EO12866_Qual Assurance Prog 2060-AR72 NPRM FRN_20121116.docx

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2012-0621; FRL-XXXX-X]

RIN 2060-AR72

RFS Renewable Identification Number (RIN) Quality Assurance Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

SUMMARY: Under the Renewable Fuel Standard (RFS) program, producers and importers of 

renewable fuel generate Renewable Identification Numbers (RINs) that are used by petroleum 

refiners and importers to demonstrate compliance with their renewable fuel volume obligations. 

Several cases of fraudulently generated RINs, however, have lead to inefficiencies and a 

significant reduction in the overall liquidity in the RIN market. The result has been greater 

difficulty for smaller renewable fuel producers to sell their RINs. The purpose of today's action 

is to address these problems by proposing additional regulatory provisions that would promote 

greater liquidity in the RIN market in a way that assures reasonable oversight of RIN generation 

and assures use of the required renewable fuel volumes. In today's action we are proposing a 

voluntary quality assurance program and related provisions intended to meet these goals. This 

program will include elements designed to make it possible to verify the validity of RINs for all 

of 2013. We are also proposing a number of new regulatory provisions to ensure that RINs are 

retired for all renewable fuel that is exported and that RINs that become invalid downstream of a 

renewable fuel producer are properly accounted for.

DATES: Comments must be received on or before [insert date 30 days after date of 

publication in the Federal Register].

Hearing: We will hold the hearing on XXXdateXXX at XXXlocationXXX, beginning at 9:00am 

local time. 

ADDRESSES: Submit your comments, identified by

Docket ID No. EPA-HQ-OAR-2012-0621, by one of the following methods:

• www.regulations.gov: Follow the on-line instructions for submitting comments.

• Email: a-and-r-docket@epa.gov.

• Mail: Air and Radiation Docket and Information Center, Environmental Protection 

Agency, Mailcode: 2822T, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

• Hand Delivery: EPA Docket Center, EPA West Building, Room 3334, 1301 Constitution 

Ave., NW., Washington, DC 20460. Such deliveries are only accepted during the 

Docket’s normal hours of operation, and special arrangements should be made for 

deliveries of boxed information.
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Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2012-0621. EPA's policy

is that all comments received will be included in the public docket without change and may be 

made available online at www.regulations.gov, including any personal information provided, 

unless the comment includes information claimed to be Confidential Business Information (CBI) 

or other information whose disclosure is restricted by statute. Do not submit information that 

you consider to be CBI or otherwise protected through www.regulations.gov or e-mail. The 

www.regulations.gov website is an “anonymous access” system, which means EPA will not 

know your identity or contact information unless you provide it in the body of your comment. If 

you send an e-mail comment directly to EPA without going through www.regulations.gov your 

e-mail address will be automatically captured and included as part of the comment that is placed 

in the public docket and made available on the Internet. If you submit an electronic comment, 

EPA recommends that you include your name and other contact information in the body of your 

comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to 

technical difficulties and cannot contact you for clarification, EPA may not be able to consider 

your comment. Electronic files should avoid the use of special characters, any form of 

encryption, and be free of any defects or viruses. For additional information about EPA’s public 

docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm. For 

additional instructions on submitting comments, go to Section I.B of the SUPPLEMENTARY 

INFORMATION section of this document.

Docket: All documents in the docket are listed in the www.regulations.gov index. Although 

listed in the index, some information is not publicly available, e.g., CBI or other information 

whose disclosure is restricted by statute. Certain other material, such as copyrighted material, 

will be publicly available only in hard copy. Publicly available docket materials are available 

either electronically in www.regulations.gov or in hard copy at the Air and Radiation Docket and 

Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW, 

Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday

through Friday, excluding legal holidays. The telephone number for the Public Reading Room is 

(202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Mary Manners, Office of Transportation and 

Air Quality, Compliance Division, Environmental Protection Agency, 2000 Traverwood Drive, 

Ann Arbor MI 48105; Telephone number: 734-214-4873; Fax number: 734-214-4051; E-mail 

address: manners.mary@epa.gov, or the public information line for the Office of Transportation 

and Air Quality; telephone number (734) 214-4333; E-mail address OTAQ@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

A. Does this Action Apply to Me?

Entities potentially affected by this proposed rule are those involved with the production, 

distribution, and sale of transportation fuels, including gasoline and diesel fuel or renewable 

fuels such as ethanol and biodiesel. Potentially regulated categories include: 
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Category NAICS1

Codes

SIC

2

Codes

Examples of Potentially Regulated Entities

Industry

Industry

Industry

Industry

Industry

Industry

Industry

324110

325193

325199

424690

424710

424720

454319

2911

2869

2869

5169

5171

5172

5989

Petroleum Refineries

Ethyl alcohol manufacturing

Other basic organic chemical manufacturing

Chemical and allied products merchant wholesalers

Petroleum bulk stations and terminals

Petroleum and petroleum products merchant 

wholesalers

Other fuel dealers

1 North American Industry Classification System (NAICS)

2

Standard Industrial Classification (SIC) system code.

This table is not intended to be exhaustive, but rather provides a guide for readers 

regarding entities likely to be regulated by this proposed action. This table lists the types of 

entities that EPA is now aware could potentially be regulated by this proposed action. Other 

types of entities not listed in the table could also be regulated. To determine whether your 

activities would be regulated by this proposed action, you should carefully examine the 

applicability criteria in 40 CFR part 80. If you have any questions regarding the applicability of 

this proposed action to a particular entity, consult the person listed in the preceding section. 

B. What Should I Consider as I Prepare My Comments for EPA?

1. Submitting CBI

Do not submit confidential business information (CBI) to EPA through 

www.regulations.gov or e-mail. Clearly mark the part or all of the information that you claim to 

be CBI. For CBI information in a disk or CD ROM that you mail to EPA, mark the outside of 

the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the 

specific information that is claimed as CBI. In addition to one complete version of the comment 

that includes information claimed as CBI, a copy of the comment that does not contain the 

information claimed as CBI must be submitted for inclusion in the public docket. Information so 

marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2. Tips for Preparing Your Comments

When submitting comments, remember to:

• Identify the rulemaking by docket number and other identifying information (subject 

heading, Federal Register date and page number).

• Follow directions - The agency may ask you to respond to specific questions or organize 

comments by referencing a Code of Federal Regulations (CFR) part or section number.

• Explain why you agree or disagree, suggest alternatives, and substitute language for your 

requested changes.

• Describe any assumptions and provide any technical information and/or data that you 

used.
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• If you estimate potential costs or burdens, explain how you arrived at your estimate in 

sufficient detail to allow for it to be reproduced.

• Provide specific examples to illustrate your concerns, and suggest alternatives.

• Explain your views as clearly as possible, avoiding the use of profanity or personal 

threats.

• Make sure to submit your comments by the comment period deadline identified.

Outline of this preamble

I. Executive Summary................................................................................................................ 8

A. Purpose of this Action......................................................................................................... 8

B. Summary of Major Provisions............................................................................................ 9

C. Impacts.............................................................................................................................. 10

II. Background and Purpose ...................................................................................................... 12

A. Treatment of Invalid RINs Under the Current Regulations.............................................. 13

B. Recent Issues Regarding Liability for Invalidly Generated RINs.................................... 15

C. Industry Systems that Conduct Oversight of RIN Generation.......................................... 17

1. Existing Systems........................................................................................................... 17

2. Sufficiency of Existing Systems................................................................................... 17

D. EPA Goals in Proposing New Regulatory Provisions...................................................... 18

III. Overview of the Proposed Program...................................................................................... 20

A. Requirements for a Quality Assurance Plan and QAP Audits.......................................... 21

B. Requirements for an Affirmative Defense........................................................................ 22

C. Replacement of Invalid RINs............................................................................................ 23

D. Voluntary Participation..................................................................................................... 24

E. Treatment of RINs Prior to Final Rule Promulgation....................................................... 25

F. Alternative Mechanism: Prohibit Producers from Separating RINs................................. 28

G. Summary of the Two QAP Options.................................................................................. 28

IV. Provisions for RIN Verification Under Option A............................................................. 30

A. Requirements for Option A Quality Assurance Plans...................................................... 31

1. Elements of an Option A QAP...................................................................................... 31

a. Verification of feedstock........................................................................................... 32

b. Verification of production process............................................................................ 33

c. Verification of renewable fuel .................................................................................. 34

e. Verification of RIN generation and separation......................................................... 36

2. Approval and Use of Option A QAPs........................................................................... 37

a. Approval of Quality Assurance Plan ........................................................................ 37

b. Frequency of updates/revisions to QAPs.................................................................. 37

B. RIN Replacement Mechanisms Under Option A.............................................................. 37

1. RIN Banks..................................................................................................................... 39

2. A-RIN Escrow Accounts .............................................................................................. 41

3. Financial Instruments and Alternative A-RIN Replacement Mechanisms................... 41

4. Minimum Replacement Capability for RIN Replacement Mechanisms ...................... 43

C. Affirmative Defenses........................................................................................................ 44

D. Treatment of Invalid A-RINs............................................................................................ 46
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1. Responsibilities for replacement of Invalid Verified A-RINs...................................... 47

2. Invalid A-RIN Replacement ......................................................................................... 48

3. Process for Replacing Invalid Verified RINs ............................................................... 49

a. Types of RINs that Can Replace Invalid Verified RINs........................................... 50

b. Impacts of RIN Replacement on Renewable Fuel Demand ..................................... 50

4. Cap on RIN Replacement ............................................................................................. 51

V. Provisions for RIN Verification Under Option B................................................................. 54

A. Requirements for Option B Quality Assurance Plans....................................................... 54

1. Elements of an Option B QAP...................................................................................... 54

a. Verification of feedstock........................................................................................... 55

b. Verification of production process............................................................................ 55

c. Verification of renewable fuel .................................................................................. 56

d. Verification of RIN generation and separation......................................................... 57

2. Approval and Use of QAPs........................................................................................... 57

a. Approval of Quality Assurance Plan ........................................................................ 57

b. Frequency of updates/revisions to QAPs.................................................................. 57

B. RIN Replacement Mechanisms......................................................................................... 58

C. Affirmative Defenses........................................................................................................ 58

D. Treatment of Invalid B-RINs............................................................................................ 59

1. Responsibilities for Replacement of Invalid Verified B-RINs..................................... 60

2. Invalid B-RIN Replacement ......................................................................................... 61

3. Process for Replacing Invalid Verified RINs ............................................................... 62

4. Temporary Limited Exemption for Invalid RIN Replacement..................................... 62

a. Determination of the Appropriate Exemption Level ................................................ 63

b. How Would the Limited Exemption be Applied? .................................................... 64

VI. Proposed Requirements for Auditors................................................................................ 68

A. Who Can Be An Auditor?................................................................................................. 68

1. Independence ................................................................................................................ 68

2. Professionally Qualified to Implement a QAP ............................................................. 69

3. Errors and Omissions Insurance ................................................................................... 70

B. Registration Requirements................................................................................................ 71

C. Other Responsibilities of Auditors.................................................................................... 73

1. Notifying the Agency When There are Problems......................................................... 73

2. Indentifying Verified RINs in EMTS ........................................................................... 74

3. Recordkeeping, Reporting, and Attest Engagements ................................................... 75

a. Recordkeeping Requirements................................................................................... 75

b. Reporting Requirements ........................................................................................... 75

c. Attest Engagements .................................................................................................. 76

d. Prohibited Activities for Third-party Auditors......................................................... 76

VII. Proposed Requirements for Audits................................................................................... 78

A. Frequency of Audits.......................................................................................................... 78

B. Elements of an Audit ........................................................................................................ 79

1. Physical Examination of Facility and Operations......................................................... 79

2. Document Review......................................................................................................... 80

3. Buyer/Seller Contacts ................................................................................................... 81

VIII. Additional Changes Related to the Definition and Treatment of Invalid RINs................ 82
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A. Export and Exporter Provisions........................................................................................ 82

1. Clarification of Exporter RVO...................................................................................... 82

2. Require Identification of Renewable Fuel Content ...................................................... 83

3. RIN Retirement Requirements...................................................................................... 83

B. “Downstream” Invalidation and Product Transfer Documents........................................ 84

1. Conditions for RIN Generation and Designation of Intended Renewable Fuel Use .... 84

2. RIN Generation for Fuel Made with Renewable Fuel Feedstock................................. 85

3. Change Associated with Fuel for which RINs have been Generated that is used for a 

Non-Qualifying Purpose ....................................................................................................... 86

4. Treatment of Improperly Separated RINs..................................................................... 87

5. Requirements for Parties that Designate or Use Renewable Fuel in an Application that 

is not Transportation Fuel, Heating Oil, or Jet Fuel ............................................................. 88

C. Treatment of Confidential Business Information ............................................................. 89

D. Proposed Changes to Section 80.1452 – EPA Moderated Transaction System (EMTS) 

Requirements – Alternative Reporting Method for Sell and Buy Transactions for Assigned 

RINs.......................................................................................................................................... 90

IX. Impacts.............................................................................................................................. 92

A. Direct Costs for Implementing QAPs............................................................................... 92

1. Time and Cost Assumptions......................................................................................... 94

2. Labor Cost Assumptions............................................................................................... 94

3. Cost Estimate Results ................................................................................................... 95

B. Costs for RIN Replacement Mechanisms......................................................................... 95

X. Public Participation............................................................................................................... 97

A. How do I submit comments? ............................................................................................ 97

B. Will there be a public hearing? ......................................................................................... 97

XI. Statutory and Executive Order Review............................................................................. 99

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: 

Improving Regulation and Regulatory Review ........................................................................ 99

B. Paperwork Reduction Act................................................................................................. 99

C. Regulatory Flexibility Act .............................................................................................. 100

D. Unfunded Mandates Reform Act.................................................................................... 101

E. Executive Order 13132 (Federalism).............................................................................. 102

F. Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments)

102

G. Executive Order 13045: Protection of Children from Environmental Health Risks and 

Safety Risks ............................................................................................................................ 102

H. Executive Order 13211 (Energy Effects)........................................................................ 103

I. National Technology Transfer Advancement Act .......................................................... 103

J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority

Populations and Low-Income Populations............................................................................. 103

XII. Statutory Authority ......................................................................................................... 104
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I. Executive Summary

The Renewable Fuel Standard (RFS) program began in 2006 pursuant to the requirements 

in Clean Air Act (CAA) section 211(o) which were added through the Energy Policy Act of 2005 

(EPAct). The statutory requirements for the RFS program were subsequently modified through 

the Energy Independence and Security Act of 2007 (EISA), resulting in the publication of major 

revisions to the regulatory requirements on March 26, 20101. 

The RFS program requires that specified volumes of renewable fuel be used as 

transportation fuel, home heating oil, and/or jet fuel each year. To accomplish this, EPA 

publishes applicable percentage standards annually that apply to the sum of all gasoline and 

diesel produced or imported. The percentage standards are set so that if every obligated party

(refiners and importers of gasoline or diesel transportation fuel) meets the percentages, then the 

amount of renewable fuel, cellulosic biofuel, biomass-based diesel, and advanced biofuel used 

are projected to meet the volumes required on a nationwide basis. 

Obligated parties demonstrate compliance with the renewable fuel volume standards in 

one of two ways. Obligated parties can demonstrate compliance either by acquiring the required 

volumes of renewable fuels together with the associated Renewable Identification Numbers 

(RINs), which are assigned by the renewable fuel producer or importer to every batch of 

renewable fuel produced or imported, or by acquiring just the RINs without the associated fuel. 

Validly generated RINs show that a certain volume of qualifying renewable fuel was produced or 

imported. The RFS program also includes provisions stipulating the conditions under which 

RINs are invalid, the liability carried by a party that transfers or uses an invalid RIN, and how 

invalid RINs must be treated. The fundamental basis of the Agency's treatment of invalid RINs 

is the concept of buyer beware, in which all regulated parties must take steps to verify that the 

RINs they acquire are valid, and all parties are liable for transferring or using invalid RINs.

A. Purpose of this Action

Several cases of fraudulently generated RINs have led some obligated parties to limit 

their RIN-related business relationships to those parties that they are confident are generating 

valid RINs. In order to ensure that RINs are validly generated, individual obligated parties are 

now conducting their own audits of renewable fuel production facilities. Given the time and 

effort to conduct such activities, as well as the large overall number of renewable fuel producers 

and importers, the result has been greater difficulty for some of the smallest renewable fuel 

producers to sell their RINs. Recently, the overall liquidity of the RIN market has been 

significantly reduced. These circumstances have also created inefficiencies in the RIN market, 

as some RINs have been treated as having more value and less risk than others. The purpose of 

today's action is to address these issues by proposing changes to the regulations that would 

promote greater liquidity in the RIN market in a way that assures reasonable oversight of the 

validity of RIN generation and assures use of the required renewable fuel volumes.

 

1

75 FR 14670
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In today's action we are proposing a voluntary quality assurance program intended to 

provide regulated parties a structured way to assure that RINs entering commerce are valid. The 

proposed program would also provide an affirmative defense against liability for civil violations 

under certain conditions for the transfer or use of invalidly generated RINs, and would specify

both the conditions under which invalid RINs must be replaced with valid RINs, and by whom. 

The voluntary program would enable smaller renewable fuel producers to demonstrate that their 

RINs are valid, reducing the risk that obligated parties believe is associated with such RINs. The 

proposed program includes elements to allow verification of RINs to occur at the beginning of 

2013.

In today's action we are also addressing other circumstances in which RINs may become 

invalid subsequent to the renewable fuel producer’s introduction of the RINs into commerce. 

For instance, exporters of renewable fuel may not retire an appropriate number and type of RINs 

as required under the current regulations. In some cases parties may have exported diesel fuel 

containing amounts of biodiesel below levels that are currently required to be reported in other 

contexts, and are merely labeled as diesel fuel. Such exports would not be reported as containing 

renewable fuel, and thus no RINs would be retired. In other cases, exporters may report that 

renewable fuel has been exported, but might sell any RINs received and then go out of business 

before RINs are retired. The result of these circumstances could be a disparity between the RINs 

generated and the renewable fuel volume consumed in the U.S. We are proposing modifications 

to the regulations pertaining to exporters of renewable fuel to address these issues. We are also 

proposing a number of other modifications intended to address cases in which parties transfer or 

use RINs that have become invalid after the producer has introduced them into commerce.

B. Summary of Major Provisions

Today's action proposes two voluntary third party quality assurance program options for 

RINs that regulated parties may exercise as an alternative to the “buyer beware” liability as 

prescribed under existing regulations. The proposed program would provide a means for 

assuring that RINs are properly generated through audits of renewable fuel production conducted 

by independent third parties using quality assurance plans (QAPs), would provide an affirmative 

defense for transfer or use of invalid RINs that had been verified under an approved QAP, and 

would provide for the replacement of such RINs. To this end, we are proposing the following:

• 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

• Replacement instruments or other mechanisms that would provide assurance that 

invalid RINs are replaced with valid RINs
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• Requirements for audits of renewable fuel production facilities, including minimum 

frequency, site visits, review of records, and reporting

• Conditions under which a regulated party could assert an affirmative defense to civil 

liability for transferring or using an invalid RIN

• Identification of the party or parties who are responsible for replacing invalid RINs 

with valid RINs and the timing of such replacement

• Changes to the EPA-Moderated Transaction System (EMTS) that would 

accommodate the quality assurance program

The two options we are proposing to verify RINs through a QAP would provide flexibility in 

how parties choose to manage the risk of transferring or using invalid RINs and costs. We are 

proposing that the quality assurance program would be applicable at the beginning of 2013.

We are also proposing modifications to the exporter provisions of the RFS program. 

These modifications would ensure that an appropriate number and type of RINs are retired 

whenever renewable fuel is exported. Finally, we are proposing a number of changes to other 

aspects of the RFS regulations governing the transfer and use of RINs that become invalid 

downstream of the producer. We are interested in comments on all aspects of today's proposal.

C. Impacts

The quality assurance program would help to reduce the number of invalidly generated 

RINs in distribution, and thus ensure that valid RINs are traded and used for compliance. As a 

result, it would help to ensure that the volumes mandated by Congress are actually used. In this 

respect, then, there will be no change to the expected impacts of the RFS program as projected in 

the RFS2 final rulemaking2in terms of volumes of renewable fuel consumed or the associated 

GHG or energy security benefits. The primary impacts of the quality assurance program would 

be improved liquidity and efficiency in today's RIN market and improved opportunities for 

smaller renewable fuel producers to sell their RINs.

Likewise, the proposed changes to the regulations governing export of renewable fuel 

would ensure that the appropriate number and type of RINs are retired for every gallon of 

renewable fuel exported, consistent with the intent of the program.

The quality assurance program that we are proposing in today's action would be 

voluntary. As a result, there would be no required costs. There would likely be costs associated 

with an individual party's participation in the quality assurance program, and in Section IX we 

have provided estimates of some elements of the costs of participation. We have also provided 

cost estimates as provided by several potential third-party auditors. However, the fact that the 

 

2

75 FR 14670, March 26, 2010
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quality assurance program would be voluntary means that a decision to participate will be made 

independently by each regulated party, and thus we cannot accurately project the costs that might 

be incurred for the nation as a whole. Furthermore, any costs incurred would only be borne if the 

industry believed that those costs were less than current costs in the marketplace resulting from 

efforts to verify, acquire, and trade, and use RINs and the risks associated with such activities. 
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II. Background and Purpose

The structure of the RFS program, and in particular the regulatory provisions governing 

the generation and use of Renewable Identification Numbers (RINs), originated during the 

development of the initial RFS program required by the Energy Policy Act of 2005. Under the 

statute, refiners, blenders, and importers of non-renewable fuels were responsible for ensuring 

that specified volumes of renewable fuel were used in the transportation sector. During the 

process of developing the regulatory program, stakeholders made it clear that requiring each 

separate obligated party to physically blend renewable fuels into its own gasoline and diesel 

would require significant and costly changes to the distribution system, fuels markets, and the 

activities of all involved. At the request of stakeholders, EPA developed the RIN system as an 

alternative to a direct blending requirement. Finalized on May 1, 2007, the RIN system provides 

obligated parties with flexibility in satisfying their responsibility to ensure that a specified 

volume of renewable fuels is used as transportation fuel in the U.S. each year. It also permits 

renewable fuel producers to sell their fuels in a manner that best meets market demands without 

forcing sales of volumes directly to obligated parties. 

Under the RFS program, each RIN is generated by the producer or importer of renewable 

fuel, and represents a volume of renewable fuel measured in terms of ethanol-equivalent gallons. 

RINs are used by obligated parties to demonstrate compliance with their Renewable Volume 

Obligations (RVO). This reflects EPA’s judgment that production and sale of renewable fuel 

generally leads to its consumption as transportation fuel.3 When a specified number of RINs are 

acquired and retired by an obligated party, EPA is confident that a certain volume of renewable 

fuel has been produced and blended for use as transportation fuel. This RIN-based approach to 

the development and implementation of the RFS program was developed in cooperation with 

stakeholders in the fuel production and distribution industries in the context of a notice-andcomment rulemaking process.

The intended result of the RIN system is that every RIN used for compliance by an 

obligated party represents physical renewable fuel that meets the regulatory criteria and which is 

used in the United States for transportation fuel, heating oil and jet fuel. To ensure that this 

result is achieved, EPA specified the conditions under which RINs are invalid, how invalid RINs 

must be treated, and which parties are liable for transferring or using invalid RINs. These 

provisions were included in the RFS1 program and were carried into the revised RFS program 

required by the Energy Independence and Security Act of 2007. 

The provisions concerning invalid RINs and the associated liability have recently come 

under scrutiny due to several cases of fraudulently generated RINs. The RFS regulations 

prohibit any person from transferring invalid RINs or using invalid RINs to demonstrate 

compliance with its RVOs. Thus, parties holding invalid RINs are prohibited from transferring 

or using these RINs to demonstrate compliance with their RVOs. Moreover, all parties holding 

invalid RINs are required to retire them. These circumstances prompted the market response 

described above that has lead to the current reductions in the liquidity of the market for RINs, 

and the increased difficulty of small producers of renewable fuel to sell the RINs they generate. 

 

3

See 72 FR 23929
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Concerns regarding the impact of fraudulently generated RINs also prompted requests from a 

broad spectrum of stakeholders for an additional, alternative regulatory mechanism that could 

more efficiently verify the validity of RINs. Some obligated parties also requested that the EPA 

place the burden for replacing invalid RINs solely on the parties that generate invalid RINs, and 

allow RINs that have been evaluated by independent third parties to be used for compliance, 

even if they are invalid.

A. Treatment of Invalid RINs Under the Current Regulations

The RFS regulations identify the conditions under which RINs are invalid at §80.1431(a). 

These include:

• A duplicate of a valid RIN.

• A RIN that was based on incorrect volumes or volumes that have not been 

standardized to 60°F.

• A RIN that has expired.

• A RIN that was based on an incorrect equivalence value.

• A RIN that is deemed invalid under the regulations applicable to foreign 

renewable fuel producers.

• A RIN that does not meet the definition of renewable fuel.

• A RIN that was assigned an incorrect “D” code value.

• A RIN that was improperly separated.

• A RIN that was otherwise improperly generated.

While the underlying actions that cause RINs to be invalid vary, in all cases of invalid RINs the 

outcome is the same: invalid RINs cannot be transferred to any person, and cannot be used to 

achieve compliance with the Renewable Volume Obligations of an obligated party or exporter. 

These restrictions on invalid RINs apply regardless of the party's good faith belief that the RINs 

were valid at the time they were acquired, transferred, or used for compliance. Parties that take 

ownership of RINs are responsible for the validity of the RINs they transfer and use, and are 

expected to take whatever measures they deem appropriate to reduce the risk that they have 

acquired invalid RINs.

The statute requires that EPA promulgate regulations so that the national volume 

mandates required by the statute are met through consumption of renewable fuel as 

transportation fuel, heating oil, or jet fuel, and specifies several provisions aimed at achieving 
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this result. Based on this, the current regulations prohibit invalid RINs from being used for 

compliance with the applicable standards. This prohibition forces obligated parties to replace 

invalid RINs that they had intended to use for compliance with valid RINs. 

The "buyer beware" approach to RINs in the RFS program is consistent with the 

approach EPA has taken in all previous mobile source fuels program. Indeed, the regulatory

language used to implement the buyer beware approach in the RFS program is essentially

identical to that used in these other programs:

• Benzene credits generated under the reformulated gasoline (RFG) program 

- §80.67(h)(3)

• Gasoline sulfur allotment trading program - §80.275(d)(5)(i)

• Gasoline sulfur credits - §80.315

• Sulfur credits generated under MVNRLM diesel fuel program - §80.531 -

§80.536

The buyer beware approach to credits has proven to be an effective mechanism for 

ensuring that the goals of fuels programs are met. It encourages the industry to self-police the 

validity of the credits they use for compliance and allows the credit market to properly allocate 

any risk associated with the generation and transfer of invalid credits. Most importantly, the 

buyer beware approach maintains the environmental benefits of a program if the party that 

generates the invalid credits is not financially viable and able to replace the invalid credits, since 

other regulated parties would then be responsible for replacing invalid credits. In the recent 

cases of fraudulently generated RINs, it was this very process that ensured that society was 

getting the benefits promised by the RFS program.4

We continue to believe that the buyer beware approach gives industry the greatest 

flexibility in determining how best to manage credit trading practices while providing society the 

assurance that the benefits of a program will materialize. However, we also recognize that there 

are some aspects of the RFS program that make it more difficult to implement a buyer beware 

approach. For instance, once RINs are generated and leave the producer, they can be fungibly

assigned to any volume of renewable fuel, making it difficult to know what volume the RIN was 

intended to represent. As a result, it can be difficult to verify that the RIN was validly generated 

once it has left the producer. The use of RINs in the RFS program is also unique in ways that 

may make the buyer beware approach more challenging for regulated parties to implement in an 

efficient manner, while retaining market liquidity. Unlike other credit programs, RINs are not 

generated by the same group of parties that use them for compliance purposes. Instead, 

renewable fuel producers generate the RINs, and obligated parties acquire them. These 

circumstances make it more difficult for obligated parties to monitor RIN generation. The RFS 

program also allows an unlimited number of parties to own and trade RINs, whereas in other 

programs credit ownership and trading is limited to the parties that must demonstrate compliance 

 

4 California takes a similar approach for addressing invalid carbon offset credits under the state’s Global Warming 

Solutions Act. 
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with applicable standards. In recent months, obligated parties have taken actions to avoid the 

purchase of invalid RINs, including limiting their business relationships to those parties that they

are able to confidently and efficiently project are generating valid RINs. This behavior has 

resulted in certain, often smaller, producers that generate valid RINs being excluded from 

opportunities to transact with obligated parties, creating inefficiencies in the RIN market, in 

particular the inclination of obligated parties to treat some RINs as having higher value and 

lower risk than others.

Our proposal for an additional, alternative mechanism for ensuring that RINs are 

appropriately generated is an attempt to address the inefficiencies that have arisen in the RIN 

market. We continue to believe that the integrity of the program depends on the scrutiny applied 

to it by regulated parties. However, in the specific case of the RFS program we also believe that 

it would be appropriate to provide additional options for organizing and managing the private 

oversight of RIN generation in addition to the buyer beware approach.

B. Recent Issues Regarding Liability for Invalidly Generated RINs

While the RFS regulations governing liability for the transfer or use of invalid RINs were 

put in place on May 1, 2007, they have come under new scrutiny in 2011 and 2012 as the result 

of several cases of fraudulently generated RINs. To date, the EPA has alleged that three 

biodiesel production companies (Clean Green, Absolute Fuels, and Green Diesel) have generated 

a total of over 140 million biomass-based diesel RINs that did not represent qualifying renewable 

fuel. 

On November 7, 2011, the EPA issued Notices of Violations (NOVs) alleging that Clean 

Green Fuels, LLC (Clean Green) generated invalid biomass-based diesel RINs. Clean Green’s 

owner, Rodney R. Hailey, was found guilty of wire fraud, money laundering, and violating the 

Clean Air Act on June 25, 2012 in the United States District Court for the District of Maryland. 

The jury found that Mr. Hailey ran a scheme in which he and his company generated and sold 

over 32 million RINs, but neither produced nor imported any renewable fuel.

The EPA issued Absolute Fuels, LLC an NOV on February 2, 2012. The NOV alleges 

the company generated over 48 million invalid biomass-based diesel RINs without producing 

any qualifying renewable fuel and transferred the majority of these invalid RINs to others. On 

August 8, 2012, a Federal Grand Jury in Lubbock, Texas indicted Jeffrey David Gunselman, 

doing business as Absolute Fuels, LLC, Absolute Fuels, LLC, and four other corporate entities 

associated with Absolute Fuels on counts of wire fraud, money laundering, and Clean Air Act 

false statements. The indictment alleges that Gunselman and his companies were involved in 

defrauding non renewable fuels companies, brokers, and the EPA by falsely representing to EPA, 

through the RFS program electronic data base, that he was producing biodiesel when in fact he 

was not producing any fuel. The allegations in the indictment are mere accusations and all 

persons are presumed innocent until and unless proven guilty beyond a reasonable doubt in a 

court of law.
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The EPA issued Green Diesel, LLC an NOV on April 30, 2012. The NOV alleges the 

company generated more than 60 million invalid biomass-based diesel RINs without producing 

any qualifying renewable fuel and transferred the majority of these invalid RINs to others.

Invalid RINs from these three companies represented about 13% of the nationwide 

biodiesel volume in 2010 and 4% in 2011. The EPA’s Criminal Investigation Division and 

Office of Civil Enforcement have additional ongoing investigations concerning the potential 

generation of fraudulently or invalidly generated RINs.

Under the buyer beware approach, all regulated parties are responsible for determining 

the validity of RINs before they transfer those RINs to another party or use them for compliance. 

