EPA Biofuel Reallocation Proposal Reportedly Could Trim Demand

Reuters’ Jarrett Renshaw reported that “the White House is considering a plan that would require large oil refineries to cover around half or less of the biofuel blending requirements recently waived for smaller facilities, according to three sources familiar with the matter.”

“The proposal submitted by the Environmental Protection Agency and now under review by the White House would require large refiners to cover a range of about 50% or less of the 1.1 billion gallons of the renewable fuel exempted last month for small plants, according to the sources,” Renshaw reported. “That could mean roughly 550 million gallons of lost demand, potentially increasing the supply of renewable fuel credits and putting downward pressure on their price.”

“The plan, if adopted, would likely frustrate biofuel producers and farm-state lawmakers who want full restoration of lost demand caused by small refinery exemptions under the Renewable Fuel Standard, the nation’s biofuel law,” Renshaw reported. “…The middle ground proposal highlights the long-running clash between Big Oil and the farm lobby — two powerful constituencies that have battled for years over the future of the RFS. That divide threatens to complicate President Donald Trump’s efforts to unify Republicans ahead of a looming budget fight.”

Multiple sources tell me that that the @USDA was “less than thrilled” about the EPA proposal that was sent to the WH.

— Jarrett Renshaw (@JarrettRenshaw) September 10, 2025

“The plan remains under review and subject to change, the sources cautioned. It is expected to be released in the upcoming weeks, ahead of an October 30 deadline to finalize biofuel blending quotas for the 2026-2027 years,” Renshaw reported. “‘The EPA is in the process of evaluating a range of options that strike an appropriate balance between obligations, reallocation, and other factors that will deliver for farmers, consumers and American energy dominance,’ a White House official told Reuters. The EPA declined to provide details of the proposal.”

Lawmakers Seek to Block Shift of Blending Obligations

Renshaw reported in a different article that “U.S. lawmakers from states with oil refineries, led by Republican Senator Mike Lee of Utah, will introduce legislation on Tuesday to block President Donald Trump from shifting renewable fuel blending obligations from small refineries to larger ones, according to draft legislation seen by Reuters.”

“U.S. biofuels policy has been politically divisive, pitting the oil industry against the farm interests that underpin U.S. production of biofuels like corn-based ethanol,” Renshaw reported. “‘Punishing American energy producers who comply with the EPA’s made-up rules isn’t just unfair, it’s bad for everyday consumers. Americans will pay more at the pump and Utah’s refineries will suffer,’ Lee said in a statement.”

But “Geoff Cooper, president and CEO of the Renewable Fuels Association, criticized the legislation as a direct attack on rural America,” Renshaw reported. “‘We shouldn’t even be having a conversation about reallocation,’ Cooper said. ‘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.'”

Members of Congress Press EPA to Draw Back Proposed RFS Volumes

Progressive Farmer’s Todd Neeley reported that “forty-two members of Congress including the entire Texas delegation are pressing on the U.S. Environmental Protection Agency to draw back on proposed volumes in the latest Renewable Fuel Standard rule and on plans to reallocate biofuels gallons waived through small-refinery exemptions, in a letter to EPA Administrator Lee Zeldin on Tuesday.”

“In the letter to Zeldin, the lawmakers commend the Trump administration for taking steps to expand energy production,” Neeley reported. “‘U.S. refineries are critical to achieving President Trump’s goals to restore American energy dominance, as a strong and competitive liquid fuel manufacturing industry is vital to maintaining low gasoline and energy prices while limiting inflation,’ the letter said.”

“The members of Congress asked Zeldin to consider ‘minimizing RVO increases to avoid a large and expansive regulatory mandate’ on the refining industry,” Neeley reported.

Additionally, “the lawmakers said reallocating gallons exempted would ‘place an undue burden on companies that have invested billions of dollars to legally comply with the program and create significant disruptions’ in the fuel market,” Neeley reported. “‘Finally, we recommend the EPA maintain a 100% renewable identification number (RINs) value for imported renewable fuels and feedstocks,’ the letter said.”