In a significant move for domestic renewable fuel markets, the U.S. Environmental Protection Agency has released a proposed rule to fully reallocate 100 percent of the renewable fuel volumes waived through recent 2025 Small Refinery Exemptions (SREs).
The draft rule directly addresses the agency’s August 31 decisions, which granted hardship exemptions to 29 small refineries under the Renewable Fuel Standard (RFS). Those waivers exceeded initial agency projections, exempting an additional 770 million Renewable Identification Numbers (RINs) worth of renewable fuels from compliance obligations. Under the newly released proposal, the EPA is moving to ensure that every gallon of that exempted volume is restored to future blending obligations rather than lost from the marketplace.
The EPA is soliciting public feedback on two specific reallocation pathways:
- Two-Year Phase-In: Dividing the 770 million RINs equally between the 2026 and 2027 compliance years, adding approximately 385 million RINs to each year’s Renewable Volume Obligation (RVO).
- Single-Year Roll-In: Reallocating the entire 770 million RIN obligation directly into the 2027 compliance year.
The reallocation plan has drawn strong support across the agricultural sector, including the American Farm Bureau Federation, the Renewable Fuels Association, and Growth Energy. Farm leaders emphasized that recovering these waived volumes protects demand for grain and oilseed feedstocks—specifically corn and soybean oil—which directly supports commodity prices, livestock feed co-products like distillers grains, and the broader farm economy.
Agricultural economists noted that when refinery exemptions go unaddressed, they effectively erode the statutory baseline for domestic biofuels. Restoring the full 770 million gallons back into future blending pools signals certainty to commercial processors and provides a vital demand floor for Midwestern and Southern row-crop producers facing tighter margins.
The public comment period for the EPA’s proposed reallocation framework will remain open through December 4.