With respect to the RINs generated by the three companies listed above, many parties did in fact 

transfer and/or use these RINs. In subsequent discussions with these parties, most of them 

indicated that notwithstanding the buyer beware aspect of the regulations, they took little or no 

action to evaluate the validity of these RINs before they purchased or used them for compliance. 

In light of the widespread failure of obligated parties to conduct adequate oversight, the EPA 

implemented a streamlined approach for parties who used invalid RINs to correct civil violations 

and resolve their liability for those civil violations. The Interim Enforcement Response Policy

(IERP) provided obligated parties who unknowingly used invalid RINs with the opportunity to 

resolve their civil violations by replacing invalid RINs with valid RINs and paying modest civil 

penalties. Almost all obligated parties that used RINs generated by Clean Green and Absolute 

Fuels have entered into settlement agreements consistent with the IERP to resolve their civil 

violations. 

Obligated parties are required to replace invalid RINs that were used for compliance with 

valid RINs to ensure that they have sufficient valid RINs to comply with their Renewable 

Volume Obligations (RVOs). Many obligated parties who used invalid RINs for compliance 

purposes purchased replacement RINs for a substantial additional cost. Under the current buyer 

beware approach, many obligated parties have included indemnification clauses in their contracts 

with RIN suppliers to address situations in which invalid RINs must be replaced. 

In light of the recent experience with invalid RINs, obligated parties have been taking 

steps to minimize their exposure to risk. In general, they have been treating RINs generated by

smaller biodiesel producers as higher risk, and have been opting instead to purchase RINs 

primarily from the largest biodiesel producers who are better known, have been under production 

for a longer period of time, and/or have the resources to replace invalid RINs should their RINs 

be determined to be invalid. While the concerns directed at any particular biodiesel producer 

may or may not be legitimate, the net result of these actions is a general reduction in the liquidity

of the biodiesel RIN market. While some biodiesel producers have been able to establish 

business relationships with obligated parties, many smaller biodiesel producers have not. These 

smaller producers have been forced to offer their RINs at a significant discount relative to RINs 

from larger producers, assuming they can find obligated parties or distributors willing to 

purchase them at all.

The buyer beware approach has succeeded in compelling regulated parties to conduct 

some oversight of RIN generation to ensure that the RINs they transfer and/or use are valid, 
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albeit not until after cases of fraudulently generated RINs came to light. However, in reaction to 

these cases, many regulated parties have reported that obligated parties have shifted their 

purchasing away from smaller producers. We believe it is appropriate to consider new 

regulatory provisions that could provide additional confidence in the validity of RINs without 

restricting access to the market by small producers.

C. Industry Systems that Conduct Oversight of RIN Generation

1. Existing Systems

While regulated parties are individually making efforts to ensure that the RINs they 

transfer and/or use are valid, a number of parties have developed more comprehensive systems 

that are intended to more efficiently meet the need for such oversight. Any party can opt to use 

one of these systems for a fee. To varying degrees, these systems offer examples of the types of 

activities that EPA has evaluated in developing the proposed provisions for a quality assurance 

program. The systems of which we are currently aware include the following:

• Ecoengineers

• GoldRIN by Turner Mason

• MVP: Murex Validity Program for RINs

• RIN Integrity Network by Genscape

• RINPlus by EM Biofuels

• RIN-tegrity Survey by Weaver

• RINTrust by Frazier Barnes & Associates

This is not meant to be a complete list, as the market response is still developing, nor is it 

intended to be an EPA endorsement of any particular auditing system or tool. 

The systems currently being offered vary in the means, frequency, and degree of 

oversight of renewable fuel production and RIN generation. Most conduct some form of on-site 

audit including a review of production inputs such as feedstocks and process energy, and outputs 

including byproducts and renewable fuel production volumes. Some also provides services such 

as regulatory guidance, assessment of product quality, monitoring of sales transactions, and RIN 

tracking. In addition to validation of production processes and RIN generation, some also offer 

financial backing to the producer in the event that RINs are subsequently discovered to be 

invalid.

2. Sufficiency of Existing Systems 

While each of these systems has elements designed to help ensure RIN validity, not every

system includes all the elements that we believe may be important. For instance, ideally each 

system would include an array of components to verify feedstocks, production processes and 

volumes, qualifying uses of renewable fuel, and generation of the appropriate number and type 
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of RINs. However, not all systems address all these aspects of production and RIN generation, 

or address them in the same way. The existence of multiple industry-run verification systems 

has also resulted in duplicative efforts wherein multiple auditors visit the same production 

facility and take the same actions to verify the same volume. Finally, the existence of these 

private systems has not completely resolved the reduction in liquidity in the market for RINs 

since they provide no assurances of an affirmative defense against a violation. Thus there is still 

a significant reluctance to purchase RINs from smaller producers. 

While these verification systems constitute a reasonable and encouraging response to the 

need to have effective and efficient oversight of RIN generation, we recognize that these 

initiatives on their own have not cultivated a market that facilitates reasonable oversight of RIN 

generation, adequate assurance that invalid RINs will be replaced, and a market for RINs where 

the opportunity to produce and sell RINs is spread broadly across producers, including small 

producers. Therefore, in today's NPRM we are proposing a set of voluntary regulatory

provisions that leverage these private market products to achieve these goals. The new 

provisions would provide regulatory options for establishing quality assurance programs, provide 

an affirmative defense against civil violations for transferring or using invalidly generated RINs 

for compliance where the RINs were verified under an approved QAP, and would specify the 

conditions under which specific parties would be required to replace invalidly generated RINs 

with valid RINs. Moreover, we are proposing several options that would be available to 

regulated parties that would provide a range of approaches to replacement of invalidly generated 

RINs, and allow the market to select the level of oversight to match the perceived risk. We 

believe that the efficiency and certainty created by these proposed regulatory options would 

complement the private verification systems already offered in a way that would facilitate the 

broadening of the market for producers and increasing market liquidity that EPA and 

stakeholders are seeking.

D. EPA Goals in Proposing New Regulatory Provisions

As stated in Section II.B above, we continue to believe that the buyer beware approach is 

both appropriate and effective in ensuring the validity of RINs and the use of valid RINs 

representing real renewable fuel to meet compliance obligations. We are not proposing to 

change the buyer beware approach under the existing regulations. Nevertheless, the issues we 

highlighted in the previous section have led us to believe that it would be helpful to create an 

additional, voluntary set of regulatory provisions that could provide reasonable oversight to 

verify the validity of RINs, reasonable assurance of replacement of invalidly generated RINs, 

and increased liquidity in the RIN market. The proposed QAP provisions would serve as the 

major component for an affirmative defense against liability in the event that a party transferred 

or used invalidly generated RINs. With greater confidence in both the validity of RINs and the 

protection against civil liability that an affirmative defense affords, there may be less of a 

disparity in value between RINs generated by large and small renewable fuel producers. As a 

result, there may be renewed market liquidity and certainty.
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To accomplish this, we believe that the new regulatory provisions should establish the 

minimum requirements for Quality Assurance Plans (QAPs) that would address all elements of 

the production of renewable fuel and the generation of RINs,. These QAPs would in turn form 

the basis for audits of renewable fuel production at particular facilities to verify that RINs were 

being validly generated. Our intent in establishing a voluntary QAP audit process would be 

twofold:

1) Any party taking ownership of RINs that had been verified as validly generated by

a qualifying auditor using an approved QAP would have an affirmative defense 

against liability for a civil violation arising from the transfer or use of an invalid 

RIN as long as certain other criteria are also met.

2) The burden for the replacement of invalidly generated RINs that had been verified 

by a qualifying auditor using an approved QAP could be shifted, as specified under 

the associated RIN replacement mechanism the party chose to put in place.

In short, the voluntary QAP audit process would help to ensure that the volume 

consumption goals of the statute are met while addressing the unique features of the RFS 

program that have resulted in inefficiencies and poor liquidity in the current RIN market.
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III. Overview of the Proposed Program

EPA is proposing to add two basic compliance related options to the RFS program to 

achieve the goals described above. Each option contains provisions for a quality assurance plan 

(“QAP”) designed by an independent third-party to meet minimum regulatory requirements and 

used to verify the validity of RIN generation; provisions for an affirmative defense to liability for 

transfer or use of a verified RIN that is determined to be invalidly generated; and provisions 

addressing replacement of verified RINs that were invalidly generated. The proposed options 

would ensure that RIN owners choosing to exercise one of them would not be liable for 

transferring or using invalidly generated RINs and, at the same time, would reduce the incidence 

of invalidly generated RINs entering the market. These new options would be in addition to the 

current regulatory provisions, and EPA is proposing to adopt both options and to allow regulated 

parties to choose either one of the new options or instead to use the buyer beware approach in the 

existing regulations. The combination of the two new options, the elements in each option, and 

the ability to choose between options, is intended to achieve the program goals described above. 

The civil liability protections afforded by these provisions would only apply to RINs that 

are invalidly generated. RINs that become invalid after generation, for example by use for a 

nonconforming purpose or improper separation, would not be covered by the affirmative defense 

mechanism in the quality assurance program we are proposing today. However, we realize that 

these RINs that become invalid “downstream” of the RIN generator may be problematic for 

obligated parties and the RIN system as a whole. Therefore, we have proposed regulatory

changes to account for the problem of RINs that become invalid after generation. These changes 

are discussed in Section VIII of this preamble. 

This proposal sets minimum requirements for QAPs that could be used to verify the 

validity of RINs. Verification by an independent third-party auditor using an EPA-approved 

QAP would provide the basis for a RIN-holder’s affirmative defense if those RINs were found to 

have been invalidly generated. The affirmative defense is a defense only to the civil liability for 

the prohibited acts of transferring or using an invalidly generated RIN for compliance purposes.

At the same time, the Agency is responsible for ensuring that the statutory annual 

minimum volume requirements are met, so invalid RINs that are retired to fulfill a Renewable 

Volume Obligation (RVO) must be replaced by valid RINs in order to make the system whole, 

even when a party has an affirmative defense to liability for a prohibited act. With the exception 

of some limited provisions that would reduce RIN replacement responsibilities under certain 

circumstances, the proposed rules provide a mechanism for the replacement of invalidly

generated RINs to ensure that the annual RFS volume mandates are met. However, the party 

responsible for replacement of invalid RINs varies between the two new options (“Option A” 

and “Option B”) that market participants may choose for any given RIN transaction. 

The primary difference between these two options is that under Option A, when verified 

RINs are found to be invalidly generated, the third-party auditor that verified the RINs would be 

responsible for retiring valid RINs to replace the invalid RINs if the RIN generator does not do 

so. Under Option B, an obligated party would remain liable for replacing any invalidly 

generated RINs that it owns if the RIN generator fails to do so, even if the obligated party 
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successfully asserted an affirmative defense. The current system would also remain in place 

after the proposed quality assurance program goes into effect, providing a third option for RIN 

buyers to purchase unverified RINs. In other words, the proposed regulations do not require that 

RINs used for fulfillment of an RVO must be verified. In summary, there would be three types 

of RINs that would be available for purchase under the proposed regulations: 

(1) RINs verified by a third-party auditor, who would be responsible for replacing the 

RINs in the event that they were invalidity generated (“Option A”), 

(2) RINs verified by a third-party auditor, where the obligated party would remain 

liable for RIN replacement (“Option B”), and 

(3) Unverified RINs, where the obligated party remains liable for replacement. 

For both of the two new options we are proposing today (Option A and Option B), there 

are three main regulatory elements: 

(A) Minimum requirements for a QAP to evaluate renewable fuel production and 

verify RINs, 

(B) The required elements for an affirmative defense, and

(C) Identification of the party responsible for replacing invalid RINs and limitations 

on RIN replacement. 

In this section we also discuss how and why the program amendments are proposed as voluntary, 

how the provisions would apply to any RINs transferred and sold prior to the effective date of 

the final rule, and an alternative structure for protecting against invalidity by prohibiting RIN 

generators from separating RINs from renewable fuel that they produce. 

A. Requirements for a Quality Assurance Plan and QAP Audits

The regulations would set minimum requirements for the audit process used to validate 

the production of renewable fuel and verify the RINs generated at the production facility, even, 

for imported fuel, if the production facility is not in the United States. The proposed 

requirements for Option A and Option B QAPs are fully discussed in Sections IV.A and V.A, 

respectively. The proposed requirements for QAP auditors and audit procedures are fully 

discussed in Sections VI and VII of this preamble. 

We would expect that different third-party auditors would develop different audit 

procedures and business models based on market demand, the type of fuel being audited, and 

many other factors. Therefore, the new provisions would require the third-party auditor to 

submit its QAP to the Agency for review and approval before using that QAP to audit renewable 

fuel production facilities. The regulations would also set both minimum requirements for third-
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party auditors at the time of registration and ongoing requirements that must be met as the thirdparty auditor continues to operate. 

The requirements for Option A QAPs would be more detailed and involved than those 

required for Option B QAPs. The differing sets of requirements would correspond with the 

differing RIN replacement responsibility under the two QAPs.

B. Requirements for an Affirmative Defense

The affirmative defense mechanism would allow any party, other than the generator of an 

invalid RIN, who holds invalidly generated RINs verified through a QAP to avoid civil liability

for violation of a prohibited act involving the transfer or use of invalid RINs for purposes of 

fulfilling an RVO. This mechanism applies only to civil liability, and has no effect on any

party’s potential criminal liability. It is similar but not identical to the defense mechanisms used 

in other fuels regulation programs, specifically the Diesel Fuel Sulfur Control regulations, 40 

CFR §80.613(a) and the Reformulated Gasoline regulations, 40 CFR §80.79(b)(1). It is fully 

discussed in Sections IV.C and V.C for Options A and B, respectively. Under Option A, in order 

to establish this affirmative defense, a party would be required to prove five elements by a 

preponderance of evidence. Under Option B, in order to establish an affirmative defense, a party

would be required to prove one additional element. 

First, a party would be required to show that the invalidly generated RINs in question 

were verified by an independent third-party auditor with an approved QAP that meets the 

applicable regulatory requirements. 

Second, a party taking ownership of an invalidly generated RIN would be required to 

demonstrate it did not know or have reason to know of the invalidity. For Option A RINs, the 

RIN owner must not have been aware of the invalidity prior to the RIN being verified. For 

Option B RINs, the RIN owner must not have been aware of the invalidity at any time up to and 

including the time the RIN was transferred or used for compliance with its RVO, unless the RIN 

generator had implemented a remedial action per the regulations. See 40 CFR 80.1474. The 

difference between the two options reflects the difference in the party responsible for replacing 

invalidly generated RINs in the two new options. When the obligated party has the replacement 

obligation under Option B, it would not be appropriate for it to knowingly commit a prohibited 

act and be required to replace the invalid RINs, but still have an affirmative defense to civil 

liability. On the other hand, when the auditor has the RIN replacement responsibility under 

Option A, the obligated party’s RVO would be backstopped by the auditor’s replacement of the 

invalid RINs and therefore the obligated party should be able to submit the invalid verified RINs 

with the understanding that the RINs will be replaced and the RVO made whole by the auditor. 

Providing an affirmative defense to obligated parties under Option A even if the obligated party 

in question knows of the invalidity could help to address some of the market liquidity concerns 

described above, by limiting the risk to refiners who purchase these RINs. At the same time, if 

the obligated party knew of the invalidity prior to the RINs in question being audited and 

verified, it would have no defense to civil liability because it would have knowingly allowed 
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invalid RINs to enter the marketplace, potentially placing other obligated parties at risk and 

diminishing the value of other RIN generators’ valid RINs. 

Third, we are proposing that a party attempting to establish an affirmative defense would 

be required to inform the Agency within 24 hours of identifying RINs that were invalidly 

generated. This requirement would assure that invalidity is promptly reported when discovered 

and would eliminate any incentives or financial advantages that might be gained from 

intentionally hiding invalidity or waiting to report. The Agency’s primary goal to maintain and 

meet the annual RFS volume mandates would be frustrated by delayed reporting of invalidly 

generated RINs. The reporting requirement would therefore be both an element of good faith 

and a practical safeguard to meet the annual RFS volume mandates. 

Fourth, a party attempting to establish an affirmative defense would be required to 

demonstrate that they did not cause the invalidity of the RIN in question.

Fifth, a party attempting to establish an affirmative defense would be required to 

demonstrate that they did not have any financial interest in the company that generated the 

invalid RIN. Requiring that the RIN owner did not have any financial interest in the RIN 

generator’s company ensures that the RIN owner did not receive and had no intention of 

receiving a financial benefit from the generation of invalid RINs. 

For Option B, a sixth element for establishing an affirmative defense would be to 

demonstrate that if the invalid B-RIN was used for compliance purposes, the party adjusted its 

records, reports, and compliance calculations as required per the regulations, unless a remedial 

action by the RIN generator was implemented. 

C. Replacement of Invalid RINs

In order to ensure that the annual national RFS volume mandates are met, the current 

RFS program requires that only valid RINs may be used by obligated parties to demonstrate 

fulfillment of their RVO. To use an invalid RIN toward fulfilling the RVO is a prohibited act. 

An obligated party that knowingly or unknowingly uses an invalid RIN to comply with its RVO 

is required to revise its compliance report to subtract out the invalid RINs and instead use only 

valid RINs. The obligated party must then either carry forward a deficit or replace the invalid 

RIN with valid RINs to meet its RVO.

Under the two new proposed options, the party responsible for replacing the invalid RIN 

would depend on the type of QAP that verified the RIN, Option A or Option B. RIN 

replacement is fully discussed in Sections IV.D and V.D of this preamble for Options A and B, 

respectively.

We are proposing in this rule to create a self-implementing administrative mechanism to 

replace invalid RINs. In all cases, and regardless of whether the RINs in question are unverified 

or verified through Option A or Option B, the proposed administrative process for replacement 
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of invalid RINs places initial responsibility to replace invalidly generated RINs on the RIN 

generator responsible for causing the invalidity. See §80.1474 of the proposed regulations for 

details of the administrative process for replacement of invalid RINs. In the event the generator 

of the invalid RINs does not replace the invalidly generated RINs according to the administrative 

process, the replacement obligation would shift to either the third-party auditor or the obligated 

party that owns the invalid RINs, depending on whether the RINs were verified through an 

Option A or Option B audit, or whether the RINs were unverified. For invalidly generated RINs 

verified by an Option A QAP, the auditor would have the responsibility to replace the RINs, and 

the obligated party would have no responsibility for RIN replacement. For invalidly generated 

RINs verified by an Option B QAP and for unverified RINs, the obligated party who owns the 

RINs would bear the replacement responsibility. In the event that regulated parties fail to 

implement the administrative process for replacement of any RINs, the EPA could bring an 

enforcement action against any or all of the parties that were required to replace the invalid 

RINs. 

Additionally, the auditor’s RIN replacement responsibility under Option A would be 

capped at a level equal to 2% of the last five years’ of RINs verified by the auditor. Under 

Option B we are proposing that the obligated party would be given a temporary limited 

exemption for their replacement obligation, under which they would not be required to replace 

up to 2% of their RVOs for 2013 and 2014. These measures are intended to limit the auditors’ 

and obligated parties’ financial exposure, as further discussed in Section IV of this preamble. We 

request comment on both the RIN replacement cap of 2% and the limited exemption of 2%.

Furthermore, because third-party auditors are unlikely to have the same resources as 

renewable fuel producers, importers, or obligated parties to enable them to replace invalid RINs, 

we are proposing a requirement that auditors using Option A to verify RINs must verify the 

existence of a RIN replacement mechanism capable of replacing a minimum fraction of the RINs 

they verify. There are a variety of replacement mechanisms possible as discussed in more detail 

in Section IV.B.

D. Voluntary Participation

We are proposing that the two new compliance options under the proposed quality

assurance program would be voluntary. Under the proposal, the QAP auditor could apply to 

EPA for approval, demonstrating that they meet the requirements applicable to auditors. 

Auditors would voluntarily decide to obtain EPA approval for their QAP, which once approved 

would provide the framework for the auditor’s verification process. However, they would be 

responsible under the regulations to fully implement the QAP as approved. Therefore, verifying 

RINs without meeting the requirements of the approved QAP would be a violation by the 

auditor. At the same time, the auditor’s failure to properly implement the QAP would not, by

itself, render the RINs invalid or constitute a civil violation by the owner of the RIN. . While 

auditors could voluntarily decide to obtain EPA approval to verify RINs, once they do so they

would be responsible to implement the plan as approved, and under Option A to replace RINs as 

required. 
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Likewise, RIN generators would be under no obligation to have their RINs verified under 

an EPA approved QAP, and obligated parties would be under no obligation to purchase verified 

RINs. However, if verified RINs are purchased, the regulations would provide what 

requirements must be met to demonstrate an affirmative defense, and would specify who would 

be responsible for replacement of invalid RINs. 

It has been suggested that if these provisions were mandatory for all obligated parties and 

only verified RINs could be used for compliance purposes, the overall stability of the RIN 

market might be improved because all RINs available in the market would be pre- approved by a 

QAP. This approach would benefit obligated parties by reducing their risk of purchasing an 

invalid RIN and decrease the likelihood of violations and need for enforcement actions. 

However, we believe that it is up to the obligated parties to determine whether and to what extent 

they wish to verify the RINs they purchase, balancing their risk tolerance against their ability and 

desire to pay for verified RINs. Also, we expect that most RINs purchased and used for 

compliance purposes will be QAP-verified even though the program is voluntary because most 

obligated parties in most situations will prefer not to take on the risk of using an unverified RIN. 

Therefore, making the program mandatory would provide only marginal gains in market stability

when compared to a voluntary program. A mandatory program would also potentially drive up 

the overall cost of RINs by forcing all RIN generators to go through the QAP process, even in 

situations where there is little to no inherent risk in the product being invalidly produced. 

Overall, we believe the proposed program would be adequate to achieve the goals described 

above, and additional requirements would bring increased costs that are not appropriate or 

necessary.

These proposed QAP options offer alternative ways for regulated entities to operate 

within and comply with the existing obligations of the RFS program. If regulated parties wish to 

conduct “business as usual” and not utilize the additional mechanisms proposed in these 

regulations, they would be free to do so and would be subject to the same obligations and penalty

structure as currently exists. Whether or not to purchase and retire RINs verified by an EPAapproved QAP is a choice each obligated party would make on its own, depending on the level 

of risk it perceives in the market and in a given producer, and its own risk tolerance. 

E. Treatment of RINs Prior to Final Rule Promulgation

The regulatory provisions proposed today would become effective only after we review 

comments submitted in response to this NPRM, determine what if any changes may be 

appropriate, and publish a final rule. However, in order to encourage the development and use of 

RIN verification processes, and to promote greater liquidity in the RIN market as soon as 

possible, the proposal applies not only to RINs generated after promulgation of the final rule, but 

also to RINs generated throughout 2013, including those generated from January 1, 2013 to the 

effective date of the final rule. This raises two separate issues on how the final regulatory

provisions would apply to RINs generated prior to the effective date of the final rule. First, what 
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would be the effect of an audit being performed in the interim period? Second, what QAP 

requirements would need to be met for an interim RIN to be verified?

Under the proposal, once the final rule is effective, auditors would apply to EPA for 

approval of their QAPs under one or both of the two Options (A and B). Once EPA registered 

the auditor and approved the QAP plan, then the auditor would implement the plan. Depending 

on the plan, RIN verification would start once the elements of the plan were in place. This 

would typically involve, for example, conducting the site inspection and appropriate record 

review, and under Option A, starting the ongoing monitoring. At that point, RINs could be 

verified by the auditor. 

However, for RINs generated prior to the final rule’s effective date, the process would be 

different, first because EPA cannot formally register an auditor or approve a QAP until the rule 

is in effect and second because there may be insufficient lead-time to implement the QAP 

requirements set out in the proposed rule and begin verifying RINs immediately as of January 1, 

2013. We recognize that RIN generators and buyers likely will want to know whether RINs 

generated and audited prior to the effective date of the final rule are likely to receive the 

proposed benefits and treatment given to RINs verified once the rule is in effect. 

First, EPA is ready to facilitate the short-term verification of RINs by informally 

reviewing auditors’ information and proposed QAPs before issuance of the final rule, and 

providing guidance on whether the plans appear to satisfy the proposed requirements. This 

would not be a final agency decision or approval, and EPA would not be legally bound by such 

an evaluation. It would instead be informal guidance to an auditor as to whether EPA has any 

concerns about its application and whether it appears to be consistent with the requirements in 

the proposed regulations. This would provide useful information for outside parties who are 

evaluating the risk associated with any particular RIN that is audited prior to the effective date of 

the final rule. 

However, RINs audited by a QAP on which EPA had offered guidance prior to the 

effective date of the final rule would not necessarily be deemed “verified” under the terms of the 

final rule. RINs can only be deemed “verified” after the final rule goes into effect, and after EPA 

has approved the QAP that was used in the audit process. It is important to note that the final 

rule’s provisions for interim RINs may not be the same as those in the proposed regulations. 

Therefore, any EPA decisions made after the rule is in effect regarding the sufficiency of QAPs 

and auditors operating prior to that time will be based on the content of the final rule, not the 

proposed rule. EPA’s intention, however, is that the proposed provisions would be applied to 

RINs audited prior to the final rule, and any changes to the proposed provisions would apply

only to RINs verified after the final rule is effective. EPA invites comment on this approach, and 

will resolve this issue in the final rule after reviewing the comments. 

A second complication in the auditing of RINs prior to the final rule’s effective date 

involves the substantive requirements for the QAPs. As discussed above, after the final rule is 

effective, a RIN could be verified only after the auditor conducted a site inspection and extensive 

document review, and (for QAP A) initiated ongoing monitoring of production processes. All 

RIN verification after the effective date of the final will thus be "prospective." For RINs 
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generated early in 2013, however, in many cases those actions could not occur until some point 

well after January 1, 2013. Given the short time period of RIN generation at issue before the 

normal oversight actions could be implemented, in many cases a matter of a few months, and the 

desire to have QAP plans start up as quickly as possible, EPA is proposing that auditors could 

verify RINs generated before the date the audit is completed. This "retrospective" RIN 

verification would only be available prior to the effective date of the final rule.

In order to verify RINs retrospectively, a number of criteria would need to be met. First, 

the audit must be completed before the effective date of the final rule. Second, the auditor must 

meet certain qualifications such as being a professional engineer and being independent of the 

producer being audited. Third, the audit must be performed according to the terms of a QAP that 

meets the Option B requirements set out in the proposed rule. Since Option A QAPs require 

ongoing monitoring of a number of indicators, they cannot be the basis of a retrospective audit 

procedure. The requirements proposed for Option B QAPs, on the other hand, may all be met 

through a thorough review of a producer’s records and a site visit to the production facility that 

occurs after the RINs being audited have been generated. Therefore, RINs retrospectively 

audited prior to the effective date of the final rule could only be officially verified as Option B 

RINs, not Option A RINs. 

We recognize that the retrospective audit process for RINs generated prior to the actual 

audit being conducted necessarily will offer less certainty than the process that applies to RINs 

generated after the audit is conducted. This is because the verification is based on document 

review and a post-hoc site visit, leaving open the possibility that RINs generated prior to the site 

visit may not be representative of actual fuel production and the documents on which the audit is 

based were fraudulent. However, as there is a relatively low volume of RINs at issue, we believe 

the risk of invalidity in this short term transition period is reasonable in light of the benefits of 

allowing a practical way to give a reasonable expectation of validity to RINs generated as of 

January 1, 2013. We expect that auditors would set up their permanent QAPs and prospective 

audit procedures as soon as possible, and both regular (prospective) Option A and Option B type 

audits could be conducted prior to the effective date of the final rule.

While these measures may give regulated parties and RIN purchasers flexibility and 

security in developing and using QAPs prior to issuance of the final rule, the EMTS system will 

not be available to display information such as whether a given RIN has been reviewed by an 

auditor or not and who conducted the audit, until after the effective date of the final rule. It will 

therefore be the responsibility of the market participants to keep records of verification of RINs 

until EMTS begins tracking and displaying RIN verification status. Likewise, it will be the 

auditors’ responsibility to communicate the results of their audits to prospective RIN purchasers 

in whatever manner they see fit, until the EMTS system is capable of displaying the verification 

status of RINs. Once the final rule is in effect, EPA will proceed to register auditors and approve 

QAP plans that meet the requirements of the final rule. Upon receiving such registration and 

approval, auditors will be able to issue verifications for RINs generated prior to issuance of the 

final rule that were reviewed according to the QAP approved under the terms of the final rule. 

Once these RINs generated prior to the effective date of the final rule have been verified, they

will be treated like all other verified RINs for purposes of the affirmative defenses and 
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replacement obligation provisions for verified RINs that are determined to be invalidly

generated. 

F. Alternative Mechanism: Prohibit Producers from Separating RINs

We request comment on an alternative option in which renewable fuel producers would 

be prohibited from separating RINs. Under the current regulations, RINs generally cannot be 

separated from the wet gallons they represent until the point of blending or purchase by an 

obligated party. However, a renewable fuel producer can separate RINs from their associated 

volumes of renewable fuel under the conditions specified in §80.1429(b)(4), including the 

situation where the fuel in question has been designated for a conforming use (i.e., for 

transportation fuel, heating oil or jet fuel) and is in fact used for such a conforming use, without 

further blending. In this circumstance, any owner of the RIN and associated gallon (including 

the producer) may separate the RIN from the fuel, including the producer of the fuel. 

In the fraud cases that disturbed the RIN market in 2011-2012, some registered biodiesel 

producers exploited this provision and generated and sold invalid RINs. Some have argued that

removing this option and prohibiting producers in all cases from separating RINs from the 

volumes they produce would greatly reduce the ability of producers to generate fraudulent RINs 

without the knowledge of other parties in the RIN market. 

While this mechanism might reduce the problem of producer fraud (of the type already 

seen), it would not eliminate the number of other ways invalid RINs could be generated at the 

point of production. Moreover, it could potentially create new concerns, as legitimate cases of 

producers separating RINs from volume would be prohibited. This would only be a partial 

solution to the problem of fraud and invalid RIN production. However, we solicit comment on 

the benefits of producers’ ability to separate RINs from wet gallons in the limited circumstances 

that are currently permitted, and whether these benefits outweigh the potential added risk of 

fraudulent RINs in the market. 

G. Summary of the Two QAP Options

A summary table of the two QAP options is provided below as a broad background for 

the outcomes associated with each option. The QAP options and associated consequences are 

discussed in each of the subsequent sections of this preamble.

Table III.G-1

Summary of Proposed QAP Options

Key Element QAP Option A QAP Option B
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Parties responsible for 

replacement of invalidly 

generated RINs5. 

Third-party auditor Obligated party

Affirmative Defense to civil 

liability for transfer or use of 

invalidly generated RINs

Yes Yes

Treatment of a knowing 

transfer or use of invalidly 

generated RINs

Affirmative defense requires 

the party did not know or 

have reason to know the RIN 

had been invalidly generated 

before the RIN was verified

Affirmative defense requires the 

party did not know or have 

reason to know the RIN had 

been invalidly generated at the 

time it was transferred or used 

for compliance

Requirement for a RIN 

replacement mechanism Yes No

Limited exemption for 

invalidly generated RIN 

replacement

None For 2013-14, up to 2% of the 

obligated party’s RVOs.

Cap on RIN replacement 2% of the most recent five 

year's worth of verified RINs None

Requirements for QAPs Detailed requirements 

including ongoing monitoring Less detailed requirements

 

5 The generator of the invalid RIN is always responsible for replacement.
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IV. Provisions for RIN Verification Under Option A

The quality assurance program that we are proposing today would include two different 

options that would be available to regulated parties. Both options are intended to provide an 

efficient mechanism for ensuring that RINs are validly generated, and both options would 

provide the basis for an affirmative defense to liability for transferring or using invalid RINs. 

However, the two options would differ in whether invalidly generated RINs could be used for 

compliance, and in which party would be responsible for replacing invalidly generated RINs.

