From EMA
On Wednesday, EPA proposed increasing Renewable Fuel Standard (RFS) obligations for 2026 and 2027 by a combined 770 million renewable identification numbers (RINs). The increase would account for the amount by which small refinery exemptions (SREs) granted for the 2025 compliance year exceeded EPA’s earlier projection. Comments are due by December 4, 2026.
On August 31, 2026, EPA acted on 34 SRE petitions for the 2025 compliance year. It granted 18 full exemptions and 11 partial (50 percent) exemptions, denied three petitions, and found two refineries ineligible. The exemptions totaled 1.76 billion RINs, nearly 80 percent more than the 990 million RINs EPA had projected for 2025 when it finalized the 2026 and 2027 RFS standards in March.
The March rule already reallocated 70 percent of the 2023–2025 exempted obligations, including the projected 2025 exemptions, into the 2026 and 2027 standards. The new proposal addresses only the 770 million RIN difference between projected and actual 2025 exemptions and would reallocate 100 percent of that difference.
The Two Options
EPA is seeking comment on two approaches to reallocating the additional 770 million RINs. The figures below are the SRE reallocation volumes included within each year’s standards, not the total annual RFS obligations.
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Option 1: Split the additional volume equally between 2026 and 2027. Each year would receive about 385 million additional RINs. The total SRE reallocation volume would increase from 990 million to about 1.38 billion RINs for 2026, and from 1.04 billion to about 1.43 billion RINs for 2027.
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Option 2: Allocate the entire additional volume to 2027. The 2026 SRE reallocation volume would remain at 990 million RINs, while the 2027 volume would increase from 1.04 billion to 1.81 billion RINs.
The choice between the two approaches is likely to be contested. Adding obligations to 2026 could draw objections from obligated parties that did not receive exemptions, particularly given the timing of the proposed adjustment. EPA has indicated that the proposed revision may extend the existing March 31, 2027, deadline for 2026 compliance reporting. Biofuel groups, meanwhile, are urging EPA to add the volumes to both years so that the market signal is immediate.
What It Means for EMA Members
RIN markets moved sharply higher following the August 31 announcement, reflecting expectations about future RFS obligations. The proposed reallocation could sustain upward pressure on RIN prices, although the ultimate market effect will depend on the final rule and other supply-and-demand factors.
Marketers without blending capacity may be particularly exposed to RIN-related increases in wholesale fuel costs because they generally have fewer opportunities to generate or acquire RINs through their own blending operations.
What to Watch
Expect a contested rulemaking. Refiners and other obligated parties that did not receive exemptions may challenge the proposed increase on statutory, procedural, and policy grounds, particularly any adjustment to 2026 obligations. Biofuel producers, agricultural groups, and other supporters of the RFS are likely to argue that full reallocation is necessary to preserve renewable fuel demand and the market signal Congress intended the program to provide.
The dispute also underscores the need for Congress to provide clearer direction on how EPA should grant small refinery exemptions and account for exempted obligations when establishing future RFS standards.
EMA will continue to evaluate the proposal and determine whether to submit comments before the December 4, 2026 deadline.
