EPA expects to finalize 2026-27 biofuel blending rules in Q1 2026

The US Environmental Protection Agency (EPA) said it expects to issue a final rule setting renewable fuel volume obligations or RVOs for 2026 and 2027 during the first quarter of next year, as multiple interagency reviews and consultations are still pending, according to a Dec. 15 filing with the US Court of Appeals for the DC Circuit.

The EPA was responding to a Dec. 8 order directing the agency to provide an update on its progress and timeline for establishing the RVO mandates for the coming years.

The order stems from ongoing litigation brought by HF Sinclair Refining & Marketing, HF Sinclair Parco Refining and Alon Refining Krotz Springs, which are challenging the EPA's August denial of their small refinery exemption petitions for 2024 compliance.

The EPA released a proposed rule, referred to as "Set 2," in June for 2026 and 2027. The proposal also aims to curb participation by imported biofuels and feedstocks, eliminate electricity from the RFS program, and reduce the 2025 cellulosic RVO, while setting higher biodiesel blending targets.

Market participants are awaiting further guidance on the 45Z tax credit and the RVO finalization, as both policies play a key role in biofuels margins. Industry participants have said delays add near-term uncertainty for RIN values and blending economics, particularly as refiners assess compliance strategies for 2026.

A public comment period closed in August, followed by a supplemental proposal in September that explored reallocating volumes waived under the small refinery exemption program.

The EPA originally had set an expectation that the RVO rules would be finalized before the statutory deadline of Nov. 30, 2025.

In its Dec. 15 filing, the EPA stated that it is working to finalize the standards, noting that more than 2,000 public comments had been submitted. It is coordinating with other federal agencies and addressing technical issues, including a regulatory impact analysis of the proposed volumes.

The agency said the rule must first undergo interagency consultations with the Agriculture and Energy departments under the Clean Air Act, as well as reviews under the Endangered Species Act, processes that are outside the EPA's control.

The EPA also cited consultations required under the Clean Air Act with the Agriculture and Energy departments. It must also meet obligations under the Endangered Species Act. Given those requirements, the agency said it expects to issue the final rule in the first quarter of 2026.

The RVO rule -- once finalized -- will determine blending obligations and compliance deadlines for biofuel producers and refiners in 2026 and 2027.

The 2025 RVO expires Jan. 31, 2026, unless the EPA finalizes the 2026 obligations earlier, in which case compliance deadlines would roll forward; otherwise, statutory deadlines would be pushed to June 1, 2026, according to the EPA.

Market participants are awaiting further guidance on the 45Z and the RVO finalization, as both policies play a key role in biofuels margins.