In this section we describe our proposed requirements for Option A. Under this option, 

obligated parties would not be responsible for replacing RINs that were invalidly generated, and 

could use invalidly generated RINs for compliance under certain conditions. The third-party 

auditors responsible for verifying RINs under this Option would also be responsible for replacing 

those RINs if they are invalidly generated. In order to implement this approach, we are 

proposing detailed requirements for quality assurance plans (QAPs) used to verify RINs that 

would include ongoing monitoring of operations at a renewable fuel production facility. We are 

also proposing that third-party auditors who verify RINs would be required to demonstrate the 

existence of mechanism capable of replacing RINs that are invalidly generated and verified by 

the auditor. For clarity, we refer to RINs that have been verified through Option A as A-RINs.

In this section we first cover the proposed elements of QAPs for Option A and the 

proposed requirements for replacement mechanism. We then describe how regulated parties 

could assert an affirmative defense for transferring invalidly generated A-RINs or using them for 

compliance. Finally, we discuss the treatment of invalidly generated A-RINs, from the 

responsibilities of owners of such RINs to the parties that would be required to replace them.

Since we are proposing two options for verifying RINs under a quality assurance 

program, both of which would be available to renewable fuel producers, we are also proposing 

two different sets of QAP requirements. Under Option A, the QAP requirements would be more 

comprehensive since obligated parties would be expected to exercise little or no oversight over 

the auditor process under this Option. Thus, for instance, we are proposing that any QAP used 

under Option A would have requirements for ongoing monitoring, i.e., those production aspects 

that have sufficient variability that less frequent monitoring could more easily result in the

generation of invalid RINs. We would consider these aspects to require “batch” level 

monitoring, or as frequent as information becomes available or can be collected. We propose 

that all other components of QAPs under Option A would be evaluated on a more limited basis 

but on a specified schedule. We consider these aspects to require “facility” level monitoring, and 

are proposing that components subject to this periodic or limited schedule be monitored on a 

quarterly basis. 

We request comment on the components we propose to assign to each category of the 

requirements for QAPs, as well as any components not mentioned here. We also request 

comment on whether we have or whether we could better strike the necessary balance between 

the costs of implementing the quality assurance program versus the benefits for the RFS 

program. We also request comment on whether quarterly monitoring is appropriate for those 

components proposed to be subject to the less frequent schedule, or whether different 
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components could or should be subject to different schedules (e.g., annual, once), and what those 

schedules should be, and why.

The quality assurance program that we are proposing would also apply to RINs generated 

for foreign-produced renewable fuel. Foreign producers of renewable fuel must be approved by

EPA and must meet all requirements applicable to non-foreign producers, i.e., the provisions of 

Subpart M. Such producers could engage a registered third-party auditor to audit their facility in 

accordance with the proposed quality assurance program. However, RINs generated from 

imported fuel would only be considered verified under the proposed quality assurance program if 

the associated foreign renewable fuel production facility is audited under an approved QAP. We 

request comment on the likelihood of such producers participating in the quality assurance 

program, any difficulties to participating they might encounter, and any issues that could affect 

the integrity of the proposed program.

A. Requirements for Option A Quality Assurance Plans

Quality Assurance Plans (QAPs) would be used to verify that renewable fuel produced at 

a given facility qualifies under the RFS program and that corresponding RINs are validly

generated. A QAP would form the basis for a facility audit, and would be created by an 

independent third- party based on criteria specified by EPA. 

This proposed rule would not impose any requirement on producers to engage a thirdparty auditor for the purpose of RIN verification, but instead would provide a voluntary means 

by which a production facility that engages an approved auditor, and upon a satisfactory facility 

audit using an approved QAP, would be verified by the auditor as validly generating RINs. RINs 

that had been verified through this process would provide the basis for an affirmative defense 

against civil violations for transferring or using invalid RINs for compliance, as discussed more 

fully in Section IV.C. As a result, verified RINs would be more valuable than RINs from a 

facility that had not been verified through a third-party auditor. We also expect that RIN 

replacement costs should significantly decrease as a result of this program.

This section discusses the minimum requirements of Option A QAPs under the RFS 

program, the elements of review that an Option A QAP must contain, and timing considerations 

affecting the use of a QAP. 

1. Elements of an Option A QAP 

QAPs would be used by registered third-party auditors to audit renewable fuel production 

at a particular facility. The QAP must include a list of elements that the auditor will check in 

order to verify that the RINs generated by a renewable fuel producer or importer are appropriate 

given the feedstock, production process, and fuel for which RINs were generated. Therefore, 

each QAP must identify the specific RIN-generating pathway from Table 1 to §80.1426 or a 

petition granted pursuant to §80.1416 that it is designed to audit. Effectively, the auditor will be 
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presenting a plan to EPA that the auditor believes is sufficient in scope and depth to ensure that 

RINs generated under such a plan are valid. The proposed required elements of a QAP are 

discussed below. In the QAP, the auditor would specify how the inclusion of the required 

elements would be accomplished. We request comment on these proposed elements, including 

detailed descriptions of any elements not mentioned below.

a. Verification of feedstock

We propose twelve required elements in Option A QAPs designed to ensure that the 

feedstocks used in the production of renewable fuel qualify to generate RINs. To begin with, for 

each batch of renewable fuel, we propose that the QAP should verify that feedstocks meet the 

definition of "renewable biomass," and identify which renewable biomass per §80.1401. 

We are also proposing specific elements depending on the type of feedstock. For 

instance, if the feedstock is separated yard waste, separated food waste, or separated MSW, the 

QAP would be required to verify that a separation plan has been submitted and accepted or 

approved, as applicable, as part of the registration requirements under §80.1450, and meets the 

requirements of §80.1426(f)(5) and that all feedstocks being processed meet the requirements of 

the separation plan. If the feedstocks are planted crops or crop residue, the QAP would be 

required to include review of records maintained pursuant to §80.1454 to verify that the land use 

restrictions of §80.1401 are met and properly reported pursuant to §80.1451(d). If the renewable 

fuel producer claims that the feedstocks qualify under the aggregate compliance approach, the 

QAP would be required to verify that the feedstocks are planted crops or crop residue that meet 

the requirements of §80.1454(g). The auditor would also be required to ensure that other 

feedstocks with additional recordkeeping requirements in §80.1454 are adequately covered (i.e. 

planted trees and tree residue and slash from non federal forest land).

The QAP would be required to verify that contracts exist for ongoing delivery of the type 

and amount of feedstocks used to produce renewable fuel, and that information in the contracts is 

consistent with production numbers. The QAP would also be required to verify that feedstock 

processing and storage equipment is appropriate, sufficient, and in working order to handle and 

process the feedstocks being used.

The QAP would be required to verify the accuracy of all feedstock-related factors used in 

calculation of the feedstock energy (FE) used under §80.1426(f)(3)(vi) or (f)(4), as applicable, 

including the average moisture content of the feedstock, in mass percent, and the energy content 

of the components of the feedstock that are converted to renewable fuel, in Btu/lb.

The QAP would be required to verify that feedstocks that can be processed at a facility

match information in the RFS registration and engineering review. (Note that we are proposing 

that a separate engineering review would no longer be required if a facility is covered by an 

Option A QAP). In addition, the feedstocks used to produce renewable fuel must be valid for the 

D code being claimed under §80.1426 (or have an approved petition under §80.1416) and must 

be consistent with the information reported in EMTS. Finally, the QAP would be required to 
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verify that the feedstock used to produce renewable fuel is not a renewable fuel from which RINs 

were already generated.

The feedstock-related elements that we are proposing to require for QAPs under Option 

A are shown in the table below, along with whether each item would be required to be monitored 

on an ongoing basis.

Table IV.A.1.a-1

Option A: QAP Monitoring Frequency – Feedstock-Related

Component Ongoing

Monitoring

Quarterly 

Monitoring

1-1 Feedstocks are renewable biomass X

1-2 Separation plan for food or yard waste submitted 

and accepted

X

1-3 Separation plan for municipal solid waste 

submitted and approved

X

1-4 Feedstocks meet separation plan X

1-5 Crop, crop residue feedstocks meet land use 

restrictions

X

1-6 Feedstocks with additional recordkeeping X

1-7 Contracts for feedstocks compare to production X

1-8 Feedstock processing, storage equipment match 

engineering review

X

1-9 Accuracy of feedstock energy (FE) calculation X

1-10 Feedstock valid for D code, consistent with EMTS X

1-11 Feedstock consistent with production process X

1-12 Feedstock is not renewable fuel where RINs 

generated

X

b. Verification of production process

We propose five required elements in Option A QAPs designed to ensure that the 

renewable fuel production process is appropriate for the RINs being generated. Auditors 

submitting QAPs for EPA approval would be required to provide a list of specific steps they will 

take to audit all five elements.

For each batch of renewable fuel, the QAP would require mass and energy balances of 

the production process, and verify that the results match expectations for the type of facility

being audited (e.g., biodiesel from soybean oil may have different expectations than biodiesel 

from non-food grade corn oil) based on typical values from prior input/output values, or similar 

facilities if prior values are not available. Energy inputs from on-site energy creation (e.g., 

propane, natural gas, coal, biodiesel, heating oil, diesel, gasoline, etc) and/or energy bills, and 

mass inputs/outputs such as feedstocks, additional chemicals, water, etc. would be required as 

part of the mass and energy balances. In addition, the QAP would be required to verify that 
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yields, production of co-products, and production of wastes match expectations for the type of 

facility being audited

In addition to mass and energy balances, QAPs under Option A would be required to 

verify that the production process is capable of producing, and is producing, renewable fuel of 

the type being claimed. The QAP would be required to verify the accuracy of all process-related 

factors used in calculation of the feedstock energy (FE) under §80.1426(f)(3)(vi) or (f)(4), as 

applicable. 

The QAP would be required to verify workforce size and conduct random employee 

interviews to confirm the production process. We believe this element is useful as a verification 

that the plant is running as stated, Staffing levels, or a reasonable metric such as is the workforce 

appropriate per shift for throughput, would confirm that the plant is operating as expected. We 

understand that automation, plant complexity and staff skill levels and experience, among other 

factors, can result in some variation here, but believe this is a easily accessed and useful data. 

Finally, the QAP would be required to also verify that production process technology and 

capacity used matches information reported in EMTS and in the facility's RFS registration. The 

QAP also would be required to verify that the production process is consistent with D code being 

used as permitted under Table 1 to §80.1426 or a petition approved through §80.1416.

The production process-related elements that we are proposing to require for QAPs under 

Option A are shown in the table below, along with whether each item would be required to be 

monitored on an ongoing basis.

Table IV.A.1.b-1

Option A: QAP Monitoring Frequency – Production Process-Related

Component Ongoing

Monitoring

Quarterly

Monitoring

2-1 Mass and energy balances X

2-2 Workforce size X

2-3 Process-related factors used in feedstock energy

(FE) calculation

X

2-4 Production process consistent with EMTS X

2-5 Production process consistent with D code X

c. Verification of renewable fuel

We propose twelve required elements in Option A QAPs designed to ensure that the 

renewable fuel being produced qualifies to generate RINs, and that the number of RINs 

generated is accurate. 
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For each batch of renewable fuel, the QAP would be required to verify that volumes of 

renewable fuel for which RINs are being generated meet, are designated for, and are sold for 

qualifying uses as defined under "transportation fuel, heating oil, and/or jet fuel" in §80.1401. 

The QAP would be required to verify a number of things related to the fuel type. For 

instance, the QAP would include verification of the existence of certificates of analysis 

demonstrating that the renewable fuel being produced meets the applicable specifications and/or 

definitions in §80.1401, and would be required to verify contracts with lab(s) for certificates of 

analysis, unless a facility has an on-site laboratory. If on-site, the QAP would be required to 

verify lab procedures and test methods. The QAP would also be required to verify the existence 

of quality process controls regarding test equipment (e.g., accuracy of flow meters, temperature 

gauges), and would be required to monitor equipment integrity to ensure proper procedures for 

equipment replacement, maintenance, and cleaning are in place. The QAP would be required to 

verify that renewable fuel being produced at the facility and that can be produced, matches 

information in RFS registration in terms of chemical composition, and would be required to 

sample and test the final fuel and compare to specifications. The QAP would be required to 

verify that renewable fuel being produced matches the D code being claimed under §80.1426, or 

approved petition under §80.1416.

The QAP would be required to verify a number of things related to the volume of 

renewable fuel produced, including a check to ensure that volume temperature correction 

procedures are followed correctly. The QAP would be required to verify that volume of 

renewable fuel produced is consistent with expectations for the amount of feedstock being 

processed and would be required to verify the accuracy of all fuel-related factors used in 

calculation of the feedstock energy (FE), as applicable, including equivalence value for the batch 

of renewable fuel and the renewable fraction of the fuel as measured by a carbon-14 dating test 

method. 

The QAP would be required to verify that fuel shipments match production, and would 

be required to consider purchases (e.g. contracts) and storage of petroleum-based fuel, if 

applicable, contracts with any company that removes wastes, co-products, off-spec products or 

any other material other than renewable fuel from the facility, if applicable. The QAP would be 

required to consider bills of lading (BOL), invoices, product transfer documents (PTDs), EMTS 

inputs, EPA quarterly reports and EIA data. Finally, the QAP would be required to verify that 

production volume being claimed is consistent with storage and/or distribution capacity and that 

actual volume production capacity matches the value specified in the facility’s RFS registration.

The renewable fuel-related elements that we are proposing to require for QAPs under 

Option A are shown in the table below, along with whether each item would be required to be 

monitored on an ongoing basis.
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Table IV.A.1.c-1

Option A: QAP Monitoring Frequency – Renewable Fuel-Related

Component Ongoing

Monitoring

Periodic

Monitoring

3-1 Renewable fuel sold for qualifying uses X

3-2 Certificates of analysis X

3-3 Process controls X

3-4 Standardization of volumes X

3-5 Renewable fuel matches D code or petition X

3-6 RIN generation is consistent with wet gallons 

produced

X

3-7 Fuel shipments match production X

3-8 Renewable content R is accurate X

3-9 Volume production matches EPA and EIA reports X

3-10 Volume production is consistent with storage, 

distribution capacity

X

3-11 Volume production capacity matches registration X

3-12 Equivalence value EV is accurate, appropriate X

e. Verification of RIN generation and separation

We propose three required elements in Option A QAPs designed to verify RIN 

generation and separation. The QAP would be required to ensure that fuel that is exported was 

not used to generate RINs, or alternatively that RINs were generated but retired.

Under the limited circumstances where a renewable fuel producer or importer separates 

RINs, the QAP would be required to verify that any RIN separation being done by the producer 

is done according to the requirements of §80.1429, was reported to EMTS accurately and in a 

timely manner, and is supported by records. In addition, the QAP must verify that appropriate 

RIN generation calculations are being followed under §80.1426(f)(3), (4), or (5) as applicable.

The elements related to RIN generation and separation that we are proposing to require 

for QAPs under Option A are shown in the table below, along with whether each item would be 

required to be monitored on an ongoing basis.
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Table IV.A.1.e-1

Option A: QAP Monitoring Frequency – RIN Generation & Separation-Related

Component Ongoing

Monitoring

Quarterly

Monitoring

5-1 RIN generation calculations X

5-2 Fuel used for export not used to generate RINs X

5-3 Verify RIN separation X

2. Approval and Use of Option A QAPs

a. Approval of Quality Assurance Plan

We are proposing that a third-party auditor must submit a QAP to EPA for approval. We 

are also proposing that a QAP must be submitted for approval every year. A QAP would be 

deemed valid on the date EPA notifies the party that submitted the QAP that it has been 

approved. Only an approved QAP could be used by a third-party auditor to provide audit 

services to renewable fuel producers. 

b. Frequency of updates/revisions to QAPs

We are proposing that a QAP approval by EPA only applies to the plan that was 

submitted to EPA, and there are specific cases in which we believe a QAP should be resubmitted 

and re-approved. For example, we are proposing that a new QAP would be required if, 

downstream of the producer, RINs are discovered to have been invalidly generated, as that 

situation would be indicative of an ineffective QAP.

We are also proposing that a QAP would need to be revised if the renewable fuel 

producer makes a change in feedstock, production process, or fuel that is not covered by the 

QAP. Under one of these conditions, the plan submitted to EPA would no longer be applicable, 

and thus approved new QAP would be required to be submitted and approved. We request 

comment on what changes would require a new QAP to be submitted for approval. Specifically, 

we request comment on whether a new QAP would be required to be submitted to EPA if the 

audited facility changes operations, feedstock, fuel type, etc.

B. RIN Replacement Mechanisms Under Option A 

Auditors operating under Option A would be responsible for replacing invalid verified 

RINs if EPA has not recovered replacement RINs from the producer. Upon registration with 

EPA, auditors would be required to demonstrate that they have access to a RIN replacement 

mechanism that can replace a minimum percentage of any invalid RINs they verify as A-RINs. 
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See Section VI.B of this preamble for full registration requirements. Under this approach, when 

EPA has not recovered replacement A-RINs from the producer that generated the invalid RINs, 

the RIN replacement mechanism would ensure the auditor’s ability to fulfill its replacement 

requirement. We are proposing that there would be no requirement for a RIN replacement 

mechanism under Option B, where only producers and obligated parties, not auditors, would be 

responsible for replacing invalid verified RINs. 

The reason we are proposing to require a RIN replacement mechanism under Option A 

(for auditors), but not under Option B (for obligated parties), is that the business models, size, 

and assets of the parties expressing interest in operating as auditors suggests that they would not 

be capable of self-financing a RIN replacement obligation. The obligated parties, on the other 

hand, are generally owners of major capital assets and are capable of self-financing a potential 

RIN replacement responsibility. While this may change in the future, it is appropriate at this 

point to ensure that there would be a reliable mechanism available to fulfill the auditor’s 

replacement obligation. We intend that the requirement of a RIN replacement mechanism would 

provide stability in the marketplace and ensure that the RIN replacement obligation would in fact 

be fulfilled.

Whatever mechanism is used must be capable of fulfilling the auditor’s potential 

replacement requirement for invalid RINs audited under an Option A QAP in a given calendar 

year, for the current year and the previous four years. The calculation of this potential 

replacement requirement is further discussed in Section IV.D.4, below, in the context of the 

proposed cap on RIN replacement under Option A. 

There are a number of RIN replacement mechanisms that may exist or become available 

to auditors. We are indifferent as to which mechanism is chosen and are proposing to leave the 

choice to the auditors, who are in the best position to know what arrangement will work best for 

their businesses. The proposed rules do not therefore limit or specify the types of mechanisms 

we would accept. Rather, we propose only general minimum requirements for an acceptable 

replacement mechanism, and we solicit comments on these and potential additional requirements 

for these mechanisms. We have considered three possible types of mechanisms that could 

provide this function: RIN banks, RIN escrow accounts, and other traditional financial 

instruments. However, these mechanisms, outlined below, are not intended to be inclusive of all 

possible ways a RIN replacement mechanism could work, and are merely suggestions of 

potential pathways Option A auditors might follow.

We request comment on the various factors that will impact the cost of establishing and 

maintaining the minimum required balance in a RIN replacement mechanism, such as how many

year’s worth of RINs the mechanism should be required to be capable of replacing, whether a 

minimum percentage of the potential replacement obligation should be used as a baseline for the 

mechanism, and alternative methods to determining the appropriate minimum funding of the 

mechanism. We also seek comment on the perceived feasibility and necessity of the replacement 

mechanism requirement for auditors under Option A. Finally, we seek comment on whether any 

of the replacement mechanisms described below or any other form of replacement mechanism 

might provide the required type and amount of coverage, whether any should be prohibited, and 

any other relevant comments on this issue. 
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1. RIN Banks

One potential replacement mechanism is a RIN bank. A RIN bank would be a repository

for valid RINs to which multiple Option A auditors (the “members” of the bank) contribute, and 

which could be used as a source of replacement RINs in the event that any one of the members 

was responsible for replacing invalid RINs.

The primary advantage of a RIN bank is that it gives each member access to a large 

quantity of A-RINs in exchange for contributing a relatively small quantity of A-RINs. 

However, if RINs from the RIN bank are used to replace RINs for which one of the bank’s 

members is responsible, the withdrawn RINs must be replaced in the bank. While the bank 

managers might require the responsible party to reimburse the bank for any RINs withdrawn as a 

result of its actions, if the responsible party declares bankruptcy or is otherwise unable to 

reimburse the bank, the remaining members would be responsible for re-populating the bank to 

the required level.

A RIN bank could be established, funded and managed by members of the bank. 

Members would each purchase and contribute verified A-RINs to the bank. While such 

contributions could be proportional to each party's RIN replacement liability, it would be up to 

the bank managers to stipulate how the bank would be populated, how withdrawals from the 

bank are administered and managed, how to re-populate the bank in the event that RINs are 

withdrawn to replace invalid RINs, and how to grant or revoke membership in the bank. 

A RIN bank would establish an EMTS account to identify the RINs contributed by the 

bank’s members. RINs would be held by the bank and be available to replace invalid RINs that 

were verified under Option A by a member of the bank. Each member of the bank would be 

required to have access to all of the RINs in the bank to replace A-RINs they had audited that 

were found to be invalid. If at any point the number of RINs held by the bank no longer met the 

EPA’s requirements, either due to the addition of a new member(s) to the bank, an increase in 

the liability of one of the members of the bank, or a withdrawal to replace invalid RINs, the 

members of the bank would again be required to contribute RINs to the bank until the minimum 

required level of RINs was reached. 

Consistent with the treatment of any RIN replacement mechanism and the potential 

replacement liability described below, we propose that a RIN bank would be required to contain, 

at minimum, a number of A-RINs equal to 2% of all of the A-RINs verified in the last five years 

by the member that has verified the greatest number of A-RINs in the previous five years. We 

believe this percentage is a reasonable estimate of the likely incidences of invalidly generated 

RINs under the proposed quality assurance program, and would allow any member of the bank, 

including the member who has verified the largest number of A-RINs in the last five years, to 

fulfill its potential RIN replacement obligation. 

Another important issue related to RIN banks is whether RINs deposited in RIN banks 

expire like other RINs or whether they are a special category of RINs that do not expire. The 
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main advantage of creating a special category of RINs that do not expire if deposited in a RIN 

bank is that it would allow the bank to provide perpetual backing for its members’ replacement 

responsibilities, as long as the RINs were not withdrawn to replace invalid RINs. However, 

RINs that do not expire could acquire a higher market value compared to RINs from the same 

facility without this new status. If EPA adopted this system, we would also have to stipulate that 

RINs placed in a RIN bank could not be withdrawn for any reason other than to replace invalid 

RINs to prevent auditors from depositing RINs into the bank, achieving this new status, and then 

withdrawing them to be sold with a new higher market value. This stipulation would place 

restrictions on the use of RINs owned by the auditors participating in this system and could be 

problematic in cases where an auditor wanted to disassociate from a bank.

The alternative to this system, and the one we are proposing today, would not change the 

status of RINs deposited in a RIN bank and would allow them to expire just like any other RINs. 

Auditors would be free to regularly withdraw older RINs from the bank and replace them with 

newer RINs (in addition to their new contributions) to prevent RINs in the bank from expiring 

and losing their value. While we recognize that this would add some administrative burden to 

auditors and potentially impact the value of RINs that are deposited in the bank (since RINs from 

a previous year are limited to being used to cover 20% of an obligated party’s RVO) we 

nevertheless believe this is a better option than creating a new class of RINs. This approach 

would allow auditors to have the most control over their own RINs, depositing and withdrawing 

them at any time, provided they maintain their required minimum balance in the bank. Further, 

since the rollover cap at §80.1427(a)(5) limiting of the previous year's RINs that may be used to 

meet the current years RVO is significantly higher than the percentage of RINs that would be 

required to be held by a bank, we believe the depreciation in the value of RINs deposited in a 

bank is likely to be minimal. Finally, this approach would be the most consistent with the 

existing program. We request comment on this approach.

We also evaluated whether to allow auditors participating in a RIN bank to continue to 

verify A-RINs if their RIN bank balance fell below the minimum funding level due to a 

withdrawal to replace invalid RINs. In the event that such a withdrawal takes place and the 

balance of the RIN bank no longer met the minimum requirements, the members of the bank 

could not verify any RINs until the bank again achieved the minimum 2% requirement. 

Replacing the withdrawn RINs would require additional RIN deposits above and beyond those 

regularly scheduled. Managers of RIN banks would be free to require more than the 2% 

minimum we are proposing as a means to ensure that the 2% minimum will be met even in the 

event of a withdrawal. 

Nevertheless, we recognize that it could be disruptive to prohibit auditors from verifying 

RINs whenever the balance in a RIN bank falls below the minimum funding requirement due to 

a withdrawal. An alternative would be to allow the bank members a specified period of time, 

such as 30 or 60 days, during which they could continue to verify RINs while building the bank 

balance back up to the minimum requirements. While this might serve to minimize disruptions 

to the program, it is not without disadvantages. Allowing for third-party auditors to verify RINs 

for a period of time without a sufficient balance in the RIN bank would create vulnerabilities in 

the program by letting validated A-RINs into the market that are not in fact backed by the type of 

mechanism required under the proposed regulations. Due to the potential for this allowance to 
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create significant vulnerabilities within this program we do not believe it would be appropriate to 

allow third-party auditors to verify RINs for any period of time when the auditor’s RIN bank has 

an insufficient balance. 

2. A-RIN Escrow Accounts

An A-RIN escrow account would work very much like a RIN bank, but would be funded 

by a single auditor instead of a group of auditors, and would be supervised and managed by a 

third-party escrow agent. The advantage of this option is that an auditor would have total control 

over the funding of the escrow account and, in contrast to the RIN bank, an auditor using an 

escrow account would never be adversely affected by the actions of another contributor to the 

account, such as failure to contribute its required share or a large withdrawal from the RIN bank 

that might leave the bank underfunded. On the other hand, an auditor using an escrow account 

would be solely responsible for the funding of the account, and so would be required to maintain 

a balance equal to a much larger percentage of its potential replacement responsibility than it 

might be if using a RIN bank.

To qualify as an acceptably funded account, we propose that the escrow account would 

be required to maintain a balance of A-RINs equal to at least 2% of the A-RINs verified by the 

auditor to date for the last five years. As discussed above, we believe this percentage would 

cover the potential exposure of an auditor to the risk of RIN fraud or other producer-caused 

invalidity under the proposed quality assurance program. 

As with the RIN bank, the RINs held in escrow would expire just like any other RIN and 

would have to be retired and replaced on a rolling basis to maintain the auditor’s ability to 

replace invalid RINs at any given point in time. Likewise, if the account’s balance fell below the 

minimum required amount for any reason, the auditor would be precluded from verifying RINs 

unless and until the account’s balance was brought back to the minimum level. 

The escrow account would contain verified A-RINs and would be used as a source of 

RINs to retire upon a finding that RINs verified by the auditor were in fact invalid. An originally 

signed copy of the escrow account agreement would be submitted by the auditor to EPA as part 

of its registration. The agreement would stipulate, for example, that the escrow agent would 

release RINs from the account upon demand by or with the concurrence of the EPA 

Administrator. RINs would be released directly to the auditor (for roll-over purposes or for 

meeting a replacement requirement) or to a designated third party such as a standby trust (solely 

for meeting the auditor’s replacement requirement.) Maintenance of the account’s minimum 

balance requirements would be part of the auditor’s regular compliance reporting. The auditor 

would set up a separate account in EMTS to identify RINs placed in the escrow account. 

3. Financial Instruments and Alternative A-RIN Replacement Mechanisms

As noted above, we would not prescribe that auditors under Option A must use only a 

RIN bank or a RIN escrow account as their replacement mechanism, but would allow other 
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mechanisms that would cover an auditor’s potential replacement responsibility. Whatever 

mechanism is used, however, would have to be capable of providing for the replacement of 2% 

of the A-RINs that the auditor had verified in the past five years. Since obligated parties would 

not be responsible for replacing invalid RINs under Option A, any replacement mechanism held 

by the auditor would need to make disbursements directly to the auditor or to a third party 

contractually obligated to perform the auditor’s replacement responsibility.

We have considered a number of traditional financial instruments that we believe are not 

suitable to provide the coverage required under Option A. For instance, a liability policy

obtained by an auditor would typically only cover losses incurred by another party contracting 

with the auditor, in this case, most likely the RIN purchaser. This would not be an acceptable 

replacement mechanism under Option A because the RIN purchaser is not responsible for 

replacement of A-RINs and therefore would have no compensable harm. If an insurance policy

could be written to cover the replacement obligation of the auditor instead of a third party, 

regardless of the fault of the auditor or the source of the invalidity (i.e., covering potentially

fraudulent acts by the producer), then such an instrument would be acceptable as a replacement 

mechanism under Option A. Similarly, a replacement mechanism that would pay out directly to 

EPA instead of the auditor would not be acceptable because EPA cannot purchase or retire RINs. 

Surety bonds and letters of credit payable to EPA would therefore not be suitable replacement 

mechanisms for Option A. 

On the other hand, a surety bond or other financial instrument, such as a letter of credit, 

could be used as a RIN replacement instrument if capable of providing direct replacement of 

invalid RINs, either by itself or by contracting with a third party. A performance bond, for 

example, might directly guarantee the performance of the auditor’s RIN replacement 

responsibility. The bond agreement could allow the surety the option of purchasing and retiring 

replacement RINs itself, hiring a third-party agent to complete the purchase and retirement, or 

paying into a standby trust that could, in turn, fulfill the replacement responsibility on its own or 

by hiring a third-party agent to do so. A payment bond, similarly, could be established to pay out 

to a standby trust authorized to purchase and retire RINs on demand by the EPA administrator, 

or to contract with a third party agent to perform the replacement.

In an effort to provide regulated parties with an option where the auditor could use a 

traditional liability policy to backstop RIN replacement, but the obligated party would still bear 

no potential RIN replacement responsibility, we considered a modified Option A approach. In 

this modified approach, the obligated party would be responsible for replacing invalid A-RINs 

that it had retired for compliance purposes, but the auditor would carry a third-party liability 

policy to cover the cost of that RIN replacement. In the event that the insurance policy failed for 

whatever reason to pay out the replacement costs, or paid out only part of the replacement costs, 

the obligated party would not be liable for fulfilling the remaining portion of its RIN replacement 

responsibility. Essentially, the obligated party would be responsible for RIN replacement, but 

would be assured that their replacement costs would be covered entirely by a third party. 

However, we see significant problems with this approach. The primary problem is that if an 

obligated party incurred a replacement obligation and sought compensation through the 

insurance policy, it would have little reason to press its claim with any vigor, knowing that any 

lack of payment from the insurer would effectively be forgiven by EPA. The obligated party, in 
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short, would be rendered whole regardless of how little the policy paid, or even if the policy paid 

at all. As a result, we consider it very likely that under this modified Option A system, the 

invalid RINs would not be replaced. This approach would also affect the behavior of the insurer, 

who would define the limits of its liability on the basis of the potential harm that the obligated 

party might suffer. Since the obligated party would not be responsible for replacing any RINs not 

covered by the insurance policy, its “harm” would be limited to whatever amount the insurer 

chose or intended to pay out. The insurer would not be penalized or pursued for failing to pay out 

to the limits of the policy because such a decision would cause no harm or loss to the obligated 

party or the policy holder. It is arguable that this situation would effectively create a fictitious 

insurance contract, because the insurer would control most if not all of the total amount of the 

loss it was insuring against. We seek comment, however, on whether this or some other 

modification to Option A would be considered acceptable and feasible.

The inapplicability of a third party liability policy as a replacement mechanism under 

Option A would not, of course, diminish its availability and use under Option B. While liability

insurance is not a required feature of the Option B program, auditors and obligated parties could 

nonetheless choose to contract for it voluntarily. Third-party liability insurance, therefore, would 

still provide a way for obligated parties to cover their potential replacement responsibility under 

Option B. Obligated parties and auditors would remain free to set up whatever kinds of contracts 

and/or third-party agreements to cover potential losses due to invalid RINs. 

