Biofuel groups backed the reallocation of 770 million exempted RINs to small refineries for 2026 and 2027 at an EPA hearing, after exemptions covering 1.76 billion credits in 2025.
At a virtual hearing held on Wednesday, Nov. 4, biofuel groups reiterated their support for the Environmental Protection Agency's (EPA) proposal to reallocate the gallons affected by small-refinery exemptions (SREs) under the Renewable Fuel Standard (RFS). The rule seeks to redistribute 770 million compliance credits, known as Renewable Identification Numbers (RINs).
In August, the EPA announced the granting of SREs to 29 refineries for the 2025 RFS requirements, which affected 1.76 billion RINs. One RIN equals one gallon of cornstarch-based ethanol. The agency had previously estimated that the exemptions would impact only 990 million RINs for 2025, so the rule proposed in October seeks to reallocate the difference between what was estimated and what was actually exempted, so that the biofuel gallons required by the RFS are not lost and are fulfilled by non-exempt refineries. The EPA described two proposed approaches for carrying out that reallocation.
Brian Jennings, executive director of the American Coalition for Ethanol (ACE), expressed strong support for reallocating the 770 million RINs to provide "greater certainty to market participants" and "support the statutory purpose of the RFS to increase blending year over year and help drive demand for E15 and E85." ACE warned that failing to reallocate the exempted volumes "could lead to lost demand for American ethanol, lost value for U.S. farmers, and a missed opportunity to lower fuel costs for consumers."
"Let's be clear. It is not hardship for refiners, who are posting record profit margins, to blend low-cost renewable fuel into their expensive petroleum products," Jennings said. "By contrast, American farmers have struggled to make ends meet for the last five years and are experiencing hardship." He added that "until this reallocation is final and complete, exempted RVOs [Renewable Volume Obligations] represent an economic drain on U.S. farmers."
Kurt Kovarik, vice president of Federal Affairs at Clean Fuels Alliance America, backed reallocating the gallons equally between 2026 and 2027. "We ask the agency to finalize this supplemental rule as soon as possible — certainly by the end of the year — to ensure that the robust volumes for 2026 and 2027 are not eroded by small refinery exemptions, past or future," he said.
Kate Shenk, the association's director of regulatory affairs, added that "timely action before the end of the year will be crucial to address diesel supplies and prices. Biodiesel and renewable diesel producers will respond to this rule and the stability of the RFS program the same way we ramped up production when the Set 2 rule was finalized in April."
Joe Kakesh, general counsel at Growth Energy, argued that reallocation should be a normal part of the EPA's administration of the RFS. "Just as it has the authority — and the obligation — to incorporate projected SREs into RVOs, the EPA also has the authority and obligation to reallocate excess RINs from the 2025 SREs to other RVOs, in this case for 2026 and 2027," he said. "In doing so, the EPA meets Congress' statutory mandate that the EPA 'ensure' that RVOs are met. In fact, the EPA should fully account for excess SRE RINs every year, not just for 2025."
Emily Skor, CEO of Growth Energy, said that "the EPA is right to account for every gallon lost to SREs. Especially at a time of record profits, refiners shouldn't be able to simply cast off their RVO blending obligations onto the American biofuels industry." She added that "despite recent announcements of near-record profits, refiners are asking for even more handouts, urging the EPA to walk away from President Trump's commitment to fully account for lost biofuel gallons and to make producers and farmers whole." "At a time when farms are facing a sixth consecutive year of negative returns and consumers are pleading for relief at the pump, we shouldn't be looking for new ways to line refiners' pockets," she said.
Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA), thanked the EPA for proposing the full reallocation of the unexpected additional SREs. "It is difficult for us to understand how, at a time of record profits in the oil industry, companies can claim economic hardship and receive a nearly record number of SREs for 2025," he said.
Shaw asked the EPA to review the letter from Iowa Attorney General Brenna Bird, which documents the discrepancies between what some companies declare to the EPA and the Department of Energy (DOE) and what they report to the Securities and Exchange Commission (SEC) and their shareholders. "We believe a change to the SRE system is needed, and that is something the EPA can address even as we hope Congress also takes action," he said.
IRFA supports full reallocation, with 50% of the volumes assigned to 2026 and the remaining 50% to 2027. Shaw explained that, under the RFS, any obligated party can roll forward up to 100% of its obligation into the following year, so if the EPA put all the volumes into 2027, they could simply be carried into 2028. "We believe it is very important that some of these volumes be allocated to 2026 and some to 2027," he said.
Shaw also recalled that when the RFS blending levels were set earlier this year, there were plants in Iowa that had shut down and employees who had been laid off. "Today, those plants are running and running at full capacity. The robust RFS that the Trump administration and the EPA established earlier this year has done what it was intended to do. We do not want to see that progress reversed," he said.
Geoff Cooper, president and CEO of the Renewable Fuels Association (RFA), called for comprehensive reform of the exemption program. "Congress intended SREs to provide temporary relief to refiners facing genuine disproportionate economic hardship — not to become a permanent entitlement," he said. "Yet the EPA continues granting exemptions under a flawed scoring matrix, despite its own findings that refiners generally recover RIN compliance costs through wholesale fuel prices. These unwarranted exemptions undermine the integrity of the RFS, reduce renewable fuel demand, and discourage investment by renewable fuel producers, farmers, and retailers who have invested billions to support this program."
Still, Cooper said that if the EPA is going to continue granting SREs en masse, the agency has a duty to fully reallocate the exempted gallons. "We commend Administrator Zeldin and the Trump administration for honoring their commitment to full reallocation and for taking steps to mitigate the harm caused by these exemptions," he added. "RFA strongly supports the EPA's proposal to reallocate 100% of the additional 770 million RINs exempted beyond the volume anticipated in the Set 2 rule. Without full reallocation, the RINs freed up by these exemptions can be carried forward to satisfy future obligations, displacing demand for newly produced renewable fuels and eroding the historic 2026 and 2027 standards established by this administration."
Cooper also highlighted the strong profits that refineries, large and small, are currently posting while consumers face high fuel prices. "At a time when gasoline and diesel supplies are tightening, refiners are enjoying strong profit margins and Americans are still paying too much at the pump, we should be encouraging greater use of affordable, American-made renewable fuels," he said. "Full reallocation is essential to protecting the economic and consumer benefits the RFS was designed to deliver."
