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EPA issues RIN program proposal, provides affirmative defense

By Ron Kotrba | January 31, 2013

After much anticipation, U.S. EPA has released its proposal for a voluntary quality assurance plan for verifying renewable identification numbers (RINs) under the renewable fuel standard (RFS). The proposal offers traders and obligated parties an affirmative defense against liability for any violations, and would specify, according to EPA, both the conditions under which invalid RINs must be replaced with valid RINs, and by whom. The proposed program includes elements to encourage verification of RINs to occur at the beginning of 2013.

The major elements of the proposal include:

-Minimum requirements for QAPs, including such things as verification of type of feedstocks, verification that volumes produced are consistent with amount of feedstocks processed, and verification that RINs generated are appropriately categorized and match the volumes produced

-Qualifications for independent third-party auditors

-Requirements for audits of renewable fuel production facilities, including minimum frequency, site visits, review of records, and reporting

-Conditions under which a regulated party would have an affirmative defense against liability for civil violations for transferring or using invalid RINs

-Identification of the party or parties who are responsible for replacing invalid RINs with valid RINs and the timing of such replacement

-Replacement instruments or other mechanisms that would provide assurance that invalid RINs are replaced with valid RINs

EPA is proposing two options that would be available for the verification of RINs through a QAP, which would provide flexibility in how parties choose to manage risk and costs of transferring or using invalid RINs. EPA is also proposing elements that could be applicable at the beginning of 2013.

“While we are still reviewing the details, this proposal appears to be another positive step toward ensuring that RIN fraud is a thing of the past,” said Anne Steckel, NBB's vice president of federal affairs. “We want to thank the EPA for working aggressively to address this issue and for proposing constructive solutions that will restore confidence in RIN markets. This problem was caused by a handful of wrongdoers who took advantage of a good policy for advancing America's energy security. Two of those people are now facing significant prison time, and that enforcement along with these tightened regulations will go a long way toward preventing anything like this from happening again.”

NBB intends to continue working cooperatively with the EPA and its partners in the petroleum sector in bringing this issue to closure.

EPA is also proposing modifications to the exporter provisions of the RFS program to ensure that an appropriate number and type of RINs are retired whenever renewable fuel is exported.

Finally, EPA is proposing a number of new regulatory provisions to address RINs that become invalid downstream of a renewable fuel producer.

A public hearing will be held March 19, and all comments must be in by 30 days after the hearing. 

To access the 150-page proposed rule, click here.

 

 

 

 

 

2 Responses

  1. Jason Burroughs

    2013-02-06

    1

    What does this do to the cottage industry of RIN validation companies? Is the intent for the EPA to regulate these new regulators, or can producers move away from third parties and have the EPA do the validation themselves? It's not quite clear to me without wading through the big document. A quick read seems to imply that a producer could use EPA's "free" program, or a third party. If that's the case, is there a list of third parties certified, or a certification program for auditors to prove that they meet requirements? I noticed that the program is voluntary anyway, so perhaps this is something that a buyer of RINs could decide how to handle - maybe they feel comfortable buying RINs from producers certified by EPA, vendor X, Vendor Y; but when offered RINs certified by Vendor Z, they've never heard of them and don't want the liability of buying RINs from that party. Thoughts?

  2. Ron Kotrba

    2013-02-07

    2

    Jason thank you for your comment. I'm at the conference now and after having now scanned through the document and talking with EPA and others, I am learning much more about the proposal, so please give me a little time to answer your questions. I will be following up with a story soon on these developments.

  3.  

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