US EPA to finalize biofuel mandate, refinery exemptions by end-March

The US Environmental Protection Agency has submitted the long-delayed proposal for biofuel volume obligations under the Renewable Fuel Standard, or RFS, to the US Office of Management and Budget for approval, said US EPA Assistant Administrator for Air and Radiation Aaron Szabo on Feb. 25 during a trade conference in Orlando.

The EPA sets annual Renewable fuel Volume Obligations, or RVOs, under the RFS, which determines blending obligations and compliance deadlines for biofuel producers and refiners in 2026 and 2027.

"The Renewable Fuel Standard Set 2 final rule is going to OMB today and we will be finalizing the rule by the end of March," Szabo said at the National Ethanol Conference, organized in Orlando.

For 2026-2027, the EPA's "Set 2" rules proposed higher RVOs compared to previous years, particularly increasing biomass-based diesel and advanced biofuel categories.

Source: US EPA "RFS Set 2 Rule" proposal

Szabo also addressed the more controversial part of the RFS, known as the Small Refinery Exemptions, and said the EPA has focused on resolving SREs first, as requested by stakeholders.

"We have not delayed this rule for any reason or by any request. This is really hard, and we want to make sure we do it right to give you all the certainty you all ask for and deserve," Szabo said.

SREs are a carve-out within the RFS rules that grant temporary waivers to fuel refineries capable of demonstrating they are facing "disproportionate economic hardships". While the rule aims to ease the financial burden of meeting blending targets, biofuel and agricultural industry groups have lobbied against it, arguing that it reduces final demand for their industries.

In June 2025, the EPA proposed record biomass-based diesel volumes and included a 50% reduction in renewable identification numbers for imported renewable fuels and fuels made from foreign feedstocks. The proposal also indicated fewer exemptions and a mandatory reallocation of the exempted volumes.

Later in December 2025, the EPA told the US Court of Appeals for the DC Circuit that it expects to issue final RVO rules during the first quarter of next year, as multiple interagency reviews and consultations are still pending.

The statutory deadline for setting up RVO rules was Nov. 30, 2025. The 2025 RVO expired Jan. 31, 2026, the EPA had said last year.