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MONDAY, AUGUST 31, 2026   |   SPECIAL REPORT & ANALYSIS

SPECIAL REPORT  |  RENEWABLE FUEL STANDARD

EPA Grants 1.76 Billion-RIN Waiver Package, Pledges Catch-Up

A 770-million-RIN adjustment narrows — but does not erase — the RFS gap

Analysis  ·  August 31, 2026

The Environmental Protection Agency (EPA) has delivered almost the high-end small refinery waiver package feared by biofuel producers and farm groups — but it paired that relief with a larger-than-expected commitment to restore much of the resulting renewable-fuel obligation.

EPA on Monday granted full or partial Renewable Fuel Standard exemptions to 29 of the 34 small refineries that petitioned for relief for compliance year 2025. The decisions exempt 1.76 billion Renewable Identification Numbers, or RINs, from retirement: 18 refineries received full exemptions and 11 received 50% exemptions. Three petitions were denied and two were ruled ineligible.

EPA is also reissuing a partial exemption for one petition for the 2024 compliance year that was originally issued in the Aug. 3, 2026 SRE Decisions Action. The agency determined that some supplemental materials the refinery had submitted to EPA were never transmitted to the Department of Energy; DOE received them, rescored the refinery on its hardship matrix, and EPA reissued the partial grant on that revised score together with its consideration of other economic factors. That reissuance sits outside the 1.76-billion-RIN, 34-petition 2025 package summarized below.

Table 1. EPA’s Aug. 31, 2026 decisions on 2025 small refinery exemption petitions. Source: EPA, August 31, 2026 Decisions on Petitions for RFS Small Refinery Exemptions (EPA-420-R-26-017), Executive Summary.

Figure 1. Disposition of the 34 petitions. Source: EPA decision document, Section VI and Appendix A.

The 1.76-billion-RIN total is 770 million RINs, or nearly 78%, above EPA’s 990-million-RIN projection when it finalized the 2026-2027 RFS in March. It is also only 40 million RINs below the 1.8-billion-RIN figure that had driven last week’s selloff in renewable-fuel credits.

Figure 2. Projected versus actual 2025 exempted volumes. Sources: EPA Set 2 final rule (March 2026); EPA Aug. 31, 2026 SRE decisions.

EPA’s release explains where the 990-million-RIN figure came from, and why the agency treats the overshoot as a forecasting problem rather than a policy shift:

“In 2020, EPA established a methodology in regulation for predicting the expected volumes that would be exempted based on an average of the past three years. Before that rulemaking, SREs were not considered as part of the volumes – in other words, all SREs had the result of reducing volumes. Following EPA’s methodology, the agency estimated that 990 million RINs would be exempted in 2025 in ‘Set 2’ and put into the volumes. However, due to more small refineries requesting exemptions and changes in financial circumstances, EPA is exempting more RINs than estimated in ‘Set 2.’”

Two elements of that passage matter for the reallocation fight. The first is the baseline EPA is defending: before the 2020 rule, exempted volumes were not built into the percentage standards at all, so every exemption simply shrank the effective mandate. Measured against that history, even a partial recovery is an improvement. The second is the agency’s attribution. EPA assigns the 770-million-RIN miss to more refineries petitioning and to changed financial circumstances — not to any change in how it decides petitions. That framing is what lets the agency describe a catch-up rule as correcting an estimate rather than reopening a settled policy, and it is precisely the framing obligated parties are likely to contest.

EPA said it will propose before the end of October to add the entire 770-million-RIN difference between its projection and the actual exemptions to the 2026 and 2027 Renewable Volume Obligations. That prospective “catch-up” is considerably larger than the roughly 500-million-RIN adjustment administration officials had been discussing before the announcement.

EPA also will use a direct final rule to move the 2025 RFS compliance date from Sept. 1 to Oct. 1, 2026, giving obligated parties another month to evaluate their credit positions following the exemption decisions.

The extension moves the 2025 compliance demonstration only. It does not change the 2025 attestation engagement deadline of June 1, 2027, and it does not change the 2026 compliance reporting deadline of March 31, 2027. EPA’s decision document confirms the Oct. 1, 2026 date and directs affected small refineries to file revised compliance reports — and to complete any additional 2024 RIN retirements toward carried-forward 2024 deficits — by that same date.

