diesel fuel next year as it signaled the first step toward a potential broader overhaul of its biofuels program.

The U.S. Environmental Protection Agency’s proposed total volume marked a slight decline from current levels and was more than 20 percent below targets laid out in a 2007 law. The U.S. Renewable Fuel Standard, or RFS, requires increased volumes of renewable fuels each year, but the proposal would keep targets for use of conventional biofuels at current levels.

The agency has begun preparations to reset future biofuel targets, said EPA Administrator Scott Pruitt. His proposal was met with praise and calls for broader reform from the petroleum industry and mixed response from biofuels producers.

Environmentalists, who have been critical of ethanol, called for Congress to reform the program.

The RFS has become a battlefield between corn and oil interests. The law has been a boon to agriculture, supporting economies across the Midwest’s Corn Belt.

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