We also considered a “hybrid” approach, combining certain features of Option A with 

certain features of Option B. Under this approach, the obligated party would retain the 

replacement responsibility, but the auditor would be required to carry a third-party liability 

policy to cover the obligated party’s potential losses due to the use of invalid A-RINs. In this 

scenario, the obligated party would remain liable for replacement of invalidly generated RINs 

even if the insurance instrument provided only partial coverage, or if it failed to provide 

coverage at all. This option would give obligated parties the extra assurances of an Option A 

QAP and a dedicated liability insurance policy held by the third-party auditor to cover their 

potential losses. However, as noted above, this approach is essentially already available under 

Option B. An independent third-party auditor could offer a QAP that met the requirements of 

Option A and could also provide the assurance of a third-party liability policy to cover the RIN 

purchaser’s potential replacement responsibility. Moreover, by leaving this as an independent 

and voluntarily chosen option, auditors and obligated parties have more flexibility to decide what 

level of coverage and risk they are willing to bear, instead of being required to maintain a set 

minimum amount of coverage. We therefore decided not to propose this as an independent 

option, but we request comment on whether this hybrid approach or some variation of it would 

be a valuable addition to the proposed program.

4. Minimum Replacement Capability for RIN Replacement Mechanisms

We do not believe it would be reasonable to require replacement mechanisms under 

Option A to provide coverage for all of the RINs an auditor verifies. Instead, we are proposing 

that coverage must be sufficient to replace 2% of the RINs verified by the auditor. We are 

proposing this level of coverage because we believe incidences of invalid RINs will be 
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significantly below historic levels. Invalid RINs in 2010 and 2011 were generated when there 

was essentially no due diligence being performance by downstream parties to ensure that RINs 

were valid, and we believe that incidences of invalidity would be significantly fewer in number 

once the proposed quality assurance program is in place. 

Nevertheless, historically, invalid RINs have not been generated with equal probability

by all biodiesel producers. Instead, it has been a few producers that were responsible, with 

essentially all RINs generated by those producers being invalid. If such circumstances were 

repeated in the future, the potential impacts on auditors would be twofold:

• Some auditors would not have to replace any of the RINs they verify, since many

producers would have generated no invalid RINs. 

• In the event that an auditor was required to replace invalidly generated RINs, 

those invalid RINs would likely represent more than 2% of the RINs that the 

auditor verified.

As a result, it is possible that the number of invalid RINs could be higher than 2% of a 

single auditor's throughput even if the total number of invalid RINs represented only 2% of all 

RINs generated for the nation as a whole. While we are proposing that auditors would only be 

responsible for having a RIN replacement mechanism capable of covering the replacement of 2% 

of the RINs he verifies, we request comment on whether the RIN replacement mechanism should 

require more than 2% coverage. 

C. Affirmative Defenses

After meeting with industry stakeholders over the course of several months, we recognize 

that providing an affirmative defense to civil liability arising from the transfer or use of invalid 

RINs would promote greater liquidity in the RIN market, especially the market for RINs 

generated by smaller producers. EPA believes that in the circumstances present in the RFS 

program, an affirmative defense combined with a reasonable QAP and adequate mechanisms to 

replace RINs that are invalidly generated, is an appropriate way to promote greater liquidity in 

the RIN market. It is our intent to design a system that would provide RIN owners with such an 

affirmative defense to civil liability provided appropriate measures are in place with respect to a 

QAP and a mechanism for replacement of invalidly generated RINs.

To this end, under the proposed regulations renewable fuel producers and obligated 

parties would have the option of participating in a quality assurance program that would provide 

significant assurance (Option A) or reasonable assurance (Option B) that RINs are validly 

generated at production facilities. EPA would approve Quality Assurance Plans (QAPs) that 

meet the basic criteria prescribed in the regulations, and these QAPs would be the template for 

production oversight by an independent third-party auditor. Performance of an approved QAP 

audit would be the foundation of an affirmative defense for parties that transfer or use QAPverified RINs for compliance purposes. The affirmative defense would only be available to RIN 
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owners for RINs that were verified by an independent third-party auditor using an EPA-approved 

QAP, whether Option A or Option B. Additionally, it is our intent that affirmative defenses 

would not be available to the generator of an invalid RIN. Since the quality assurance program 

would be voluntary, parties could still purchase RINs not verified by an EPA-approved QAP and 

transfer or use these unverified RINs, but they could not assert an affirmative defense if the RINs 

were found to be invalid, regardless of their level of good faith or any independent due diligence 

they perform prior to purchase. 

Once a RIN has been verified by the auditor, any person, other than the generator of the 

RIN, who transfers or uses that verified RIN would be eligible for an affirmative defense if the 

RIN was in fact invalidly generated and the person then transfered it to another party or used it 

for compliance purposes. Once a RIN was verified through an audit based on an Option A QAP, 

it would remain verified and the verification would never be revoked.6 The QAPs would be 

designed to verify valid generation of RINs, and the assertion of an affirmative defense would be 

limited to the prohibited acts of transferring and using invalidly generated RINs. We are 

proposing new regulations in Section VIII to address RINs that become invalid downstream of 

the RIN generator, but an affirmative defense would not apply in this situation. It should again 

be noted that an affirmative defense is not available for a RIN that was not verified under an 

EPA-approved QAP. In other words, the system as it exists under the current regulations would 

continue to be an option for obligated parties who do not wish to purchase RINs verified by a 

QAP. 

As noted above (Section III of this preamble), there are two types of verified RINs: those 

verified by a third-party auditor who is required to have a replacement mechanism to guarantee 

replacement of invalidly generated RINs (“Option A” or “A-RINs”) and those verified by a 

third-party auditor who is not required to replace invalidly generated RINs (“Option B” or “BRINs”). The requirements for establishing an affirmative defense under Option A are described 

below, while Option B is described in Section V.C. In order to establish an affirmative defense 

under Option A or Option B, we are proposing that the elements would be required to be proven 

by a preponderance of the evidence. This means that each element was “more likely than not” to 

have been met. Additionally, we are proposing that when a person seeks to establish an 

affirmative defense, they would submit a written report to EPA, along with any necessary

supporting documentation, that would demonstrate how the elements were met. The written 

report would need to be submitted within 30 days of the person discovering the invalidity of the 

RIN. We welcome comment on the elements of the affirmative defense and the effects of 

establishing an affirmative defense. 

In the event that invalidly generated A-RINs are transferred or used, the person could 

establish an affirmative defense to liability arising from transferring or using the invalid A-RINs 

for compliance with an RVO if the following elements were proven by a preponderance of 

evidence: 

 

6

If a RIN was improperly verified, the QAP auditor could be liable for committing the prohibited act of verifying a 

RIN without following the requirements of the approved QAP plan. However, the RIN would remain verified for 

purposes of asserting an affirmative defense by parties who transferred or used that RIN after it was verified.
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1) The RINs in question were verified in accordance with an approved Option A QAP as 

defined in EPA regulations; 

2) The RIN owner did not know or have reason to know that the RINs were invalidly

generated prior to being verified by the third-party auditor; 

3) The QAP auditor or RIN owner informs the Agency within 24 hours of discovering 

that the RINs in question were invalidly generated; 

4) The RIN owner did not cause the invalidity; and

5) The RIN owner did not have a financial interest in the company that generated the 

invalid RIN.

Allowing invalid RINs to circulate in the market without EPA’s knowledge would 

subvert the intent of the quality assurance program and the RFS program. In that context, the 

knowledge and notification requirements, (2) and (3) of the above list, ensure that the RIN owner 

did not knowingly allow invalid RINs to enter the market, and did not benefit from the use or 

retirement of the invalid RINs without informing EPA that the RIN was invalid. 

We request comment on all the elements we are proposing as prereequisites to asserting 

an affirmative defense, and in particular the requirement to report invalid RINs to the EPA 

within 24 hours of discovery.

An affirmative defense generally can be asserted in an administrative or judicial 

enforcement proceeding, and is a defense that precludes liability even if all of the elements of a 

claim are proven. In this proposed rule, we are including an explicit notification requirement to 

allow EPA to evaluate affirmative defense claims before deciding whether or not to commence 

an enforcement action.

D. Treatment of Invalid A-RINs

Under both the current and proposed regulations, RIN purchasers must assess the level of 

risk associated with purchasing a particular RIN to comply with their Renewable Volume 

Obligations (RVOs). For instance, a purchaser unfamiliar with the renewable fuel producer 

generating the RIN risks the possibility that the RIN is invalid, while a well-known producer 

might seem less risky. The use of the QAPs as described in this NPRM would reduce the risk of 

purchasing invalid RINs, especially in situations where the producer of the RIN is unknown or 

new to the market. Where a producer is considered less risky in a given situation by a given 

purchaser, the RIN buyer may not need as extensive a QAP to reduce its risk to an acceptable 

level, and would be willing to risk the obligation to replace the RIN if it were found invalid. On 

the other hand, a RIN deemed more risky might require a more stringent QAP and additional 

assurances against the responsibility to replace it if the RIN turns out to be invalid. The 

obligation to replace invalid RINs that have been retired for compliance purposes will differ 

depending on whether the RIN was unverified, or verified through an Option A or Option B 

QAP. 
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 Additionally, as discussed in Section III.C, we are proposing an administrative process 

for replacement of invalid RINs that places initial responsibility to replace invalidly generated 

RINs on the RIN generator responsible for causing the invalidity. In the event the RIN generator 

does not replace the invalidly generated RINs according to the administrative process, the 

replacement obligation would shift to the third-party auditor under Option A. Thus, for invalidly

generated RINs verified by an Option A QAP, the auditor would have the responsibility to 

replace the invalidly generated RINs, and the obligated party would have no responsibility for 

RIN replacement. However, in the event that regulated parties fail to implement the 

administrative process for replacement of any invalid RINs, the EPA could bring an enforcement 

action against any or all of the parties that were required to replace the invalid RINs. See 

§80.1474 of the proposed regulations for details of the administrative process for replacement of 

invalid RINs. 

This section describes the responsibilities of regulated parties that generate RINs or take 

ownership of RINs verified under Option A but which are ultimately found to have been 

invalidly generated. We also describe the conditions under which invalid RINs must be 

replaced, by whom, and the mechanisms for doing so.

1. Responsibilities for replacement of Invalid Verified A-RINs

For Option A we are proposing a system wherein RINs would be verified by a third-party 

auditor using an EPA-approved QAP, and the third-party auditor would be liable for replacing 

invalidly generated RINs. Obligated parties would not be liable for replacing invalid RINs under 

Option A, and could use invalid A-RINs for compliance. 

Obligated parties that purchase A-RINs would not be subject to civil liability if an A-RIN 

transferred or used for compliance purposes was later found to have been invalidly generated, if 

all the elements of an affirmative defense were successfully asserted, as described in Section 

IV.C. Moreover, obligated parties would be under no obligation to replace A-RINs used for 

compliance that were subsequently found to be invalid and could transfer and use invalidly

generated A-RINs (if they did not know or have reason to know the A-RINs were invalidly

generated prior to being verified) without violating the Prohibited Acts section, §80.1460.

Under Option A, the third-party auditor would be required to have a replacement 

mechanism capable of replacing invalidly generated A-RINs that were verified by that auditor. 

We chose to have the third-party auditor replace invalidly generated A-RINs to provide obligated 

parties the greatest amount of incentive to buy RINs from smaller producers, who might be 

perceived to be higher risk producers, which would increase the liquidity of the market. The 

third-party auditors would have the greatest oversight of A-RIN generation because of the 

robustness of the verification product they are providing to the market under Option A. Thus, 

charging them with the corresponding replacement obligation is a reasonable approach to 

achieving the goals of the proposal. Additionally, as discussed above, after meeting with several 

third-party auditors, we discovered that they, in most cases, do not have the same level of 

financial resources that many obligated parties possess. Therefore, requiring a replacement 

mechanism provides a level of security for the Agency in making sure the statutory volume 
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mandate is met. As described more fully in Section IV.B, the form of this replacement 

mechanism would determine how this replacement occurs.

QAP Option A would provide the greatest risk mitigation for obligated parties in the 

event that their RINs were invalidly generated and later used for compliance purposes. Not only 

could they assert a defense to civil liability for using an invalid A-RIN for compliance purposes, 

but they would not be responsible for later replacing that RIN. QAP Option A would provide a 

means for all producers to participate in the market because obligated parties would bear no risk 

of a replacement obligation for any A-RINs, regardless of who produced them. Smaller 

producers would thus have access to a larger number of obligated parties as potential customers 

than they might have under the existing regulations, where obligated parties are always subject to 

a replacement obligation if the RINs they have retired are deemed invalid. We seek comment on 

this issue.

2. Invalid A-RIN Replacement

The current regulations do not specify that a party must replace invalid RINs because 

RIN replacement is a function of the need to meet an RVO. If the party holding an invalid RIN 

is an obligated party, and he does not have a sufficient number of valid RINs to meet his RVO, 

he must acquire additional valid RINs. Other parties that retire invalid RINs are not required to 

replace them because they do not have a requirement to acquire RINs to meet an RVO.

Under the quality assurance program the requirement to replace an invalid RIN may be 

placed on a party other than the owner of the invalid RIN. As a result, the regulations governing 

the replacement of invalid verified RINs must specify which party is responsible. Under Option 

A only the renewable fuel producer or importer who generated the invalid RINs and the auditor 

who verified those RINs would be responsible for replacing them. 

In general, as discussed above, the administrative process for replacement of invalid 

RINs places initial responsibility of replacement of invalid RINs on the RIN generator, 

regardless of who actually owns the invalid RINs at the time that the invalidity is discovered. 

Even though we are proposing that invalid verified A-RINs could continue to be transferred and 

used for compliance, RIN generators would never be permitted to transfer verified A-RINs once 

they know that those A-RINs are invalid.

If the RIN generator failed to replace invalidly generated A-RINs, EPA would shift the 

responsibility to the third-party auditor to replace the invalid A-RINs. A QAP A auditor would 

be responsible for replacing invalidly generated A-RINs up to the levels discussed in Sections 

IV.B and IV.D.5. All regulated parties that are potentially liable for replacing invalid RINs 

would be free to obtain more coverage for RIN replacement than the regulations require. In the 

event that regulated parties fail to implement the administrative process for replacement of any 

RINs, the EPA could bring an enforcement action against any or all of the parties that were 

required to replace the invalid RINs. 
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The methods for replacing invalidly generated RINs under QAP Option A are outlined 

below. See §80.1474 of the proposed regulations for details of the administrative process for 

replacement of invalid RINs. In general, RINs verified under Option A could always be 

transferred or used even if they are discovered to have been invalidly generated, since RIN 

replacement would be carried out by the RIN generator or the auditor. 

In the event that EPA or the independent third party auditor alleged that an A-RIN was 

invalidly generated, that RIN would be a “potentially invalid RIN” or “PIR”. The RIN generator 

would be required to take one of three possible corrective actions within 30 days of being 

notified of the PIR:

• Retire a valid A-RIN of the same D-type as the PIR, either by purchasing it or 

generating a new valid RIN and separating it from the physical volume that it 

represents; 

• Retire the invalidly generated RIN (if still in the RIN generator’s possession); or

• If the RIN generator believed the PIR was in fact valid, it would submit a demonstration 

in writing to EPA providing a basis for its claim of validity. If EPA determined that 

the demonstration was sufficient, it would deem the RIN valid, and if not sufficient, it 

would notify the RIN generator of that finding and again require the RIN generator to 

replace the PIR within 30 days.

In order to allow a producer to replace a PIR with a new valid RIN from renewable fuel that it 

has generated, we are proposing a new provision in §80.1429 that would permit producers to 

separate RINs from volume they produced for the specific purpose of retiring RINs to replace a 

PIR. If the RIN generator retired a valid RIN to replace the PIR, the invalid RIN that it replaced 

could continue to be transfered or used for compliance by any party. 

If the RIN generator did not replace an invalidly generated A-RIN for any reason, EPA 

would turn to the third-party auditor to replace the invalid A-RIN. The auditor would have 60 

days from the day it received notification of the PIR to retire a valid RIN to replace the PIR. 

Regardless of whether the RIN generator or auditor replaced the invalid A-RIN or not, any other 

party that owned the potentially invalid A-RIN could transfer or use that A-RIN for compliance 

purposes. Under no circumstances would an obligated party or other third-party owner of an ARIN be responsible for replacing the A-RIN if it was deemed invalidly generated.

3. Process for Replacing Invalid Verified RINs

When EPA confirms that a verified RIN has been invalidly generated, the RIN generator 

who generated the RIN in question would be notified directly. At this point, the process of 

retiring an appropriate valid RIN would begin. 

There would be two forms of invalid RIN replacement under the proposed quality

assurance program:
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1. If a party that is required to replace an invalid verified RIN owns the RIN in 

question, it may be retired through EMTS in the same way that invalid RINs 

under the current regulations are retired.

2. If a party that is required to replace an invalid verified RIN does not own the RIN 

in question, or the RIN has already been used for compliance, the party would be 

required to acquire a valid RIN and retire it in place of the invalid RIN. In this 

case, since it would be a valid RIN that is being retired, a new retirement code 

reason would be created in EMTS for this purpose.

a. Types of RINs that Can Replace Invalid Verified RINs

Parties that retire valid RINs to replace invalid RINs would be required to match the 

renewable fuel category and the QAP category of both the valid and invalid RINs. For instance, 

an invalid verified RIN with a D code of 4, representing biomass-based diesel, could only be 

replaced with a valid verified RIN with a D code of 4. Moreover, we propose that invalid RINs 

verified through Option A could only be replaced with valid RINs verified through Option A, not 

Option B (and vice-versa). Since the balance of cost and risk could be different under Options A 

and B of the quality assurance program, RINs verified under the two options could have different 

prices even though they have the same D code. Thus there could be a financial incentive for 

valid RINs verified under one option to be used to replace invalid RINs verified under the other 

option, and this could lead to unforeseen market imbalances. Nevertheless, we request comment 

on whether valid RINs verified under one option should be permitted to replace invalid RINs 

verified under the other option. 

We do not believe that valid RINs generated under the existing regulations (i.e. not under 

the proposed quality assurance program) should be permitted to replace an invalid verified RIN. 

The replacement of invalid RINs with valid RINs is an approach that we have designed in the 

context of the quality assurance program to allow verified RINs that are found to be invalid to 

continue to be transfered and used for compliance. We do not believe it would be appropriate to 

replace a RIN that had been verified through the quality assurance program with one that has not 

been verified.

 

b. Impacts of RIN Replacement on Renewable Fuel Demand

The purpose of requiring invalid RINs to be replaced is to ensure that the annual 

renewable fuel volume mandates provided in CAA 211(o)(2) are fulfilled. However, the process 

of identifying invalid RINs and replacing them could potentially unfold over months or even 

years. This process could result in some portion of a given year's applicable volume requirement 

being fulfilled in a subsequent year, as replacement RINs may not be generated in the same year 

that the invalid RINs were generated. Thus there is a possibility that RIN replacement could 

cause greater demand for renewable fuel in a given year than the applicable standards are 
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intended to require for that year. While we expect the number of invalidly generated RINs to be 

considerably less under our proposed quality assurance program than they were in 2010 and 

2011, nevertheless we believe that this issue should be addressed.

While the RFS program is designed to result in the use of specified volumes of renewable 

fuel within each calendar year, the current regulations include provisions that allow the volumes 

used in a given year to be more or less than the specified volume. For instance, the RIN rollover 

cap at §80.1427(a)(5) allows up to 20% of a given year's volume requirement to be met with 

previous-year RINs. Effectively, this means that the demand for renewable fuel in a given year 

can be up to 20% below the volumes required. In addition, the deficit carryover provision at 

§80.1427(b) allows an obligated party to delay compliance with any portion of his RVOs by one 

year. Although an obligated party cannot carry over a deficit for two years in a row, the fact that 

there is no limit to the size of deficit carryovers means that in theory there could be substantial 

differences between the volumes required in a given year and the actual demand for renewable 

fuel in that year. In addition, the applicable percentage standard set by EPA is based on 

projections of gasoline and diesel production, and to the extent the actual production varies from 

these projections, the actual volume of renewable fuel may be more or less than the national 

volume called for in section 211 (o)(2). Finally, under the current regulations, the future 

replacement of RINs may occur in the context of an enforcement action related to the transfer or 

use of invalid RINs. This replacement obligation under the proposed regulations has a similar

effect as far as timing of RIN replacement, recognizing that under the proposal there should be 

many fewer invalid RINs generated, and therefore much less need for future RIN replacement.

Consistent with the effect of these various provisions, we believe it would also be 

appropriate to permit an invalid verified RIN to be replaced outside of the year in which it was 

generated. In the case of RIN replacement using valid RINs from a RIN escrow account or RIN 

bank, valid RINs are set aside before invalid RINs are generated and discovered. The small 

increase in demand for renewable fuel caused by setting aside these valid RINs would occur 

before RIN replacement, not after, and they would accrue at the same rate that RINs are being 

generated and verified. We believe that these features of RIN escrow accounts and RIN banks 

would mitigate the impacts of RIN replacement on the renewable fuel market, and thus the use of 

future year RINs to replace invalid RINs generated in the past would be very unlikely to create a 

difficulty in meeting the volume mandates in a given year.

4. Cap on RIN Replacement

Another mechanism that we are proposing to reduce the costs associated with the quality

assurance program is a cap on RIN replacement. Such a cap would help to ensure that QAP 

Option A would be implementable, and thus help to achieve the overall goals of this proposal. 

We are proposing that the cap would not apply to invalid RIN replacement for the nation as a 

whole, but rather to individual auditors that would be required to replace invalid RINs. 

However, since its primary benefit would be to reduce the costs of a RIN replacement 

mechanism that an auditor would be required to hold, we are proposing that the cap would apply 

only to auditors under QAP Option A, since auditors under QAP Option B would not be required 

to hold a RIN replacement mechanism. The cap would apply to all RINs that the auditor 
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validates through a QAP within a calendar year, and would apply separately to RINs of each D 

code. 

The level of the cap should reflect a balance between the need to ensure that the volume 

mandates of the RFS program are met and providing auditors with reasonable assurance that the 

costs of replacing invalid RINs will not be excessive. We believe that the incidences of invalidly

generated RINs would be significantly lower under Option A than they were over the previous 

few years. Since we are proposing that the required RIN replacement mechanism should provide 

coverage for 2% of the RINs verified by an auditor over the last five years, we likewise believe it 

would be appropriate to cap the number of A-RINs that an auditor must replace at 2% of the ARINs he verifies over the last five years. We believe that this cap would both ensure that most if 

not all of invalidly generated A-RINs would be replaced, and would provide assurances that the 

costs of a RIN replacement mechanism would not be excessive. However, we request comment 

on whether a higher cap would be more appropriate.

We are proposing that the cap apply to all RINs that have been verified by an auditor to 

date, up to a maximum of the most recent five year's worth of verified RINs. The table below 

provides an example for how the cap would be applied.

Table IV.D.5-1

Example of Application of RIN Replacement Cap under Option A

A-RINs 

Verified by the 

auditor

2% cap

Maximum number of A-RINs that 

the auditor would be responsible 

for replacing

2013 50,000,000 1,000,000 1,000,000

2014 30,000,000 600,000 1,600,000

2015 35,000,000 700,000 2,300,000

2016 40,000,000 800,000 3,100,000

2017 60,000,000 1,200,000 4,300,000

While cases of invalid RINs that were unintentionally generated tend to represent a small 

fraction of a given producer's total production, fraudulently generated RINs have historically 

represented 100% of a single producer's total production. Since in general we would expect a 

given producer's RINs to be validated by a single auditor, it is possible that all of the invalidly

generated RINs from a single producer may have been validated by a single auditor. In such a 

case, we do not believe that a 2% cap would be appropriate. Therefore, we are proposing that 

the invalid RIN replacement cap applicable to auditors under QAP Option A would be the larger 

of:

1. 2% of all the RINs that the auditor has verified to date, up to a maximum of the 

most recent five year's worth of verified RINs, or

2. The largest number of RINs that were generated by a single renewable fuel 

producer and verified by the auditor.
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This approach would also mitigate instances wherein a producer and an auditor collude to 

generate and validate RINs that are fraudulent.

Finally, we are proposing that the 2% cap on RIN replacement would not apply to RINs 

covered by the auditor's E&O insurance. This issue is discussed further in Section VI.A.3.

While we are proposing that the 2% cap on RIN replacement would apply indefinitely

under Option A, it may be appropriate to make it applicable only to 2013, or alternatively to have 

a higher cap for years after 2013. A cap on RIN replacement would help to reduce costs of the 

quality assurance program, but it also presents the possibility that some invalidly generated RINs 

may not be replaced, and that as a result the volume mandates established by Congress may not 

be met. In the short term, as a means for assuring smooth implementation of the quality

assurance program, we believe that a cap on RIN replacement is appropriate. However, in the 

longer term it may not be necessary. Recognizing this, we have proposed that the limited 

exemption applicable under Option B would only be available in 2013 and 2014 (see Section 

V.D.4). Therefore, we request comment on whether the cap on RIN replacement available under 

Option A should likewise only apply in the short term, with a higher cap or no cap at all for the 

longer term. We also request comment on whether the minimum required coverage for RIN 

replacement mechanisms under Option A should be higher than 2% in the event that the RIN 

replacement cap is higher than 2%.
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V. Provisions for RIN Verification Under Option B

As described in Section IV, the quality assurance program we are proposing today would 

include two different options that would be available to regulated parties. Both options would be 

intended to provide a more efficient mechanism for ensuring that RINs are validly generated, and 

both options would provide an affirmative defense against civil violations for certain actions 

involving invalid RINs. However, the two options would differ in whether invalidly generated 

RINs could be used for compliance, and in which party would be responsible for replacing 

invalidly generated RINs.

In this section we describe our proposed requirements for Option B. Under this option, 

obligated parties would be responsible for replacing RINs that were invalidly generated, as under 

the current regulations. Also, obligated parties would not be permitted to use an invalidly

generated RIN for compliance unless the generator of the invalid RIN replaced it. However, 

since obligated parties are more likely to conduct their own oversight to verify that the RINs they

acquire are valid, we are proposing that the requirements for quality assurance plans (QAPs) 

used to verify RINs would be less rigorous than those under Option A. Moreover, we would not 

require third-party auditors who verify RINs as having been validly generated to replace RINs 

that are invalidly generated. For clarity, we refer to RINs that have been verified through 

Option B as B-RINs.

In this section we first cover the proposed elements of QAPs for Option B. We then 

describe how regulated parties could assert an affirmative defense for transferring invalidly 

generated RINs or using them for compliance. Finally, we discuss the treatment of invalidly

generated RINs, from the responsibilities of owners of such RINs to the parties that would be 

required to replace them.

A. Requirements for Option B Quality Assurance Plans

As described more fully in Section IV.A, QAPs would be used to verify that the 

production of renewable fuel at a given facility meets all EPA requirements and that 

corresponding RINs are validly generated. In general, QAPs under Option B would operate in 

the same way that QAPs under Option A would operate. The primary difference would be the 

frequency of monitoring of the required QAP elements. Specifically, we propose that there 

would be no requirement for ongoing monitoring under Option B, rather, all elements of an 

Option B QAP would be evaluated on a quarterly basis. In addition, there are fewer required 

elements under an Option B QAP compared to an Option A QAP.

1. Elements of an Option B QAP 

QAPs would be used by approved independent third-party auditors to audit renewable 

fuel production. The QAP must include a list of elements that the auditor would check to verify
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that the RINs generated by a renewable fuel producer or importer are appropriate given the 

feedstock, production process and fuel for which RINs were generated. Therefore, each QAP 

must identify the specific RIN-generating pathway from Table 1 to §80.1426 or a petition 

granted pursuant to §80.1416 that it is designed to audit. The proposed required elements of an 

Option B QAP are discussed below. We request comment on these proposed elements, including 

detailed descriptions of any elements not mentioned below.

We also request comment on whether quarterly monitoring is appropriate under Option 

B, or whether different components could or should be subject to different schedules (e.g., 

monthly, biannually, etc), and what those schedules should be, and why.

a. Verification of feedstock

We propose nine required elements in Option B QAPs designed to ensure that the 

feedstocks used in the production of renewable fuel qualify to generate RINs. First, for each 

batch of renewable fuel, we propose that the QAP should verify that feedstocks meet the 

definition of "renewable biomass," and identify which renewable biomass per §80.1401. 

We are also proposing specific elements depending on the type of feedstock. For 

instance, if the feedstock is separated yard waste, separated food waste, or separated MSW, the 

QAP would be required to verify that a separation plan has been submitted and accepted or 

approved, as applicable, as part of the registration requirements under §80.1450, and meets the 

requirements of §80.1426(f)(5), and that all feedstocks being processed meet the requirements of 

the separation plan. If the renewable fuel producer claims that the feedstocks qualify under the 

aggregate compliance approach, the QAP would be required to verify that the feedstocks are 

planted crops or crop residue that meet the requirements of §80.1454(g). 

The QAP would be required to verify that the feedstocks used to produce renewable fuel 

are valid for the D code being claimed under §80.1426 (or have an approved petition under 

§80.1416) and must be consistent with the information reported in EMTS. The QAP would be 

required to verify that the feedstock used to produce renewable fuel is not a renewable fuel from 

which RINs were already generated.

Finally, the QAP would be required to verify the accuracy of all feedstock-related factors 

used in calculation of the feedstock energy (FE) used under §80.1426(f)(3)(vi) or (f)(4), as 

applicable, including the average moisture content of the feedstock, in mass percent, and the 

energy content of the components of the feedstock that are converted to renewable fuel, in 

Btu/lb.

b. Verification of production process
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We are proposing four required elements in Option B QAPs designed to ensure that the 

renewable fuel production process is appropriate for the RINs being generated. Auditors 

submitting QAPs for EPA approval would be required to provide a list of specific steps they will 

take to audit all four elements.

First, the QAP would be required to verify that production process technology and 

capacity used matches information reported in EMTS and in the facility's RFS2 registration.

The QAP also would be required to verify that the production process is capable of producing, 

and is producing, renewable fuel of the type being claimed.

For each batch of renewable fuel, the QAP would require mass and energy balances of 

the production process, and verify that the results match expectations for the type of facility

being audited (e.g., biodiesel from soybean oil may have different expectations than biodiesel 

from non-food grade corn oil) based on typical values from prior input/output values, or similar 

facilities if prior values are not available. Energy inputs from on-site energy creation (e.g., 

propane, natural gas, coal, biodiesel, heating oil, diesel, gasoline, etc) and/or energy bills, and 

mass inputs/outputs such as feedstocks, additional chemicals, water, etc., would be required as 

part of the mass and energy balances. 

Finally, the QAP would be required to verify the accuracy of all process-related factors 

used in calculation of the feedstock energy (FE) under §80.1426(f)(3)(vi) or (f)(4), as applicable. 

c. Verification of renewable fuel

We propose seven required elements in Option B QAPs designed to ensure that the 

renewable fuel being produced qualifies to generate RINs, and that the number of RINs 

generated is accurate. 

For each batch of renewable fuel, the QAP would be required to verify that volumes of 

renewable fuel for which RINs are being generated meet, are designated for, and are sold for 

qualifying uses as defined under "transportation fuel, heating oil, and/or jet fuel" in §80.1401. 

The QAP would be required to verify a number of things related to the fuel type. For 

instance, the QAP would include verification of the existence of certificates of analysis 

demonstrating that the renewable fuel being produced meets the applicable specifications and/or 

definitions in §80.1401, and would be required to verify contracts with lab(s) for certificates of 

analysis, unless a facility has an on-site laboratory. If on-site, the QAP would be required to 

verify lab procedures and test methods. The QAP would be required to verify that renewable 

fuel being produced at the facility and that can be produced, matches information in RFS2 

registration in terms of chemical composition, and would be required to sample and test the final 

fuel and compare to specifications. The QAP would be required to verify that renewable fuel 

being produced matches the D code being claimed under §80.1426, or approved petition under 

§80.1416.
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The QAP would be required to verify a number of things related to the volume of 

renewable fuel produced, including a check to ensure that volume temperature correction 

procedures are followed correctly. The QAP would be required to verify that volume of 

renewable fuel produced matches expectations for the amount of feedstock being processed and 

would be required to verify the accuracy of all fuel-related factors used in calculation of the 

feedstock energy (FE), as applicable, including equivalence value for the batch of renewable fuel 

and the renewable fraction of the fuel as measured by a carbon-14 dating test method. 