Table 2. The compliance calendar after the decisions. Sources: EPA Aug. 31, 2026 announcement; EPA decision document, Section V.C and n.107; 40 CFR 80.1451, 80.1464.

Figure 3. The sequencing problem: 2025 compliance may close before the catch-up proposal is public. Sources: EPA; Ag Policy & Markets Daily analysis.

The outcome means 85% of the petitioning refineries received at least some relief, making this a major refinery win. 

But EPA’s reallocation pledge means it is not the unmitigated biofuel loss that a 1.76-billion-RIN announcement would have represented without a follow-up rule.

Figure 4. Where the petitions came from. Refinery locations are identified by Ag Policy & Markets Daily from public plant records; EPA’s Appendix A lists company and decision only. Source: EPA decision document, Appendix A.

The Critical Detail: “100%” Does Not Mean Full Restoration

EPA’s statement that it intends to reallocate “100%” requires careful interpretation.

It is also worth being precise about where that commitment lives. The pledge appears in EPA’s news release, in a single sentence: “EPA will propose to reallocate 100 percent of the difference between projected and actual exempted volumes for 2025 SREs into the 2026 and 2027 Renewable Volume Obligations (RVOs) before the end of October 2026.” That sentence is not in the decision document, and it is not in the Federal Register notice. Neither of those documents mentions reallocation, the 2026-2027 percentage standards or an October rulemaking; both are confined to the petitions themselves, EPA’s hardship analysis and how the exemptions will be implemented.

The asymmetry is the story. The exemptions were executed through final agency action, immediately effective on issuance and reviewable only in the D.C. Circuit. The offset exists, for the moment, as one sentence in a press release — a document that creates no obligation, is not subject to comment and cannot be enforced against the agency.

The agency is proposing to reallocate 100% of the 770-million-RIN forecast error, not 100% of the entire 1.76-billion-RIN exemption package.

EPA’s March Set 2 rule reallocated only 70% of the exempted RVOs associated with 2023 through 2025. For 2025, EPA projected 990 million exempted RINs, multiplied that amount by 70% and incorporated approximately 693 million RINs into the 2026-2027 standards. The reduced 2025 amount was assigned principally to the 2027 standard.

The resulting arithmetic is:

Table 3. Reconciling the exemption package with the reallocation pledge. Source: Ag Policy & Markets Daily calculations from EPA figures.

Figure 5. From 1.760 billion exempted RINs to 297 million left outside the mandate. Source: Ag Policy & Markets Daily calculations.

Thus, assuming EPA leaves the original 70% treatment unchanged, the combination of Set 2 and the promised supplemental rule would ultimately recover approximately 1.46 billion of the 1.76 billion exempted RINs, or about 83%.

Approximately 297 million RINs, or 17% of the total exemption, would remain unreallocated. That represents the 30% of EPA’s original 990-million-RIN projection that the March rule deliberately left in the RIN bank to reduce the late rule’s burden on obligated parties.

Using the 13.13% total renewable-fuel percentage employed in the attached analysis, that remaining 297-million-RIN gap is equivalent to roughly 2.3 billion gallons of petroleum gasoline and diesel remaining outside the recovered obligation.

That is materially different from saying that EPA is fully restoring every gallon lost to the exemptions.

EPA’s Catch-Up Sharply Reduces the Worst-Case Scenario

Prior reporting warned that a waiver package above 1.8 billion RINs, combined with no supplemental reallocation, could have left roughly 1.1 billion RINs unrecovered, equivalent to about 8.4 billion gallons of obligated petroleum fuel. At the actual 1.76-billion-RIN level, the unreallocated amount would have been approximately 1.07 billion RINs without further EPA action:

1.76 billion actual exemptions

Minus approximately 693 million already recovered through Set 2

Equals approximately 1.07 billion RINs still outside the mandate

EPA’s proposed 770-million-RIN addition would reduce that gap to about 297 million RINs — a reduction of roughly 72% from the no-catch-up outcome.

Figure 6. The demand hole under three outcomes. Gallon equivalents use the 13.13% total renewable-fuel percentage. Source: Ag Policy & Markets Daily calculations.

