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SATURDAY, AUGUST 01, 2026   |   SPECIAL REPORT & ANALYSIS

SPECIAL REPORT  |  RFS REFINERY EXEMPTIONS

Out of Runway: Court Clock Forces EPA’s Hand on Refinery Exemptions

EPA has promised rulings by Monday on the remanded Alon and HF Sinclair waivers — decisions that will test April’s precedent-setting court loss, shape the gallon-reallocation fight and land the same week the Senate farm bill moves to end the case-by-case SRE petition system and replace it with an automatic small-refinery adjustment.
 

Analysis  ·  August 1, 2026

The Environmental Protection Agency (EPA) is out of runway on the refinery exemption question it has sat on since spring. In a July 28 court filing, the agency committed to decide the two remanded 2024-compliance-year small refinery exemption (SRE) petitions from Alon Refining Krotz Springs and HF Sinclair by Monday, Aug. 3 — Aug. 4 in some accounts of the filing — after the refiners asked the D.C. Circuit to force its hand. As of this writing, nothing has been posted despite some errant conjecture from biofuel “experts” that the announcement would come Friday, July 31. Whatever lands early in the coming week will be read far beyond two refineries.

The courts have already settled whether these refineries are eligible. What the coming week will reveal is what “hardship” still means at EPA — and whether the gallons it waives ever come back.

How two waivers landed on a court clock

Last August, EPA cleared the long-festering SRE backlog in one stroke, deciding 175 petitions from 38 refineries covering compliance years 2016-2024: 63 full (100%) exemptions, 77 partial (50%) exemptions, 28 denials and seven petitions ruled ineligible. Among the denials were the 2024 petitions of Alon’s Krotz Springs, La., refinery and HF Sinclair. Both companies went to court.

On April 7, the D.C. Circuit handed them a precedential win (Alon Refining Krotz Springs, Inc. v. EPA), vacating the denials. EPA had insisted a refinery stay under the 75,000-barrel-per-day small-refinery threshold in two consecutive years; the court held that reading contradicts the agency’s own 2014 regulation — for a retroactive petition, the qualifying year and the exemption year are the same year, here 2024. The court issued its mandate April 24, formally returning the petitions to EPA and starting a 90-day period that expired July 23 without EPA action, by the refiners’ own count in their July 24 motion to compel decisions. EPA’s July 28 response promised rulings by Aug. 3 — roughly a week ahead of the Aug. 11 deadline the companies had proposed.

Table 1. Key dates in the small refinery exemption endgame. Sources: D.C. Circuit; EPA; Senate Ag Committee; trade press.

A precedent bigger than two refineries

The April ruling did more than revive two petitions — it lowered the eligibility bar for every retroactive exemption request, stripping EPA of its favorite threshold argument. What remains on remand is the hardship determination, where EPA still has discretion and the Energy Department’s scoring matrix still matters. But the agency’s own August 2025 template — 50% partial exemptions as the default outcome when DOE’s matrix split the difference — makes a partial grant the path of least resistance. A fresh denial, by contrast, would invite another round in a courtroom that has now repeatedly sided with refiners, at an agency that has already been sued once this summer for slow-walking these very petitions.

The reallocation stakes

The gallons are where the ethanol and biodiesel lobbies come in. The March 27 final rule set the 2026-27 renewable volume obligations at 26.81 billion and 27.02 billion RINs and, for the first time, baked in a 70% reallocation of volumes exempted for 2023-25 — adding back roughly 0.99 billion RINs in 2026 and 1.04 billion in 2027. Biofuel groups wanted 100% and said so loudly. Exemptions granted now, after that rule was finalized, raise the obvious question: do these newly waived 2024 gallons ever get made up, or are they simply lost demand? Expect the answer to be litigated in EPA’s pending supplemental SRE rulemaking — and expect the fight to be sharper than the volumes alone suggest, because record-high 2026 blending mandates have driven the value of an exemption to unprecedented levels.

The farm bill wild card

Monday’s rulings also land in the middle of a legislative pivot. The revised Senate Farm Bill 2.0 text released late Friday — markup is set for Thursday, Aug. 6 — pairs permanent nationwide year-round E15 with language that would retire the case-by-case SRE petition system: beginning in 2028 EPA could no longer grant or enforce petition-based exemptions, no refinery could petition for any year after 2027 or file anything after July 1, 2028, and EPA would have to act on the backlog by Oct. 1, 2028, “to the maximum extent practicable.” In its place, qualifying small refineries would get an automatic, production-based “certainty” carve-out keyed to their 2023-25 petitions and production. EPA would then reallocate the calculated exempt volume to other obligated parties — after subtracting an amount whose renewable-fuel obligation is equivalent in energy content to 500 million gallons of conventional biofuel — with a true-up against actual exempt volumes in later years.

Note the wrinkles. Eligibility for the Senate carve-out is keyed to 2023-25: a refinery’s automatic reduction equals the lesser of its biggest 2023-25 production year — one for which it petitioned by June 1, 2026, and met the 75,000-barrel-a-day small-refinery definition — or its current-year output. That means the April precedent construing that very definition, won by these two refiners, would carry straight into the new regime, and a savings clause preserves existing-law remedies for pending petitions like the two due Monday. The House-passed standalone bill (HR 1346) runs the trade the other way — an automatic 75% RVO reduction for qualifying small refining companies from 2028, with reallocation of that automatic adjustment expressly barred, plus a separate “at-risk” petition process capped at 150 million gallons — a formula ethanol groups swallowed only as the price of passage. Either way, if Congress finishes the job, Monday’s decisions could stand among the last of the case-by-case era — even as their outcome echoes through both bills.

Bottom line

Expect relief, not another denial, say some contacts — though that is analysis, not an outcome the court ordered. April’s ruling settled only eligibility; the disproportionate-economic-hardship judgment remains EPA’s to make. Still, the courtroom record and EPA’s own 2025 practice suggest both refineries could emerge with at least 50% exemptions, announced right at the Aug. 3/4 wire. The volumes at stake are modest; the signals are not. Watch three things: whether any grants are full or partial; whether EPA says anything about making the waived gallons up; and how the rulings color Thursday’s Senate farm bill markup, where the replacement for the case-by-case exemption era is already drafted.

AG POLICY & MARKETS DAILY   |   SPECIAL REPORT  |  RFS REFINERY EXEMPTIONS — SATURDAY, AUGUST 01, 2026