ANKENY, Iowa – Iowa biofuel experts are expressing concern over the EPA’s recently proposed draft rule regarding the potential reallocation of granted small refinery exemptions (SRE) under the Renewable Fuel Standard (RFS).

On Sept. 18, the EPA requested additional volumes representing complete (100 percent) reallocation or 50 percent reallocation for SREs granted in full or in part for 2023 and 2024, as well as those projected to be granted for 2025. In addition, the EPA is providing more information on its projection of SREs to inform the calculation of the 2026 and 2027 percentage standards, the agency said.

The RFS program is a national policy that requires a certain volume of renewable fuel be used to replace or reduce the quantity of fossil fuel in transportation fuel, home heating oil, or jet fuel, the EPA said. Reallocation of the EPA’s SRE’s refers to the agency’s proposal to shift the renewable fuel obligations waived by SRE’s from small refineries to other refiners that are subject to the RFS.

The EPA defines a small refinery as one with an average crude oil input of no more than 75,000 barrels per day. The agency said the exemption provides a way for small refineries to be excused from their RFS obligations under the RFS program. This is granted only if the refinery can demonstrate that compliance with the RFS program would cause what the EPA refers to as “disproportionate economic hardship” for the year in which the exemption is requested, the agency added.

(Renewable fuel obligations refer to the requirements under the RFS program, which mandate that fuel refiners and importers blend specific volumes of renewable fuels, such as ethanol and biodiesel, into the U.S. transportation fuel supply.)

According to the Iowa Biodiesel Board (IBB), Iowa is the nation’s leading biodiesel-producing state and soybean oil producer. Grant Kimberley, IBB executive director, Iowa Soybean Association senior director of market development and sixth-generation Maxwell, Iowa, farmer, has been calling for upholding the integrity of the RFS, saying reallocation of RFS small refinery exemptions would threaten growth for biodiesel producers and farmers.

“Iowa’s soybean farmers helped establish the biodiesel industry and have benefited from its growth,” he told Farm World. “With the uncertainty surrounding U.S. trade relations, particularly with China, our largest customer, maintaining and growing domestic markets for the crops we produce is as important as ever.

“We know that growing access to higher blends not only benefits consumers and the environment, but also helps farmers weather difficult economic times and supports Iowa’s agriculture industry,” he added. He said by increasing the value of soybean oil, clean fuels support roughly 10 percent of the price per bushel of soybeans.

He added that clean fuels lower the price of soybean meal, a key ingredient for livestock producers and the food supply.

“We encourage the EPA to fully account for all waived gallons, while also working quickly to finalize the 2026-2027 RVO (specific volumes of renewable fuel, called renewable volume obligations, which the RFS program requires, to be blended into U.S. transportation fuel each year) proposal. Farmers and biodiesel producers alike need this certainty.”

Mark Mueller, Iowa Corn Growers Association president and fourth-generation Waverly, Iowa, farmer, said with the current state of the farm economy and a USDA-projected record corn crop, farmers cannot afford to lose any demand for biofuels such as ethanol.

“We encourage the EPA to reallocate 100 percent of the 2023-2025 SRE’s, and add those volumes to 2026 and 2027 RFS obligations,” he said. “This will ensure renewable fuel demand is maintained at the levels intended.

“Any increase of RINs (renewable identification numbers, which are electronic credits that track and verify the production and consumption of renewable fuels under the EPA’s RFS program) in the market due to SRE’s could significantly impact the value of renewable fuels and limit consumption,” he added.

The EPA said the rule will go through a 45-day period of public comment (as of Sept. 18) prior to being finalized.