Senate Year-Round E15 Strategy Shifts to Legislative Vehicles as Lawmakers Seek Path Beyond Controversial House-Passed Bill
Disagreements over refinery eligibility remain a major obstacle, while Senate supporters search for a legislative vehicle and language capable of advancing year-round E15
The House’s passage of year-round E15 legislation has shifted the fight to the Senate, where lawmakers are increasingly focused on both the substance of the bill and the vehicle that could ultimately carry it across the finish line.
Senate Ag Committee Republicans are already discussing what some are calling the “second act” of the House-passed E15 bill. While supporters remain committed to making permanent the nationwide sale of E15 during the summer driving season, many acknowledge that the House language is very unlikely to move through the Senate unchanged.
A central issue is the bill’s language on refinery eligibility.
However, incorporating reallocation language creates a separate political challenge. Refinery-state lawmakers have historically opposed such provisions, arguing they shift compliance costs to other refiners. Senators representing crude oil and refining states — particularly Sen. Ted Cruz (R-Texas) and some Gulf Coast lawmakers — are viewed as potential obstacles to any Senate bill containing mandatory reallocation requirements. Cruz and Sen. Mike Lee (R-Utah) previously urged EPA not to proceed with reallocation proposals, arguing they would raise refinery compliance costs. Of note: Senate Majority Whip John Barrasso (R-Wyo.) has emerged as one of the most vocal critics of the House-passed bill, arguing it could harm small refineries that play an important role in supplying fuel to inland markets. Barrasso has also opposed EPA’s proposed reallocation of exempted RFS volumes, highlighting the challenge Senate negotiators face as they attempt to craft legislation acceptable to both ethanol-producing states and refining-state lawmakers. Given Barrasso’s position in Senate leadership, many observers believe any successful Senate compromise will have to address concerns surrounding small refinery exemptions and compliance costs.
That is why the Senate debate is likely less about whether year-round E15 should happen and more about what refiners receive in return. Several senators have already suggested the House bill will need changes. Sen. John Hoeven (R-N.D.) said senators will “probably have to make a tweak on the small refinery exemption.”
That leaves Senate negotiators searching for a narrow compromise. Biofuel and farm-state interests want stronger protections for RFS volumes. A possible compromise could mirror EPA’s 70% approach on reallocations, phase in reallocation, limit it to certain waiver years, or pair reallocation with more predictable SRE timelines and transparency. Yet a bill that fully embraces reallocation risks losing support from refinery-state senators whose votes may be needed to clear the Senate.
As a result, many industry observers believe the final Senate language must differ from the House version if it is to have a realistic chance of passage. Potential compromises could include partial reallocation, a phased-in approach, or provisions providing greater certainty and transparency regarding future refinery waiver decisions.
| What is the difference between the year-round E15 bill that the House passed versus Senate Bill S 593 by Sens. Fischer and Capito The differences are actually much larger than many people realize. S 593, sponsored by Sen. Deb Fischer (R-Neb.) and Sen. Shelley Moore Capito (R-W.Va.), is a much cleaner E15 bill. Its primary purpose is to permanently extend the Reid Vapor Pressure (RVP) waiver to E15 and allow year-round nationwide sales. It largely focuses on the Clean Air Act issue that prevents E15 sales during the summer months. Of note: The Fischer-Capito bill, however, is not purely a “clean E15 bill.” Besides extending the Reid Vapor Pressure (RVP) waiver for year-round E15, it contains provisions addressing unresolved small refinery exemption issues dating back to the 2016-2018 compliance years. Specifically, it provides a mechanism for certain small refineries to reclaim or reapply Renewable Identification Number (RIN) credits associated with those years. That provision stems from years of litigation and regulatory uncertainty surrounding retroactive SRE petitions. The 2016-2018 period was the most controversial era of the RFS program because EPA granted a large number of refinery exemptions after the compliance years had ended, resulting in substantial reductions in renewable fuel obligations and creating major disputes between refiners and biofuel groups. EPA later revisited many of those decisions through court proceedings, remands, and subsequent agency actions. (Note: The House bill contains these same Fischer/Capito return of RINs). The political significance is important. Many ethanol and farm groups initially viewed S 593 as a relatively narrow E15 measure because it does not create the sweeping new SRE structure found in the House bill. However, refiners have argued that the Senate bill contains provisions intended to resolve lingering compliance issues from the 2016-2018 period and provide certainty regarding previously retired RINs.The House-passed bill beginning in 2028 would eliminate EPA’s current hardship exemption framework, establish an automatic 75% exemption for qualifying small refining companies, create a separate category for at-risk refineries, and prohibit EPA from reallocating volumes associated with those automatic exemptions. The true difference is that Fischer-Capito represents