Ethanol Blog: Biofuels Groups Call For 100% Reallocation of Small-Refinery Exemptions to Uphold RFS Integrity

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October 02, 2025

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by Todd Neeley (DTN Progressive Farmer) U.S. biofuels groups made it clear on Wednesday (October 1, 2025) that only 100% biofuels gallons reallocation of small-refinery exemptions to the Renewable Fuel Standard would be acceptable, in public comments given during a virtual hearing hosted by the U.S. Environmental Protection Agency.

Two weeks ago, the EPA released a proposal that includes reallocating up to 100% of gallons exempted from 2023 to 2025. The proposal also asks for comment on alternatives from zero gallons to 50% or even 75% of gallons reallocated. So, full reallocation would include about 2.18 billion gallons total.

The EPA announced in August it had granted full exemptions on 63 petitions, partial exemptions on 77 petitions and denied 28 petitions on SRE requests covering 2016 to 2024.

In addition, EPA is proposing to add a new SRE reallocation volume term in the percentage standard equations for 2026 and 2027, to account for exemptions granted for the 2023-2025 compliance years.

RFA CALLS FOR INDEPENDENT SRE EVALUATIONS

Geoff Cooper, CEO of the Renewable Fuels Association, told the agency his group "strongly disagree" with EPA's new approach to determining 'disproportionate economic hardship' and believe that the agency is improperly expanding the scope of relief available to small refineries by "overreading" a legal ruling from the U.S. Court of Appeals for the District of Columbia Circuit in Sinclair Wyoming Refining Company LLC v EPA. The court ruled that the agency's decision to deny exemption requests to the RFS was contrary to law and arbitrary and capricious.

Cooper said the EPA has a duty to "independently evaluate" petitions and assess whether a small refiner has experienced disproportionate economic hardship.

"EPA should not be deferring to the DOE's long-outdated 2011 study and scoring matrix," Cooper said.

Although the Government Accountability Office in 2022 said the U.S. Department of Energy study was "critically flawed" and EPA agreed, "Nowhere in its August 2025 SRE decision document did EPA address these flaws or its past criticism of the study and scoring matrix," Cooper told the agency.

If the EPA does not decide to change the way it evaluates whether small refineries suffer economic hardship, Cooper said the agency "must reallocate 100% of those exempted volumes."

Cooper said his group supports EPA's proposal to "fully reallocate" exempt volumes for 2026 and 2027.

"As this administration recognized in 2020, reallocation is the only way for the agency to meet its statutory obligation to ensure that the required volumes are achieved," he said.

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GROWTH ENERGY QUESTIONS EXEMPTIONS

Growth Energy CEO Emily Skor told the agency her group believes the agency is granting more small-refinery exemptions than what was intended by the law.

"As the RFS celebrates two decades of success, refiners have had ample time to make investments in renewable fuels and higher ethanol blends," she said.

"We continue to believe that these small-refinery exemptions should only be granted sparingly and in very limited circumstances. In August, we saw EPA take a thoughtful and reasonable approach to the more than 200 pending SREs weighing on the RFS program. After clearing out the older SREs, those for 2022 and earlier, and not bloating the RIN (renewable identification numbers) bank, the agency has in this supplemental proposal appropriately focused on the pool of exempted gallons for 2023 through 2025."

Skor said Growth Energy supports EPA's proposal to reallocate gallons to fully account for them so that biofuel demand is not lost.

"The bottom line -- if the agency follows through on the proposal, and if it properly accounts for the refinery exemptions it has granted and will grant moving forward, EPA can and will protect biofuel production and demand for U.S. farm commodities, in line with the goals of the RFS," she said.

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ACE CONCERNED ABOUT RINS SUPPLY

Brian Jennings, CEO of the American Coalition for Ethanol, said the Trump administration's decision to grant SREs in August for 2023 and 2024 increased the supply of renewable identification numbers.

"Furthermore, as EPA has cautioned, if the volumes of renewable fuel represented by the SREs are not reallocated, obligated parties could use the oversupply of low-priced RINs to satisfy the 2026 and 2027 renewable volume obligations instead of buying and blending physical gallons of ethanol and other renewable fuel," Jennings said.