Finally, the QAP would be required to verify that production volume being claimed 

matches storage and/or distribution capacity and that actual volume production capacity matches 

the value specified in the facility’s RFS2 registration.

d. Verification of RIN generation and separation

We propose three required elements in Option B QAPs to verify RIN generation and 

separation. First, if applicable, the QAP must verify that RIN separation is appropriate under 

§80.1429(b)(4). Next, the QAP must verify that appropriate RIN generation calculations are 

being followed under §80.1426(f)(3), (4), or (5) as applicable. Finally, the QAP must verify that 

fuel that is exported was not used to generate RINs, or alternatively that were generated but 

retired.

2. Approval and Use of QAPs

a. Approval of Quality Assurance Plan

We propose that approval of QAPs under Option B would operate in essentially the same 

way as under Option A. We are proposing that auditors must submit a QAP to EPA for approval. 

We are also proposing that a QAP must be submitted for approval every year. A QAP would be 

deemed valid on the date EPA notifies the party that submitted the QAP that it has been 

approved. Only an approved QAP could be used by a third-party auditor to provide audit 

services to renewable fuel producers. 

b. Frequency of updates/revisions to QAPs

We are proposing that a QAP approval by EPA only applies to the plan that was 

submitted to EPA, and there are specific cases in which we believe a QAP should be resubmitted 

and re-approved. For example, we are proposing that a new QAP would be required if, 

downstream of the producer, RINs are discovered to have been invalidly generated, as that 

situation would be indicative of an ineffective QAP.
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We are also proposing that a QAP would need to be revised if the renewable fuel 

producer makes a change in feedstock, production process, or fuel that is not covered by the 

QAP. Under one of these conditions, the plan submitted to EPA would no longer be applicable, 

and thus approved new QAP would be required to be submitted and approved. We request 

comment on what changes would require a new QAP to be submitted for approval. Specifically, 

we request comment on whether a new QAP would be required to be submitted to EPA if the 

audited facility changes operations, feedstock, fuel type, etc.

B. RIN Replacement Mechanisms

As outlined in Section IV, auditors operating under Option A must have a replacement 

mechanism sufficient to cover a minimum percentage of invalid RINs they verify. We are 

proposing that there would be no requirement for a replacement mechanism under Option B, 

though this does not preclude any regulated party from setting up such a mechanism voluntarily 

or contracting amongst themselves to ensure that the obligated party’s potential replacement 

responsibility is accounted for. 

C. Affirmative Defenses

As discussed in Section IV.C, we believe that making an affirmative defense available 

against otherwise applicable civil liability arising from the transfer or use of invalid RINs would 

promote greater liquidity in the RIN market, especially the market for RINs generated by smaller 

producers. 

Under the proposed quality assurance program, there would be two types of verified 

RINs: those verified through an Option A QAP by a third-party auditor who is required to 

replace invalidly generated RINs, and those verified through an Option B QAP by a third-party 

auditor who is not required to replace such RINs. The requirements for establishing an 

affirmative defense under Option B are described below. As discussed under Option A, we are 

proposing that when a person seeks to establish an affirmative defense, they would submit a 

written report to EPA, along with any necessary supporting documentation, that would 

demonstrate how the elements were met. The written report would need to be submitted within 

30 days of the person discovering the invalidity of the RIN. We welcome comment on the 

elements of the affirmative defense and the effects of establishing an affirmative defense.

In the event that invalidly generated B-RINs are transferred or used, the person could 

establish an affirmative defense to the prohibited act of transferring or using the invalid B-RINs 

for compliance with an RVO if the following elements were proven by a preponderance of 

evidence: 
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1) The RINs in question were verified in accordance with an approved Option B QAP as 

defined in EPA regulations; 

2) The RIN owner did not know or have reason to know that the RINs were invalidly

generated at the time of transfer or use for compliance, unless a remedial action had

been implemented by the RIN generator; 

3) The QAP provider or RIN owner informs the Agency within 24 hours of discovering 

that the RINs in question were invalidly generated;

4) The RIN owner did not cause the invalidity;

5) The RIN owner did not have a financial interest in the company that generated the 

invalid RIN; and

6) If the RIN owner used the invalid RINs for compliance, the RIN owner adjusted its 

records, reports, and compliance calculations in which the invalid RIN was used as 

required by regulations, unless a remedial action by the RIN generator had been 

implemented.

The affirmative defense requirements pertaining to B-RINs are the same as those for ARINs, except for the element of knowledge, item (2), and for the element dealing with adjusting 

RVO calculations, item (6). Owners of verified B-RINs must not have known or had reason to 

know of the invalidity of the RIN at the time they either transfered a RIN or used a RIN for 

compliance purposes. This restrains the use of B-RINs more than A-RINs. This is because under 

Option B, obligated parties are responsible for replacing any invalid RINs used for compliance 

purposes, notwithstanding an affirmative defense to liability for the civil violation arising from 

the transfer or use of invalid RINs. We do not believe it would be appropriate to allow an 

obligated party to use an invalid RIN for compliance with its RVO if it already knew of the 

invalidity and therefore knew that, even if it successfully avoided liability for a civil violation, it 

would still be liable for retiring valid RINs in the future to replace the invalid RINs. Similarly, 

we do not believe it would be appropriate to allow a RIN owner to transfer an invalid RIN to a 

third party if it knew that the third party could not retire the RIN for compliance with an RVO 

(or even that it would be possible to sell an invalid B-RIN, given that it had lost its value for 

compliance purposes). For these reasons, we propose that the owner of an invalid but verified BRIN cannot assert an affirmative defense if it knows or has reason to know of its invalidity at the 

time it transfers or uses the RIN for compliance purposes. Such knowledge would subvert the 

purpose of the quality assurance program. In regard to item (6), we have chosen to have the 

affirmative defense for B-RINs contingent upon obligated parties taking the invalid B-RINs out 

of the system or demonstrating that the producer implemented a remedial action by retiring a 

replacement B-RIN. This would help the Agency efficiently ensure that the environmental goals 

of the RFS program are achieved by incentivizing obligated parties to make the system whole. 

 

D. Treatment of Invalid B-RINs

The treatment of invalid RINs would differ depending on the type of verified RIN that is 

chosen by the RIN owner. The treatment of invalid RINs verified under Option A is discussed in 

Section IV.D. This section describes the responsibilities of regulated parties that generate RINs 

or take ownership of RINs verified under Option B, but which are ultimately found to have been 
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invalidly generated. We also describe the conditions under which invalid B-RINs must be 

replaced, by whom, and the mechanisms for doing so.

Additionally, we reiterate that we are proposing an administrative process for 

replacement of invalid RINs that places initial responsibility to replace invalidly generated RINs 

on the RIN generator responsible for causing the invalidity. In the event the RIN generator does 

not replace the invalidly generated RINs according to the administrative process, the replacement 

obligation would shift to the obligated party that owns the invalid RINs under Option B and for 

invalid RINs were unverified. Thus, for invalidly generated RINs verified by an Option B QAP 

and for unverified RINs, the obligated party who owns the RINs would bear the replacement 

responsibility. However, in the event that regulated parties fail to implement the administrative 

process for replacement of any RINs, the EPA could bring an enforcement action against any or 

all of the parties that were required to replace the invalid RINs. See §80.1474 of the proposed 

regulations for details of the administrative process for replacement of invalid RINs. 

1. Responsibilities for Replacement of Invalid Verified B-RINs

Under Option B, RINs would be verified by a third-party auditor using an EPA-approved 

QAP just as under Option A. However, under Option B the obligated parties would be

responsible for replacing invalidly generated RINs if the RIN generator failed to do so under the 

administrative process for replacement of invalid RINs. 

Obligated parties that purchase B-RINs would not be subject to a civil violation if a BRIN transfered or used for compliance purposes was later found to have been invalidly

generated, if the elements of an affirmative defense were successfully asserted. See Section V.C. 

However, obligated parties would be responsible for replacing any invalidly generated B-RINs 

used for compliance purposes. Obligated parties would be free to contract with producers, 

independent third-party auditors, or other parties, such as brokers, to limit their exposure for 

replacement of invalidly generated B-RINs. Obligated parties would not be permitted to transfer 

or use B-RINs they know or have reason to know have been invalidly generated. Any such 

transfer or use would be deemed a prohibited act, pursuant to §80.1460.

Option B would provide flexibility for obligated parties, producers, and third-party 

auditors to minimize the cost of verification services for RINs deemed less risky. Obligated 

parties that want the protection of an affirmative defense but would rather contract on their own 

terms regarding replacement of invalidly generated RINs could find this option appealing, as it 

would be easier for them to find coverage for less risky RINs and/or to demand replacement 

assurance as a term of their purchase contract or audit service contract. Additionally, smaller 

producers could be drawn to this option because the cost to participate in the quality assurance 

program could be less under Option B due to the absence of a requirement for a RIN replacement 

mechanism and the less stringent audit requirements for an Option B QAP. 

However, as with Option A, Option B might not work for all parties in all situations. 

Obligated parties could still view the potential risk of replacing invalidly generated B-RINs, even 

though they could be protected by contracts, as too high to purchase from smaller producers. 
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Producers deemed more risky could therefore choose to use Option A QAP auditors. We seek 

and welcome comments on potential risk containment measures to alleviate obligated parties’ 

potential concerns of purchasing from smaller producers

2. Invalid B-RIN Replacement

As mentioned above and in Section IV.D, the proposed administrative process for 

replacement of invalid RINs places initial responsibility of replacement of invalid RINs on the 

RIN generator, regardless of who actually owns the invalid RINs at the time that the invalidity is 

discovered. 

If the RIN generator fails to replace invalidly generated B-RINs, EPA would shift the 

responsibility to the obligated parties to replace the invalid B-RINs. In the event that regulated 

parties fail to implement the administrative process for replacement of any RINs, the EPA could 

bring an enforcement action against any or all of the parties that were required to replace the 

invalid RINs. 

The methods (fully detailed in the proposed regulations in §80.1474) for replacing 

invalidly generated RINs under QAP Option B are outlined below. In general, and in contrast to 

Option A, potentially invalid RINs verified under Option B could not be transfered or used for 

compliance purposes.

In the event that EPA or the independent third-party auditor alleges that a B-RIN was 

invalidly generated, the RIN would be a potentially invalid RIN or “PIR”. The RIN generator 

would be required to take one of three possible corrective actions within 30 days of being 

notified of the PIR:

• Retire a valid B-RIN of the same D-type as the PIR, either by purchasing it or by 

generating a new valid RIN and separating it from the physical volume it represents; 

• Retire the invalidly generated RIN (if still in the RIN generator’s possession); or

• If the RIN generator believed the PIR was in fact valid, it would submit a demonstration 

in writing to EPA providing a basis for its claim of validity. If EPA determined that 

the demonstration was sufficient, it would deem the RIN valid, and if not sufficient, it 

would notify the RIN generator of that finding and again require the RIN generator to 

replace the PIR within 30 days.

As discussed in section IV.D.2, producers would be permitted to separate RINs from volume 

they produced for the specific purpose of retiring a RIN to replace a PIR. Similarly, if the RIN 

generator retired a valid RIN to replace the PIR, the invalid RIN that it replaced could continue 

to be transfered or used for compliance by any party. However, if the RIN generator for any

reason failed to replace the PIR, the obligated party would be notified of the failure and would be 

required to retire the invalid RIN within 60 days. If the PIR had already been used for 
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compliance with its RVO, the obligated party would be required instead to correct its RVO by 

subtracting the number of PIRs from it. Unless and until the PIR was replaced, either by the RIN 

generator or the obligated party, it would remain a PIR and could not be transfered or used for 

compliance purposes. 

3. Process for Replacing Invalid Verified RINs

The process for replacing invalid RINs under Option B would in general be the same as 

under Option A. This includes the use of particular codes in EMTS for retiring replacement 

RINs, and a requirement that replacement RINs match the invalid RINs in terms of their D codes 

and type of verification under the quality assurance program (i.e. Option A or Option B). See the 

broader discussion under Section IV.D.3 regarding the general process for replacing invalid 

verified RINs.

In Section IV.D.3.b we discussed the possibility under Option A that replacement RINs 

may not be generated in the same year that the invalid RINs were generated, and that such 

circumstances could result in a portion of a given year's applicable volume requirement being 

fulfilled in a subsequent year. Thus there is a possibility that RIN replacement could cause 

greater demand for renewable fuel in a given year than the applicable standards are intended to 

require for that year. This same situation could occur under Option B. However, we do not 

believe that this circumstance would create a problem for the renewable fuels market under our 

proposed program for the reasons discussed in Section IV. In addition, we are proposing a 

limited exemption to B-RIN replacement that would absolve obligated parties from replacing a 

small percentage of invalidly generated B-RINs. See Section V.D.4 below. The level of this 

limited exemption may very well be above the number of invalid B-RINs generated, given that 

our proposed quality assurance program is expected to dramatically reduce incidences of 

invalidly generated RINs compared to 2010 and 2011. As such, the occasions in which invalid 

B-RINs must be replaced would be correspondingly smaller, or even non-existent. 

4. Temporary Limited Exemption for Invalid RIN Replacement

During the development of the proposed QAP process for today's NPRM, some regulated 

parties raised the possibility of a regulatory provision that would permit a small fraction of 

invalid RINs to not be replaced by parties downstream from the producer. Given the perceived 

concerns about RINs generated by the smallest producers, such a limited exemption for invalid 

RIN replacement could help provide a means for those small producers to sell their RINs, 

particularly during the first two years while auditors are learning to implement QAPs. We 

believe that a provision for a temporary limited exemption for invalid RIN replacement may be 

appropriate, and we request comment on it. It is important to note that this would only apply to 

replacement by parties other than the producer. The issue is not whether some percentage of 

RINs should never have to be replaced, but instead what is the appropriate approach for 

replacement by parties other than the producer.
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a. Determination of the Appropriate Exemption Level

The number of invalid RINs that could be exempt from replacement should be a small 

fraction of the overall volume obligation. We believe that this fraction should be consistent with 

some measure of real-world uncertainty in whether the renewable fuel volume requirements will 

be precisely met. Since there are several potential sources of uncertainty, there are several 

different ways that an appropriate exemption level for invalid RIN replacement could be 

calculated.

One source of uncertainty is the roundoff in the applicable percentage standards for 

cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel. In the RFS1 

program that was finalized on May 1, 2007, we determined that the applicable percentage 

standards would be specified to two decimal places.7 As a result, the total number of RINs that 

are actually used to comply with the applicable standards may differ by up to 0.005% from the 

precise number of RINs that would be needed to exactly match the volume mandates. For 

example, the applicable 2012 standard for biomass-based diesel was set at 0.91% on January 9, 

2012, corresponding to a volume requirement of 1.0 bill gal. Since this percentage standard was 

the result of rounding to two decimal places, the actual calculated value could have been as high 

as 0.91499% and still round to 0.91%. Obligated party compliance with a standard of 0.91% 

instead of 0.91499% would mean that the actual volume of biodiesel consumed could be 0.9945 

bill gal instead of 1.0 bill gal, a difference of 0.0055%. This same result can be obtained by 

dividing the maximum potential rounding error of 0.005% by the applicable percentage standard 

of 0.91%.

If we were to base the exemption for invalid RIN replacement on the roundoff error in the 

applicable percentage standards, the calculation would be carried out as follows:

     =

    (0.005%)

  

Table V.D.4.a-1 provides the results if this formula were applied to the applicable 2012 

standards. 

Table V.D.4.a-1

Exemption for Invalid RIN Replacement Based on Roundoff Error in Applicable Standards

Applicable 

Standard

Exemption for 

RIN Replacement

Cellulosic biofuel 0.006% 8.3%a

Biomass-based diesel 0.91% 0.55%

Advanced biofuel 1.21% 0.41%

Total renewable fuel 9.23% 0.05%

a Based on a maximum potential roundoff error of 0.0005% instead of 0.005%

 

7

Since the required volumes of cellulosic biofuel have been significantly less than the volumes specified in the 

statute, we have used three decimal places for the percentage standard for cellulosic biofuel.
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Another source of uncertainty in whether the required volumes of renewable fuel will 

actually be consumed is the difference between the projected volumes of gasoline and diesel that 

are used to calculate the applicable percentage standards, and the volumes of gasoline and diesel 

that are actually consumed. Using EIA's Short-Term Energy Outlook (STEO), we determined 

that projections of the sum of gasoline and diesel have typically exceeded the actual volumes by 

an average of 1.7%.

Table V.D.4.a-2

Comparison of Projected Versus Actual Obligated Volumes

Projected (bill gal) Actual (bill gal) Difference

2011

2010

2009

2008

2007

2006

2005a

196.9

196.6

200.1

210.0

208.4

206.5

204.0

193.1

196.2

193.7

198.4

206.8

205.9

203.7

-1.9%

-0.2%

-3.2%

-5.5%

-0.7%

-0.3%

-0.2%

Average -1.7%

Source: EIA's Short Term Energy Outlook, Table 4a. Values represent the sum of 

motor gasoline and distillate fuel oil consumption. All projected volumes for a given 

year are from the October release in the previous year.

a

STEO for years prior to 2005 do not include projections.

Based on the formula used to calculate the applicable percentage standards, a shortfall of 1.7% in 

actual gasoline + diesel consumption volumes will produce a 1.7% shortfall in the volume of 

renewable fuel consumed. Since Congress established the mechanism for calculating the 

applicable standards, including the use of projected volumes, this shortfall represents an 

acceptable source of uncertainty in the RFS program. As such, it may also represent an 

acceptable level of uncertainty in the context of establishing a limited exemption for invalid RIN 

replacement by parties other than the renewable fuel producer. 

Based on our review of potential sources of uncertainty, it appears that differences 

between projected and actual gasoline and diesel volumes is the largest source of uncertainty. 

Using the historical differences shown in Table V.D.4.a-2, we propose that the limited 

exemption for invalid RIN replacement be set at 2%, approximating the 1.7% value to account 

for the variability shown in Table V.D.4.a-2. However, we request comment on a different value 

based on one of the alternative methods described above.

b. How Would the Limited Exemption be Applied?

A primary purpose of the overall proposal would be to address the market liquidity

concerns discussed above, largely focused on the ability of small producers to sell RINs. As 

described in Section IV, QAP Option A addresses this by providing a significant degree of 

oversight on RIN generation, and placing the replacement obligation on the QAP auditor, not the 

obligated party. As a result, we do not believe that it would be necessary for the limited 
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exemption to apply under Option A, and we propose that the limited exemption would only

apply under Option B. In addition, we propose that the limited exemption would be available 

only to obligated parties that are required to replace invalid RINs, not renewable fuel producers 

that are required to replace invalid RINs.

Nevertheless, under Option A an auditor would be responsible for replacing invalidly

generated RINs. If the limited exemption for RIN replacement was also available to the auditor, 

it might help reduce the costs associated with any RIN replacement mechanisms that auditors 

carry. We do not believe that any such costs reductions would be significant, but we 

nevertheless request comment on whether the limited exemption should also apply under Option 

A.

While a limited exemption for RIN replacement could also apply under the existing 

regulations, we do not believe that this would be appropriate. The voluntary QAP process that 

we are proposing in today's NPRM is an alternative to the existing regulatory provisions 

governing liability for the transfer or use of invalid RINs and their replacement. We are 

considering a limited exemption for RIN replacement only in this context, as a component of the 

voluntary QAP process and other measures aimed at achieving a regulatory structure that 

facilitates reasonable oversight of RIN generation, adequate assurance that invalid RINs will be 

replaced, and a market for RINs where the opportunity to produce and sell RINs is spread 

broadly across producers, including small producers. 

We propose that the limited exemption would apply separately to each of the four 

standards under the RFS program: cellulosic biofuel, biomass-based diesel, advanced biofuel, 

and total renewable fuel. We do not believe it would be appropriate to apply the limited 

exemption only to the total renewable fuel standard, since doing so would permit much more 

than 2% of invalid advanced biofuel RINs to not be replaced. For instance, in 2012 the required 

volume of advanced biofuel is 2.0 bill gal, while the total renewable fuel requirement is 15.2 bill 

gal. If the 2% limited exemption was applied only to the total renewable fuel requirement, 

allowing up to 258 mill invalid RINs to not be replaced, this would represent 13% of the 

advanced biofuel requirement if all the invalid RINs were advanced biofuel RINs. It would 

represent an even larger fraction of biomass-based diesel.

We also propose that the limited exemption would apply separately to each obligated 

party that is responsible for replacing invalid RINs rather than to the industry as a whole. For 

instance, an obligated party would apply the 2% limited exemption to each of its four Renewable 

Volume Obligations (RVOs) to determine the number of RINs of each of the four types that 

would not need to be replaced should they be found to be invalidly generated. This approach 

would ensure that each obligated party can estimate at the beginning of each year how many 

RINs would not need to be replaced should they be determined to be invalid, and moreover 

would allow him to adjust his RIN acquisition activities in real-time to address risk based on the 

number of invalid RINs he had already acquired. If instead we applied the limited exemption to 

the nationwide volumes, we do not believe it would have the intended effect of reducing 

perceived risk for obligated parties considering acquiring RINs from smaller renewable fuel 

producers. So long as the total nationwide number of invalid RINs fell below 2%, no obligated 

party would be required to replace invalid RINs. However, each individual obligated party
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would never know if any RINs he acquires would be protected from replacement should they be 

determined to be invalid. Moreover, this approach would create an inherent imbalance among 

obligated parties holding invalid RINs since it could potentially allow one party to avoid 

replacing a large number of invalid RINs while effectively forcing another party to replace all of 

its invalid RINs.

We propose that the limited exemption would represent the threshold below which 

invalid RINs would never be required to be replaced rather than a trigger that determines when 

all invalid RINs must be replaced. Under our proposed threshold approach, an obligated party 

would know at the beginning of each year that 2% of the RINs needed to meet each of his RVOs 

would never need to be replaced if those RINs were B-RINs and were determined to be invalidly

generated. The limited exemptions would be calculated as follows:

LECB,i = 0.02 × RVOCB,i

LEBBD,i = 0.02 × RVOBBD,i

LEAB,i = 0.02 × RVOAB,i

LERF,i = 0.02 × RVORF,i

where:

LECB,i = Limited exemption for cellulosic biofuel for year i

LEBBD,i = Limited exemption for biomass-based diesel for year i

LEAB,i = Limited exemption for advanced biofuel for year i

LERF,i = Limited exemption for renewable for year i

RVOCB,i = The Renewable Volume Obligation for cellulosic biofuel for the obligated party

for calendar year i, in gallons, pursuant to §80.1407.

RVOBBD,i = The Renewable Volume Obligation for biomass-based diesel for the obligated 

party for calendar year i after 2010, in gallons, pursuant to §80.1407.

RVOAB,i = The Renewable Volume Obligation for advanced biofuel for the obligated party

for calendar year i, in gallons, pursuant to §80.1407.

RVORF,i = The Renewable Volume Obligation for renewable fuel for the obligated party for 

calendar year i, in gallons, pursuant to §80.1407.

Under this threshold approach, the number of B-RINs than an obligated party would be required 

to replace would be those in excess of the applicable limited exemption LE as calculated above. 

Under an alternative trigger approach, an obligated party would not be required to replace any 

invalid RINs so long as the number of invalid RINs he owns falls below 2% of his RVOs. 

However, if at any time within a calendar year the number of invalid RINs he owns exceeded 2% 

of his RVOs, he would be required to replace all of them. We do not believe that this alternative 

would have the intended effect of reducing perceived risk for obligated parties considering 

acquiring RINs from smaller renewable fuel producers. 

Finally, we propose that the limited exemption would be applicable only during the first 

two years of the quality assurance program, for calendar years 2013 and 2014. During this 

timeframe, we expect regulated parties to be working to optimize implementation of the quality

assurance program, and it may not be possible for all of the smallest renewable fuel producers to 
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participate under QAP Option A. The limited exemption can help to ensure that the RIN market 

is more liquid as the program starts up, as obligated parties would be less concerned about 

potential invalidity for B-RINs. However, as the program matures, we believe that there will be 

much less need for a limited exemption since small renewable fuel producers will have greater 

opportunities to have their RINs verified under Option A. Moreover, obligated parties will gain 

experience in the first two years of the program with Option B, and we would expect their 

confidence in the validity of B-RINs to grow over this timeframe as well.
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VI. Proposed Requirements for Auditors

Today, we are proposing a number of requirements for the independent third-party 

auditors that would use approved quality assurance plans (QAPs) to audit renewable fuel 

production to verify that RINs were validly generated by the producer. Qualified, independent 

third-party auditors would be integral to the successful implementation of the combination of 

provisions EPA is proposing. Under both options, third-party auditors would need to meet 

minimum qualifications (e.g. independence and professional competency requirements). All 

third-party auditors would be required to register with EPA, similar to how other parties (e.g. 

gasoline refiners, renewable fuel producers, etc.) register for other EPA fuels programs. We are 

also proposing to require that third-party auditors under both options have professional error and 

omission insurance (E&O Insurance). However, under Option A, third-party auditors would also 

be required to have an approved RIN replacement mechanism since, as discussed in Section 

IV.B, they would be responsible to replace RINs that become invalid for any reason after being 

verified by the auditor. During registration, third-party auditors would submit QAPs to EPA for 

approval, demonstrate that they meet minimum qualifications, and provide the Agency with 

other information as discussed below. After EPA has approved a QAP and registered the thirdparty auditor, we propose that the auditor could flag RINs in EMTS as verified. This would 

provide parties throughout the renewable fuel distribution chain the confidence that a RIN has 

been validly generated and that an affirmative defense may be established. Finally, in order to 

ensure that QAPs are appropriately implemented, we are also proposing recordkeeping, 

reporting, and attest engagement requirements on third-party auditors consistent with similar 

requirements on other parties in RFS. 

A. Who Can Be An Auditor?

One key element of the QAP process is the minimum qualifications that the auditors 

conducting facility visits must have. Today we are proposing minimum qualifications for an 

auditor in order to implement a QAP and verify RINs. First, as is required of independent thirdparties that conduct engineering reviews for renewable fuel producers under RFS, auditors would 

be required to be independent of the renewable fuel producers that they are auditing. Second, 

auditors would be required to have the professional expertise to effectively implement QAPs. 

Third, under Option A, third-party auditors would be required to also have an approved RIN 

replacement mechanism, as discussed in Section IV above to assure replacement of invalid RINs 

generated from facilities that an auditor has audited, as well as E&O insurance. EPA believes 

that these key qualifications would provide assurances that auditors could successfully 

implement QAPs and would help avoid the generation of invalid RINs at the fuel producer level. 

We seek comment on whether any additional minimum qualifications would be necessary for 

auditors to successfully implement QAPs or aid in the generation of invalid RINs at facilities.

1. Independence

The first, and perhaps the most important, requirement for auditors is that they remain 

independent of renewable fuel producers. Independence of the auditor from upstream parties is 
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necessary to ensure that RINs are not inappropriately validated due to a conflict of interest 

between the third-party auditor and the renewable fuel producer. For example, if auditors were 

employed by the renewable fuel producers to validate RINs produced from a facility owned by 

the producer, the auditor would have an incentive to ensure that RINs produced from that facility

appeared valid, while the RINs may in fact be invalid. In the RFS2 final rule, we defined an 

independent third-party as a party that was not operated by the renewable fuel producer (or any 

subsidiary or employee of the producer) and free from any interest in the renewable fuel 

producer’s business. Similar provisions have also appeared in RFS1 and other fuels programs 

when a third-party is required to independently test fuel samples, audit reporting and 

recordkeeping requirements, and/or conduct in-use compliance surveys. Thus, we are proposing 

the same independent third-party definition for third-party auditors that we used in RFS2 for an 

independent third-party to conduct engineering reviews. Additionally, we are proposing that 

independent third-party auditors submit an affidavit attesting to their independence as part of 

registration (discussed below).

Although the proposed requirement for independence is limited to renewable fuel 

producers, it could be extended to include independence from other parties as well. However, 

we believe this is unnecessary. This proposed rulemaking is not intended to discourage any

current efforts that an obligated party or other intermediary may take to ensure compliance with 

RFS requirements, and requiring that third-party auditors be independent of all parties may 

hamper existing efforts by industry to mitigate invalid RIN generation. However, some parties 

may have a conflict of interest with third-party auditors that might promote the improper 

validation of RINs. For example, a third-party auditor could also be acting on behalf of a RINowner, which may be an incentive to validate RINs fraudulently to sell to other parties. 

Therefore, we specifically seek comment over whether we should expand the proposed definition 

of independence to include other parties.

We also recognize that a conflict of interest may exist if the independent third-party 

implementing a QAP for a renewable fuel production facility was the same party that conducted 

the facility’s engineering review required under §80.1450(b)(2), since the auditor would 

essentially be verifying its own assessment of a facility. Similar reasoning could apply to the 

independent third-parties that do attest engagements. However, we recognize that, especially in 

the beginning, there may be a limited number of qualified independent-third party auditors 

capable of implementing QAPs for a facility if we do not allow independent third-parties that 

conducted engineering reviews or attest engagements to also implement QAPs for a given 

facility. Therefore, we specifically seek comment on whether we should exclude a third-party 

that has conducted an engineering review or attest engagement for a facility from implementing a 

QAP for that same facility. We also seek comment on whether any other situations present a 

conflict of interest for independent third-party auditors that may disqualify a third-party from 

being able to implement a QAP for a facility.

2. Professionally Qualified to Implement a QAP

Another key element to ensure the effective implementation of QAPs at renewable fuel 

production facilities would be that auditors have the necessary professional expertise. In RFS2, 
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we require that each renewable fuel production facility undergo an engineering review by a 

licensed professional engineer as part of registration. In this NPRM, we are proposing a similar 

requirement for auditors since the verification of production capabilities of a quality assurance 

program should be similar to the type of review conducted in the engineering review process for 

RFS registration. Independent third-party auditors would demonstrate that they possess the 

required professional expertise during registration.

However, since the complexity of QAP implementation may vary substantially based on 

size and scope of the QAP and whether RINs are verified under Option A or Option B, 

independent third-parties that conduct audits may need to demonstrate additional professional 

qualifications to EPA before they can be registered to implement QAPs. For example, periodic 

(e.g. quarterly) audits may include careful review of several months’ worth of invoices and other 

bookkeeping records for a facility, and this type of audit may be more suitable to a certified 

public accountant (CPA) than a professional engineer. Additionally, we require that all 

responsible parties in RFS undergo annual attest engagements conducted by a licensed certified 

public accountant (CPA) or certified internal auditor (CIA) to verify similar information.

Although we are not proposing that independent third-parties that implement QAPs demonstrate 

that CPAs conduct audits, we are seeking comments over whether third-parties must have any 

additional qualifications before we register them as auditors under the proposed quality

assurance program.

Another potential qualification, suggested by a party that may conduct third-party facility 

audits, could be that an independent third-party auditor has sufficient knowledge of the RFS 

program in order to conduct audits and potentially validate RINs. Although we believe that 

third-party auditors should have thorough knowledge of RFS requirements to implement QAPs, 

it would be difficult to construct a standard to measure a third-party auditors “competency.” It 

was suggested by a party that may conduct third-party facility audits that we require elements of 

various ISO validation standards such as, for example, ISO standards used for validation of 

international greenhouse gas programs. We believe that these standards could serve as a useful 

template in the development of similar voluntary consensus standard board (e.g. ISO and ASTM 

International) specifications for third-party auditors. However, we also believe that standards 

such as these are best developed through the existing collaborative processes that draw upon the 

expertise of affected stakeholders. It is also important to note that several independent thirdparties have developed sufficient expertise with RFS to provide useful validation services to 

obligated parties, and we believe that there exist adequate incentives for parties to ensure that 

third-party auditors understand the RFS program sufficiently to prepare and implement QAPs. 

