Yesterday, August 31, the U.S. Environmental Protection Agency (EPA) issued decisions on 34 small refinery exemption petitions for the 2025 compliance year, exempting 29 refineries from 1.76 billion renewable fuel credits worth of obligation. Eighteen petitions received full exemptions, 11 received half exemptions, three were denied, and two were found ineligible. A small refinery is one running 75,000 barrels per day or less, and an exemption releases it from its renewable volume obligation, the requirement to blend renewable fuel or else buy Renewable Identification Numbers, or RINs, the credits that prove the blending happened somewhere in the system. The half grants are not a compromise EPA invented.

EPA Will Reallocate 100 Percent of the Overage:

When the EPA finalized the Set 2 rule in March, the agency assumed 990 million RINs would be exempted for 2025 and folded that figure into the 2026 and 2027 standards at a 70 percent reallocation rate. Actual exemptions came in at 1.76 billion. EPA now says it will propose to reallocate 100 percent of the difference between the projected and actual exempted volumes into the 2026 and 2027 obligations, and to do it before the end of October. That gap is roughly 770 million RINs. Counting the 70 percent already applied to the original projection, something on the order of 1.4 billion of the 1.76 billion should find its way back into the mandate.

In comments filed with Administrator Lee Zeldin last October, NEFI told EPA that accounting for less than 100 percent of exempted volumes would let exemptions undercut the volumes Congress directed the agency to ensure, and that calls for zero reallocation should be rejected.

Compliance Deadline Moves to October 1:

EPA is also extending the 2025 compliance reporting deadline by 30 days, from today to October 1, through a direct final rule. The extension reduces no one's obligation and grants no exemptions. It moves only the date by which credits must be retired.

NEFI is reviewing EPA’s announcement and supporting documents, and consulting with biofuel industry experts and outside counsel on the implications for delivered fuels. We will provide further analysis as the details become clear. Questions or comments may be directed to NEFI President Jim Collura at jim.collura@nefi.com.