"This type of demand destruction undermines the integrity of the RFS. Unfortunately, demand destruction occurred in 2018 and 2019 when SREs and low RIN prices discouraged refiners from blending ethanol above E10 and artificially restrained sales of E15, E30, and E85."

...

IRFA WANTS FULL REALLOCATION

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said 100% reallocation of the 2023 to 2025 exemptions is the appropriate action.

"The law requires EPA's prime directive to be ensuring RFS blending levels are met," Shaw said.

"Only full reallocation will maintain the integrity to the RFS and deliver meaningful benefits to rural America. IRFA strongly believes EPA should finalize its proposal to reallocate 100% of the exemptions over 2026-2027. We are concerned by reports that a 50% reallocation scheme is gaining steam. If EPA ultimately determines that 100% reallocation over 2026-2027 is not possible, the agency should not undermine the RFS with 50% reallocation. Instead, as an alternative, the EPA should reallocate 100% of the 2023-2025 exemptions over four years. This approach would have the same market impact in the short term as 50% reallocation but would still provide lasting support for American farmers and the biofuels industry." READ MORE

Related articles

RFA Opposes Granting of SREs, Calls for 100 Percent Reallocation (Renewable Fuels Association)
Growth Energy Calls on EPA to Follow Through on RVO, Reallocation Proposals (Growth Energy)
ACE Urges EPA to Finalize Full Reallocation of Small Refinery Exemptions in RFS Set 2 Rulemaking (American Coalition for Ethanol)
IRFA Calls for Full Reallocation of Refinery Exemptions at EPA RFS Hearing (Iowa Renewable Fuels Association)
Iowa Biodiesel Board: EPA Must Fully Reallocate Refinery Renewable Fuel Standards (RFS) Exemptions (River Cities Reader)
Clean Fuels: Data Shows Farmers Risk Losing $7.5 Billion If EPA Does Not Reallocate RFS Small Refinery Exemptions (Clean Fuels Alliance America)
Ethanol Blog -- Study: Soybean Farmers Face Up to $7.5B Loss if EPA Doesn't Reallocate All Biofuels Gallons Waived (DTN Progressive Farmer)

Excerpt from Renewable Fuels Association: In testimony today (October 1, 2025)to the U.S. Environmental Protection Agency, the Renewable Fuels Association expressed strong disagreement with the agency’s recent decision to grant 140 small refinery exemptions (SREs) based on a new approach to determining “disproportionate economic hardship (DEH).” While RFA opposes the granting of those SREs in the first place, it supports EPA’s proposal to fully reallocate all exempted renewable fuel blending volumes.

“If EPA is going to resume granting SREs under its flawed notion of DEH, it must reallocate 100 percent of those exempted volumes,” RFA President and CEO Geoff Cooper said. “Without reallocating 100 percent of the exempted volumes, the volumes originally proposed cannot be achieved and any final volumes will be illusory."

Cooper also objected to EPA’s reliance on the Department of Energy’s outdated small refinery study and “scoring matrix” in the SRE process. “EPA has a duty to independently evaluate petitions and assess whether a small refiner has experienced DEH,” he said. “EPA should not be deferring to the DOE’s long-outdated 2011 study and scoring matrix. In 2022, the Government Accountability Office faulted the DOE study as ‘critically flawed,’ and EPA itself asserted that the study fails to provide useful information.”

While RFA continues to oppose granting of SREs, Cooper said, “We applaud EPA for proposing to project and fully reallocate exempt volumes for 2026 and 2027. As this administration recognized in 2020, reallocation is the only way for the agency to meet its statutory obligation to ensure that the required volumes are achieved; partial reallocation cannot satisfy this duty.”

For the same reason, he added, EPA must reallocate 100 percent of the exempted volumes for 2023, 2024, and 2025. Anything less would permit obligated parties to avoid their share of the statutory mandate, shifting the burden unfairly onto renewable fuel producers. Cooper concluded that RFA believes EPA’s return of expired volume credits for 2022 and earlier is a reasonable and prudent exercise of its authority under the Clean Air Act. READ MORE

Excerpt from Growth Energy: Growth Energy, the nation’s largest biofuel trade association, called on the U.S. Environmental Protection Agency (EPA) today to finalize its pending Renewable Fuel Standard (RFS) proposals regarding the 2026-2027 renewable volume obligations (RVOs) and the potential reallocation of renewable fuel demand due to granted small refinery exemptions (SREs).

