WASHINGTON — On Friday, the Environmental Protection Agency announced it is moving to resolve a years-long backlog of Small Refinery Exemption petitions under the Renewable Fuel Standard, a federal program requiring refiners to blend a minimum volume of renewable fuels into the nation’s fuel supply. The agency announced it has acted on 175 petitions filed by 38 small refineries covering compliance years 2016 through 2024. (Read more on the move here.)
More industry groups are sharing their reaction to the news. American Coalition for Ethanol (ACE) CEO Brian Jennings issued the following statement after today’s announcement:
“EPA appears to be carefully trying to balance the recent caselaw and the RFS statute when it comes to their new methodology for small refinery exemptions. The good news is that EPA is proposing to reallocate any and all small refinery exemptions they grant for 2023 and beyond, which is how the SRE program should be implemented. EPA will issue a supplemental proposal on how they intend to reallocate exempted gallons for 2023 and beyond, and their reallocation methodology will be incorporated into the final ‘Set 2’ rule later this year which also covers the 2026 and 2027 renewable volume obligations.
“The Agency argues they’re not going to reallocate for exempted gallons granted to small refineries for the 2016 through 2022 RFS compliance years because those RINs are expired and it will not have an impact on blending. That may be true, and we will carefully monitor how the D6 RIN market reacts to this news. In the past, SREs led to depressed RIN values which discourages blending of E15 and higher blends. Overall, however, the approach proposed by EPA looks reasonable.”
Clean Fuels Alliance America has begun carefully evaluating EPA’s grant to 38 small refineries of full or partial exemptions from compliance with the Renewable Fuel Standards for 2016-2024. EPA announced a new framework for granting small refinery exemption petitions and applied it to more than 175 pending petitions, including previously denied petitions.
Clean Fuels expressed wariness of the agency’s award to the refiners of more than 1.4 billion Renewable Identification Numbers (RINs) from compliance years 2023 and 2024 to be used for the delayed compliance deadline for 2024. EPA indicated it will propose a supplemental rule in the coming month to consider reallocating the associated RIN gallons and address the impact on the recently proposed 2026-2027 RFS volumes. Clean Fuels looks forward to working with EPA to quickly finalize this proposal, which will delay the finalization of the 2026 and 2027 rule.
Kurt Kovarik, Clean Fuels’ Vice President of Federal Affairs, stated, “EPA’s course correction on RFS small refinery exemptions creates fresh uncertainty for America’s farmers and biodiesel, renewable diesel, and SAF producers. We look forward to working with the agency to ensure today’s decision does not unwind the strong signal of support issued in June through robust RFS volumes meant to drive growth and recognize investment in domestic fuels and American agriculture.”
In the recently proposed Renewable Fuel Standards for 2026 and 2027 and Draft Regulatory Impact Analysis, EPA reiterated that its analyses consistently show “all obligated parties—including small refiners—fully recover the costs of RFS compliance” through fuel sales.
Kovarik continued, “EPA’s announcement conflicts with its consistent finding that small refiners are not facing disproportionate economic hardships from RFS compliance. Refunding retired RINs has the potential to undercut current markets for domestic biodiesel, renewable diesel, and SAF as well as for American oilseed crops and other feedstocks. This announcement comes just as farmers begin planning to harvest the year’s soybean crop, which is expected to achieve a record-setting yield. We urge EPA to ensure that small refinery exemptions do not undermine the market for farmers and clean fuel producers.”
Also, the National Oilseed Processors Association (NOPA) thanked the Environmental Protection Agency (EPA) for addressing the backlog of Small Refinery Exemption (SRE) petitions the current administration inherited. By taking a measured approach to resolving these petitions, EPA now has the opportunity to finalize Renewable Volume Obligations (RVOs) that can provide greater stability and predictability for the Renewable Fuel Standard (RFS) at a critical time for farmers and processors.
“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,” said Devin Mogler, President and CEO of NOPA. “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.”
NOPA will continue to engage with EPA and other stakeholders as they work to finalize the RVOs and supplemental rule to ensure they deliver much needed certainty and lasting benefits for U.S. agriculture. The RFS remains a critical tool for advancing U.S. energy dominance while supporting American farmers and rural manufacturing jobs.
