EPA proposes adding 770 million RINs to 2026-27 biofuel mandates to offset 2025 refinery exemptions
The Oct. 16 proposal offers two ways to restore demand erased by the August exemptions: split the volume across 2026 and 2027, or put it all on 2027. Comments are due Dec. 4, with a virtual hearing Nov. 4.
The Environmental Protection Agency (EPA) wants refiners to retire 770 million more renewable identification numbers (RINs) across 2026 and 2027 to make up for the small refinery exemptions it granted for 2025[1]. The agency does not expect that to produce a single extra gallon of ethanol or biodiesel beyond what its April standards already called for[1].
That gap between the size of the number and its expected effect runs through the proposed rule, published in the Federal Register on Oct. 16[1]. EPA describes the add-on as a defensive measure: without it, credits freed up by the 2025 exemptions could be rolled forward and used instead of new biofuel blending[1]. Comments are due Dec. 4[1].
The details: two ways to spread 770 million RINs
The proposal follows the Aug. 31 decisions on 34 exemption petitions for the 2025 compliance year. EPA granted full exemptions to 18 refineries and 50 percent exemptions to 11, denied three petitions and found two ineligible, for a total of 1.76 billion RINs exempted across 29 refineries[1, 2].
That was far above plan. When EPA set the 2026 and 2027 volumes on April 1 (the “Set 2” rule), it projected 2025 exemptions from a three-year average of 2022-2024 exempted fuel: 7.55 billion gallons, or 990 million RINs[1]. The actual 2025 exempted fuel volume came to 13.38 billion gallons[1]. EPA attributed the difference to “more small refineries requesting exemptions and changes in financial circumstances”[2].
The April rule had already added back 70 percent of 2023-2025 exemptions through a “SRE reallocation volume” written into the percentage formulas, and it put about 700 million RINs tied to the projected 2025 exemptions into 2027[1]. Commodity Hill’s August report on the 2024 exemptions covered how that add-back worked. The new proposal would reallocate 100 percent of the 770 million RINs above the projection, a departure EPA acknowledges from the 70 percent approach in April[1].
EPA is co-proposing two schedules[1]:
| Reallocation volume (billion RINs) | 2026 | 2027 |
|---|---|---|
| Set 2 rule, current | 0.99 | 1.04 |
| Option A: equal split | 1.37 | 1.43 |
| Option B: all to 2027 | 0.99 | 1.81 |
Source: EPA Table IV-1[1].
Under the equal split, the agency notes, refiners would have to “acquire additional RINs for the 2026 compliance year after the compliance year was over”[1]. Loading everything on 2027 would give them notice before that year starts and let them recover the cost through fuel sales, EPA says[1]. The agency asks for comment on whether some other division between the years would be better, on its legal authority, and on “legitimate reliance interests” in the April rule[1]. It asks commenters to stick to the 2025 exemptions and not reargue the rest of Set 2[1].
The proposal also triggers an automatic extension of the 2026 compliance reporting deadline, now March 31, 2027[1]. The new date depends on when, or whether, EPA finalizes the 2026 changes; EPA gives June 1, 2027, as one possible example[1].
In the field: corn and soybean demand
EPA lists soybean farming, corn farming, cattle ranching and hog farming among the industries potentially affected[1]. The percentage standards show where the volume would land. For 2027, the total renewable fuel standard would rise from 15.78 percent to 16.01 percent under the equal split or 16.23 percent under the 2027-only option[1]. Biomass-based diesel would go from 5.37 percent to 5.43 or 5.48 percent[1]. The conventional renewable fuel slice, which EPA derives by subtracting advanced biofuel from the total, would go from 9.17 percent to 9.32 or 9.47 percent[1].
What the proposal does not do is raise the volume targets themselves. EPA says it does not expect production and use to exceed the 24.02 billion and 24.46 billion RINs already set for 2026 and 2027, and projects that refiners “would acquire these additional RINs by purchasing carryover RINs from other parties rather than blending additional quantities of renewable fuel”[1]. The case for the rule is what happens without it. Excess carryover credits “could reduce RIN prices and demand for renewable fuel and RINs in future years,” EPA writes, and could leave the market short of the volumes set in April[1].
