EPA’s Set 3 Slippage: 2028 Biofuel Volumes Likely to Blow Past the Statutory Deadline
Agency officials privately signal even a proposal by Oct. 31 is a stretch, with a final rule sliding to early-to-mid 2027 — leaving the RFS’s biggest unresolved questions perhaps hanging over markets for another year
Oct. 31, 2026 — under the Clean Air Act’s “set” authority —is effectively the deadline for the final 2028 RVO volumes under the Renewable Fuel Standard (RFS), which must be established 14 months before the compliance year begins.
But sources say EPA is telegraphing that it will miss the statutory mark by a wide margin, with finalization drifting into early or mid-2027 — roughly six to eight months late. That also cuts against market chatter that a proposed rule was near. That is no longer the case, based on government and industry contacts.
Sources say EPA wants some time to see the market reaction to Set 2 – there has only been a couple of months of EMTS RIN generation data/soy crush stats since the rule was finalized. That is why some biofuel stakeholders say that are okay with a delay, as one source put it, “as long as we can get some direction later this year.”
Perhaps the biggest potential “tell” that EPA is not going to meet the Oct. 31 deadline is that in the latest regulatory agenda for the agency, the RFS Set 3 rule is not even listed as a regulatory action the agency has planned for 2026.
EPA has not sent its proposal to the Office of Management and Budget (OMB). And there could be a reason for that… Aaron Szabo is (for a few more days or weeks, anyway) EPA’s assistant administrator for the Office of Air and Radiation — the office that houses the Office of Transportation and Air Quality (OTAQ), which writes and administers the RFS. He’s an attorney and former lobbyist who worked at the White House Council on Environmental Quality and OMB in the first Trump term, then at Faegre Drinker and the CGCN Group, where his lobbying clients notably included the American Fuel and Petrochemical Manufacturers — the refiner trade group that is the RFS’s most persistent adversary. That history made his party-line Senate confirmation in July 2025 contentious, though biofuel groups largely made peace with him once the Set 2 rule came out with record volumes. Szabo has announced he’s leaving. News reports noted on July 7 that Szabo is resigning after roughly a year on the job. EPA hasn’t disclosed his final day, hasn’t said where he’s going, and — notably — declined to name even an acting successor. His tenure was defined mostly by the climate side of the portfolio: he shepherded the rescission of the 2009 greenhouse gas endangerment finding and has pending rules repealing power plant GHG limits and rewriting the methane rules. The RFS wasn’t cited in the departure coverage, but it sat squarely in his shop, and he was the political appointee who signed off on the Set 2 final rule and the small refinery exemption reallocation approach. As for impact on coming RFS decisions, the honest answer is that it reinforces, rather than causes, the slippage some EPA contacts described above. The Set 3 rule is at exactly the stage — internal drafting, hard calls on the import RIN reduction mechanics and prospective SRE treatment, then OMB interagency review — where a leadership vacuum at the top of the air office slows things down. Career staff at OTAQ do the technical work regardless, but the unresolved Set 3 questions are fundamentally political judgment calls (how hard to penalize imported feedstocks, how many exemptions to project, whether to sustain the biomass-based diesel growth path), and those decisions tend to stall without a confirmed assistant administrator to own them. A successor would need Senate confirmation, which realistically takes months even on a friendly calendar; an acting official can move a proposal but is typically reluctant to lock in controversial final rule calls. It also matters who the replacement is: biofuel and ag groups will watch closely whether the next air chief comes from the refining orbit, as Szabo did, or is more attuned to the farm state coalition — that could color the Set 3 final rule’s toughest tradeoffs. Net effect: it adds credibility to the “proposal barely by Oct. 31, final in early-to-mid 2027” timeline, and it introduces a new variable — who holds the pen when the hardest Set 3 decisions actually get made. |
EPA Administrator Lee Zeldin has been publicly bullish on Set 3 timing. His most explicit commitment came at the Agri-Pulse Ag and Food Policy Summit on March 23, 2026, just before the Set 2 rule dropped. He said EPA would “immediately begin work on RFS Set 3 upon completion” of Set 2, framing it as a matter of providing “greater predictability” to markets — an implicit acknowledgment that the Set 2 rule, finalized nearly a year late and after the 2026 compliance year had already begun, was exactly the scenario he wanted to avoid repeating. “We immediately moved to RFS Set 3 as soon as we finished RFS Set 2,” he told the House Energy and Commerce Committee April 28. “We will work as fast as we possibly can to be able to get this back on track.” That is as close to a commitment to meet the Oct. 31 deadline as Zeldin has said. Then on May 14, testifying before the Senate Appropriations subcommittee on EPA’s FY 2027 budget request, he confirmed the agency would “over the next few months” be completing a rulemaking to set new RVOs — the Set 3 rule. Notably, though, he has never publicly committed to a specific date for either the proposal or the final rule.
