While the move could save "Big Oil" billions of dollars, it also has stunned producers of the corn-based biofuel and their supporters.
The Environmental Protection Agency is set to make a final decision on the cut next month, but the clash between the two industries has just started heating up.
Both sides are "powerful" and have "deep-pocketed lobbies," Reuters said.
The investigation by Reuters shows the ethanol side -- or "Big Corn" -- lost its battle because of Philadelphia refiners. Now, it's trying to make up what it calls "lost ground."
It is important to note that the players in the fight behind last year's proposed cut were not the traditional oil companies, but instead Philadelphia-area refinery owners The Carlyle Group and Delta Airlines.
These refiners "helped convince policymakers that the rising mandates would cripple their businesses and threaten thousands of jobs," according to Reuters.
Meanwhile, biofuel groups have stepped up their efforts and hearings have resumed on Capitol Hill ahead of the decision.
Many policy analysts now believe when the EPA finalizes the rules on blending ethanol and gasoline, the cuts will be not as deep as the ones proposed in November.
Read the full Reuters article here.