U.S. EPA Processes Renewable Fuel Standard Small Refinery Exemption Backlog

November 20, 2025 Update: As of Nov. 7, the U.S. Environmental Protection Agency (EPA) has ruled upon 16 more Small Refinery Exemption (SRE) petitions, granting full exemptions for two, granting partial exemptions for 12, and denying two petitions. Notice of these rulings was published in the Federal Register on Nov. 20. The U.S. EPA stated that they are committed to addressing new petitions within the 90-day statutory review period and ask that small refineries that receive exemptions contact the U.S. EPA Fuels Program Helpdesk to begin the RINs return process, which can be reached at FuelsProgramSupport@epa.gov.

Under the Energy Policy Act of 2005, the Renewable Fuel Standard (RFS) requires that all transportation fuel contain at least a minimum volume of renewable fuels to reduce greenhouse gas emissions. Since its establishment, enforcement of RFS has varied greatly, ranging from blanket exemptions to complete denial of all petitions. While the current goals of the RFS include boosting the domestic renewable fuel industry, these requirements can also result in disproportionate economic hardship for small refineries. These small refineries may petition to be exempted from certain RFS requirements as allowed for in 40 CFR 80.1441(a)(1).

Exemption Applications Processed

On August 22, 2025, the U.S. Environmental Protection Agency (U.S. EPA) provided determinations on the backlog of Small Refinery Exemption (SRE) petitions for the 2016 to 2024 compliance years, 93 of which were denied but remanded to U.S. EPA for reconsideration. Of the 175 SRE petitions reviewed by  U.S. EPA and the U.S. Department of Energy (U.S. DOE), 63 were granted full exemptions, 77 were granted partial exemptions, 28 were denied, and seven were determined to be ineligible. U.S. EPA reaffirmed that the 2020 Renewable Volume Obligation (RVO) Rulemaking will grant partial relief to eligible small refineries that face partial hardship from the RFS requirements.

The refineries granted partial or full exemptions will be granted relief for certain requirements for fuels produced during the exempted compliance years. However, exemptions are granted for individual years, and refineries desiring an exemption must petition U.S. EPA annually or they will be subject to RFS requirements.

Returning RFS Compliance credits

U.S. EPA has also reaffirmed a policy to return Renewable Identification Numbers (RINs) that were previously retired to fill RVOs when a small refinery is retroactively granted an exemption for a past compliance year. Because RINs must be used within a two-year window, only RINs returned for 2023 may be used to meet compliance requirements for 2024. RINs returned for years prior to 2023 may be used for past compliance years that fall within the two-year window. These vintage RINs could potentially result in refineries retroactively fulfilling previously unfulfilled RVOs for non-exempt compliance years. On the other hand, small refineries that fulfilled their compliance obligations yet received a retroactive exemption become effectively penalized for their efforts since their recovered RINs will have expired.

Reallocation of Exempted Volumes

In addition, U.S. EPA recently proposed a supplemental rule for the RFS that reallocates exempted renewable volumes. Due to exemptions granted on August 22, 2025 for the 2023 and 2024 compliance years, the number of RINs available to fulfill compliance obligations increased, with additional exemptions expected for the 2025 compliance year. The rule proposed by U.S. EPA would reallocate a percentage of the RINs for years 2023 through 2025 to years 2026 and 2027 instead to maintain demand for renewable fuels in the wake of an influx of available compliance credits. As a result, small refineries may be able to use their returned RINs to fulfill RVOs for years outside of the two-year period. More information on the proposed rule can be found on the U.S. EPA website.

Why does this matter?

U.S. EPA proposed RFS for 2026 and 2027 in June 2025 that reduced the cellulosic biofuel volume requirement for 2025 but doubled the biomass-based diesel volume requirements for 2026 and 2027 compared to historical data. Moreover, the proposal includes reducing the number of RINs for imported renewable fuels and renewable fuels produced from imported goods. Coupled with the intention to remove renewable electricity from the RFS program, this proposal clearly aims to increase demand for domestically produced biofuel. However, industry groups posit that these new standards are unrealistic, impossible to fulfill with domestic production alone, and will cause compliance costs for the refining industry to reach over 70 billion dollars annually.

