EPA Ups Small Refinery Waivers, Plans to Reallocate Full Burden
After granting more 2025 renewable fuel exemptions than projected, the EPA will propose a new rule to shift the entire compliance shortfall to non-exempt parties.
The U.S. Environmental Protection Agency granted 18 full and 11 partial exemptions for small refineries from their 2025 obligations under the Renewable Fuel Standard, waiving compliance for what the source indicates is 1.76 billion Renewable Identification Numbers (RINs). This total far exceeds the agency's prior estimate of 990 million RINs.
In a significant policy shift, the EPA announced it will initiate a new rulemaking to reallocate 100% of the actual exempted 2025 volumes to non-exempt obligated parties for the 2026 and 2027 compliance years. This reverses a previous rule that reallocated only a portion of the estimated shortfall. The change increases the number of RINs that larger refineries and fuel importers must acquire and retire, heightening compliance costs. The potential retroactive application to the 2026 compliance year is expected to face strong industry opposition.
Counsel for non-exempt parties should monitor the forthcoming proposed rule, expected by the end of October 2026, and prepare for a short comment period. The outcome of separate, ongoing litigation in the D.C. Circuit regarding the prior reallocation rule may also influence the agency's final action.