WASHINGTON, D.C.—Growth Energy, the nation’s largest biofuel trade association, issued the following statement after the U.S. Environmental Protection Agency (EPA) proposed a rule regarding reallocation, and how it will account for gallons lost due to small refinery exemptions (SREs) under the Renewable Fuel Standard (RFS).
“With this proposal, EPA acknowledges how important biofuels like ethanol are to the rural economy,” said Growth Energy CEO Emily Skor. “We commend the Trump EPA for being the first-ever EPA to propose a way to ensure past-year SRE gallons don’t compromise renewable fuel demand. Full reallocation of exempt gallons is a surefire way to drive income to America’s rural communities. We look forward to providing detailed comments on how EPA can align the final rulemaking with the President’s energy dominance agenda while maintaining the integrity of the RFS and delivering the greatest possible benefit to American agriculture.”
Learn more about the RFS here.
Background
Under the Renewable Fuel Standard (RFS), the Environmental Protection Agency (EPA) sets the number of gallons of renewable fuels (such as biofuels) that must be blended into the nation’s total fuel supply each year. Those obligations apply to fuel producers (petroleum refiners) and importers. The law also allows EPA to grant small refinery exemptions (SREs) in rare circumstances when a refiner demonstrates “disproportionate economic hardship” in its efforts to comply with the RFS.
On August 22, 2025, the EPA released its decision on 175 pending SRE petitions, covering compliance years 2016-2024. In all, EPA approved a total of 140 petitions: 63 full exemptions and 77 partial (50%) exemptions.
EPA also announced that it would release a supplemental proposal to its proposed Set 2 RVO to reallocate exempt SRE gallons from 2023-2025 compliance years to the 2026 and 2027 compliance years covered by Set 2. Under this approach, refiners will be required to make up for lost gallons from those years, ensuring that SREs don’t compromise renewable fuel demand.
EPA released the supplemental proposal on SRE reallocation on September 16, 2025. It indicates that the agency is considering accounting for “volumes representing complete (100 percent) reallocation and 50 percent reallocation for SREs granted in full or in part for 2023 and 2024, as well as those projected to be granted for 2025, as part of the ongoing RFS rulemaking.” Growth Energy and other rural leaders are calling on the agency to reallocate 100 percent of lost gallons, thus protecting the rural economy from demand destruction.