a one-time hit to RFS volumes while leaving current eligibility for SREs in place along with EPA policy of 70% reallocation of future SREs, while HR 1346 represents much larger and ongoing reductions in RFS volumes through automatic SREs and the prohibition of reallocation. Upshot: The House-passed HR 1346 evolved into a much broader bill. Besides allowing year-round E15 sales, it makes major changes to the Renewable Fuel Standard’s Small Refinery Exemption (SRE) program (and future RFS volumes). Those provisions are what generated much of the controversy. Small Refinery Exemptions (SREs). The biggest distinction is that the House bill restructures the SRE program beginning in 2028. Under HR 1346, qualifying small refineries would automatically receive a 75% exemption from Renewable Volume Obligations (RVOs), replacing the current petition-based process. The bill also narrows the definition of which refineries qualify and establishes a separate mechanism for certain “at-risk” refineries to obtain larger exemptions. S 593 does not contain those RFS restructuring provisions. It is largely limited to fixing the E15 volatility waiver issue. Reallocation. This is where the Senate debate becomes especially interesting. The House bill explicitly prohibits EPA from reallocating gallons associated with the automatic refinery exemptions. In other words, if gallons are waived, EPA cannot simply redistribute those obligations to other refiners. S 593 avoids that fight entirely because it does not attempt to rewrite the SRE framework. Why this matters in the Senate. Ironically, the narrower Senate bill may have an easier path because it keeps the coalition focused on E15. The House bill forced lawmakers to take positions not only on E15 but also on refinery exemptions, RIN markets, and future RFS compliance costs. The measure in the House was developed by the House with little or no consultation with the Senate. Refinery-state senators are less concerned about year-round E15 itself than they are about how changes to SREs affect refinery compliance obligations. The Set 3 overlay. The timing is important because EPA is already developing its Set 3 Renewable Fuel Standard rule (see separate box below), which will cover 2028 and beyond. EPA must finalize the 2028 standards by Oct. 31, 2026 — roughly 14 months before they take effect (a proposed rule is expected this month). The agency will also need to account for the new EPA provision that starting in 2028, provides only 50% RIN value for imported fuels and fuels made from imported feedstocks. That means Congress and EPA are now operating on parallel tracks. If Congress adopts the House approach and statutorily prohibits reallocation, EPA will likely have to incorporate that assumption into Set 3 volume-setting. If Congress ultimately embraces some form of reallocation — perhaps closer to EPA’s Set 2 framework that reallocated 70% of exempted gallons — EPA could set 2028 RVOs under a different demand outlook. |
Meanwhile, Senate ethanol supporters are actively identifying legislative vehicles beyond the farm bill. Sen. Chuck Grassley (R-Iowa) recently pointed to several possible opportunities. “I think there’s multiple opportunities: the farm bill, the defense bill, any appropriation bill,” Grassley said. “There’s going to be three or four opportunities to get it in one of those bills.”
Grassley also suggested that even if Senate Ag Committee Chairman John Boozman (R-Ark.) remains reluctant to include E15 provisions in a farm bill package, supporters still have procedural options. “That doesn’t preclude us offering it as an amendment, either in committee or on the floor,” Grassley said.
The comments highlight growing recognition that the most realistic path for year-round E15 may be attachment to must-pass legislation rather than movement as a stand-alone bill.
Still, Senate supporters are not ruling out a separate measure. Sen. Deb Fischer (R-Neb.) said lawmakers continue to discuss that possibility. “We’re even discussing the stand-alone bill because we know we have support from both sides of the aisle on E15, so we’re just going to try and work through that,” Fischer said.
Despite that optimism, most Washington observers continue to view a stand-alone Senate bill as a difficult path. Unlike the House, where leadership secured passage with a simple majority, Senate supporters would likely need to assemble a broader bipartisan coalition while simultaneously resolving differences between ethanol producers, soybean groups, farm organizations and refinery interests.
But there is another possible option some Senate staffers are chatting about: Senators supporting year-round E15 could woo Senate Ag Chair John Boozman (R-Ark.) into putting the measure into his coming farm bill if they pledge support for additional funding for ag disaster and farmer relief late this year. If not, they could possibly withhold their support for such funding. Boozman apparently does not want three things in the coming Senate Farm Bill 2.0: (1) No year-round E15 language; (2) No pesticide labeling language; and (3) No end around language to Proposition 12.
For now, the debate increasingly centers on whether negotiators can find a compromise on refinery waiver eligibility and reallocation that satisfies enough stakeholders to move the legislation. The answer to that question may determine not only the final Senate language but also whether year-round E15 ultimately rides on the farm bill, the National Defense Authorization Act, an appropriations package, or another year-end legislative vehicle, perhaps in a post-election lame-duck session of Congress.
