REFILE-UPDATE 3-U.S. ethanol groups bristle as EPA frees refiners from biofuels law

NEW YORK, April 4 (Reuters) - The U.S. Environmental Protection Agency has approved the request of 25 small refineries to be exempted from the nation's biofuels laws, an agency source said on Wednesday, marking a big increase from previous years and triggering an outcry from farm groups worried the move will hurt ethanol demand.