Agency sets partial relief policy and outlines next steps
The U.S. Environmental Protection Agency (EPA) has taken action on a backlog of 175 Small Refinery Exemption (SRE) petitions covering compliance years 2016 through 2024. After reviewing each case with the U.S. Department of Energy, EPA granted 63 full exemptions, 77 partial exemptions, denied 28 petitions, and found 7 ineligible.
EPA reaffirmed its policy, first set in the 2020 Renewable Volume Obligation rule, to grant partial relief—typically a 50% exemption—when a small refinery shows partial hardship. This approach aims to recognize that not all small refineries face the same level of challenge while keeping national renewable fuel goals on course.
“The EPA inherited a messy situation and we appreciate the agency’s commitment to ending the years-long SRE litigation and restoring stability to the RFS. NOPA is confident the agency understands that strong RVOs will have profoundly positive impacts on U.S. farmers and rural America. We urge the EPA to build on this progress and quickly finalize the RVOs in a way that delivers these positive impacts, by finalizing a re-allocation policy that fully accounts for gallons lost due to SREs in 2023-2025 and any projected SREs for future years, expanding volumes for the biomass-based diesel category to at least 5.25 billion gallons and ensuring domestic feedstocks and fuels are prioritized. These measures are essential to ensuring the program strengthens domestic markets and keeps investment and jobs in rural America,” said Devin Mogler, President and CEO, National Oilseed Processors Association (NOPA)
EPA also clarified how Renewable Identification Numbers (RINs) will be handled when exemptions are granted for past years. RINs may only be used in the year they are generated or the following year. Because of that two-year window, 2022 and earlier RINs cannot be used to meet open 2024 or future obligations. EPA says this limit should prevent older RINs from affecting current or future biofuel demand.
Looking ahead, EPA plans to send a supplemental proposed rule to the Office of Management and Budget to address reallocation of exempted volumes for 2023 and later years. The agency does not plan to reallocate volumes from 2016–2022 due to the RIN timing limits. EPA will also explain how it plans to project SREs in setting percentage standards for 2026 and 2027, helping to keep intended renewable fuel volumes in place.
Industry reactions were mixed but focused on maintaining market stability. Groups representing oilseed processors and biofuel producers urged EPA to fully reallocate gallons lost to 2023–2024 exemptions and to finalize strong volume targets. Others warned that refunding retired RINs must not weaken demand for biodiesel, renewable diesel, sustainable aviation fuel, or farm-based feedstocks.
For farmers and rural communities, the key takeaway is that EPA’s approach seeks to balance hardship relief with steady growth in homegrown fuels.