EPA proposes reallocating excess 2025 SREs to 2026, 2027

On October 16, 2026, EPA published a rule proposing to revise the Small Refinery Exemption (SRE) reallocation volumes for compliance years 2026 and 2027 under the Renewable Fuel Standard (RFS) program.

Who’s impacted?

The RFS program applies to obligated parties, including:

• Refiners of gasoline or diesel fuel (i.e., transportation fuel); and
• Importers of transportation fuel.

EPA sets annual renewable fuel volume and percentage standards for each compliance year. Obligated parties must calculate their individual renewable volume obligations (RVOs), measured in Renewable Identification Numbers (RINs), and obtain and retire enough RINs to meet their RVOs for each compliance year.

What’s the issue?

In April 2026, EPA established the annual volume and percentage standards for the 2026 and 2027 compliance years (Set 2 Rule), including reallocating part of the SREs granted and expected to be granted for the 2023–2025 compliance years.

However, EPA granted a higher volume of SREs for the 2025 compliance year than expected, exempting 770 million more RINs than the Set 2 Rule projected for the 2026 and 2027 compliance years. The agency plans to revise the Set 2 Rule to account for the additional SRE reallocation volume.

What’s the proposed solution?

EPA proposes reallocating 100 percent of the additional 770 million RINs by reallocating the additional 2025 exempted RVO either:

• Equally between the 2026 and 2027 compliance years, or
• Fully to the 2027 compliance year.

The proposed rule would adjust the renewable volume and percentage standards for biomass-based diesel, advanced biofuel, and total renewable fuel. The Set 2 Rule didn’t establish SRE reallocation volumes for cellulosic biofuel.

Additionally, the proposed rule may extend the current 2026 compliance reporting deadline of March 31, 2027.

EPA will host a virtual public hearing for the proposed rule on November 4, 2026. Public comments on the rule are due by December 4, 2026 (Docket ID No. EPA-HQ-OAR-2024-0505).

Key to remember: EPA proposes to reallocate the excess 2025 small refinery exemption volumes to the 2026 and 2027 compliance years.