The warning about the size of the waiver package was therefore largely validated. Its worst-case conclusion about the resulting demand hole was not, because EPA has now promised the supplemental action the analysis identified as necessary.

The mix of decisions also helps explain why the final total rose so far above EPA’s projection. The earlier Bloomberg Intelligence baseline discussed assumed eight full exemptions and 25 partial exemptions. EPA ultimately issued 18 full exemptions, more than twice that assumption, along with 11 partial grants. Because full exemptions remove the refinery’s entire obligation, the increased share of full relief drove the total substantially higher.

Figure 7. Assumed versus actual decision mix. Sources: Bloomberg Intelligence baseline as discussed in the Aug. 24 analysis; EPA Appendix A.

Refinery Relief Is Final; Agriculture’s Payback Is Not

The most important remaining risk is timing.

The exemption decisions are final agency actions. The 1.76 billion RINs will not have to be retired by the exempted refineries for 2025 compliance, and the deadline extension immediately removes the Sept. 1 buying deadline that could have forced short refiners into the market.

The 770-million-RIN offset, however, is still only a commitment to issue a proposed rule. EPA has not specified:

How much will be placed in 2026 versus 2027.

How the volume will be divided among conventional, advanced and biomass-based diesel categories.

When the proposal will become final.

Whether the final rule will retain the full 770 million RINs after comments and legal review.

There is also an unusual sequencing issue: the revised 2025 compliance date is Oct. 1, while EPA says the catch-up proposal will be issued sometime before the end of October. Refiners therefore may complete 2025 compliance before the public sees the proposed allocation of the compensating 2026-2027 obligations.

That makes the result less “Wimpy” than feared, but not entirely free of the Popeye character’s promise to pay Tuesday for a hamburger today. Refiners receive the hamburger — the exemption — now. The biofuel payback still must survive notice, comment, final agency action and almost certain litigation.

Table 4. What is settled and what is not. Sources: EPA decision document; EPA Federal Register notice (FRL-13562-01-OAR); Ag Policy & Markets Daily analysis.

EPA Is Reversing an Important Part of Its March Position

The promised supplemental proposal also represents a notable change from EPA’s position in the final Set 2 rule. In March, EPA said it did not plan to revise the 2026 and 2027 percentage standards to account for later changes in its SRE approach or inaccuracies in its exempt-fuel projection. The rule used the 2022-2024 three-year average to project 2025 exemptions and treated that estimate as final for purposes of the percentage standards.

EPA is now doing precisely what the March rule said it did not plan to do: reopening the 2026-2027 obligations because actual 2025 exemptions materially exceeded the projection.

That reversal benefits biofuel producers, but it creates a possible legal argument for obligated parties that relied on the final March standards. The Set 2 rule itself acknowledged that late and partially retroactive reallocation creates burdens for refiners and said the 70% approach was chosen partly to mitigate them.

Refining groups therefore could challenge the supplemental increase as an impermissible late-year compliance surprise.

Biofuel groups, meanwhile, could challenge EPA for failing to restore the remaining 30% of its original 2025 projection. 

The agency has placed itself between two potential lawsuits.

Inside the Decision Document: Mechanics That Shape the RIN Supply

The decision document itself carries three implementation details that matter as much to the RIN balance as the headline number.

First, EPA is not issuing new credits. Refineries that already retired RINs for 2025 will have those same RINs returned to them, and EPA is returning both expired and unexpired vintages. Pre-2024 vintage RINs come back expired and cannot be used for future compliance; 2024 RINs returned to small refineries are usable for trading or against open 2025 obligations. That distinction determines how much of the 1.76 billion actually becomes tradable supply.

EPA explains why it chose that route. Had the agency instead replaced the old, expired RINs with current-vintage credits across its August 2025, November 2025 and August 2026 decisions, it estimated roughly 3.3 billion new RINs would have entered the market — an influx it said would depress prices and reduce investment in renewable fuel production. The volume at issue in this action is smaller, but EPA applied the same approach for consistency.

Second, the reporting mechanics change. Fully exempted refineries must file revised compliance reports showing zero obligated gasoline and diesel and zero RVOs, while still reporting their production under a new exempted-fuel category. Partially exempted refineries report half their volumes as obligated and half as exempt, and must retire enough RINs to cover the 50% obligation or carry a deficit forward. Those revised reports are due Oct. 1, 2026.