Senate E15 debate collides with EPA’s upcoming Set 3 RFS rule Year-round E15 legislation is becoming intertwined with EPA’s 2028 Renewable Fuel Standard rulemaking, creating another layer of complexity for senators, refiners and biofuel producers. The Senate’s debate over year-round E15 is no longer occurring in isolation. Hanging over the legislative fight is EPA’s upcoming Set 3 Renewable Fuel Standard rule covering 2028, a rulemaking that could significantly influence the economics of biofuel blending and potentially reshape the politics surrounding small refinery exemptions and gallon reallocation. Major issue: Many ethanol advocates view year-round E15 as a demand-expansion measure, but increasingly the discussion is becoming linked to how EPA structures future Renewable Volume Obligations (RVOs) under the Renewable Fuel Standard. That connection could prove critical because EPA is expected to propose Set 3 yet this month and finalize the rule by Oct. 31, 2026, under statutory requirements that Renewable Fuel Standard volumes be established 14 months before they take effect. (However, passage of provisions like those in HR 1346 that prohibit reallocation would also impact EPA decision making on volumes for not only ethanol, but also BBD and advanced fuels. EPA would need to set volumes lower and couldn’t consider amounts to be waived.) EPA Administrator Lee Zeldin has already indicated that work on Set 3 is underway. The rule is expected to establish 2028 blending requirements and may become one of the most consequential biofuels rulemakings in years because it will be the first major RFS package developed under the Trump administration’s current energy and agricultural policy framework. Complicating matters further is the EPA RFS plan which put in place a requirement that imported fuels and fuels produced from imported feedstocks receive only 50% of the Renewable Identification Number (RIN) value available to domestically produced qualifying fuels starting in 2028. That provision creates a new variable EPA must account for when setting future renewable fuel volumes and evaluating compliance economics across the biofuels marketplace. For ethanol and soybean groups, the interaction between E15 legislation and Set 3 is becoming increasingly important. If Congress passes a year-round E15 bill without addressing reallocation of small refinery exemption volumes, sources signal they don’t think EPA can artificially jack up RVOs to compensate for the unreallocated volumes. Conversely, if Congress adopts explicit reallocation language, EPA may view that as preserving more renewable fuel demand within the existing framework, potentially affecting how aggressively it sets future volume obligations. In other words, the Senate’s decision on reallocation could directly influence EPA’s regulatory calculations. This is one reason the American Soybean Association and other biofuel interests are interested in making improvements in the Senate. While they strongly support year-round E15, they argue that exempted gallons should not simply disappear from the system. Their concern is that reduced renewable fuel obligations could undermine both ethanol demand and soybean oil demand used in biodiesel and renewable diesel production. Refinery-state lawmakers see the issue differently. As noted, Senators such as Sen. Ted Cruz (R-Texas) and Senate Majority Whip Sen. John Barrasso (R-Wyo.) have historically opposed reallocation policies, arguing that shifting exempted obligations onto other refiners increases compliance costs and places additional burdens on domestic fuel producers. That conflict is likely to intensify as EPA moves closer to its Set 3 proposal. Some industry observers believe Senate negotiators may ultimately attempt to avoid locking EPA into a specific reallocation framework through legislation and instead leave the agency greater flexibility as it develops the 2028 rule. Others argue that Congress should provide clarity now because uncertainty surrounding future small refinery exemption treatment could complicate EPA’s effort to establish durable 2028 blending requirements. Timing also matters. If Congress acts on E15 before EPA finalizes Set 3, lawmakers could effectively shape the assumptions EPA uses when determining 2028 RVO levels. If Congress fails to act, EPA may be forced to make its own assumptions regarding E15 growth, refinery waivers, imported-feedstock treatment and future renewable fuel demand. As a result, the Senate debate is becoming much larger than a simple question of whether consumers can purchase E15 year-round. The outcome could help determine how EPA structures the next generation of Renewable Fuel Standard requirements, how the agency accounts for the new 50% RIN treatment for imported fuels and imported feedstocks, and whether future renewable fuel obligations are built around a system that reallocates waived gallons or allows those obligations to disappear altogether. For biofuel producers, soybean growers, refiners and fuel marketers, the stakes now extend well beyond summer gasoline sales. The decisions Congress and EPA make over the next several months could shape the Renewable Fuel Standard’s economic framework heading into 2028 and potentially influence renewable fuel demand for years thereafter. |
Private biofuel industry analysts’ assessment: “The House version would effectively reverse the Trump administration’s approach outlined in the 2026–2027 Renewable Volume Obligations (RVO) rulemaking by prohibiting the reallocation of Small Refinery Exemption (SRE) volumes. EPA stated in the final rule that, “In the future, we intend to continue our policy of prospectively accounting for exempted volumes of gasoline and diesel such that there will be no need to include SRE reallocation volumes in this manner again.” By eliminating reallocation while simultaneously creating an amended SRE process that would automatically grant exemptions without requiring a demonstration of economic hardship, the House proposal would significantly reduce overall biofuel demand. The burden would fall disproportionately on biomass-based diesel producers and soybean growers, as reflected in analyses from FAPRI, CBO, and farmdoc Daily.
“Moreover, Reid Vapor Pressure (RVP) restrictions are only one of several barriers limiting broader E15 adoption. As a result, it is doubtful that a nationwide year-round RVP waiver for E15 would generate a meaningful near-term increase in ethanol consumption or corn demand. When viewed alongside the proposed SRE changes, the House bill would likely represent a net negative for agriculture and farmers.
“In fact, the legislation has the potential to undo much of the progress achieved through the 2026–2027 RVO framework. Current estimates suggest the House approach could result in a net reduction of roughly 1 billion gallons of biomass-based diesel demand. That volume equates to approximately 8 billion pounds of soybean oil, or about 727 million bushels of soybeans, before accounting for the offsetting value of soybean meal. Such a reduction would have significant implications for soybean demand, crush margins, renewable fuels investment, and overall farm income.”