EPA hosted a virtual public hearing on its proposals where Growth Energy CEO Emily Skor used her testimony to urge the agency to stand strong on its RVO and reallocation proposals, and to keep the interests of American farmers in mind as it considers its next move.

“The Renewable Fuel Standard continues to be one of our nation’s most successful energy policies. We remain grateful to President Trump and Administrator Zeldin for working to expand U.S. biofuel production, and for this administration’s embrace of the RFS as an economic engine for American agriculture,” said Skor. “Once finalized, higher volumes under the RFS will truly unleash American energy dominance by unlocking investments, creating jobs, and supporting growth in rural America.

“If the agency follows through on the proposal, and if it properly accounts for the refinery exemptions it has granted and will grant moving forward, EPA can and will protect biofuel production and demand for U.S. farm commodities, in line with the goals of the RFS,” she added. “Given the looming crisis in the ag economy, the agency’s approach promises to serve as an economic lifeline to American farmers.”

Read Skor’s full testimony as prepared for delivery here. An audio recording of Skor’s testimony as delivered can be found here. Learn more about the RFS here. READ MORE

Excerpt from American Coalition for Ethanol: In testimony delivered today during the U.S. Environmental Protection Agency’s (EPA) virtual public hearing on how it plans to handle reallocation of small refinery exemptions (SREs) under the Renewable Fuel Standard (RFS), American Coalition for Ethanol (ACE) CEO Brian Jennings emphasized the need for EPA to fully reallocate gallons lost to SREs in order to get the RFS back on track.

“We appreciate the important step EPA is taking with this “Set 2” supplemental proposal to rectify and reallocate the impacts of small refinery exemptions (SREs) issued for the 2023 and 2024 RFS compliance years, as well as reallocation for SREs anticipated for 2025,” Jennings stated in his testimony.

Without reallocation, Jennings underscored EPA’s reasoning that obligated parties could use the oversupply of low-priced renewable identification numbers (RINs) to satisfy the 2026 and 2027 obligations without buying or blending physical gallons of ethanol and other renewable fuels.

“This type of demand destruction undermines the integrity of the RFS,” Jennings said, adding that demand destruction occurred in 2018 and 2019 when SREs and low RIN prices discouraged refiners from blending ethanol above E10 and artificially restrained sales of E15, E30, and E85.

Jennings commended EPA for working to reallocate volumes that should have been legally blended and stated ACE’s view that the Agency is bound by statute to finalize full and complete reallocation for 2026 and 2027.

“In other words, the Agency must reallocate 100% of the 2023 through 2025 exempted RVOs – an estimated 2.18 billion gallons – to the final Set 2 rule," Jennings said.

ACE also applauds EPA for indicating the Agency will prospectively account for and reallocate SREs as it undertakes RVO rulemakings beyond 2027. Jennings concluded by stressing its imperative for EPA to finalize the rule before the end of the 2025 calendar year to get the RFS back on track. READ MORE

Excerpt from Iowa Renewable Fuels Association: Today (October 1, 2025) the Iowa Renewable Fuels Association (IRFA) participated in the Environmental Protection Agency’s (EPA) public hearing on the proposed Renewable Fuels Standard (RFS) blending rule for 2026-2027. As part of that rule, the EPA is evaluating whether to reallocate 100% or 50% of refinery exemptions granted for 2023 and 2024, as well as those anticipated for 2025.

During his remarks at the hearing, IRFA Executive Director Monte Shaw strongly urged the EPA to finalize its proposal to reallocate 100% of the 2023-2025 refinery exemptions.

“The law requires EPA’s prime directive to be ensuring RFS blending levels are met,” said Shaw. “Only full reallocation will maintain the integrity to the RFS and deliver meaningful benefits to rural America.”

Shaw noted that while the delays and backlogs of processing the refinery exemption requests were inherited by the current EPA, it is their duty to fully implement the RFS.