Third, the two ineligibility rulings rest on narrow, and different, grounds. One refinery exceeded the 75,000-barrel-per-day throughput ceiling in 2025. The other never received the initial blanket exemption — it qualified as a small refinery under RFS1 in the 2004 qualification year but did not submit the required verification letter — and EPA holds that a refinery cannot obtain an extension of an exemption it never had.

RIN Market Gets a Split Signal

The immediate RIN-market implications are mixed.

The bearish elements are substantial:

The final waiver package is near the top of the range circulated before the announcement.

The 2025 compliance deadline has been delayed.

Obligated parties now know that 1.76 billion RINs will not have to be retired by the exempted refineries.

The supplemental demand does not yet exist in a final regulation.

RIN values had already adjusted sharply. According to reporting, conventional D6 RINs fell to approximately $1.75 on Aug. 24 from roughly $2.50 in July, while D4 biomass-based diesel credits traded near $1.92.

Figure 8. RIN values ahead of the decision. Source: Aug. 24, 2026 Ag Policy & Markets Daily analysis.

But markets trade against expectations, not against zero. The final total is slightly below the “more than 1.8 billion” scenario, while the 770-million-RIN catch-up commitment is substantially larger than the roughly 500-million-RIN remedy previously discussed.

Analysts say that combination could provide support to longer-dated RINs even while the immediate exemption and deadline extension pressure current compliance-year credits. Much will depend on EPA’s proposed split between 2026 and 2027 and among the individual RIN categories.

Corn and Soybean Effects Will Differ

The 1.76 billion RINs should not be described as 1.76 billion physical gallons of ethanol, biodiesel or renewable diesel disappearing from the market.

An SRE relieves a refinery of its obligation to retire credits. It enlarges the pool of RINs available for banking or use by other obligated parties. Physical biofuel demand is affected later when those credits substitute for RINs generated from new renewable-fuel production. EPA’s own rules recognize that carryover RINs can be used in place of new renewable fuel.

A Bloomberg Intelligence estimate noted that approximately 60% of a high-end SRE package could fall on conventional D6 RINs. Applying that illustrative weighting to the actual decision would put roughly 1.06 billion RINs of the initial effect in the conventional category, although EPA has not yet published the final category breakdown.

Table 5. Illustrative category split of the exempted volume. This is a weighting applied for analysis, not an EPA allocation. Sources: Bloomberg Intelligence; Ag Policy & Markets Daily calculations.

For corn ethanol, routine E10 blending is supported by gasoline economics as well as the RFS. The principal risk is therefore weaker D6 values reducing the incentive for discretionary gallons through E15, E85 and other higher blends. That can pressure ethanol margins and gradually soften corn demand rather than immediately removing an equivalent volume of ethanol.

For soybean oil, biodiesel and renewable diesel, the physical demand risk may be more immediate because RIN and tax-credit values play a larger role in the marginal economics of production. Before the decision, the American Soybean Association estimated that an inadequately reallocated high-end package could threaten about 500 million gallons of biomass-based diesel and renewable diesel demand and roughly $1 billion in soybean revenue. Those estimates were based on the feared no-offset scenario and should be reduced substantially if EPA finalizes the 770-million-RIN catch-up as announced.

Little Evidence of a Meaningful Pump-Price Benefit

The decisions unquestionably lower compliance costs for the 29 small refineries receiving relief. A larger RIN supply can also reduce credit costs for nonexempt refiners.

But the nationwide retail fuel benefit is likely to be difficult to identify.

EPA’s previous work has generally found that RIN costs are incorporated into wholesale petroleum prices and recovered by refiners. Individual merchant or small refiners can still face disadvantages, but granting SREs does not necessarily translate dollar-for-dollar into cheaper gasoline.

Moreover, the current oil and gasoline price surge is being driven primarily by crude oil supply risk and refinery-market disruptions associated with the conflict with Iran. Against that backdrop, lower RIN costs may improve refinery economics but are unlikely by themselves to reverse the larger crude-driven increase at the pump.