Therefore, we are not proposing to create such a requirement for auditors, but we do seek 

comment on whether the Agency should be responsible for the development of a similarly

detailed professional competency standard to validate RINs.

3. Errors and Omissions Insurance

An additional element to ensure the effective implementation of QAPs at renewable fuel 

production facilities would be to require independent third-party auditors to maintain 

professional liability insurance, commonly known as Errors and Omissions or E&O insurance. 
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We are proposing this as a registration requirement for both QAP Option A and Option B. The 

amount of insurance should be sufficient to cover replacement of any RINs verified by an auditor 

that turn out to be invalid as a result of auditor error, omission, or negligence. Additionally, we 

are proposing that independent third-party auditors would be required to use insurance providers 

that possess a financial strength rating in the top four categories from either Standard & Poor’s or 

Moody’s (i.e., AAA, AA, A or BBB for Standard & Poor’s and Aaa, Aa, A, or Baa for 

Moody’s). We feel that requiring E&O insurance would help to achieve the level of 

professionalism necessary for the quality assurance program to work as intended. Possession of 

E&O insurance would lend business and financial credibility to a potential QAP auditor in the 

eyes of their customers, as well as provide a level of comfort for the Agency that the statutory

volume mandate would be met in the event of error, omission, or negligence on the part of a 

QAP auditor. We seek comment on (1) whether the requirement of E&O insurance would fulfill 

the goals discussed above, (2) whether the requirement would prevent some third-party auditors 

from being able to participate in the quality assurance program, and (3) what, if any, minimum 

amount of coverage should be required and how should that minimum amount be calculated.

Since E&O insurance policies are intended to provide coverage for any failings on the 

part of the auditor, we do not believe that the 2% cap on RIN replacement proposed for Option A 

should apply to RIN replacement that is covered by an E&O insurance policy. Thus we are 

proposing that the 2% cap on RIN replacement would only apply to invalidly generated RINs 

that the auditor is responsible for replacing, but which are not the result of errors, omissions, or 

negligence on the part of the auditor.

B. Registration Requirements

In order to implement and enforce the new quality assurance program that we are 

proposing today, we believe that third-party auditors must become regulated parties under the 

RFS program. We believe that it would be necessary to impose registration, recordkeeping, and 

reporting requirements on third-party auditors to ensure that appropriate QAPs are executed 

according to the requirements specified in the proposed regulations. This would allow EPA and 

affected parties to monitor and have confidence that third-party auditors are implementing QAPs 

appropriately. 

One necessary requirement for third-party auditors would be that they have to register 

with EPA as a regulated party through the Agency’s Central Data Exchange (CDX). We 

already require that obligated parties, renewable fuel producers, and RIN owners register with 

EPA, and that those parties provide us with production information, basic company information, 

and in the case of renewable fuel producers, third-party engineering reviews. Requiring thirdparty auditors to register would allow EPA to determine that the basic minimum requirements 

discussed in Section VI.A. are met. Registering auditors would also facilitate the process of 

allowing third-party auditors to indentifying RINs as having been verified. 

During registration, we propose that third-party auditors would need to provide basic 

contact information as well as their basic corporate structure. This information is useful both as 

contact information and to help the Agency determine whether a third-party auditor is a 
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legitimate legal entity. Third-party auditors would be required to indicate which facilities they 

intend to audit. EPA recognizes that a third-party auditor may contract with additional 

renewable fuel producers and facilities to implement QAPs after initial registration, and 

therefore, we are also requiring that a third-party auditor be required to update their registration

each time they wish to verify RINs for additional renewable fuel producers or new facilities. This 

information would help the Agency ensure that QAPs submitted to the EPA as part of the 

registration process are consistent with the type of renewable fuel facilities being audited. 

Since we are proposing a requirement that third-party auditors implementing QAPs under 

both Options A and B have E&O insurance (see Section VI.A.3), third-party auditors would be 

required to provide copies of any applicable E&O insurance policies during the registration 

process. If a third-party auditor is implementing a QAP under Option A, they would need to also 

provide EPA with copies of pertinent documents and other evidence that demonstrate they have 

an adequate replacement mechanism in place. This information is necessary to ensure that thirdparty auditors have the ability to cover their RIN replacement responsibilities. Third-party 

auditors would also be expected to provide EPA with copies of professional certifications (see 

Section VI.A.2) and a signed affidavit that states that the third-party auditor is independent of 

and free from any conflicts of interest with any renewable fuel producer that for which they 

intend on verifying RINs. 

Third-party auditors would also be required to provide QAPs for Agency approval during 

registration, and EPA would be required to approve a QAP before a third-party auditor could be 

registered and use a QAP for a facility audit. EPA believes that it would be inappropriate to 

register a third-party auditor without an appropriate QAP. QAP details are discussed in more 

detail in Sections IV.A and V.A for Options A and B, respectively.

Recognizing that foreign third-party auditors may have unique challenges compared with 

domestic third-party auditors, EPA is proposing additional registration requirements for foreign 

third-party auditors. In the final RFS2 rulemaking, we outlined a number of requirements that 

applied to foreign RIN owners (see 40 CFR 80.1467). These additional requirements are 

designed to ensure enforcement of RFS regulations at the foreign RIN owner’s place of business 

and are similar to requirements for foreign parties under other fuels regulations. For example, 

under RFS, foreign RIN owners must submit reports in English and provide translated 

documents in English upon demand from EPA inspectors or auditors, must submit themselves to 

administrative and judicial enforcement powers and provisions of the United States without 

limitation based on sovereign immunity, and post a bond covering a portion of the gallon-RINs 

that a foreign RIN owner owns. EPA is proposing the same requirements be extended to foreign 

third-party auditors and seeks comment over whether fewer or additional requirements would be 

necessary.

The effectiveness of this proposed rule is contingent on the integrity of the third-party 

auditors and their ability to competently implement approved QAPs. The registration process is 

designed to help ensure that QAPs are implemented by competent, qualified and independent 

third-party auditors. A third-party auditor may only verify RINs under a voluntary quality 

assurance program if the auditor is registered with EPA. In order to ensure that auditors fulfill 

their regulatory obligations, we propose that each auditor would renew its registration on an 
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annual basis. The renewed registration submissions would include updates to information 

required for initial registration and an affidavit by the auditor that it is in full compliance with 

applicable QAP regulations. The affidavit would include a specific certified statement that the 

third-party auditor 1) has only verified RINs that it reviewed under an EPA-approved QAP, 2) 

has informed EPA and RIN generators about all potentially invalid RINs that it discovered, and 

3) has fulfilled its RIN replacement obligation if applicable. Third-party auditors that fail to 

accurately and completely renew their registrations will no longer be registered and therefore can 

no longer implement QAPs and verify RINs. We also propose that we may revoke a third-party 

auditor’s registration at any time if it determines that the third-party auditor has failed to meet its 

regulatory requirements. Furthermore, we are proposing that we can deny a registration 

application from any third-party auditor that employs any person that was involved in the 

verification of RINs for a third-party auditor whose registration was revoked. We seek comment 

on whether this approach is appropriate.

We also seek comment on whether we should require that third-party auditors’ 

registration information, including QAPs, be made publicly available. We believe that there is a 

positive correlation between the effectiveness of a quality assurance program and the amount of 

transparency in the third-party auditor’s registration and QAP implementation processes. By

making registration information publicly available, it would allow other parties to evaluate 

whether they have confidence in a QAP conducted by a third-party auditor. This would also 

allow affected stakeholders to notify EPA of concerns or deficiencies in a third-party auditor’s 

registration or QAP. Some third-party auditors may argue that such information is confidential 

business information. To address this concern, EPA could allow third-party auditors to submit 

both confidential and public versions of registration documents to ensure that sensitive 

information is protected. 

C. Other Responsibilities of Auditors

1. Notifying the Agency When There are Problems

We believe that an important element of today’s proposed quality assurance program is 

the timely notification and correction of problems that are identified during the facility audit 

process, and a requirement to communicate potential problems that are uncovered through this 

process. Historically, in other EPA fuels programs, such as the RFG, ULSD, and E15 Survey

Programs, we require that the independent party that implements the program report potential 

violations of standards within 24 hours of identifying the potentially non-compliant fuel sample. 

This has allowed the Agency to work with responsible parties to correct potential issues in a 

timely manner, thereby reducing the potential environmental impact of the non-compliant fuel. 

We believe that the utility of this third-party notification would enhance the effectiveness of 

today’s proposed quality assurance program. Therefore, we are proposing requirements that 

third-party auditors would be required to notify EPA and the renewable fuel producer of 

potential problems, including but not necessarily limited to fraud, errors, and/or omissions, 

within 24 hours after a problem has been identified. We seek comment on whether EPA should 

allow third-party auditors more or less time to report potential issues that arise during audits of 

renewable fuel production facilities. 
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2. Indentifying Verified RINs in EMTS

The primary goal of today’s proposed quality assurance program is to allow downstream 

parties to feel confident that RINs are being appropriately generated at renewable fuel production 

facilities. Third-party auditors have an integral role in providing this assurance by verifying that 

facilities are in fact producing the type and quantity of renewable fuels from the appropriate 

feedstocks using specified pathways, and that the associated RINs have been validly generated. 

The next step would be for third-party auditors to identify RINs as having been verified so that 

downstream parties would know which RINs had been subjected to review by an auditor and 

thus can be the basis for an affirmative defense. To attain this goal, we are proposing 

requirements that third-party auditors would be responsible for tagging RINs as having been 

"verified" in a way that would be clearly visible in EMTS after they have been generated.

We propose that verifying a RIN in EMTS be prospective, meaning that a RIN could only

be verified after an auditor has audited a facility in accordance with an approved QAP and met 

other conditions discussed below. Apart from the verification of RINs during the interim period 

between release of the NPRM and the final rule, we do not believe that there are any benefits 

from allowing verification of RINs retroactively in EMTS that warrant the complication, 

confusion, and risks associated with it.

We also believe that before a QAP can be implemented by a third-party auditor, a 

relationship must be established in CDX between the third-party auditor and the renewable fuel 

producer or importer. This process would occur during the initial registration of a third-party

auditor and after any updates to a third-party auditor’s registration. This procedure would be 

necessary to ensure that both the third-party auditor and the renewable fuel producer or importer 

have agreed to establish a quality assurance program under a proposed affirmative defense 

option. Also as discussed in Section IV.B, EPA may not recognize this relationship unless the 

third-party auditor satisfy applicable replacement mechanism requirements. Hence, we propose 

that renewable fuel producers would have to acknowledge through an update of their registration 

that a third-party auditor will implement a QAP and verify RINs at the renewable fuel producer’s 

facility.

Third-party auditors should also have the ability to stop verification of newly generated 

RINs should a problem arise during the QAP implementation process. Since third-party auditors 

would be in the best position to identify potentially invalid RINs before EPA and other parties, 

allowing third-party auditors this flexibility is necessary to ensure that problems with invalid 

RINs are quickly identified and corrected. Additionally, since under Option A and potentially as 

a contractual matter Option B, a third-party auditor may have some liability to replace RINs, 

they should have the ability to limit their liability should they notice through the implementation 

of a QAP that RINs may be invalid. However, if a third-party auditor removes the “flag” for a 

facility that is generating RINs, this will not affect a previously verified RIN’s ability to be used 

for compliance if it has been generated prior to the third-party auditor choosing to no longer 

validate a facility’s RINs. Since one of the goals of today’s proposed quality assurance program 

would be to mitigate the transaction and use of invalid RINs for compliance purposes, we are 
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proposing that third-party auditors under both options be required to remove the validation flag 

for RINs generated at a facility until problems are rectified and confidence is restored to both the 

third-party and EPA that newly generated RINs are valid.

As mentioned above, one key requirement for the effective implementation of a QAP by

a third-party party auditor would be that the third-party auditor must be free from conflicts of 

interest with renewable fuel producers that are being audited. However, some existing thirdparty auditors currently act as agents for renewable fuel producers by not only verifying that 

RINs are appropriately generated at renewable fuel producer’s facilities, but by also handling a

renewable fuel producer’s reporting activities in EMTS (e.g. they submit reports to generate 

RINs in EMTS for renewable fuel volumes produced at a facility owned/operated by the 

renewable fuel producer). This may present a conflict of interest since those third-party auditors 

have a contractual relationship to act on behalf of the renewable fuel producer. On the other 

hand, since third-party auditors are going to be responsible for verifying all RINs generated at a 

facility in EMTS, they may be able to serve as an agent for a renewable fuel producer in this 

capacity without an apparent conflict of interest. We seek comment on whether we should allow 

third-party auditors to act as agents in the generation of RINs for renewable fuel producers. We 

also seek comment on any element of today’s proposal to require third-party auditors to validate 

RINs in EMTS.

3. Recordkeeping, Reporting, and Attest Engagements

a. Recordkeeping Requirements

Under both options, we propose third-party auditors would be required to implement 

EPA-approved QAPs and maintain records of all verification and validation activities related to 

the implementation of a quality assurance program. These records would serve to demonstrate 

that a QAP was appropriately implemented if invalid RINs are reported at a later date. 

b. Reporting Requirements

Under the existing RFS program, obligated parties, exporters of renewable fuel, 

producers and importers of renewable fuels, and any party who owns RINs must report 

appropriate information to EPA on a regular (e.g. quarterly and/or annual) basis. Similarly, we 

are proposing that the third-party auditors would be required to submit quarterly reports, in line 

with existing RFS quarterly reporting deadlines, identifying how many RINs the auditor has 

verified the previous quarter. We are also proposing that independent third-party auditors would 

have to include the facilities audited and the dates of those audits. This information would allow 

EPA to compare a third-party auditor's reported activity to information gleaned from EMTS to 

ensure that third-party auditors are appropriately implementing QAPs. 

If a third-party auditor were to implement a QAP under Option A, then he would be 

required to also report the size of the replacement mechanism he has obtained to cover their 

potential RIN replacement liability. We believe that these reports would help the Agency ensure 

that third-party auditors are maintaining an appropriate replacement mechanism to replace 
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invalid RINs relative to the number of RINs verified by the third-party auditor. For example, 

renewable production facilities sometimes increase production levels, which may increase the 

size of the RIN replacement mechanism a third-party auditor would need to have. 

We recognize that some may see this as providing the same information twice since we 

are proposing to require that independent third-party auditors identify facilities they intend to 

audit and provide proof of an appropriate replacement mechanism during registration. However, 

we believe that quarterly reports indicating where and when audits occurred and the size of the 

appropriate RIN replacement mechanism relative to the number of RINs validated by third-party 

auditors would provide a useful compliance tool to better ensure that third-party auditors are 

effectively implementing QAPs. We seek comment on whether we should require quarterly 

reports from third-party auditors, or more/less frequent reporting, and whether we should require 

third-party auditors to report additional information on a regular basis.

c. Attest Engagements

We seek comment on whether to require that third-party auditors have an annual attest 

engagement similar to those required of other parties currently required under §80.1464. Attest 

engagements are used in many of the Agency’s fuels programs and are similar to financial audits. 

Attest engagements consist of an independent, professional review of compliance records and 

reports. During discussions with stakeholders, some suggested that we establish an “audit the 

auditor” program. We believe that attest engagements may be an appropriate means of verifying 

the accuracy of the information reported to us by the third-party auditors. Similar to current RFS 

requirements, the attest engagement could consist of an outside certified CPA or certified 

independent auditor following agreed upon procedures to determine whether underlying records, 

reported items, and transactions agree, and issuing a report as to their findings and that attest 

engagements occur annually. These requirements would be similar to those we require of other 

parties in RFS.

d. Prohibited Activities for Third-party Auditors

We are proposing new prohibition and liability provisions applicable to third-party 

auditors. Since we are creating a new regulated party that will be integral to the successful 

implementation of voluntary quality assurance programs, we believe it is appropriate to hold 

these parties liable if they fail to comply with the proposed requirements. The prohibition and 

liability provisions would be similar to those of other fuels programs. We propose to identify

certain prohibited acts, such as failing to properly implement an EPA-approved QAP; failing to 

timely notify RIN generators and EPA of potentially invalid RINs; failing to replace invalid 

RINs, if applicable; and verifying RINs that are invalid.

In addition, a third party auditor who is subject to an affirmative requirement under this 

proposal will be liable for a failure to comply with the requirement. For example, third-party 

auditors will be liable for separate violations for failing to comply with the registration, reporting 

and recordkeeping requirements. Like other fuels programs, we propose that if the third party 
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auditor causes another person to violate a prohibition or fail to comply with a requirement, the 

third party auditor may be found liable for the violation. 

The penalty and injunction provisions in section 211(d) of the Clean Air Act apply to 

violations of the renewable fuels regulations implemented pursuant to section 211(o). 

Accordingly, under the proposed rule, any person who violates any proposed prohibition or 

requirement may be subject to civil penalties of $37,500 for every day of each such violation and 

for the amount of economic benefit or savings resulting from the violation. 

We request comment on the need for any additional prohibition and liability provisions 

specific for third-party auditors.
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VII. Proposed Requirements for Audits

We are proposing that a renewable fuel producer’s facility must be visited and assessed 

as part of any audit conducted under the proposed quality assurance program. An auditor would 

use an approved QAP as the basis for the verification of renewable fuel produced and RINs 

generated at a facility. In order to verify production, the auditor must conduct site visits, review 

documents, and contact entities that do business with the facility. The proposed components of 

audits are discussed in this section. As with other provisions of the RFS program, the proposed 

use of a QAP and the associated audit would also be available to foreign producers of renewable 

fuel. We request comment on specific aspects of the proposed program vis-a-vis foreign 

producers, and specifically request comment on possible additional program elements that may

only be applicable to foreign producers.

A. Frequency of Audits

We are proposing that an auditor conduct at least four (4) onsite visits per year, or every 

three (3) months. We believe this is an appropriate time frame for evaluating factors that only 

need to be evaluated “periodically” (see Section IV.A). We request comment on this proposed 

standard audit frequency, and whether this frequency should be different if an Option A QAP or 

an Option B QAP is used. We are proposing that new production facilities should be audited 

before verification of RINs and, subsequently, according to the standard schedule. 

We expect that each visit could take from one to several days, depending on the size and 

complexity of the facility, the availability of records, changes since the last audit, etc. It is 

possible that there may be some value to requiring unannounced visits as well, and we request 

comment on the value and impact that such unannounced site visits/audits would have on the 

effectiveness of the program and its associated costs. 

Based on the proposed audit schedule, we are also proposing that RINs would be verified 

only for a specified period following an audit. To the extent that an audit of any entity usually 

certifies what was done, the audits we are proposing are prospective in that the audits are 

verifying that past practices and procedures have been followed, and are currently in place for 

future RINs that will be generated. We believe this prospective approach is appropriate for the 

proposed quality assurance program because the audit (and accompanying satisfactory outcome 

based on the applicable QAP) would be verifying the starting point from which future RINs 

would be generated. In that sense, the upcoming period of RIN generation is starting with a 

“verified slate”. In addition, it could place a serious impediment in the market for RINs if their 

verification followed their generation by any applicable period of time.

To allow for some flexibility around the proposed standard audit schedule (i.e., quarterly, 

or roughly every 90 days), we are proposing that RINs generated for up to 110 days after the last 

audit could be verified, unless the real time monitoring data or other information obtained by the 

QAP auditor prior to the onsite audit indicates that RINs are invalid. If another audit was not 
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conducted within 110 days, RINs could no longer be verified for that facility until a new audit 

was conducted. We request comment on this coverage period. 

If a verified RIN was invalidly generated, it would indicate that the QAP that had been 

used to verify that RIN was deficient in some aspect. As remedy, we are proposing a more 

frequent audit schedule than the standard as one change to the applicable QAP if such invalid 

verified RINs are found. We are proposing that the onsite frequency be changed from every

three months to once a month in the event of invalid RINs. We are also proposing that this 

schedule would remain in effect for one year, assuming no additional invalid RINs are 

discovered during that time frame. We request comment on this proposed schedule for facility

audits when the facility is found to have generated invalid RINs.

For those components of the audit that we propose to require ongoing, or batch-level 

monitoring, the QAP would be required to provide details of the means for collection and 

evaluation of the data collected on an ongoing basis.

B. Elements of an Audit

The elements of a QAP are discussed in some detail above in sections IV and V. The 

following provides some additional detail on the elements of an audit.

1. Physical Examination of Facility and Operations

The goal of the onsite visit is to verify that plant has the technology to produce, store, and 

blend biofuels at registered levels, is operating in accordance with the facility’s registration, and 

that the RINs generated since the last visit are valid. The auditor will likely use plant maps and 

photos as part of this analysis, and should compare and contrast the plant’s infrastructure with 

the third-party engineering review reports on file with EPA. The auditor should note the size and 

number of storage and blending tanks, and observe the measurement of volume in the tanks. The

auditor should determine whether the process rate is consistent with annual and quarterly

production of the facility, and whether the facility has quality process controls in place (e.g., are 

ASTM specifications being followed where appropriate).

We believe that mass and energy balances on the facility are critical components of any

audit. Because integrated facilities will likely have energy usage that is not directly related to 

biofuel production, the auditor should have alternate means of assessing and correlating energy

usage to production.

We request comment on whether and how the physical examination of the facility should 

occur more frequently for facilities subject to an Option A QAP than for those subject to an 

Option B QAP.
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2. Document Review

The auditor should ensure that the producer has and is fulfilling the EPA record-keeping 

requirements at §80.1454(c)(1)(i)(A)-(B) and (ii). We expect the auditor to evaluate reports 

submitted to EPA, and propose that these be reports year-to-date, as applicable, and from the 

previous year, for comparison. These include Activity Reports, RIN transaction reports, RIN 

generation reports, and Renewable Fuel producer Co-product reports. The third-party 

engineering review and annual attestation report should also be reviewed. 

Reports submitted to EPA should be cross-checked with other records. For instance, the 

auditor should have access to certificates of analysis. The auditor must check recent feedstock 

receipts (if the producer uses a variety of feedstocks, then the auditor should be provided with 

receipts for each feedstock). Integrated facilities may not have internal sales receipts for 

feedstock usage, so an alternative paper trail will likely be required. Similar to the feedstock 

document review and crosscheck, renewable fuel and co-product delivery documentation should 

be part of any audit. 

For all documentation reviews, we would expect the auditor to analyze reports to 

determine whether a producer is reporting volumes consistently, and to require (from the 

producer) explanation for missing or inaccurate reports. The auditor should investigate 

discrepancies between volumes reported and processed. Other reports the auditor should 

consider as part of its review include the EIA M22 Survey, any state reports, federal and state tax 

returns, and association dues reports.

Of prime concern to the proposed quality assurance program is the verification of RINs, 

and there are many aspects to this part of the audit. The auditor should evaluate monthly RIN 

generation reports submitted through the EMTS, verify that RINs generated match wet gallons 

sold, determine if the facility purchases or separates RINs, and review product transfer 

documents for all RIN activity. We propose that this review encompass random samples of 

documentation; however, based on the documentation provided by the producer, the auditor 

could decide to review all documentation. Furthermore, and in order to ensure that renewable 

fuel producers will maintain their records in a manner that will allow third party auditors and the 

EPA to efficiently evaluate whether RINs were properly generated, we are also proposing to 

change § 80.1426 to state that RINs may only be generated for fuel that is demonstrated pursuant 

to the reporting requirements of § 80.1451, the recordkeeping requirements of § 80.1454, or in 

other records maintained by the producer, to be produced in accordance with the applicable 

pathway listed in Table 1 to § 80.1426(f) or a petition approved by EPA pursuant to § 80.1416.

Finally, the auditor should also determine if there is any import or foreign biofuel 

producer documentation.

We request comment on whether and how the document review discussed here should be 

more detailed (and/or include different details) for facilities subject to an Option A QAP than for 

those subject to an Option B QAP.
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3. Buyer/Seller Contacts

At the end of an audit, the auditor should know all customers of and suppliers to the 

facility, and all parties that distribute feedstock to and fuel from the facility. We expect the 

auditor to contact the customers and suppliers in order to verify sales and purchases, in 

accordance with the requirements under the applicable QAP (i.e., Option A or Option B). We 

envision this proposed requirement as a “spot check”; the auditor should be able to provide a 

reason for such calls regarding the entity called, questions asked, etc. We request comment on 

whether and how the audit requirements for Buyer and Seller contacts should differ between 

facilities subject to an Option A QAP than for those subject to an Option B QAP.
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VIII. Additional Changes Related to the Definition and Treatment of Invalid RINs

A. Export and Exporter Provisions

In this action, we propose to address the following issues regarding the export of 

renewable fuels: clarify exporter RVO requirements, require identification of renewable fuel 

content for all fuel transfers, and change rules to require retirement of RINs at the time of export. 

The Agency is proposing to address these issues primarily because they were not clearly 

addressed in the previous regulation, and because the export of renewable fuel, particularly 

ethanol and biodiesel, has become more prevalent in the transportation fuel market. These 

proposed changes will make the RVO obligations of exporters clear, and address how RINs 

should be handled when the renewable fuel is exported. In addition, it will provide EPA with the 

data needed to track renewable fuel exports. The intent is to insure that exported fuel is not 

included in meeting the mandated domestic annual renewable fuel volume requirement.

1. Clarification of Exporter RVO

Proposed language will clarify that RINs must be generated for renewable fuel volumes 

produced for export. Any volume of renewable fuel which is exported, either neat or blended, 

requires calculation of an export RVO. How these RINs are managed is addressed in additional 

sections below. One alternative is to exempt exported renewable fuel from the RVO, but only if 

the fuel producer is the exporter of record, and has the necessary documentation to prove that the 

fuel was exported.

EPA is proposing this change because the requirements for exported renewable fuel were 

not addressed directly in the current regulations. Export was not one of the specified exemptions 

from the RVO requirement, nor was export volume addressed. This is because the United States 

was not a renewable fuel exporter at the time that these regulations were written. With changes 

in the global fuel market, the US has now become a renewable fuel exporter and the 

requirements for exports must be addressed.

40 CFR section 80.1430 requires “any party that owns any amount of renewable fuel, 

whether in its neat form or blended with gasoline or diesel, that is exported from any of the 

regions described in section 80.1426(b) shall acquire sufficient RINs to comply with all 

applicable Renewable Volume Obligations under paragraphs (b) through (e) of this section 

representing the exported renewable fuel.” Exporters of biodiesel must declare and comply with 

an obligation to buy an amount of RINs (x 1.5) equivalent to the volume exported. 40 CFR 

section 80.1427 requires “each party that is an obligated party under section 80.1406 and is 

obligated to meet the Renewable Volume Obligations under section 80.1407, or is an exporter of 

renewable fuels that is obligated to meet the Renewable Volume Obligations under section 

80.1430, must demonstrate pursuant to section 80.1451(a)(1) that it is retiring for compliance 

purposes a sufficient number of RINs.”
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EPA is proposing to clarify that “any party that owns any amount of renewable fuel, ... 

that is exported” also covers heating oil. As the regulation is written, the intended use of the fuel 

is not a relevant factor.

In addition, we propose that even parties which transact in RIN-less fuel register with the 

EPA. We believe this will enable greater compliance for those that sell RINs without regard to 

the underlying volumes of fuel. Further, we believe it will allow for enhanced traceability of 

biodiesel used in exported fuel.

2. Require Identification of Renewable Fuel Content

Section 205(a) of the Energy Independence and Security Act of 2007 provides that “each 

retail diesel fuel pump shall be labeled in a manner that informs consumers of the percent of 

biomass-based diesel or biodiesel that is contained in the biomass-based diesel blend or biodiesel 

blend that is offered for sale, as determined by the Federal Trade Commission.” EISA also 

specifically addresses three categories of biodiesel fuel blends, requiring labels with precise 

wording for two. First, fuel blends containing no more than five percent biodiesel and no more 

than five percent biomass-based diesel, and that meet ASTM D975 (“Standard Specification for 

Diesel Fuel Oils”), need not be labeled. Second, fuel blends containing more than five but no 

more than twenty percent biomass-based diesel or biodiesel “shall be labeled ‘contains biomassbased diesel or biodiesel in quantities between 5 percent and 20 percent.’” EISA Sec. 205(b)(2) 

(emphasis added). Finally, blends containing more than twenty percent biodiesel or biomassbased diesel “shall be labeled ‘contains more than 20 percent biomass-based diesel or 

biodiesel.’” EISA Sec. 205(b)(3) (emphasis added).

We recommend disclosure language similar to the following, based on a successful state 

law now in effect. Such documentation will prevent innocent failure to use fuel properly or 

create blends greater than B5, and create a paper trail for use in enforcement actions.

Any person that sells or otherwise transfers title to a biomass-based diesel blend or 

biodiesel blend to any other person for resale of the product shall prepare a document evidencing 

such transfer. Such transfer documents may be in the form of an invoice, bill of lading, bill of 

sale or other written instrument meeting the requirements of this subsection. All such transfer 

documents shall include the name of the transferor, the name of the transferee, the date of 

transfer, the volume in gallons of the product transferred, and either the volume in gallons or 

percentage of biomass-based diesel or biodiesel that is contained in the blended product. Each 

person making such transfer shall maintain each transfer document required by this subsection 

for a period of four years from the transfer date.

3. RIN Retirement Requirements

Under the RFS, final compliance reports for the immediately preceding year are made on 

February 28th. For parties exporting renewable fuel without the intention of retiring sufficient 
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RINs, we believe this allows the exporter to continue their malfeasance for nearly 14 months 

(January 2013 to February 2014, as an example) without detection or any requirement to report.

The problem was anticipated, as stated in the final RFS2 Rule: “However, we are aware 

of some exporters who sell RINs that they separate as a source of revenue, with the intention to 

purchase replacement RINs on the open RIN market later in the year to comply with their RVOs. 

At this time we are not aware of such activities resulting in noncompliance, and thus the RFS2 

regulations promulgated today will continue to allow this. However, we may revisit this issue in 

the future if there is evidence that exporters are failing to comply because they are selling RINs 

that they separate from exported volumes.”

It has now come to our attention that some exporters are intentionally purchasing fuel for 

export, separating the RINs and selling them for additional revenue, and closing down business 

before they are required to ever report their activities to EPA. We recommend changes to the 

recording and RIN retirement requirements for exported renewable fuel volumes.

One approach would require exporters to clearly demonstrate on a quarterly basis that 

they are acquiring RINs sufficient to cover volumes exported. This shorter time frame would 

significantly reduce the window of opportunity for large exports of renewable fuel without the 

required RINs to be retired. Alternatively, EPA could require the immediate retirement of RINs,

at the time of export. This would prevent rolling deficits carried by exporters, and guard against 

“shell companies” closing up shop in order to avoid the cost of meeting their export RVO.

B. “Downstream” Invalidation and Product Transfer Documents

In order to clarify the intent of the existing regulations and alleviate some problems 

caused by activities that invalidate RINs after the RIN has left the producer, we are proposing the 

following changes.

1. Conditions for RIN Generation and Designation of Intended Renewable Fuel Use 

The existing regulations at § 80.1426(a) and (c) require renewable fuel producers and 

importers to generate RINs for fuel that: (1) qualifies for a D code pursuant § 80.1426(f) or a 

petition approved pursuant to § 80.1416, and (2) is demonstrated to be produced from renewable 

biomass pursuant to the recordkeeping and reporting requirements in the regulations. However, 

§ 80.1426(c) also specifies that RINs may not be generated for fuel that is not designated or 

intended for use as transportation fuel, heating oil or jet fuel. We are proposing amendments to 

§§ 80.1426(a) and (c), and conforming amendments to the product transfer document (PTD) 

regulations in § 80.1453, to specify that designation of a fuel as transportation fuel, heating oil or 

jet fuel is to occur in the PTDs that a renewable fuel producer or importer prepares to accompany 

a fuel shipment. These changes would clarify the existing “designation” requirement for RIN 

generators by specifying the exact location and content of the designations. The requirement to 

designate intended fuel uses in PTDs would operate as a constant reminder to renewable fuel 
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producers and importers that RINs may only be generated for fuel intended for use as 

transportation fuel, heating oil or jet fuel, and would facilitate EPA enforcement of the 

“designation” requirement. The proposed regulations would require that any designation reflect 

the renewable fuel producer’s or importer’s intent regarding the use of the fuel. This would 

ensure that designations are made in good faith; parties designating fuel for a qualifying use who 

in fact knew that the fuel would likely be used for other purposes would be in violation of this 

proposed regulation. 