For soybean growers, the number to watch is biomass-based diesel. Clean Fuels Alliance America, the trade group for biodiesel, renewable diesel and sustainable aviation fuel, lists soybean oil among its industry’s feedstocks[5]. Kurt Kovarik, the group’s vice president of federal affairs, asked EPA to choose the split: “We urge EPA to finalize the proposal to add supplemental volumes to both 2026 and 2027 to ensure that the market signal from the robust RFS volumes is clear and immediate”[5].
The Renewable Fuels Association (RFA), which represents ethanol producers, said the plan “will help offset the demand loss for ethanol producers and farmers” if finalized as proposed[4]. RFA President and CEO Geoff Cooper, who called most of the exemptions “unjustified,” urged quick action so producers, refiners and agriculture “have the certainty they need heading into 2027”[4].
At the pump, EPA estimates the change would add less than one cent per gallon to gasoline and diesel compared with the current standards[1]. Its table puts the 2027 RFS cost of diesel, against a baseline with no RFS, at 21.0 cents a gallon under current rules, 21.4 cents under the split and 21.8 cents under the 2027-only option[1].
On the Hill and in court: the reliance question
No vote in Congress is involved. EPA is relying on the same Clean Air Act “set” authority, section 211(o)(2)(B)(ii), that it used for the April standards, and floats section 211(o)(2)(A)(i) as an alternative[1]. It concedes that it is acting after the statutory deadlines for both years and that a final rule could reach back into 2026[1]. EPA cites D.C. Circuit decisions allowing late and retroactive volumes when the agency “reasonably” considers the burden on refiners, and calls the 2025 exemption total “an unanticipated event” that justifies reopening the numbers[1].
The two sides of the fuel business read the August decisions differently. Farm and biofuel groups backed full reallocation as protection for ethanol, biodiesel and renewable diesel demand, while independent refiners argued that shifting obligations raises compliance costs and tightens the RIN market, according to RFD-TV[6]. On Aug. 31, Cooper said the plan “creates a pathway for ensuring no net loss in renewable fuel demand” and called for reform of what he termed the “broken SRE program”[3].
The refiners’ side of the ledger appears in EPA’s own text. The agency concedes that reopening the April numbers “can negatively impact regulatory certainty and disrupt market expectations,” especially when the effects are retroactive, and notes that in April it said it did not intend to revisit those standards[1]. It also warns that if the rule is finalized in 2027, there are “concerns with notice and potential retroactive effects” under either option[1]. EPA expects any reliance refiners placed on the April percentages to be outweighed, but it put the question out for comment[1]. On cost, the agency’s position is that refiners, “in general on a nationwide scale,” recover what they spend on RINs through higher prices for the fuel they sell, and that even without that pass-through the added cost for small refiners stays under 1 percent of sales[1].
EPA says in the proposal that its Aug. 31 press release counted as additional notice that the rule was coming[1]. That release promised a proposal “before the end of October 2026”[2]. Clean Fuels credited EPA with releasing it earlier than that[5].
Exemption timing has moved compliance dates already this year. EPA extended the 2025 compliance deadline by 30 days, to Oct. 1, 2026, to let the market account for the additional RINs[2]. EPA also said the Department of Energy is reviewing the 2011 “disproportionate economic harm” method it uses to score exemption petitions[2].
What to watch: hearing, comments and the final numbers
- Oct. 28: last day to pre-register to speak at EPA’s virtual hearing[1].
- Nov. 4: virtual public hearing, beginning at 9 a.m. Eastern; EPA plans three minutes per speaker[1].
- Dec. 4: written comments due in docket EPA-HQ-OAR-2024-0505[1].
- March 31, 2027: current 2026 compliance reporting deadline, which this proposal pushes back under EPA’s rules[1].
The final figure may not be 770 million. EPA says the 1.76 billion RIN total was estimated from refiners’ projected gasoline and diesel volumes, and that the final rule will use reported 2025 compliance data and fold in any 2025 exemption decisions issued after the proposal[1]. Until then, as RFD-TV put it after the August decisions, full reallocation “remains an announced policy direction rather than a completed regulatory action”[6].