The U.S. Environmental Protection Agency is proposing to restore 100% of additional renewable fuel volumes waived through small refinery exemptions, a move that could help protect demand for American corn and soybeans as farmers harvest their crops and confront another challenging farm economy.
EPA Administrator Lee Zeldin announced the proposal Tuesday, Oct. 13, in Peosta, Iowa, following an August decision that granted 29 small refineries full or partial exemptions from their obligations under the federal Renewable Fuel Standard (RFS).
The August exemptions totaled 1.76 billion renewable identification numbers (RINs), the credits used to demonstrate compliance with federal renewable fuel requirements. That was substantially higher than the approximately 990 million RINs EPA had projected would be exempted for the 2025 compliance year.
The difference — approximately 770 million RINs — is now at the center of EPA’s proposal to restore the waived obligations by requiring other refiners to account for those volumes in future compliance years.
For farmers, the stakes extend well beyond a regulatory dispute between Washington and the refining industry. Renewable fuel requirements help establish demand for corn used to produce ethanol and soybean oil used in biodiesel and renewable diesel. When those requirements are waived without corresponding adjustments elsewhere, agricultural groups warn that the resulting loss of demand can ripple through rural economies already under pressure from tight crop margins and high production costs.
“In each action taken, EPA works to deliver for all Americans,” Zeldin said. “As soon as we got into office, American farmers asked the Trump EPA not to give them handouts but create avenues for them to enter additional markets.”
He said the proposal is intended to maintain a “strong and durable market” for farmers selling their crops.
The agency is offering two options for restoring the additional waived volumes. One would divide the 770 million RIN difference equally between the 2026 and 2027 compliance years. The other would assign the entire amount to 2027.
EPA is accepting public comments through Dec. 4, 2026. The agency also said the proposed revisions could extend the existing March 31, 2027, deadline for reporting 2026 compliance.
The proposal is drawing broad support from agricultural and biofuel organizations, although industry leaders say the administration must follow through by finalizing the rule and providing greater certainty for future investments.
Farm groups welcome effort to protect demand
The National Corn Growers Association (NCGA) welcomed the announcement, saying it follows through on the administration’s commitment to protect farmers and biofuel producers.
Matt Frostic, a Michigan corn farmer and NCGA president, said the full reallocation would help ensure biofuel producers are not left short of the renewable fuel volumes originally established under the RFS.
“We are pleased to see that the administration has kept its pledge to protect farmers and biofuel producers while administering this critical program, and we appreciate that biofuel producers will be kept whole with the reallocation of all waived volumes,” Frostic said.
He added that corn farmers want the program administered with greater certainty in the years ahead.
“We hope that the Renewable Fuel Standard and the small refinery exemption program are managed with certainty in the years to come.”
The American Soybean Association (ASA) also endorsed the proposal, pointing to the importance of domestic biofuel demand as soybean growers navigate difficult economic conditions.
Dave Walton, an Iowa soybean farmer and ASA vice president, said the announcement addresses a key concern for growers who depend on a strong domestic market for soybean oil.
“Soybean farmers are navigating a tough farm economy, and the administration’s strong domestic biofuel policies will continue to drive much-needed market demand in the U.S.,” Walton said.
ASA urged EPA to finalize the supplemental rule as quickly as possible.
The American Farm Bureau Federation also views the proposal as an important step toward preserving agricultural demand.
Dr. Faith Parum, deputy chief economist for the organization, said the announcement provides more detail about how EPA intends to fulfill its earlier commitment to reallocate the waived volumes and gives stakeholders an opportunity to weigh in.
“These reallocations make sure that these renewable fuel volumes get made, and they’re made with North American feedstocks,” Parum said. “So, think about your corn and your soybean oil, and so that’s really great for American farmers and ranchers because it keeps that renewable fuel in production and ups those feedstock requirements.”
Parum said restoring the volumes would help maintain demand for a range of agricultural commodities used in renewable fuels.
“This is great for the farm economy because it keeps demand for our feedstock strong,” she said. “Our corn, our soybean, canola — all of that is used for these renewable fuels. And by making sure that these volumes are reallocated, it’ll make sure that demand is steady for U.S. farmers and ranchers.”
For growers, the distinction is important: A federal blending requirement does not guarantee a particular price for corn or soybeans, but it helps establish a market for the feedstocks used to manufacture renewable fuels.
Biofuel industry pushes for quick action
The Renewable Fuels Association (RFA), Growth Energy and the American Coalition for Ethanol (ACE) also praised EPA’s decision to propose full reallocation, while calling for additional steps to strengthen the Renewable Fuel Standard.
Geoff Cooper, president and CEO of the RFA, thanked Zeldin and the White House for honoring their commitment to restore the renewable fuel volumes affected by the exemptions.
“While we believe most of the exemptions were unjustified, EPA’s reallocation plan — if finalized as proposed — will help offset the demand loss for ethanol producers and farmers,” Cooper said.
He said the industry needs certainty as it approaches 2027 and argued that refinery exemptions should not undermine domestic biofuel demand.
“With refiners enjoying record-high profit margins, gasoline supplies tightening, and drivers still paying too much at the pump, the Trump administration understands this is no time to undermine domestic biofuels with SREs,” Cooper said. “The administration should be expanding access to affordable American-made ethanol — not giving the oil industry another break.”