As proposed, section 80.1426(f)(12) includes requirements related to the distribution and 

sale of renewable naptha, biobutanol, and other renewable fuels, as designated by EPA, that must 

also be satisfied if RINs are to be generated for those fuels. These special conditions were 

developed because these fuel types are typically used for purposes other than as transportation 

fuel, heating oil or jet fuel. We are proposing to reference these existing requirements together 

with other conditions for RIN generation in § 80.1426(a). In addition, we seek comment on 

whether we should adopt additional regulatory requirements designed to ensure that fuel for 

which RINs have been generated are in fact used for qualifying purposes. We do not believe that 

such additional requirements would likely be necessary or appropriate for certain renewable 

fuels, such as denatured ethanol, for which non-qualifying uses either do not exist or are likely

only de minimis in nature. However, other biofuels such as butanol or naptha could readily be 

put to non-qualifying uses in the chemicals market, in the production of cosmetics, etc. For such 

fuels, we seek comment on whether it would be appropriate to adopt additional conditions for 

RIN generation designed to ensure appropriate end use of the fuel, and what those conditions 

should be for specific types of fuel. For example, we seek comment on the option of limiting 

RIN generation for renewable fuels, such as naptha and butanol, for which the only significant 

qualifying uses under the Act would be as gasoline blendstock, to situations where the renewable 

fuel producer or importer itself uses the products as gasoline blendstock, or enters into a contract 

with the fuel purchaser providing that it may only be used as gasoline blendstock. We solicit 

comment on the extent to which there is a potential for biodiesel, heating oil, renewable diesel 

and other fuels to be used for non-qualifying purposes, and what, if any, conditions related to 

ensuring qualifying end use would be appropriate to impose on renewable fuel producers and 

importers as a condition of RIN generation for such fuels. 

Existing section § 80.1426(c) identifies situations in which RINs may not be generated. 

We propose a conforming amendment to this section that would specify that RINs may not be 

generated unless the conditions specified in § 80.1426(a) are satisfied.

2. RIN Generation for Fuel Made with Renewable Fuel Feedstock

The existing regulations do not provide a pathway for any party to generate RINs for a 

fuel produced using another renewable fuel as a feedstock. Parties seeking to do so, however, 

may submit a petition requesting approval pursuant to §80.1416. 40 C.F.R. § 80.1426(c)(6)(ii) 

sets forth certain prohibitions that would apply if, in the future, EPA approved a pathway that 

allowed a party to generate RINs for a fuel that was produced using another renewable fuel as a 

feedstock. These prohibitions are designed to prevent parties from generating more than one 

RIN for the same volume of renewable fuel. For example, the production of ETBE uses ethanol 
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as a feedstock, and RINs may have been previously generated if the ethanol used to make the 

ETBE was denatured. The ETBE producer in this example should not be allowed to generate 

RINs representing the full energy equivalence of the finished ETBE, if RINs were previously 

generated for the ethanol feedstock. In order to address this type of scenario, we are proposing 

to modify § 80.1426(c)(6) to prohibit a party from generating new RINs for a fuel that is made 

from a feedstock that is a renewable fuel, where the feedstock that is a renewable fuel was 

produced by another party, unless EPA approves a petition under §80.1416 to allow for the 

generation of RINs for a fuel that was produced using another renewable fuel as a feedstock and 

the petition and approval include an enforceable mechanism to prevent double counting of RINs.

 

Lastly, we propose to amend § 80.1426(f)(4) to address the problem of “double 

discounting” for non-renewable feedstocks. Specifically, we have discovered that the existing 

regulations inadvertently cause the number of RINs generated to be discounted twice for the 

presence of non-renewable feedstocks. The first would be in the calculation of the equivalence 

value, and the second would be in the calculation of the number of RINs generated under § 

1426(f)(4)(i). To correct this problem, we are proposing to add a new paragraph (f)(4)(iii) so 

that the equivalence value must be based only on the renewable fuel made from renewable 

biomass, not from non-renewable feedstocks.

3. Change Associated with Fuel for which RINs have been Generated that is used 

for a Non-Qualifying Purpose

Section 80.1429(f) of the existing regulations provides that any person who uses a 

renewable fuel for an application other than transportation fuel, heating oil or jet fuel use must 

retire RINs if RINs were received with that renewable fuel. Section 80.1429(f) was intended to 

require that the person that uses RIN generating fuel for a non-qualifying purpose retire RINs 

received with the fuel so that they cannot be used for RFS compliance. This approach makes 

sense since the party that uses the fuel for a non-qualifying purpose is the party that is choosing 

the non-qualifying use and has the most direct knowledge about how the fuel is used. We 

propose to amend the regulations to require any person who uses fuel for which RINs were 

generated for a non-qualifying purpose to retire the appropriate type and number of RINs, 

regardless of whether RINs were received with the fuel. Parties using a renewable fuel need 

only review the PTDs associated with the fuel to ascertain if RINs were generated for the fuel, or

if the biofuel is RIN-less. If RINs were generated and have been separated from the fuel, the 

RINs are bought and sold in the marketplace under the assumption that the associated fuel will 

be put to a qualifying use. We believe that any person using fuel for which RINs have been 

generated for a non-qualifying use should make the RIN system whole by retiring an equivalent 

number and type of RIN. This approach would place the burden of ensuring an appropriate 

number of RINs is retired if the fuel is not used for a qualifying purpose on the party with the 

best knowledge about how the fuel is used. In order to accomplish this, we propose to remove 

and reserve paragraph 80.1429(f) of the regulations and propose adding a new section 80.1433 to 

require parties that use or designate for use fuel for which RINs were generated in an application 

other than transportation fuel, heating oil, or jet fuel to retire an appropriate number and type of 

RINs within specified timeframes. We further propose new subsection 80.1460(g) which would 

prohibit a person from using qualifying renewable fuel for which RINs were generated in an 
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application other than as transportation fuel, heating oil, or jet fuel, unless the requirements of 

80.1433 have been met. The proposed amendments would require retirement of applicable RINs 

within a 10-20 day period (depending on whether the fuel was purchased with assigned RINs or 

not). As discussed below, EPA is proposing that a similar RIN-retirement provision apply to 

exporters of fuel or which RINs were generated. The 10-20day RIN retirement requirement 

would replace the existing annual exporter RVO calculation and compliance demonstration. 

Since parties using RIN-generating fuel for purposes other than as transportation fuel, 

heating oil or jet fuel would be required to retire RINs for such fuel under today’s proposal, we 

believe that it would also be appropriate to allow obligated parties who may have purchased the 

original RINs generated for this fuel to use those RINs for compliance purposes, under certain 

conditions. We propose to amend 40 CFR 80.1460(c)(2) and (3) to prohibit obligated parties 

who acquire RINs for fuel that is ultimately used for non-qualifying purposes from using these 

RINs for compliance, where the obligated party itself used the fuel for a non-qualifying purpose 

but failed to retire an appropriate number of RINs, or knows that the fuel associated with the 

RINs they generated for that fuel was used for a non-qualifying purpose, but the party or parties 

engaged in that fuel use failed to retire an appropriate number of RINs. We also propose to 

amend section 80.1460 to prohibit the use of a fuel for which RINs have been generated for a 

purpose other than as transportation fuel, heating oil or jet fuel unless the party engaged in that 

use complies with the requirements of 80.1433. Amending the regulations in this manner will 

provide obligated parties with assurance that a RIN that was properly generated for a fuel that 

was designated and intended by the fuel producer to be used as a transportation fuel, heating oil 

or jet fuel may be used for compliance purposes, even if a third-party uses the fuel associated 

with the RIN for a non-qualifying purpose, so long as a sufficient number of RINs are retired as 

required by 80.1433. 

4. Treatment of Improperly Separated RINs 

Section 80.1431(a)(1)(viii) provides that a RIN that was improperly separated pursuant to 

80.1429 is invalid. Under section 80.1460(c)(1), obligated parties may not use invalid RINs for 

compliance purposes. EPA proposes to remove 80.1431(a)(1)(viii) of the regulations, and 

instead add section 80.1460(h), identifying the improper separation of RINs as a prohibited act. 

The net effect of these changes would be to allow obligated parties to use RINs that were 

improperly separated for compliance purposes, since the RINs would no longer be considered 

invalid. However, improper RIN separation would be a prohibited act under the regulations. 

EPA also seeks comment on whether the RFS regulations should instead maintain section 

80.1431(a)(1)(viii), but also require a more comprehensive and robust mechanism to allow 

parties that acquire separated RINs and EPA to evaluate whether the RINs were properly 

separated and used for a qualifying purpose. The goal would be to make it easier for EPA and 

obligated parties to determine whether RINs are valid. These mechanisms could require a 

designate and track approach, with corresponding recordkeeping and reporting requirements, 

similar to the program set forth in the diesel sulfur regulations at 40 C.F.R. Part 80, Subpart I. In 

general, under Subpart I, each time custody of fuel is transferred from one facility to another 

facility, the transferor must designate the fuel and record its volume. The party who receives 
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custody of the fuel must record the same information, to ensure that each party relies on the same 

designation and volume for its own compliance purposes. Maintaining proper PTDs, with 

proper designations, is also part of the diesel sulfur program’s recordkeeping requirements. EPA 

seeks comment on whether the RFS regulations should establish similar designation and track 

requirements addressed at tracking and recording RIN separation events and end use of 

renewable fuels.

Additionally, EPA requests comment on whether we should require RIN separators to 

include with their quarterly reports additional records related to qualifying separation events that 

are already required as part of the recordkeeping regulations. See § 80.1454 for a description of 

the records that must be retained by parties. EPA believes requiring this information to be 

reported quarterly will allow EPA to review the information in a more timely than in the existing 

structure, where EPA must request it from RIN separators on an ad hoc basis. Additionally, all 

parties who separate RINs must sign and certify that the information reported to EPA under the 

RFS program is true and accurate. 

Inaccurate, misleading, and/or false reports submitted to EPA may be used in a criminal 

prosecution against the submitter and other culpable persons. Enhanced reporting requirements 

for RIN separators would facilitate EPA’s ability to investigate and prosecute persons who 

engage in RIN separation violations. EPA seeks comment on the type and scope of reporting 

that would most likely assist EPA in identifying RIN separation violators. 

5. Requirements for Parties that Designate or Use Renewable Fuel in an Application 

that is not Transportation Fuel, Heating Oil, or Jet Fuel

EPA is proposing a new section §80.1433 that states the requirements for those parties 

that designate or use a fuel for which RINs have been generated for a use other than 

transportation fuel, heating oil, or jet fuel. As discussed in the amendments to section §80.1429, 

EPA is proposing to require the retirement of an equivalent number and type of RINs by the 

party that designates or uses such a fuel for a non-qualifying use. This approach will make the 

RIN system “whole” while also minimizing transaction costs for all parties and EPA. The 

proposed regulations specify formulas for a party putting fuel for which RINs were generated to 

a non-qualifying use to use in calculating the number of RINs that should be retired. However, 

EPA also seeks comment on the alternative of requiring such users to refer to the PTD 

accompanying the fuel to determine the number and type of RINs to retire. Proposed section 

80.1453(a) would require RIN generators and all subsequent transferors of renewable fuel to 

identify on PTDs the number and type of RINs generated for it. If this section is finalized it 

could offer a more accurate and easier system for identifying the correct number of RINs that 

should be retired in order to make the RIN system whole when biofuel for which RINs were 

generated are put to a non-qualifying use.

EPA requests comments on whether we should include a provision to exempt small 

entities from the requirements proposed in 40 C.F.R. §80.1433. EPA is taking comment on the 

extent to which it would be appropriate to relieve certain small entities from the requirement of 

retiring RINs when they use fuel for which RINs were generated for a non-qualifying purpose. 
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EPA understands there are instances, such as emergencies, where small parties may have no 

practical choice but to use fuel that was produced as renewable fuel for a use other than as 

transportation fuel, heating oil or jet fuel. This exemption would allow small parties to avoid not 

only the RIN retirement requirement in 80.1433 itself, but also the RFS2 requirements of 

registering, recordkeeping and reporting that are associated with being a RIN owner. EPA 

envisions that any such exemption would apply only to end users of fuel for which RINs have 

been generated who are themselves small entities, and only for a very small amount of fuel. We 

seek comment on a possible maximum volume of fuel, such as 200 to some maximum number of 

gallons per year that would be exempt from 80.1433 requirements for qualified small entities.

We also seek comment on factors such as the number of employees or value of assets that 

could be used to identify qualified small entities. EPA requests comment on the proof and or 

documentation we should collect in order to identify parties as small entities entitled to the 

exemption. We propose that this provision would not apply to parties that designate renewable 

fuel for a non-qualifying end use. Instead, the provision would only apply to those parties who 

actually use fuel for which RINs have been generated for a non-qualifying use, such as a 

stationary generator. We believe that it is unlikely that parties engaged in the transfer and redesignation of fuel uses have a need for a small volume exemption to § 80.1433, but EPA solicits 

comment on this issue. 

C. Treatment of Confidential Business Information

EPA is proposing to summarize and publish registration and QAP information required 

under 40 CFR 80.1450 (b) and (c) from independent third-party auditors and renewable fuel 

producers and importers that are registered with the RFS program, and that such summarized 

information shall not be considered confidential. This information does include QAP plans and 

independent engineering reviews. In cases where QAP plans and independent engineering 

reviews include proprietary information, we propose that registrants provide the Agency with 

two versions of those documents, one clearly marked as containing CBI, with appropriate areas 

denoted as CBI, and a second public version with CBI information redacted. 

Additionally, we are proposing to publish monthly, quarterly and/or annual averaged 

information, required to be reported under 40 CFR 80.1451(b) for renewable fuel producers and 

importers, on a corporate and/or facility-by-facility basis, and that such averaged information 

shall not be considered confidential.

We believe that the added transparency of making this information available to the 

public, along with the implementation of the QAP process, will strengthen the RFS program and 

act as a deterrent to fraudulently generated RINs. We welcome comment on these proposals to 

publicize this registration and reporting information.
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D. Proposed Changes to Section 80.1452 – EPA Moderated Transaction System 

(EMTS) Requirements – Alternative Reporting Method for Sell and Buy 

Transactions for Assigned RINs

Reporting and product transfer document (PTD) requirements, found in sections 80.1452 

and 80.1453, respectively, currently state that the reportable event for a RIN purchase or sale 

occurs on the date of transfer. Sellers must report the sale of RINs within five (5) business days 

of the reportable event via the EPA Moderated Transaction System (EMTS). Buyers must report 

the purchase of RINs within ten (10) business days of the reportable event via EMTS. The date 

of transfer is the date on which title of RINs is transferred from the seller to the buyer. Some 

buyers and sellers of assigned RINs have expressed concerns with these requirements stating 

they have difficulty determining the date of transfer since title of the renewable fuel is not 

transferred until the fuel physically reaches the buyer. Some transactions, for example those by 

rail or barge, may take several weeks, and their current accounting systems do not include a 

means for capturing the buyer’s receipt date. 

EPA understands this concern, but also recognizes that some regulated parties have 

modified their accounting systems to address the current reporting and PTD requirements in 

RFS2. We also believe that for parties separating, retiring, and selling or buying separated RINs, 

the current reporting and PTD requirements are effective and should remain unchanged. 

Therefore, at this time EPA is not proposing to replace existing requirements, but is instead 

proposing an additional, alternative method for reporting sell and buy transactions involving 

assigned RINs only. 

The proposed alternative method for sell and buy transactions of assigned RINs would 

redefine the reportable event for both the seller and the buyer, introduce a unique identifier that 

the seller must provide to the buyer, and require the buyer to report the date of transfer. Buyers 

and sellers would need to agree on which method they would be using to report transfers of 

assigned RINs; either the current method or the alternative method. EPA believes that this 

alternative would provide the regulated community with the flexibility to address their reporting 

concerns and also provide EPA with the data necessary to effectively administer and enforce 

transactions of assigned RINs. EPA welcomes comment on this proposed alternative method for

reporting assigned RIN buy and sell transactions.

We propose that sellers of assigned RINs under the alternative method be required to do 

the following:

 Within five (5) business days of shipping renewable fuel with assigned RINs, report a 

sell transaction, using the alternative method, via EMTS;

 Include in the EMTS sell transaction report other required information per section 

80.1452; and

 Provide a PTD to the assigned RIN buyer with a unique identifier, also reported via 

EMTS, in addition to the information in section 80.1453. The date of transfer is not 

required for the alternative method.
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We propose that buyers of assigned RINs under the alternative method be required to do the 

following:

 Within five (5) business days of receiving a shipment of renewable fuel with assigned 

RINs, report a buy transaction, indicating use of the alternative method, via EMTS;

 Include in the EMTS buy transaction report other required information per section 

80.1452;

 Include in the EMTS buy transaction report the unique identifier provided by the 

seller; and

 Include in the EMTS buy transaction report the date the renewable fuel was received, 

i.e. the date of transfer.

If this proposed alternative method is finalized, the EMTS would be modified to accept such 

transactions. EPA would provide additional instruction and guidance at the time of the new 

EMTS version release. EPA invites comment on all aspects of this proposal. 
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IX. Impacts

The quality assurance program that we are proposing in today's NPRM would provide a 

voluntary mechanism for regulated parties to verify that RINs are validly generated, provide an 

affirmative defense against violations if a regulated party transfers an invalidly generated RIN or 

uses it for compliance, and provide clarity regarding the responsibility of regulated parties to 

replace invalidly generated RINs. The proposed program would not change the volume 

requirements of the RFS program, but instead would merely help to ensure that those volume 

requirements are met. Likewise, the proposed changes to the regulations governing export of 

renewable fuel, separation of RINs from wet gallons, and qualifying uses of renewable fuel 

would also be intended to ensure that the RFS volume requirements are met with qualifying 

renewable fuel. As a result, there would be no change to the expected impacts of the RFS 

program in terms of volumes of renewable fuel consumed or the associated GHG or energy

security benefits. Instead, the primary impacts of the quality assurance program would be 

improved liquidity in the RIN market and improved opportunities for smaller renewable fuel 

producers to sell their RINs.

The quality assurance program that we are proposing in today's action would be 

voluntary. As a result, there would be no obligatory costs. There would likely be costs 

associated with an individual party's participation in the quality assurance program. However, 

the fact that the quality assurance program would be voluntary means that a decision to 

participate will be made independently by each regulated party, and thus we cannot estimate the 

costs that might be incurred for the nation as a whole. Furthermore, any costs incurred would 

only be borne if the industry believed that those costs were less than current costs in the 

marketplace resulting from efforts to verify, acquire, and trade RINs. 

In the discussion below, Section IX.A addresses direct costs associated with 

implementing Quality Assurance Plans (QAPs), such as the time required to develop a QAP and 

the associated recordkeeping and reporting, site visits to renewable fuel production facilities, 

costs for accounting services, etc. Section IX.B addresses potential costs associated with RIN 

replacement mechanisms that would be required under Option A.

A. Direct Costs for Implementing QAPs

Currently, there are approximately 485 biofuel producers operating more than 600 biofuel 

production facilities. These numbers are expected to increase as the biofuel market expands. 

While it is unlikely that all biofuel producers would opt to participate in the quality assurance 

program, that was the assumption for these cost estimates in order to reflect the maximum 

potential cost of the program. 

EPA staff met with seven parties who are already developing RIN validation programs 

for the biofuels industry. We also met with several industry groups and obligated parties which 

have been affected by RIN fraud. These parties all provided informal estimates of the costs 
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associated with this type of quality assurance program which was used to inform our cost 

calculations.

For those biofuel producers who opt into the quality assurance program, each biofuel 

production facility must be visited and assessed as part of any audit conducted under the 

proposed quality assurance program. An auditor would use an approved QAP as the basis for the 

verification of biofuel produced and RINs generated at a facility. In order to verify production, 

the auditor must conduct site visits, review documents, and contact entities that do business with 

the facility. The proposed components of audits are described in Section VII.

We are proposing that production facilities should be visited on a quarterly basis. New 

production facilities would be visited prior to verification of any RINs and, subsequently, 

according to the standard quarterly schedule. We expect that each visit could take from one to 

several days, depending on the size and complexity of the facility, the availability of records, 

changes since the last audit, etc. For some components of the audit, we propose to require 

ongoing, or batch-level, monitoring. The QAP would be required to provide details of the means 

for collection and evaluation of the data collected on an ongoing basis.

Tables IX.A-1, IX.A-2, and IX.A-3 below itemize the activities anticipated for each 

biofuel production facility audit. The estimates include costs incurred by the biofuel producer 

(Table IX.A-1), the auditor (Table IX.A-2), and the EPA (Table IX.A-3). This table does not 

include costs associated with the RIN replacement mechanism that some QAP providers may

acquire to cover loss in the event of RIN fraud. These costs are discussed separately below. 

Table IX.A-1

Costs to the Biofuel Producer for Implementing a QAP

Category

Manager

Time

Prof./Tech.

Time

Clerical

Time

No.

Per yr.

Capital

$

Total

Hours

Total

$

Site Visit 1 16 4 2 42 3,588

Reporting 2 12 4 3 54 4,560

Recordkeeping 0 0 2 3 6 222

TOTAL 102 8,370

Table IX.A-2

Costs to the QAP Auditor for Implementing a QAP

Category

Manager

Time

Prof./Tech.

Time

Clerical

Time

No.

Per yr.

Capital

$

Total

Hours

Total

$

Auditor:

Contract Init. 4 4 2 1 530 10 1,428

Site Visit 4 16 0 1 1,060 20 3,036

Follow-up 2 28 5 3 1,060 105 12,459

Monitoring 2 50 0 52 5,020

Consultants 4 1,000 4,000

Reporting 0 4 12 16 1,656

QAP Prep 2 16 4 22 3,808
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EMTS 0 25 0 25 2,400

Recordkeeping 0 12 25 37 2,077

TOTAL 250 38,839

Table IX.A-3

Costs to the EPA for Implementing a QAP

Category

Manager

Time

Prof./Tech.

Time

Clerical

Time

Capital

$

Total

Hours

Total

$

Implementation 3 3 267

EMTS Data 

Management

1 1 89

TOTAL 4 356

1. Time and Cost Assumptions

The specific times estimated for each task are shown in Tables IX.A-1, IX.A-2, and 

IX.A-3. These estimates are based on a number of basic assumptions. An initial site visit of the 

facility to be audited is assumed to require two days, and include estimated travel and per diem 

costs. For simplicity, we have estimated an average $600 for airfare, $150 for lodging, and $80 

for the per diem expenses. It is assumed that a plant manager would meet briefly with the 

auditor, and that a plant chemist or other professional would escort the auditor throughout the 

visit. Some clerical support would be required to locate files for the related document reviews. 

It was assumed that an auditor would travel and spend half a day on contract initiation. 

Any follow up site visits were assumed to be shorter in duration, as the auditor would now be 

familiar with the facility and its normal operation. A substantial amount of the auditor’s time 

would be spent in follow up documentation of the facility, such as checking feedstock suppliers, 

process fuel suppliers, doing volume and mass balances, and monitoring the ongoing operation 

of the facility. It was assumed that an auditor would employ specialized consultants and/or local 

agents to perform some portion of the audit support.

In addition to tracking facility operation, an auditor would also be responsible for 

preparing the QAP, maintaining recordkeeping, monitoring and/or brokering activities on EMTS, 

and assisting with RFS reporting requirements. 

2. Labor Cost Assumptions

The labor costs used in this cost estimation are average mean wages for each labor 

category, as provided in the Bureau of Labor and Statistics Report dated May 2011. Based on 

this data, we used the following hourly wages for each employee type:

Managerial $55.04 per hour

Technical/Professional $47.81 per hour

Clerical $18.35 per hour
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Doubling to account for company overhead and benefits, and for convenience, rounding up to the 

dollar, gives the following hourly rates:

Managerial $110 per hour

Technical/Professional $96 per hour

Clerical $37 per hour

For the Agency costs, the work was assumed to be performed by a GS-13 technical employee, 

doubled and rounded up, for an hourly rate of $89.

3. Cost Estimate Results

We made our total cost estimate based on the number of registered biofuel producers in 

the CDX as of July 2011, assuming that all parties choose to participate in the voluntary quality

assurance program. This assumes 485 RIN generators with 600 biofuel production facilities. 

This results in a total cost for the program of $27,576,450. If all parties are participating in the 

program and all RINs are verified, this results in a per RIN cost of less that $0.01. However, 

these costs are assumed to be linear and there are no economies of scale. Therefore, the per RIN 

cost will vary depending on the number of RINs generated by each fuel producer. The following 

section includes a number of scenarios based on the size of the plant, and the QAP options that 

can be chosen.

B. Costs for RIN Replacement Mechanisms

For reasons described previously, some QAP providers may choose a replacement 

mechanism to insure against invalid RINs. Such mechanisms would be required under Option A, 

but would not be required under Option B. There is large uncertainty in estimating the costs of 

these mechanisms because it is an entirely new market. Informal discussions with potential QAP 

auditors, as well as other parties involved in similar markets or financial surety mechanisms in 

general, have suggested a broad range of potential costs. For these reasons the costs for such a 

mechanism were not included in the analysis above, and EPA welcomes comments on the cost 

impacts of any potential financial surety mechanisms. 

In order to fully inform cost impacts of the various QAP options, we discuss the relevant 

cost factors of the three possible types of mechanisms discussed in Section IV above. The 

discussion includes RIN banks, RIN escrow accounts, and other traditional financial instruments. 

As noted previously, these mechanisms are not intended to be inclusive of all possible ways a 

RIN replacement mechanism could work, and are merely suggestions of potential pathways 

Option A auditors might follow.

A RIN bank is a managed repository of valid audited RINs which are available to all 

members of the bank for replacement purposes. The costs associated with a RIN bank are 
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directly proportional to the value of the RINs banked, and the number of banked RINs required 

to meet the obligations of the bank members. There would also be bank management costs, 

which would be impacted by the number of bank members, and how the bank is managed in 

terms of RIN deposit, withdrawal, update, and replacement. In addition, bank managers would 

need to come up with a system to maintain current year RINs in the bank, which may involve 

additional costs for the sale of expiring RINs and any differential in the value of the RIN at the 

time of deposit and the time of sale or release. These costs would be born by the members of the 

bank, but would likely be passed on to RIN purchasers to the maximum extent possible. These 

parameters will vary so much from bank to bank that it is impossible to estimate an average per 

RIN cost across the entire program. However, it is reasonable to assume that the cost would be 

effectively the per RIN value of banked RINs plus some fractional percentage to cover 

management costs.

A RIN escrow account would work very much like a RIN bank, but would be funded by a 

single auditor instead of a group of auditors, and would be supervised and managed by a thirdparty escrow agent. The advantage of this option is that an auditor would have total control over 

the funding of the escrow. However, an auditor using an escrow account would be solely

responsible for the funding of the account, and so would be required to maintain a balance equal 

to a much larger percentage of its potential replacement responsibility than it might be if using a 

RIN bank. The cost of a RIN escrow account is entirely dependent upon the number and value 

of the RINs covered by the escrow. 

Traditional financial instruments, such as surety bonds, letters of credit, or expanded 

insurance coverage, are also options under Option A. The costs for this type of coverage is 

dependent on the level of risk determined by the surety provider, as well as the value of the RINs 

to be covered. This type of financial instrument would most likely provide a maximum dollar 

amount of coverage, which would translate into a per RIN cost depending on the number of 

RINs covered, relative to the number of RINs audited by the the QAP provider purchasing the 

financial protection. EPA has learned that the cost of these policies vary greatly among the 

parties looking into these options. For this reason, this type of financial protection was not 

included in the cost analysis outlined above. 
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X. Public Participation

We request comment by [Insert date 30 days after publication in the Federal 

Register] on all aspects of this proposal. This section describes how you can participate in this 

process.

A. How do I submit comments?

We are opening a formal comment period by publishing this document. We will accept 

comments through [insert date 30 days after date of publication in the Federal Register]. If 

you have an interest in the program described in this document, we encourage you to comment 

on any aspect of this rulemaking. We request comment on various topics throughout this 

proposal. 

Your comments will be most useful if you include appropriate and detailed supporting 

rationale, data, and analysis. If you disagree with parts of the proposed program, we encourage 

you to suggest and analyze alternate approaches to meeting the goals described in this proposal. 

You should send all comments, except those containing proprietary information, to our Air 

Docket (see ADDRESSES) before the end of the comment period. If you submit proprietary

information for our consideration, you should clearly separate it from other comments by

labeling it ‘‘Confidential Business Information (CBI).’’ You should send CBI directly to the 

contact person listed under FOR FURTHER INFORMATION CONTACT instead of the public 

docket. This will help ensure that no one inadvertently places proprietary information in the 

docket. If you want us to use your confidential information as part of the basis for the final rule, 

you should send a non-confidential version of the document summarizing the key data or 

information. We will disclose information covered by a claim of confidentiality only through the 

application of procedures described in 40 CFR Part 2. If you do not identify information as 

confidential when we receive it, we may make it available to the public without notifying you.

B. Will there be a public hearing?

We will hold the hearing on XXXdateXXX at XXXlocationXXX. It will start at 9:00 

a.m. and continue until everyone has had a chance to speak. If you would like to present 

testimony at the public hearing, we ask that you notify the contact person listed above under 

FOR FURTHER INFORMATION CONTACT at least ten days before the hearing. You should 

estimate the time you will need for your presentation and identify any needed audio/visual 

equipment. We suggest that you bring copies of your statement or other material for the EPA 

panel and the audience. It would also be helpful if you send us a copy of your statement or other 

materials before the hearing. We will make a tentative schedule for the order of testimony based 

on the notifications we receive. This schedule will be available on the morning of the hearing. 

In addition, we will reserve a block of time for anyone else in the audience who wants to give 

testimony. We will conduct the hearing informally, and technical rules of evidence won’t apply. 
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We will arrange for a written transcript of the hearing and keep the official record of the hearing 

open for 30 days to allow you to submit supplementary information. You may make 

arrangements for copies of the transcript directly with the court reporter.
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XI. Statutory and Executive Order Review

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 

13563: Improving Regulation and Regulatory Review

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a 

"significant regulatory action” because it raises novel legal and policy issues. Accordingly EPA 

submitted this action to the Office of Management and Budget (OMB) for review under 

Executive Orders 12866 and 13563 and any changes made in response to OMB 

recommendations have been documented in the docket for this action. 

This action is being proposed today as a result of several cases of fraudulently generated 

RINs. As discussed above, several biodiesel production companies have been identified as 

having generated RINs that did not represent qualifying renewable fuel. While these invalid 

RINs represented a very small amount (about 5%) of the nationwide biodiesel volume in the

2009 - 2011 timeframe, the net result is that this fraud has impacted the liquidity of the biodiesel 

RIN market as some biodiesel RINs are perceived as having less value than others. In addition, 

as a result of fraudulent activities, obligated parties have been subject to monetary penalties and 

the additional cost of purchasing new RINs to cover the invalid RINs, even though they

purchased the original RINs in good faith believing that they were valid. These issues have 

raised novel legal and policy issues for the RFS program and EPA believes it is necessary put in 

place an additional regulatory mechanism that could provide an alternative way to assure that 

RINs used for compliance are valid to restore confidence in the RIN market and level the playing 

field for large and small producers.

