WASHINGTON D.C. -On Jan. 20, 2026, U.S. lawmakers and key energy and biofuel stakeholders announced a tentative agreement on legislation to permit year-round sales of E15 gasoline blends, with revised treatment of small refinery exemptions under the Renewable Fuel Standard - a move that could reshape ethanol demand and agricultural markets.

 A breakthrough agreement was reached Jan. 20, 2026, between influential biofuel advocates and the American Petroleum Institute (API) on proposed revisions to bipartisan legislation that would allow year-round sales of E15 fuel (gasoline with 15% ethanol). This development comes after the oil and gas lobby withdrew support from the original bill late last year, raising concerns about its passage. The agreement significantly alters how small refinery exemptions (SREs) are handled under the Renewable Fuel Standard (RFS), a central issue for both agricultural and energy stakeholders.

Under the revised terms, exemptions from annual biofuel blending mandates would be limited to companies that process a total of at least 75,000 barrels per day of crude oil across all operations - replacing the previous per-plant threshold. Beginning in 2028, the Environmental Protection Agency (EPA) would reduce compliance obligations for "each small refining company" by 75%, requiring them to blend or purchase RINs (Renewable Identification Numbers) only for the remaining 25% of the federal blending target. This compromise aims to balance refiner relief with stronger support for biofuel demand and agricultural interests.

Senate Agriculture Committee leaders from both parties, including Chairman John Boozman (R-Ark.) and Ranking Member Sen. Amy Klobuchar (D-Minn.), expressed guarded optimism that the legislation could pass Congress soon. The bill, initially close to final approval in late 2024, stalled amid industry disagreements. Now, with a negotiated path forward, advocates hope it can be enacted as part of broader funding legislation Congress must approve by Jan. 30 to avoid a government shutdown.

The potential inclusion of the E15 bill in must-pass federal spending legislation adds urgency to the negotiations - but also introduces uncertainty. Oil industry officials opposing the revised policy are expected to intensify lobbying efforts in Washington this week, reflecting ongoing resistance from parts of the energy sector. Their primary concern remains the expanded market access for higher ethanol blends, which they argue could disrupt existing fuel infrastructure and pricing dynamics.

For U.S. agriculture, the stakes are high. Expanded E15 availability is widely seen as a driver of increased ethanol consumption, boosting corn demand and offering potential upside for growers amid fluctuating commodity prices and input cost pressures. Biofuel producers and farm organizations have long lobbied for year-round E15 sales, framing it as essential for rural economies and renewable fuel competitiveness.

Analysts note that the revised refinery exemption framework could strengthen confidence in biofuel markets by reducing waiver use that historically lowered ethanol blending volumes. However, how refiners adjust and the ultimate legislative vehicle for passage remain open questions. With Congress under pressure to avert a shutdown and policymakers balancing energy, agriculture, and economic priorities, the next week could prove decisive.