Those statements, plus Zeldin’s repeated emphasis when finalizing Set 2 on giving market participants “predictability and sufficient lead time to make investment and production decisions,” are what built the market expectation of a summer 2026 proposal with a final rule possibly by late October — meeting or beating the statutory timing for the 2028 volumes. Some coverage as recently as early July was still calling an October final rule “a realistic and increasingly expected outcome.”
Zeldin’s public framing points to an on-time or early Set 3, while the working-level signal from biofuel stakeholders in recent weeks is EPA would be lucky to get a proposal by Oct. 31, and a final rule not until early or mid-2027.
Zeldin made similar “moving as fast as humanly possible” assurances on Set 2 throughout 2025, and that rule still slipped nearly a year past its deadline —though to his credit, once he publicly promised Set 2 “before the end of March,” EPA delivered — his specific public date commitments have held up better than his general assurances.
Second, the Szabo departure previously discussed: the air office losing its confirmed assistant administrator with no named successor is precisely the kind of thing that turns “over the next few months” into next year. The key to watch is whether the proposal reaches OMB interagency review by late summer; if it hasn’t by September, the contacts’ timeline previously mentioned is the operative one.
The slippage itself is unsurprising; it’s practically an RFS tradition. The Set 2 rule covering 2026-2027 was proposed in June 2025 and not finalized until late March 2026 — itself well past its own statutory timing — and EPA has missed nearly every major RVO deadline of the past decade.
The pattern matters legally as well as practically: chronic lateness is what has repeatedly drawn deadline lawsuits from biofuel groups and, in past cycles, consent decrees that ended up dictating the rulemaking calendar.
A Set 3 final rule in mid-2027 would land barely six months before the 2028 compliance year starts, giving obligated parties almost no runway.
What makes this delay more consequential than routine RFS foot-dragging is how much unfinished business EPA deliberately parked in Set 3. The final Set 2 rule punted the import RIN reduction — the 50% haircut on RINs for fuels made from foreign feedstocks — to 2028 “or shortly thereafter,” and the mechanics of feedstock tracing and country-of-origin verification remain unwritten.
The agency also signaled that its 70% partial reallocation of small refinery exemption volumes was a one-time cleanup, meaning Set 3 must establish how projected SREs get built into the 2028 formulas prospectively.
Those two questions — the import penalty and SRE treatment — are arguably worth more to RIN values and soybean oil demand than the headline volume numbers themselves.
For the countryside, the stakes run through the crush sector. Biomass-based diesel volumes near 9 billion gallons in 2027 underpin the wave of soybean crush capacity that has come online or been announced, and investors deciding whether that buildout extends into the late 2020s need to know whether EPA sustains the growth trajectory into 2028-2030 and how the domestic-feedstock preference meshes with the 45Z clean fuel production credit. A final rule that doesn’t arrive until mid-2027 means those capital decisions — and RIN and bean oil markets — trade on speculation for another year.
Add in the pending refiner litigation against the Set 2 rule, which Growth Energy has intervened to defend, and the post-2027 RFS landscape stays unsettled on both the regulatory and judicial fronts.
Bottom line: The practical planning assumption for 2028 standards is now a proposal around late 2026 and a final rule in the first half of 2027 — late enough to invite deadline litigation, and late enough that the import-feedstock and SRE fights will dominate biofuel policy well into the next presidential campaign season.
We previously noted that Set 3 is shaping up as the most consequential biofuel rulemaking since the original statutory tables ran out. It will determine whether the domestic-feedstock realignment announced in Set 2 gets operational teeth, whether SRE-driven demand leakage is structurally repaired or perpetually relitigated, and whether the RFS and 45Z function as reinforcing pillars or misaligned overlays. The pressure to resolve the IRR mechanics, SRE projections and reallocation policy in a single pass is correspondingly intense. What EPA puts in it will tell corn growers, soybean farmers, crushers and renewable diesel investors whether Washington intends the biofuel boom to keep compounding — or to plateau. It appears stakeholders may have to wait longer than they hoped for EPA answers.