“IRFA strongly believes EPA should finalize its proposal to reallocate 100% of the exemptions over 2026-2027. We are concerned by reports that a 50% reallocation scheme is gaining steam. If EPA ultimately determines that 100% reallocation over 2026-2027 is not possible, the agency should not undermine the RFS with 50% reallocation. Instead, as an alternative, the EPA should reallocate 100% of the 2023-2025 exemptions over four years. This approach would have the same market impact in the short term as 50% reallocation but would still provide lasting support for American farmers and the biofuels industry.”

Shaw also commended the EPA for proposing strong RFS blending levels, stating, “The originally proposed blending levels for 2026 and 2027 were robust and appreciated. While we disagree with the metrics used to grant recent refinery exemptions, IRFA appreciates the agency’s responsible handling of refinery exemptions granted from 2016 to 2022 and its commitment to prospectively reallocate future exemptions beginning in 2026.”

The Iowa Renewable Fuels Association represents the state’s liquid renewable fuels industry and works to foster its growth. Iowa is the nation’s leader in renewable fuels production with 42 ethanol refineries capable of producing 4.7 billion gallons annually – including 34 million gallons of annual cellulosic ethanol production capacity – and 10 biodiesel facilities with the capacity to produce 416 million gallons annually. For more information, visit the Iowa Renewable Fuels Association website at: www.IowaRFA.org. READ MORE

Excerpt from Clean Fuels Alliance America: Clean Fuels Alliance America shared with EPA Administrator Lee Zeldin projections of the economic impact for U.S. soybean farmers and processors of EPA’s proposed supplemental “SRE reallocation volume” to the 2026 and 2027 RFS volumes. EPA is co-proposing to either fully (100%) or partially (50%) account for 2023-25 small refinery exemptions granted this year by adding a supplemental volume in 2026 and 2027. The agency is also taking comment on other volumes, including 0%.

“U.S. soybean farmers and processors could lose between $3.2 billion and $7.5 billion in crop value over the next two years if EPA does not completely reallocate recently exempted RFS volumes,” Clean Fuels writes in a letter to Zeldin. “With increased farm productivity, U.S. soybean growers are right now harvesting a projected 4.3 billion bushels of soybeans for the season worth $43 billion. And with more than $6 billion of investment, U.S. soybean processors are expected to crush a record 2.5 billion of those bushels next year. Facing retaliatory trade measures from China and growing global competition from countries like Argentina and Brazil, America’s farmers can not afford to lose the value that U.S. biomass-based diesel brings.”

Clean Fuels engaged World Agricultural Economic and Environmental Services (WAEES) to provide EPA economic analysis of the co-proposed 100% and 50% reallocation supplemental volumes as well as a scenario with 0% reallocation.

WAEES’ analysis indicates that if EPA adopts the 50% reallocation proposal rather than complete (100%) reallocation, the results over the 2026 – 2027 timeframe will include:

490 million gallons in lost biomass-based diesel production;
$1.4 billion in lost soybean farm revenue; and
a $1.8 billion drop in the value of soybean products to soybean crushers.

If EPA fails to reallocate any of the exempted volumes, WAEES’ analysis shows the results over the 2026 – 2027 timeframe will be considerably worse:

1 billion gallons in lost biomass-based diesel production;
$2.6 billion in lost soybean farm revenue; and
a $4.9 billion drop in the value of soybean products to soybean crushers.

Kurt Kovarik, Clean Fuels’ Vice President of Federal Affairs, stated, “Clean Fuels urges EPA to quickly finalize the robust, timely RFS volumes it proposed in June and ensure they are not eroded by small refinery exemptions. U.S. biodiesel and renewable diesel production supports 10 percent of the value of every bushel of soybeans grown here. Supporting continued growth of U.S. biomass-based diesel is crucial right now to support American farmers and the agricultural economy.”

The letter is available on cleanfuels.org.

ABOUT CLEAN FUELS ALLIANCE AMERICA

Made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil, and animal fats, the clean fuels industry is a proven, integral part of America’s clean energy future. Clean Fuels Alliance America is the U.S. trade association representing the entire biodiesel, renewable diesel and sustainable aviation fuel supply chain, including producers, feedstock suppliers and fuel distributors. Clean Fuels receives funding from a broad mix of private companies and associations, including the United Soybean Board and state checkoff organizations. READ MORE