How ALL4 Can Help

Because the proposed RFS for 2026-2027 could result in historically high compliance costs, preemptively understanding their effects on small refineries is crucial to their economic health. As small refineries look towards the future, ALL4 can help navigate regulatory applicability and the RFS scoring matrix, prepare exemption petitions, and assess compliance. To learn more, contact Meghan Skemp at mskemp@all4inc.com or your local ALL4 staff.

Under the Energy Policy Act of 2005, the Renewable Fuel Standard (RFS) requires that all transportation fuel contain at least a minimum volume of renewable fuels to reduce greenhouse gas emissions. Since its establishment, enforcement of RFS has varied greatly, ranging from blanket exemptions to complete denial of all petitions. While the current goals of the RFS include boosting the domestic renewable fuel industry, these requirements can also result in disproportionate economic hardship for small refineries. These small refineries may petition to be exempted from certain RFS requirements as allowed for in 40 CFR 80.1441(a)(1).

Exemption Applications Processed

On August 22, 2025, the U.S. Environmental Protection Agency (U.S. EPA) provided determinations on the backlog of Small Refinery Exemption (SRE) petitions for the 2016 to 2024 compliance years, 93 of which were denied but remanded to U.S. EPA for reconsideration. Of the 175 SRE petitions reviewed by  U.S. EPA and the U.S. Department of Energy (U.S. DOE), 63 were granted full exemptions, 77 were granted partial exemptions, 28 were denied, and seven were determined to be ineligible. U.S. EPA reaffirmed that the 2020 Renewable Volume Obligation (RVO) Rulemaking will grant partial relief to eligible small refineries that face partial hardship from the RFS requirements.

The refineries granted partial or full exemptions will be granted relief for certain requirements for fuels produced during the exempted compliance years. However, exemptions are granted for individual years, and refineries desiring an exemption must petition U.S. EPA annually or they will be subject to RFS requirements.

Returning RFS Compliance credits

U.S. EPA has also reaffirmed a policy to return Renewable Identification Numbers (RINs) that were previously retired to fill RVOs when a small refinery is retroactively granted an exemption for a past compliance year. Because RINs must be used within a two-year window, only RINs returned for 2023 may be used to meet compliance requirements for 2024. RINs returned for years prior to 2023 may be used for past compliance years that fall within the two-year window. These vintage RINs could potentially result in refineries retroactively fulfilling previously unfulfilled RVOs for non-exempt compliance years. On the other hand, small refineries that fulfilled their compliance obligations yet received a retroactive exemption become effectively penalized for their efforts since their recovered RINs will have expired.

Reallocation of Exempted Volumes

In addition, U.S. EPA recently proposed a supplemental rule for the RFS that reallocates exempted renewable volumes. Due to exemptions granted on August 22, 2025 for the 2023 and 2024 compliance years, the number of RINs available to fulfill compliance obligations increased, with additional exemptions expected for the 2025 compliance year. The rule proposed by U.S. EPA would reallocate a percentage of the RINs for years 2023 through 2025 to years 2026 and 2027 instead to maintain demand for renewable fuels in the wake of an influx of available compliance credits. As a result, small refineries may be able to use their returned RINs to fulfill RVOs for years outside of the two-year period. More information on the proposed rule can be found on the U.S. EPA website.

Why does this matter?

U.S. EPA proposed RFS for 2026 and 2027 in June 2025 that reduced the cellulosic biofuel volume requirement for 2025 but doubled the biomass-based diesel volume requirements for 2026 and 2027 compared to historical data. Moreover, the proposal includes reducing the number of RINs for imported renewable fuels and renewable fuels produced from imported goods. Coupled with the intention to remove renewable electricity from the RFS program, this proposal clearly aims to increase demand for domestically produced biofuel. However, industry groups posit that these new standards are unrealistic, impossible to fulfill with domestic production alone, and will cause compliance costs for the refining industry to reach over 70 billion dollars annually.

How ALL4 Can Help

Because the proposed RFS for 2026-2027 could result in historically high compliance costs, preemptively understanding their effects on small refineries is crucial to their economic health. As small refineries look towards the future, ALL4 can help navigate regulatory applicability and the RFS scoring matrix, prepare exemption petitions, and assess compliance. To learn more, contact Meghan Skemp at mskemp@all4inc.com or your local ALL4 staff.