EPA releases draft QAP requirements for RIN validation
The U.S. EPA has released its draft quality assurance plan requirements as part of its work to restructure the renewable fuel standard program to ensure renewable identification number (RIN) credits generated are valid before entering the marketplace. These developments are a direct result of isolated cases of fraud in the RIN market that have caused obligated parties reluctance to buy RINs from small and medium sized biodiesel producers, if any at all, for fear of unknowingly purchasing invalid RINs and the subsequent fines, penalties and replacement costs that could result under the EPA’s existing “buyer beware” stance, a position that has come under great scrutiny from the oil refiners and importers. EPA is developing a rulemaking proposal, which is expected to be released by the end of this year. The agency says it expects this to promote greater liquidity in the transfer and use of RINs, helping to make the RFS program more efficient and effective.
The proposal EPA is developing includes a quality assurance program that could be used to verify RINs have been validly generated. The proposal would provide a recognized means for independent third parties to audit the production of renewable fuel and the generation of RINs. The basis for these audits would be quality assurance plans (QAPs), developed and implemented by independent third parties, based on the requirements specified for a QAP in the regulations.
EPA says it is releasing this early draft of the types of QAP requirements in response to the interest of regulated parties in being able to verify the validity of RINs at the beginning of 2013. The parties considering participation in the quality assurance program under development can begin making preparations to conduct audits, since, as EPA states, they will have an early understanding of the elements that are likely to be proposed for QAPs. Any party that has developed a QAP and would like EPA to evaluate it can submit it to EPA’s support box (email@example.com).
EPA notes that while the QAP requirements in the draft release represent the agency’s current thinking, some elements could change in the Notice of Proposed Rulemaking as it continues to gather information and develop other aspects of the proposed program requirements. Once EPA releases the NPRM containing the proposed requirements for QAPs, stakeholders can provide the agency with comments on all aspects of the proposal, including the specific proposed requirements for QAPs. Any final rule will reflect EPA's consideration of comments received on the proposed rule and/or further consideration by EPA.