The RFA also called for reform of the small refinery exemption program, arguing that exemptions originally intended to provide temporary relief to genuinely small, independent refineries have become a recurring source of uncertainty for farmers and biofuel producers.
Growth Energy CEO Emily Skor said the proposal would help deliver on the potential of the historic renewable fuel volumes EPA established earlier this year.
“With this proposal, EPA would deliver on the full potential of historic RVOs and fulfill its promise to make American farmers and biofuel producers whole,” Skor said.
She added that restoring the waived volumes would strengthen rural economies and help farmers access dependable markets for their crops.
The American Coalition for Ethanol likewise called the proposal an important step toward preserving the integrity of the RFS.
“Every gallon of renewable fuel displaced by an SRE represents lost demand for American ethanol, lost value for farmers and a missed opportunity to lower fuel costs for consumers,” ACE CEO Brian Jennings said.
Jennings cautioned, however, that reallocation alone will not resolve the industry’s concerns. He urged Congress to pass nationwide legislation allowing year-round sales of E15, a gasoline blend containing 15% ethanol, before the end of the year.
ACE said uncertainty surrounding small refinery exemptions has delayed progress on year-round E15 and called on EPA to establish strong renewable fuel volumes in its upcoming “Set 3” rule.
The organization also wants EPA to account for any remaining demand losses if the waived volumes are not fully restored.
Why the 770 million RIN difference matters
The dispute began when EPA issued its August 31 decisions on pending small refinery exemption petitions for the 2025 compliance year.
Small refineries can seek relief from federal renewable fuel obligations if they demonstrate that compliance would cause disproportionate economic hardship. Refiners have argued that compliance costs and elevated renewable fuel credit prices can create financial pressure on their facilities.
EPA’s decisions granted full exemptions to 18 refiners and partial exemptions to another 11, producing a total of 1.76 billion exempted RINs. The RFA described the action as the second-highest annual volume of small refinery exemptions ever granted, while other industry accounts characterized the exemptions as the largest ever issued under the program.
The additional 770 million RINs above EPA’s original projection represent the specific volume addressed by Tuesday’s proposal.
The distinction matters because EPA’s March 27 “Set 2” rule had established historically high renewable fuel requirements for 2026 and 2027. The agency estimated that rule would generate more than $10 billion for rural economies and create more than 100,000 jobs in agricultural and manufacturing sectors.
The August exemptions raised concerns that some of the anticipated demand would disappear unless EPA increased obligations for other refiners.
Under the new proposal, EPA would restore the entire difference between projected and actual exempted volumes. However, the agency has not yet finalized the rule, and the ultimate timing of the restored obligations will depend on the outcome of the rulemaking process.
Reuters reported Tuesday that renewable fuel credit prices for ethanol and biodiesel fell slightly following the announcement, according to a refinery trader attending the OPIS biofuels conference in Chicago. That market reaction underscores that the proposal itself does not immediately resolve all uncertainty surrounding renewable fuel demand.
USDA, lawmakers back reallocation
U.S. Agriculture Secretary Brooke Rollins said the proposal recognizes the contribution biofuel producers make to American energy supplies and agricultural markets.
“I’m thrilled to see Administrator Zeldin act on this growing momentum and provide a path forward to 100% reallocation by 2027,” Rollins said.
She said the biofuel industry generates more than $100 billion in economic activity and supports more than 100,000 American jobs.
Iowa lawmakers also praised the announcement, citing the importance of ethanol and biodiesel production to the state’s farm economy.
Sen. Chuck Grassley, R-Iowa, said he worked with the White House, Sen. Joni Ernst and Iowa Reps. Ashley Hinson, Mariannette Miller-Meeks, Zach Nunn and Randy Feenstra to secure full reallocation.
“Today’s decision is a major boost for Iowa’s rural economy and the 31,000 Iowa jobs that biofuels directly employ,” Grassley said.
Ernst said reallocating the waived volumes into the 2026 and 2027 obligations would strengthen domestic markets while helping provide more predictable conditions for farmers and consumers.
Rep. Miller-Meeks said the proposal would help create additional demand for Iowa corn and soybeans. Hinson said it reflects an agreement reached with the administration in August to ensure exemptions do not reduce demand for homegrown biofuels.
Rep. Nunn emphasized the connection between domestic renewable fuels, consumer fuel costs and agricultural markets, saying he would continue working to get the rule finalized.
What happens next?
The next milestone is EPA’s Dec. 4 deadline for public comments. Agricultural organizations, biofuel producers, refiners and other stakeholders will have an opportunity to weigh in on whether the additional volumes should be divided between 2026 and 2027 or assigned entirely to 2027.
That choice will determine when the restored obligations take effect and how quickly the market receives a clearer signal about future demand.
For corn and soybean producers, the proposal offers a potential measure of support at a time when dependable markets remain critical to the farm balance sheet. But it does not eliminate the broader challenges facing growers, nor does it guarantee higher commodity prices.
The immediate question is whether EPA will finalize the rule in time to provide the certainty agricultural and biofuel organizations say they need heading into 2027.
For farmers who have spent the growing season investing in seed, fertilizer, fuel and other inputs, the stakes are straightforward: The more dependable the domestic market for ethanol and biodiesel feedstocks, the more opportunities there are to turn this year’s harvest into revenue.
EPA has proposed restoring the additional waived volumes in full. Now, the agricultural industry will be watching to see whether that promise becomes a finalized federal requirement.