DOE Review Signals More Uncertainty Ahead

The Department of Energy’s decision to reconsider how it applies its 2011 disproportionate-economic-hardship methodology may prove nearly as consequential as the 2025 decisions.

EPA says DOE is reviewing how its matrix has historically been used and what information future petitioners should submit to account for current market circumstances. That suggests the 18 full and 11 partial grants should not automatically be treated as the template for 2026 and 2027.

“Based on agency experiences, DOE is evaluating how it has historically utilized their 2011 disproportionate economic harm methodology and the information needed for future small refinery petitions to account for current market circumstances in this new phase of the RFS program. DOE will continue to seek public feedback from all impacted stakeholders on these analyses.”

The final sentence is the one biofuel and refining groups should read closely. DOE is committing to take public input on the analyses themselves — a channel that has historically been closed, because the matrix scoring for individual petitions is treated as confidential business information and reaches the public only in aggregate. If that feedback process is real, it becomes the first practical opportunity for either side to influence the size of the 2026 and 2027 exemption pools before the petitions are filed, rather than litigating the results afterward.

But until DOE completes that work, EPA’s future exempt-volume projections will remain unusually uncertain. A changed methodology could produce higher or lower SRE totals, complicating EPA’s stated goal of prospectively accounting for exemptions and avoiding further catch-up rules.

EPA’s Market-Manipulation Warning Is Highly Unusual

EPA closed its announcement with an unusually pointed warning about news reports and other information that moved RIN prices before the agency acted.

The agency said the volatility raises concerns about possible misuse of material nonpublic information and market manipulation and announced expanded coordination with the Commodity Futures Trading Commission. The release reads:

“Since the beginning of the Trump Administration, EPA has observed inaccurate and misleading reporting on the agency’s RFS actions that have contributed to significant market movements despite no official statement or action from the Administration. Most recently, misleading reports and information led to significant volatility in the RIN market. These incidents raise serious concerns about the potential misuse of material nonpublic information and possible market manipulation. EPA continues to work with the Commodity Futures Trading Commission and will expand its coordination to ensure compliance with all applicable federal laws and protect the integrity of the RIN market.”

Two features of that language are worth separating. The first sentence is not about this decision at all: it asserts a pattern of inaccurate reporting running back to the start of the administration, and it ties those reports to market movements that occurred with “no official statement or action” behind them. The second is narrower — the specific pre-decision volatility in RIN values, which the agency links to “misleading reports and information” rather than to a leak of the petition results themselves.

That statement should not be read as a finding that a particular trader, company, government official or news organization violated federal law. EPA identified no alleged offender and disclosed no specific transaction under investigation.

It does, however, raise the enforcement stakes. EPA and the CFTC have operated under a formal information-sharing agreement since 2016 that allows transaction and position information from EPA’s RIN system to be used in market-oversight work and investigations of possible fraud or abuse.

The language also appears designed to discourage selective leaking of petition results or internal policy discussions in a relatively opaque market where a shift of hundreds of millions of RINs can produce abrupt price movements.

Bottom Line

EPA’s decision is a split outcome rather than a clean victory for either side.

Refiners received nearly the high-end package they sought: 1.76 billion RINs of relief, with 29 of 34 petitioners receiving full or partial exemptions. Biofuel producers avoided the worst-case result because EPA committed to recovering the entire 770-million-RIN forecasting error through higher 2026 and 2027 obligations.

But EPA is not proposing to restore the full exemption package. Even if the catch-up is finalized exactly as announced, approximately 297 million RINs would remain unreallocated under the 70% structure established in March.

The waiver is final now. The agricultural offset is not.

The next phase of the battle therefore shifts from the individual refinery petitions to EPA’s supplemental rulemaking — particularly the allocation between 2026 and 2027, the division among RIN categories and whether the agency can finalize the added obligations before litigation or regulatory delay erodes their market value.

Appendix: EPA’s 34 Individual 2025 Decisions

Table 6. Every 2025 SRE petition decided on Aug. 31, 2026. Source: EPA, August 31, 2026 Decisions on Petitions for RFS Small Refinery Exemptions (EPA-420-R-26-017), Appendix A.

AG POLICY & MARKETS DAILY   |   SPECIAL REPORT  |  RENEWABLE FUEL STANDARD — MONDAY, AUGUST 31, 2026