EPA Releases Rulemaking to Reallocate Waived RFS Volumes, Biofuel Industry Expresses Cautious Optimism Public Comment DEADLINE October 31, 2025

September 17, 2025

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by Erin Krueger (Biomas Magazine) The U.S. EPA on Sept. 16 released a supplemental notice of proposed rulemaking (SNPRM) that considers several options for reallocating Renewable Fuel Standard renewable volume obligations (RVOs) waived under the small refinery exemption (SRE) program.

The SNPRM aims to revise the proposed RFS RVOs for 2026 and 2027 that were proposed as part of the RFS “Set 2” rulemaking to account for the SRE decisions issued by the agency in August. The “Set 2” proposal, initially released in June, proposed to set the total 2026 RVO at 24.02 billion renewable identification numbers (RINs), a nearly 8% increase when compared to the 2025 RVO. The proposed 2027 RVO is 24.46 billion RINs, up nearly 2% when compared to the previous year. A public comment period was open through Aug. 8 and the EPA is currently expected to finalize the rulemaking in October.

In a separate action, the EPA on Aug. 22 issued decisions on 175 SRE petitions, filed by 38 refineries and span RFS compliance years 2016-2024. The agency granted full exemptions to 63 petitions, granted partial exemptions to 77 petitions, denied 28 petitions and determined 7 petitions to be ineligible. As part of the SRE announcement, the EPA announced plans to submit a draft SNPRM to the White House Office of Management and Budget focused on a proposal to reallocate exempted volumes from RFS compliance year 2023 and later. The SNPRM was also expected to provide updated information on how the agency intends to project SREs for 2026 and 2027 in the context of establishing RFS percentage standards for those years.

That supplemental proposal was delivered to the OMB on Sept. 2. The agency is now releasing the SNPRM for public comment.

In the SNPRM, the EPA co-proposes to increase RVOs for 2026 and 2027 representing complete 100% reallocation and 50% partial reallocation of SREs granted in full or in part for 2023 and 2024, as well as those projected to be granted for 2025 as part of the ongoing RFS rulemaking. The EPA is also taking comment on SRE reallocation volumes equal to other amounts, such as 25%, 75% or 0%.

According to the SNPRM, the August SRE decisions action exempted 11.4 billion gallons of gasoline and diesel produced by small refineries from incurring a RVO for the 2023 and 2024 compliance years, resulting in 1.4 billion RINs no longer needing to be retired for compliance in those years. The EPA has not yet taken action on SRE petitions filed for RFS compliance year 2025 but plans to in the coming months. Currently, the EPA projects that it will approve SRE petitions equal to 780 million RINs. As a result, the EPA projects a total of 2.18 billion RINs will not be needed to be retired as a result of SREs for 2023-2025. For 2026 and 2027, the EPA said it currently projects that exempted volumes of gasoline and diesel will be 5.95 billion gallons for each year.

The EPA plans to hold virtual public hearing on the SNPRM on Oct. 1. A public comment period is open through Oct. 31.

The Renewable Fuels Association expressed cautious optimism about the EPA’s reallocation proposal. “While we continue to question whether any SREs for 2023-2025 are truly justified in the first place, we are encouraged that EPA is proposing to add the exempted volumes back to future RFS requirements for 2026 and 2027,” said Geoff Cooper, president and CEO of the RFA. “We support EPA’s proposed option to fully reallocate 2023-2025 SREs and believe such an approach will ensure intended levels of renewable fuel consumption are maintained over the long-term. We appreciate that EPA continues to focus on SRE approaches that minimize marketplace disruptions, while honoring the congressional purpose and intent of the RFS program. EPA clearly recognizes that an unmitigated influx of RIN credits from SREs could devastate markets and undermine renewable fuel production and consumption. As this is only a proposal, we look forward to working with EPA to ensure its final rule appropriately upholds the integrity of the RFS program, supports America’s farmers, and strengthens our nation’s energy and economic security.”

