The Environmental Protection Agency (EPA) has disclosed in federal court that it has "developed a new approach" for reviewing Small Refinery Exemption (SRE) requests under the Renewable Fuel Standard. Crucially, the agency intends to deliver rulings not only on active petitions but also on those currently entangled in litigation, including high-profile cases like Sinclair Wyoming Refining's 2018 denials.

The move comes amid a clamoring backlog of 195 pending SRE petitions, some dating back to 2016. Industry insiders suggest EPA may begin delivering decisions "as soon as this week."

Legal and Market Stakes

Litigation over SREs has been a persistent reality for nearly a decade. A pivotal 2024 D.C. Circuit ruling vacated the EPA's blanket denial of 2022 waiver requests, sending them back for review. The uncertainty surrounding exemption rules has also led to repeated appeals from refineries across the nation.

Notably, the U.S. Supreme Court recently clarified that the D.C. Circuit is the proper venue for most SRE-related challenges, eliminating forum-shopping ambiguities.

Implications for Agriculture and Energy

• Biofuel and commodity markets are bracing for impact. Broad SRE grants without reallocation can depress RIN prices, thereby undercutting ethanol and soybean values.

• Under the RFS, obligated parties must blend renewable fuels or trade RIN credits. When exemptions are granted, the compliance burden shifts-potentially tightening obligations for other refiners.

Historical Backdrop & Current Strategy

The EPA's history with SRE policies has been tumultuous. In prior years, such as 2022, the agency rescinded 36 exemptions initially granted by the Trump administration following court guidance. Additionally, previous changes in the "disproportionate economic hardship" standard and reallocation mandates have prompted legal rebuffs.

Now, with the backlog of nearly 200 petitions from 2016-2025, including recent filings, the EPA aims to clear the docket.

Why It Matters for U.S. Ag Professionals

• Crop insurance, commodity prices, and supply chain decisions are sensitive to RFS waiver outcomes. A wave of approvals could disrupt ethanol volumes and credit pricing.

• Policy and farm bill forecasting: A new EPA process signals shifting expectations for ag policy, blending mandates, and rural investment.

• Sustainable agriculture and precision planning: Farmers and ethanol producers may need to adjust planting decisions and hedge strategies based on expected RIN market behavior.