Bill Stops RFS Waiver Reallocation Plan

LINCOLN, Neb. (DTN) -- Even before the Trump administration releases a proposal to reallocate biofuels gallons waived from the Renewable Fuel Standard, a group of federal lawmakers from oil-producing states is trying to stop it from happening.

Near the end of August, the U.S. Environmental Protection Agency announced it had granted 63 full small-refinery exemptions, 77 partial exemptions and denied 28 other petitions.

EPA has since sent a proposal for review to the Office of Management and Budget to reallocate biofuels gallons lost through exemptions to other refiners, essentially requiring them to either blend more biofuels or buy renewable identification numbers, or RINs, to meet their RFS obligations.

On Tuesday, Sens. Mike Lee, R-Utah; John Barrasso, R-Wyo.; and Bill Cassidy, R-La., introduced the "Protect Consumers from Reallocation Costs Act of 2025" in the Senate, which would essentially not allow the EPA to reallocate RFS gallons.

Currently, the RFS statute in the Clean Air Act does not allow reallocation.

"For each calendar year, the administrator may not reallocate to other persons any renewable fuel obligation applicable to a small refinery to which an extension of an exemption applies," the bill that would amend the Clean Air Act states.

Ethanol industry groups have been adamant that any SREs granted by EPA should be made up with a corresponding reallocation of gallons to other obligated parties to the RFS.

"Today I'm introducing a bill to advance President Trump's growth agenda for American energy and lower costs for hardworking families," Lee said in a post on social platform X.

"Nowhere in the Clean Air Act does it say that the swampy corn lobby can force Americans to pay more for their products. By jamming through more biofuels and environmental compliance costs, regulators are stifling US energy producers and jacking up the price of fuel. It's bad for refineries, bad for American consumers and bad for American energy independence. That's why I'm introducing the 'Protect Consumers from Reallocation Costs Act,' ensuring that refineries in Utah and across the nation are not subjected to unlawful regulations invented by DC lobbyists."

Geoff Cooper, president and CEO of the Renewable Fuels Association, said in a statement that refiners should be following the RFS law already.

"We shouldn't even be having a conversation about reallocation," he said.

"Reallocating exempted volumes wouldn't even be necessary if all refiners would simply follow the law and do their fair share. Refiners of all shapes and sizes have had 20 years to figure out how to comply with the RFS and the small-refinery exemption was always meant to be a temporary bridge to compliance. This bill simply rewards the bad behavior of a handful of small refineries who have steadfastly refused to blend renewable fuels and are looking for yet another way to dodge their legal obligation to deliver lower-cost, cleaner fuels to American drivers."

In an announcement on more than 180 pending petitions for small-refinery exemptions on Aug. 22, 2025, EPA said it did not plan to propose reallocation of any of the exempted volumes from 2016 to 2022.

"EPA will also be providing updated information on how the agency intends to project SREs for 2026 and 2027 in the context of establishing percentage standards for those years," the agency said in a news release last month.

"The proposed adjustments will help ensure that refineries blend the intended volumes of renewable fuel into the nation's fuel supply in 2026 and 2027 after accounting for the SREs granted for 2023 and 2024 in today's actions and projected SREs granted for 2025-2027 in Set 2."

According to the 31-page document released by the EPA on the decision, the granted full and partial exemptions account for 5.34 billion Renewable Identification Numbers, or RINs. What's more, the agency said it has moved away from presuming all refineries can fully pass RIN costs to consumers and acknowledged some refineries may face higher RFS compliance costs.

This is a significant change from previous assumptions made by EPA on the RFS costs.

In addition, EPA said it was reaffirming a policy to return RINs previously retired for compliance when a small refinery receives an exemption for a prior compliance year.

Under the RFS program, RINs have a two-year window for use, covering the compliance year in which they were generated and the following compliance year.

Read more on DTN:

"Trump Grants Full SREs on 63 Petitions," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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