Growth Energy said reallocation of waived RFS volumes will benefit rural communities. “With this proposal, EPA acknowledges how important biofuels like ethanol are to the rural economy,” said Emily Skor, CEO of Growth Energy. “We commend the Trump EPA for being the first-ever EPA to propose a way to ensure past-year SRE gallons don’t compromise renewable fuel demand. Full reallocation of exempt gallons is a surefire way to drive income to America’s rural communities. We look forward to providing detailed comments on how EPA can align the final rulemaking with the President’s energy dominance agenda while maintaining the integrity of the RFS and delivering the greatest possible benefit to American agriculture.”

Clean Fuels Alliance America welcomed the proposal. “Clean Fuels commends EPA for proposing to ensure that the RFS volumes it finalizes for upcoming years are not eroded by small refinery exemptions,” said Kurt Kovarik, vice president of federal affairs at Clean Fuels. “U.S. biodiesel and renewable diesel production supports ten percent of the value of every bushel of soybeans grown here. It is one bright spot in the agricultural economy this year. Clean Fuels and its members will work to ensure that the final RFS volumes for 2026 and 2027 fully support continued growth in biomass-based diesel production and provide real value for farmers.”

“Farmers, biodiesel and renewable diesel producers still need to fight to secure robust RFS volumes for next year,” Kovarik continued. “We look forward to working with EPA to finalize today’s proposal before the start of the 2026 compliance year to ensure market certainty for farmers and producers.”

Additional information, including a full copy of the SNRPM, is available on the EPA website. READ MORE

Related articles

Proposed Renewable Fuel Standards for 2026 and 2027: Supplemental Notice (U.S, Environmental Protection Agency)
US EPA keeps all options open in biofuel reallocation proposal (Reuters)
EPA Proposes RFS Reallocation Options: Trump Administration Proposes Reallocation of Gallons Exempted From RFS in EPA Proposal (DTN Progressive Farmer)
EPA Floats Options For Full, Partial ‘Reallocation’ Of Waived RFS Volumes (Inside EPA)
US releases proposal for reallocation of waived bio credits, final rule likely delayed (Quantum Commodity Intelligence)
RFA Cautiously Optimistic About EPA’s Renewable Volume Reallocation Proposal (Renewable Fuels Association)

Excerpt from Reuters: Biofuel groups want full reallocation to ensure the small refinery waivers do not dent demand for products like corn-based ethanol, while refiners oppose reallocation citing costs.

Industry officials from both sectors called the EPA proposal a "punt" and said the 45-day comment period will be crucial. "With every option on the table, we didn’t get much clarity today," said one of the officials, who asked not to be named criticizing the agency.

The U.S. Renewable Fuel Standard requires refiners to blend billions of gallons of biofuels into the country's fuel pool each year or buy credits called RINs from those who do.

...

The EPA in August cleared a backlog of more than 170 SRE requests dating back to 2016 — a sweeping move that required it to come up with the plan to account for waived obligations.

The EPA was only required to come up with a plan to reallocate exempted gallons dating back to 2023, however, because RINs generated for previous years have already expired.

The EPA proposal said 2.18 billion RINs worth of blending obligations will have been exempted from 2023 through 2025. READ MORE

Excerpt from DTN Progressive Farmer: EPA said it also expects "additional exemptions" to be granted for the 2025 compliance year.

"The ability for obligated parties to use these RINs to comply with the 2026 and 2027 RVOs is expected to impact demand for renewable fuel if not carefully considered," the agency said in a news release.

"This proposal is an important step in the EPA's tireless work to repair the damage done after four years of the Biden-Harris administration neglecting key components of the RFS program, including threats to transform the RFS program into a subsidy for electric vehicle charging stations as part of a larger strategy to electrify the transportation sector. The Trump administration reaffirms its renewed commitment to honor the program's purpose to support biofuels as an essential part of a thriving liquid fuels market."

The EPA said it "recognizes the importance" of issuing one final Set 2 rule that establishes the RVOs for 2026 and 2027 and addresses the reallocation of SREs from 2023-2025. READ MORE