Updates throughout
New York, 22 August (Argus) — The US Environmental Protection Agency (EPA) today fully or partially granted the majority of small refiners’ requests for waivers from federal biofuel blend mandates, while limiting the windfall for newly exempt refiners.
The agency fully accepted 63 petitions, offered 50pc relief in response to 77 petitions, denied 28 requests, and determined that 7 were ineligible. Program data shows 13 petitions still pending, mostly from the 2025 compliance year.
The Renewable Fuel Standard requires oil refiners and importers to blend biofuels into the conventional fuel supply or buy Renewable Identification Number (RIN) credits from those that do. Refiners that process no more than 75,000 b/d can request hardship exemptions from the mandates, which they have long cast as financially onerous. President Donald Trump’s administration had an unprecedented backlog of requests to decide after courts took issue with former president Joe Biden’s reasoning for mass denials.
While the number of exemptions frustrated biofuel and farm advocates, small refiners that lobbied officials for retroactive compensation were denied more sweeping relief. EPA said on Friday that it would return already-surrendered RINs to newly exempt companies but that only credits from 2023 and later could be used for future compliance. Returned older credits, effectively worthless, “are not expected to impact demand for biofuels”, the agency said.
Because the older credits have no value, EPA does not plan to force oil companies to blend more biofuels to account for those exemptions. But EPA signaled a different approach for more recent years, saying that it planned to account for actual exemptions in 2023 and 2024 and expected exemptions in 2025 when setting future biofuel quotas. The agency said it would “in the near future” submit a proposal to the White House Office of Management and Budget that will clarify its plan.
EPA had already signaled that it would estimate future exemptions when setting biofuel mandates, but accounting for actual exemptions from active compliance years in addition would be a major shift that could increase costs for larger oil companies, if implemented.
Program data show that affected small refiners have to submit about 1.4bn fewer RINs across 2023 and 2024 following Friday’s exemptions — but companies without exemptions could have to make up that lost volume in the future depending on EPA’s pending proposal. The total mandates in those years were 20.9bn RINs and 21.5bn RINs respectively. EPA said Friday it aimed to ensure stability in the often-volatile RIN market, noting that replacing expired credits with active ones would have flooded the market with 3bn more RINs.
Current-year D6 ethanol credits rose 4pc and D4 biomass-based diesel credits rose 3pc on Friday, as traders saw EPA’s solution to older-vintage credits as limiting supply increases.
Biofuel groups, while frustrated that most eligible refiners won at least some relief, expressed cautious optimism about EPA’s plan. Renewable Fuels Association president Geoff Cooper said Friday’s exemptions “should have little or no effect on current and future levels of renewable fuel production and use”.
But companies will eagerly await more details about EPA’s proposal to account for 2023 and 2024 waivers, which could come as soon as next week.
EPA has signaled that it wants to finalize new biofuel mandates before November, but that timeline appears ambitious if the agency has to first take comment on a proposal that could drastically shift its formula for setting those mandates.
Clean Fuels Alliance America, which represents biomass-based diesel producers, said that the new plan “will delay the finalization of the 2026 and 2027 rule”. In a draft regulation earlier this year, EPA proposed record-high biofuel blending for those years.
Legal challenges are virtually guaranteed. The agency said that its decisions had “nationwide scope or effect” — an effort to steer litigation toward one federal circuit court rather than a hodgepodge of regional courts that might issue conflicting rulings.
Small refiners denied full relief are likely to challenge the Trump administration’s reasoning. EPA said it almost entirely relied on recommendations from the Department of Energy (DOE), which scores individual applications for “disproportionate economic hardship” and considers factors like a refiner’s output of diesel compared to gasoline and its local market’s acceptance of renewables.
While EPA is legally required to consult with DOE, the new policy of largely deferring to that department’s recommendations would be a major change from recent years. A 2022 study from the US Government Accountability Office concluded that DOE’s methodology was “critically flawed”, and EPA officials at the time told the watchdog agency that DOE’s analysis no longer provided useful information.
Accepting DOE scores appears to have led to some counterintuitive results, though specific details from applications are kept confidential. Par Pacific’s 18,000 b/d Wyoming refinery earned full exemptions for three straight years before losing relief the next. Ergon’s 23,000 b/d facility in West Virginia won partial exemptions for 2021 and 2024, but not the years in between. And EPA offered at least some relief to Suncor’s 36,000 b/d Commerce City East refinery over six straight years — while denying any relief for four of those years to Suncor’s 67,000 b/d Commerce City West refinery at the same Colorado site.
“Not a lot of rhyme or reason to it”, a refining source told Argus.
The unpredictability of the exemptions — with essentially all refiners receiving different answers depending on the year — could also make it hard for EPA to estimate future waivers when finalizing biofuel quotas. The agency has received some exemption petitions for 2025 but has yet to decide any for that year or beyond.
Large oil refiners will also hotly oppose any effort from EPA to raise their biofuel blending to compensate for their smaller competitors winning exemptions. While some oil companies joined with farm groups this year to push for higher biofuel mandates, the industry has more recently expressed frustration with Trump-backed biofuel policies that they say are boosting feedstock and fuel costs.
“It is inexplicable that EPA is even considering adding more mandated biofuels on top of the largest and most expensive [Renewable Fuel Standard] mandate ever proposed by reallocating exempted volumes”, the American Fuel and Petrochemical Manufacturers said.
By Cole Martin and Matthew Cope