B. Paperwork Reduction Act

The information collection requirements in this proposed rule have been submitted for 

approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act, 

44 U.S.C. 3501 et seq. The Information Collection Request (ICR) document prepared by EPA 

has been assigned EPA ICR number 2473.01.

The RFS program requires that specified volumes of renewable fuel be used as 

transportation fuel, heating oil, and/or jet fuel each year. Obligated parties demonstrate 

compliance with the RFS standards through the acquisition of unique Renewable Identification 

Numbers (RINs) assigned by the producer or importer to every batch of renewable fuel produced 

or imported. Validly generated RINs show that a certain volume of qualifying renewable fuel 

was produced or imported. The RFS program also includes provisions stipulating the conditions 

under which RINs are invalid, the liability carried by a party that transfers or uses an invalid 

RIN, and how invalid RINs must be treated.

In this action we are proposing a voluntary quality assurance program intended to provide 

a more structured way to assure that the RINs entering commerce are valid. The voluntary
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quality assurance program for RINs would provide a means for regulated parties to ensure that 

RINs are properly generated, through audits of production facilities conducted by independent 

third parties using quality assurance plans (QAPs). 

The annual public reporting and recordkeeping burden for this collection is estimated to 

be 320 hours per response. A document entitled “Supporting Statement for Renewable Fuels 

Standard (RFS2) Voluntary RIN Quality Assurance Program (Proposed Rule)” has been placed 

in the public docket. The supporting statement provides a detailed explanation of the Agency’s 

estimates by collection activity. The estimates contained the supported statement are briefly 

summarized here:

TOTAL NO. OF RESPONDENTS: 485

TOTAL BURDEN HOURS: 192,270

TOTAL COST TO RESPONDENTS: $ 4,062,000 

Burden is defined at 5 CFR 1320.3(b).

An agency may not conduct or sponsor, and a person is not required to respond to, a 

collection of information unless it displays a currently valid OMB control number. The OMB 

control numbers for EPA's regulations in 40 CFR are listed in 40 CFR Part 9. 

To comment on the Agency's need for this information, the accuracy of the provided 

burden estimates, and any suggested methods for minimizing respondent burden, EPA has 

established a public docket for this rule, which includes this ICR, under Docket ID number EPAHQ-OAR-2012-0621. Submit any comments related to the ICR to EPA and OMB. See 

ADDRESSES section at the beginning of this notice for where to submit comments to EPA. 

Send comments to OMB at the Office of Information and Regulatory Affairs, Office of 

Management and Budget, 725 17th Street, NW, Washington, DC 20503, Attention: Desk Office 

for EPA. Since OMB is required to make a decision concerning the ICR between 30 and 60 days 

after [Insert date of publication in the Federal Register.], a comment to OMB is best assured 

of having its full effect if OMB receives it by [Insert date 30 days after publication in the 

Federal Register.]. The final rule will respond to any OMB or public comments on the 

information collection requirements contained in this proposal.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act generally requires an agency to prepare a regulatory

flexibility analysis of any rule subject to notice and comment rulemaking requirements under the 

Administrative Procedure Act or any other statute unless the agency certifies that the rule will 

not have a significant economic impact on a substantial number of small entities. Small entities 

include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of this rule on small entities, small entity is defined as: (1) 

A small business as defined by the Small Business Administration’s (SBA) regulations at 13 

CFR 121.201 (see table below); (2) a small governmental jurisdiction that is a government of a 
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city, county, town, school district or special district with a population of less than 50,000; and (3) 

a small organization that is any not-for-profit enterprise which is independently owned and 

operated and is not dominant in its field. The following table provides an overview of the 

primary SBA small business categories potentially affected by this regulation: 

Industry Defined as small 

entity by SBA if:

NAICS acodes

Petroleum refineries ≤1,500 employees. 324110

a North American Industrial Classification System.

The program proposed in today’s action is a voluntary quality assurance program 

intended to provide a more structured way to assure that RINs entering commerce are valid. As 

a result of the recent fraud issue, obligated parties are reluctant to purchase RINs from smaller 

refiners because of the uncertainty of their validity. While this voluntary program could be 

beneficial for both larger and smaller refineries it could be particularly beneficial for smaller 

petroleum refineries if they choose to participate. In the current climate, these smaller producers 

have been forced to offer their RINs at a significant discount relative to RINs from larger 

producers, assuming they can find obligated parties or distributors willing to purchase them at 

all. While there will be some cost to opt into the program, we believe these costs will be offset 

by leveling the playing field between larger producers and small producers, allowing small 

producers to effectively compete in the market. 

After considering the economic impacts of this action on small entities, I certify that this 

action will not have a significant economic impact on a substantial number of small entities. This 

action will not impose any requirements on small entities. We continue to be interested in the 

potential impacts of the proposed rule on small entities and welcome comments on issues related 

to such impacts.

D. Unfunded Mandates Reform Act

This rule does not contain a Federal mandate that may result in expenditures of $100 

million or more for State, local, and tribal governments, in the aggregate, or the private sector in 

any one year. The agency has determined that this action does not contain a Federal mandate that 

may result in expenditures of $100 million or more for the private sector in any one year. 

Because the program outlined in this proposal is optional, entities subject to this rule will have 

the flexibility to participate or not. Thus, this action is not subject to the requirements of sections 

202 or 205 of the UMRA. This action is also not subject to the requirements of section 203 of 

the UMRA because it contains no regulatory requirements that might significantly or uniquely 

affect small governments. 
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E. Executive Order 13132 (Federalism)

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires 

EPA to develop an accountable process to ensure “meaningful and timely input by State and 

local officials in the development of regulatory policies that have federalism implications.” 

“Policies that have federalism implications” is defined in the Executive Order to include 

regulations that have “substantial direct effects on the States, on the relationship between the 

national government and the States, or on the distribution of power and responsibilities among 

the various levels of government.” 

This action does not have federalism implications. It will not have substantial direct 

effects on the States, on the relationship between the national government and the States, or on 

the distribution of power and responsibilities among the various levels of government, as 

specified in Executive Order 13132. These rules will apply to manufacturers of on-highway

engines and not to state or local governments. Thus, Executive Order 13132 does not apply to 

this action. 

In the spirit of Executive Order 13132, and consistent with EPA policy to promote 

communications between EPA and State and local governments, EPA specifically solicits 

comments on this proposed rule from State and local officials.

F. Executive Order 13175 (Consultation and Coordination with Indian Tribal 

Governments)

This action does not have tribal implications, as specified in Executive Order 13175 (65 

FR 67249, November 9, 2000). This rule will be implemented at the Federal level and impose 

compliance costs only on engine manufacturers who elect to participate in the program. Thus, 

Executive Order 13175 does not apply to this rule.

EPA specifically solicits additional comment on this proposed action from tribal officials.

G. Executive Order 13045: Protection of Children from Environmental Health Risks 

and Safety Risks

EPA interprets Executive Order 13045 as applying only to those regulatory actions that 

are based on health or safety risks, such that the analysis required under section 5-501 of the 

Order has the potential to influence the regulation. This rule is not subject to Executive Order 

13045 because it does not establish an environmental standard intended to mitigate health or 

safety risks.
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H. Executive Order 13211 (Energy Effects)

This action is not a “significant energy action” as defined in Executive Order 13211 (66 

FR 28355 (May 22, 2001)), because it is not likely to have a significant adverse effect on the 

supply, distribution, or use of energy. We have concluded that any energy impacts of this rule 

will be negligible because the voluntary QAP audit process would ensure that the volume 

consumption goals of the statute are met while addressing the unique features of the RFS 

program that have resulted in inefficiencies and poor liquidity in the RIN market.

I. National Technology Transfer Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 

(“NTTAA”), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs the agencies to use 

voluntary consensus standards in its regulatory activities unless to do so would be inconsistent 

with applicable law or otherwise impractical. Voluntary consensus standards are technical 

standards (e.g., materials, specifications, test methods, sampling procedures, and business 

practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA 

directs EPA to provide Congress, through OMB, explanations when the EPA decides not to use 

available and applicable voluntary consensus standards.

This proposed rulemaking does not involve technical standards. Therefore, EPA is not 

considering the use of any voluntary consensus standards. 

J. Executive Order 12898: Federal Actions to Address Environmental Justice in 

Minority Populations and Low-Income Populations

Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive 

policy on environmental justice. Its main provision directs federal agencies, to the greatest 

extent practicable and permitted by law, to make environmental justice part of their mission by

identifying and addressing, as appropriate, disproportionately high and adverse human health or 

environmental effects of their programs, policies, and activities on minority populations and lowincome populations in the United States. 

Today’s action proposes a voluntary set of regulatory provisions that could provide 

regulated parties with a specific mechanism for demonstrating that they have conducted due 

diligence to verify the validity of RINs. Therefore, EPA has determined that this action will not 

have disproportionately high and adverse human health or environmental effects on minority or 

low-income populations. 
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XII. Statutory Authority

Statutory authority for the rule finalized today can be found in section 211 of the Clean 

Air Act, 42 U.S.C. 7545. Additional support for the procedural and compliance related 

aspects of today’s rule, including the recordkeeping requirements, come from Sections 

114, 208, and 301(a) of the Clean Air Act, 42 U.S.C. 7414, 7542, and 7601(a).

List of Subjects in 40 CFR Part 80

Administrative practice and procedure, Air pollution control, Diesel fuel, Environmental 

protection, Fuel additives, Gasoline, Imports, Oil imports, Petroleum.

Dated: _______________________

______________________________

Lisa P. Jackson,

Administrator.
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For the reasons set forth in the preamble, 40 CFR part 80 is amended as follows:

PART 80—REGULATION OF FUELS AND FUEL ADDITIVES

1. The authority citation for part 80 continues to read as follows:

Authority: 42 U.S.C. 7414, 7542, 7545, and 7601(a).

Subpart M—[Amended]

2. Section 80.1401 is amended by adding the definitions of "A-RIN", "B-RIN", "Independent 

Third-Party Auditor", "Quality assurance plan", "Quality assurance audit", and "Verified RIN" to 

read as follows:

§80.1401 Definitions.

* * * * *

A-RIN means a RIN verified by a registered independent third-party auditor using a QAP that 

has been approved under §80.1469(a) following the audit process described in §80.1472.

B-RIN means a RIN verified by a registered independent third-party auditor using a QAP that 

has been approved under §80.1469(b) following the audit process described in §80.1472.

Independent Third-Party Auditor means a party meeting the requirements of §80.1471(b) that 

conducts QAP audits and verifies RINs. 

Quality Assurance Plan, or QAP, means the list of elements that an independent third-party 

auditor will check to verify that the RINs generated by a renewable fuel producer or importer are 

valid. 

Quality Assurance Audit means an audit of a renewable fuel production facility conducted by an 

independent third-party auditor in accordance with a QAP that meets the requirements of 

§80.1469.

Verified RIN means a RIN generated by a renewable fuel producer that was subject to a QAP 

audit executed by an independent third-party auditor, and determined by the independent thirdparty auditor to be valid. Verified RINs include both A-RINs and B-RINs.

* * * * *
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3. Section 80.1426 is amended as follows:

a. By revising paragraph (a)(1)(i)

b. adding paragraphs (a)(1)(iii) and (a)(1)(iv).

c. By revising paragraphs (c)(1) and (c)(6).

d. By revising paragraphs (f)(4)(i)(A)(1) and (f)(4)(i)(B).

e. By adding paragraph (f)(4)(iii).

e. By revising paragraph (f)(12).

f. By adding paragraph (f)(13).

§ 80.1426 How are RINs generated and assigned to batches of renewable fuel by 

renewable fuel producers or importers?

(a) * * *

(1) * * *

(i) Qualifies for a D code pursuant to § 80.1426(f), or EPA has approved a petition for 

use of a D code pursuant to § 80.1416, and is demonstrated pursuant to the reporting 

requirements of § 80.1451 and the recordkeeping requirements of § 80.1454, or other 

records maintained by the producer, to be produced in accordance with the applicable 

pathway listed in Table 1 to § 80.1426(f) or a petition approved by EPA pursuant to 

§ 80.1416.

* * *

(ii) Is designated on a product transfer document (PTD) for use as transportation fuel, 

heating oil, or jet fuel in accordance with §80.1453(a)(12); and 

(iv) For renewable electricity, biogas, renewable naptha, biobutanol, or any other 

renewable fuel designated by EPA that are typically not used as a transportation fuel, 

is distributed and sold in accordance with §80.1426(f)(10), §80.1426(f)(11), or 

§80.1426(f)(12), as appropriate. 

* * * * *

(c) * * *

(1) Fuel producers and importers may not generate RINs for fuel that does not satisfy the 

requirements of subsection (a)(1) of this section.

* * * * *

(6) A party is prohibited from generating RINs for a volume of fuel that it produces if the 

fuel has been produced by a process that uses a renewable fuel as a feedstock, and the 

renewable fuel that is used as a feedstock was produced by another party, except that 
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RINs may be generated for such fuel if allowed by EPA in response to a petition 

submitted pursuant to §80.1416 and the petition approval specifies a mechanism to 

prevent double counting of RINs.

* * * * *

(f) * * *

(4) * * *

(i) * * *

(A) * * *

(1) VRIN shall be calculated according to the following formula:

VRIN = EV * Vs * FER / (FER + FENR)

Where:

VRIN = RIN volume, in gallons, for use in determining the number of gallon-RINs 

that shall be generated for the batch.

EV = Equivalence value for the batch of renewable fuel per §80.1415, subject to 

qualification in paragraph (f)(4)(iii) of this section.

Vs = Standardized volume of the batch of renewable fuel at 60 oF, in gallons, 

calculated in accordance with paragraph (f)(8) of this section.

FER = Feedstock energy from renewable biomass used to make the transportation 

fuel, in Btu.

FENR =Feedstock energy from non-renewable feedstocks used to make the 

transportation fuel, heating oil, or jet fuel, in Btu.

* * * * *

(B) Method B. VRIN shall be calculated according to the following formula:

VRIN = EV * Vs * R

Where:

VRIN = RIN volume, in gallons, for use in determining the number of gallon-RINs 

that shall be generated for the batch.

EV = Equivalence value for the batch of renewable fuel per §80.1415, subject to 

qualification in paragraph (f)(4)(iii) of this section.

Vs = Standardized volume of the batch of renewable fuel at 60 oF, in gallons, 

calculated in accordance with paragraph (f)(8) of this section.
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R = The renewable fraction of the fuel as measured by a carbon-14 dating test 

method as provided in paragraph (f)(9) of this section.

* * * *

(iii) In determining the RIN volume VRIN according to paragraph (f)(4)(i)(A) or 

(f)(4)(i)(B) of this section, the equivalence value used to determine VRIN which is 

calculated according to §80.1415 shall use a value of 1.0 to represent R, the renewable 

content of the renewable fuel. 

* * * *

(12)(i) For purposes of this section, renewable naptha, biobutanol, or any other renewable 

fuel designated by EPA that is typically not used as a transportation fuel, is 

considered renewable fuel and the producer may generate RINs if all of the following 

apply:

(A) The fuel is produced from renewable biomass and qualifies for a D code in Table 

1 to this section or has received approval for use of a D code by the 

Administrator;

(B) The fuel producer has entered into a written contract for the sale and use of a 

specific quantity of fuel derived from renewable biomass sources with a party that 

uses that fuel for transportation purposes;

(C) The fuel produced from the renewable naptha, biobutanol, or other designated 

renewable fuel for which RINs were generated was sold for use as a 

transportation fuel and for no other purposes; and

(D) The renewable naptha, biobutanol, or other designated renewable fuel is used as 

or in a transportation fuel.

(ii) Reserved.

(iii) Reserved.

(13) For purposes of Table 1 to this section, process heat produced from combustion of gas at 

a renewable fuel facility is considered derived from biomass if the gas is biogas.

(i) For biogas directly transported to the facility without being placed in a commercial 

distribution system, all of the following conditions must be met:

(A) The producer has entered into a written contract for the procurement of a 

specific volume of biogas with a specific heat content.

(B) The volume of biogas was sold to the renewable fuel production facility, and to 

no other facility.

(C) The volume and heat content of biogas injected into the pipeline and the volume 

of gas used as process heat are measured by continuous metering.
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(ii) For biogas that has been gathered, processed and injected into a common carrier 

pipeline, all of the following conditions must be met:

(A) The producer has entered into a written contract for the procurement of a 

specific volume of biogas with a specific heat content.

(B) The volume of biogas was sold to the renewable fuel production facility, and to 

no other facility.

(C) The volume of biogas that is withdrawn from the pipeline is withdrawn in a 

manner and at a time consistent with the transport of fuel between the injection 

and withdrawal points.

(D) The volume and heat content of biogas injected into the pipeline and the volume 

of gas used as process heat are measured by continuous metering.

(E) The common carrier pipeline into which the biogas is placed ultimately serves 

the producer's renewable fuel facility.

(iii) The process heat produced from combustion of gas at a renewable fuel facility

described in paragraph (f)(12)(i) of this section shall not be considered derived from 

biomass if any other party relied upon the contracted volume of biogas for the 

creation of RINs.

4. Section 80.1429 is amended by adding paragraph (b)(10) and revising paragraph (f) to read as 

follows:

§ 80.1429 Requirements for separating RINs from volumes of renewable fuel.

* * * * *

(b) * * *

(10) Any party that produces a volume of renewable fuel may separate any RINs that have been 

generated to represent that volume of renewable fuel or that blend if the separated RINs are 

retired to replace invalid RINs according to §80.1474.

* * * * *

(f) [Reserved]

* * * * *

5. Section 80.1430 is amended by .... to read as follows:
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§ 80.1430 Requirements for exporters of renewable fuel.

(a) Any party that owns any amount of renewable fuel, whether in its neat form or blended, that 

is exported from any of the regions described in §80.1426(b) shall acquire sufficient RINs to 

comply with all applicable Renewable Volume Obligations under paragraphs (b) through (e) 

of this section representing the exported renewable fuel.

(b) Exporter Renewable Volume Obligations. An exporter of renewable fuel shall determine its 

Exporter Renewable Volume Obligations from the volumes of the renewable fuel exported.

(1) Cellulosic biofuel. 

ERVOCB,k = VOLk* EVk

Where:

ERVOCB,k= The Exporter Renewable Volume Obligation for cellulosic biofuel for 

discrete volume k in gallons.

k = A discrete volume of renewable fuel that the exporter knows or has reason 

to know is cellulosic biofuel that is exported in a single shipment.

VOLk= The standardized volume of discrete volume k, in gallons, calculated in 

accordance with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

(2) Biomass-based diesel. 

ERVOBBD,k = VOLk* EVk

Where:

ERVOBBDI,k= The Exporter Renewable Volume Obligation for biomass-based diesel for 

discrete volume k, in gallons.

k = A discrete volume of renewable fuel that is biodiesel or renewable diesel 

and is exported in a single shipment.

VOLk= The standardized volume of discrete volume k calculated in accordance 

with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

(3) Advanced biofuel. 

ERVOAB,k= VOLk* EVk

Where:

ERVOAB,k= The Exporter Renewable Volume Obligation for advanced biofuel for 

discrete volume k, in gallons.
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k = A discrete volume of renewable fuel that is advanced biofuel (including 

biomass-based diesel, renewable diesel, cellulosic biofuel and other 

advanced biofuel) and is exported in a single shipment.

VOLk= The standardized volume of discrete volume k, in gallons, calculated in 

accordance with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

(4) Renewable fuel. 

ERVORF,i= VOLk* EVk

Where:

ERVORF,i= The Renewable Volume Obligation for renewable fuel for discrete volume 

k, in gallons.

k = A discrete volume of exported renewable fuel that is exported in a single 

shipment.

VOLk= The standardized volume of discrete volume k, in gallons, calculated in 

accordance with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

* * * * *

(e) For renewable fuels that are in the form of a blend at the time of export, the exporter shall 

determine the volume of exported renewable fuel based on one of the following:

* * * * *

6. Section 80.1431 is amended by revising paragraph (a)(1)(viii) and paragraph (b) to read as 

follows:

§ 80.1431 Treatment of invalid RINs.

(a) * * *

(1) * * *

(viii) [Reserved]

* * * *

(b) Except as provided in § 80.1473, the following provisions apply in the case of RINs that are 

invalid:
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(1) Upon determination by any party that RINs owned are invalid, the party must keep 

copies and adjust its records, reports, and compliance calculations in which the invalid RINs 

were used. The party must retire the invalid RINs in the applicable RIN transaction reports under 

§ 80.1451(c)(2) for the quarter in which the RINs were determined to be invalid.

(2) Invalid RINs cannot be used to achieve compliance with the Renewable Volume 

Obligations of an obligated party or exporter, regardless of the party's good faith belief that the 

RINs were valid at the time they were acquired.

(3) Any valid RINs remaining after invalid RINs are retired must first be applied to 

correct the transfer of invalid RINs to another party before applying the valid RINs to meet the 

party's Renewable Volume Obligations at the end of the compliance year.

7. Section 80.1433 is added to read as follows:

§80.1433 Requirements for parties that designate or use fuel for which RINs were 

generated for an application that is not transportation fuel, heating oil, or jet fuel.

(a) Any party that designates or uses any amount of fuel originally produced as renewable fuel, 

whether in its neat form or blended, for an application that is not transportation fuel, heating 

oil, or jet fuel shall retire an appropriate number and type of RINs according to one of the 

following equations and as specified in paragraph (b).

(1) Except as provided as (a)(5), Cellulosic biofuel. 

RINRETCB,i= Σ(VOLk* EVk)i

Where:

RINRETCB,i= The quantity of cellulosic biofuel RINs that must be retired for day i, in 

gallons.

k = A discrete volume of fuel which the party used in an application other than 

as transportation fuel, heating oil or jet fuel and which the party knows or 

has reason to know would have qualified as cellulosic biofuel if not put to 

a non-qualifying use. 

VOLk= The standardized volume of discrete volume k, in gallons, calculated in 

accordance with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

(2) Except as provided as (a)(5), Biomass-based diesel. 

RINRETBBD,i= Σ(VOLk* EVk)i

Where:
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RINRETBBD,i= The quantity of biomass-based diesel RINs that must be retired for day i, 

in gallons.

k = A discrete volume of fuel which the party used in an application other than 

as transportation fuel, heating oil or jet fuel and which the party knows or 

has reason to know would have qualified as biomass-based diesel if not 

put to a non-qualifying use. 

VOLk= The standardized volume of discrete volume k, in gallons, calculated in 

accordance with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

(3) Advanced biofuel. 

RINRETAB,i= Σ(VOLk* EVk)i

Where:

RINRETAB,i= The quantity of advanced biofuel RINs that must be retired for day i, in 

gallons.

k = A discrete volume of fuel which the party used in an application other than 

as transportation fuel, heating oil or jet fuel and which the party knows or 

has reason to know would have qualified as advanced biofuel if not put to 

a non-qualifying use..

VOLk= The standardized volume of discrete volume k, in gallons, calculated in 

accordance with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

(4) Renewable fuel. 

RINRETRF,i= Σ(VOLk* EVk)i

Where:

RINRETRF,i= The quantity of renewable fuel RINs that must be retired for day i, in 

gallons.

k = A discrete volume of fuel which the party used in an application other than 

as transportation fuel, heating oil or jet fuel and which the party knows or 

has reason to know would have qualified as renewable fuel if not put to a 

non-qualifying use.

VOLk= The standardized volume of discrete volume k,, in gallons, calculated in 

accordance with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

(5) If the party has reason to know that the fuel would have qualified as cellulosic diesel if 

not put to a non-qualifying use, he must choose either the formula specified in paragraph 
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(a)(1) or that in paragraph (a)(2) to calculate the number and type of RINs that must be 

retired.

(b) For the purposes of calculating the number of RINs that must be retired under paragraphs (a) 

of this section:

(1) If the equivalence value for the discrete volume k can be determined pursuant to 

§80.1415 based on its composition, then the appropriate equivalence value shall be 

used in the calculation pursuant to paragraph (a).

(2) If the discrete volume k is known to be biomass-based diesel but the composition is 

unknown, the EVk shall be 1.5.

(3) If neither the category nor composition of discrete volume k can be determined, the 

EVk shall be 1.0.

(c) VOLk shall be based on one of the following:

(1) Information from the supplier of the blend of the concentration of fuel originally

produced as renewable fuel in the blend; 

(2) Determination of the renewable portion of the blend using Method B or Method C of

ASTM D 6866 (incorporated by reference, see §80.1468), or an alternative test 

method as approved by the EPA; or 

(3) Assuming the maximum concentration of the renewable fuel in the blend as allowed 

by law and/or regulation.

(d) [Reserved]

(e) All RINs retired pursuant to this section shall be identified in EMTS according the following 

schedule:

(1) Within ten (10) business days of the designation or use of a fuel for which RINs were 

generated for a use other than as transportation fuel, heating oil, or jet fuel, where 

assigned RINs were received with the fuel.

(2) Within twenty (20) business days of the designation or use of a fuel for which RINs 

were generated for a use other than as transportation fuel, heating oil, or jet fuel, 

where assigned RINs were not received with the renewable fuel.

(f) Any volume of fuel which is designated or used for a purpose other than as transportation 

fuel, heating oil or jet fuel cannot be redesignated or used as renewable fuel.

8. Section 80.1450 is amended by revising paragraph (g) and adding paragraph (j) to read as 

follows:

§ 80.1450 What are the registration requirements under the RFS program?
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* * * * *

(g) Any independent third-party auditor described in §80.1471 must register with EPA as an 

independent third-party auditor and receive an EPA issued company identification number prior 

to conducting quality assurance audits pursuant to §80.1472. Registration information must be 

submitted at least 30 days prior to conducting audits of renewable fuel production facilities. The 

independent third-party auditor must provide to EPA the following:

(1) The information specified under § 80.76, if such information has not already been 

provided under the provisions of this part.

(2) Documentation of professional qualifications as described in §80.1450(b)(2)(i)(A) and 

§80.1450(b)(2)(i)(B).

(3) Documentation of professional liability insurance as described in §80.1471(c).

(4) Any quality assurance plans as described in §80.1469.

(5) Name, address, and company and facility identification number of all renewable fuel 

production facilities that the independent third-party auditor intends to audit under 

§80.1472.

(6) An affidavit from each renewable fuel producer or foreign renewable fuel producer 

stating its intent to have the independent third-party auditor conduct a quality assurance 

audit of any of the renewable fuel producer’s or foreign renewable fuel producer’s 

facilities.

(7) An affidavit stating that an independent third-party auditor is independent, as described in 

paragraphs §80.1471(b), of any renewable fuel producer or foreign renewable fuel 

producer.

(8) Proof of a RIN replacement instrument, if applicable, as described under §80.1470.

(9) The name and contact information for each person employed by the independent thirdparty auditor to conduct audits or verify RINs.

(10) Registration updates. —

(i) Any independent third-party auditor who makes changes to his quality assurance 

plan(s) that will allow him to audit new renewable fuel production facilities, as 

defined in § 80.1401 that is not reflected in the producer's registration information on 

file with EPA must update his registration information and submit a copy of an 

updated QAP on file with EPA at least 60 days prior to producing the new type of 

renewable fuel.
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(ii) Any independent third-party auditor who makes any other changes to a QAP that will 

affect the third-party auditor’s registration information but will not affect the 

renewable fuel category for which the producer is registered per paragraph (b) of this 

section must update his registration information 7 days prior to the change.

(iii) Independent third-party auditors must update their QAPs at least 60 days prior to 

verifying RINs generated by a renewable fuel facility uses a new pathway.

(iv) Independent third-party auditors must update their QAPs at least 60 days prior to 

verifying RINs generated by any renewable fuel facility not identified in their existing 

registration. 

(11) Registration renewal. Registrations for independent third-party auditors expire at the 

end of the calendar year, December 31, after EPA has approved a registration under this 

paragraph (g) unless:

(i) The independent third-party auditor resubmits all information, updated as necessary, 

described in §80.1450(g)(1) thru (g)(7) no later than October 31; and

(ii) The independent third-party auditor submits an affidavit affirming that he or she has 

only verified RINs using a QAP approved under §80.1469, notified all appropriate 

parties of all potentially invalid RINs as described in §80.1471(d), and fulfilled all of 

his or her RIN replacement obligations under §80.1474.

(12) Revocation of Registration.

(i) The Administrator may issue a notice of intent to revoke the registration of a thirdparty auditor if the Administrator determines that the auditor has failed to fulfill any

requirement of this subpart. The notice of intent shall include an explanation of the 

reasons for the proposed revocation.

(ii) Within 60 days of receipt of the notice of intent to revoke, the independent third-party 

auditor may submit written comments concerning the notice, including but not limited to 

a demonstration of compliance with the requirements which provide the basis for the 

proposed revocation. Communications should be sent to the following address: XX The 

Administrator shall review and consider any such submission before taking final action 

concerning the proposed revocation.

(iii) If the auditor fails to respond in writing within 60 days to the notice of intent to

revoke, the revocation shall become final by operation of law and the Administrator shall 

notify the independent third-party auditor of such revocation.

(iv) EPA may deny the registration of an independent third-party auditor if the 

independent third-party auditor employs any person that was previously employed by an 

independent third-party auditor whose registration was revoked.
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* * * 

(j) Registration shall be on forms, and following policies, established by the Administrator.

9. Section 80.1451 is amended as follows:

a. By revising paragraphs (a)(1)(ix), (a)(1)(x), (a)(1)(xi), (a)(1)(xii), and (a)(1)(xiii).

b. By adding paragraphs (a)(1)(xiv), (a)(1)(xv), and (a)(1)(xvi).

c. By revising paragraphs (c)(2)(x), (c)(2)(xi), (c)(2)(xii), (c)(2)(xiii), (c)(2)(xiv), (c)(2)(xv), and 

(c)(2)(xvi).

d. By adding paragraphs (c)(2)(xvii) and (c)(2)(xviii).

e. By revising paragraph (g).

f. By adding paragraph (h).

§ 80.1451 What are the reporting requirements under the RFS program?

(a) * * *

(1) * * *

(ix) The total current-year RINs by category of renewable fuel, as those fuels are defined in 

§80.1401 (i.e., cellulosic biofuel, biomass-based diesel, advanced biofuel, renewable fuel, and 

cellulosic diesel), retired for compliance that are invalid as defined in §80.1431(a).

(x) The total prior-year RINs by renewable fuel category, as those fuels are defined in §80.1401, 

retired for compliance.

(xi) The total prior-year RINs by renewable fuel category, as those fuels are defined in §80.1401, 

retired for compliance that are invalid as defined in §80.1431(a).

(xii) The total cellulosic biofuel waiver credits used to meet the party's cellulosic biofuel RVO.

(xiii) A list of all RINs generated prior to July 1, 2010 that were retired for compliance in the 

reporting period.

(xiv) A list of all RINs that were retired for compliance in the reporting period and are invalid as 

defined in §80.1431(a).

(xv) Any deficit RVO(s) carried into the subsequent year.

(xvi) Any additional information that the Administrator may require.

* * * * *

(c) * * *
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(2) * * *

(x) The total current-year RINs retired that are invalid as defined in §80.1431(a).

(xi) The total prior-year RINs retired.

(xii) The total prior-year RINs retired that are invalid as defined in §80.1431(a).

(xiii) The number of current-year RINs owned at the end of the quarter.

(xiv) The number of prior-year RINs owned at the end of the quarter.

(xv) The number of RINs generated.

(xvi) The volume of renewable fuel (in gallons) owned at the end of the quarter.

(xvii) The total 2009 and 2010 retired RINs reinstated.

(xviii) Any additional information that the Administrator may require.

* * * * *

(g) All independent third-party auditors. Any party that is an independent third-party auditor as 

defined in §80.1471 that verifies RINs must submit to EPA reports according to the schedule, 

and containing all the information, that is set forth in this paragraph (g).

(1)(i) For RINs verified beginning on January 1, 2014, RIN generation verification reports for 

each facility audited by the independent third-party auditor shall be submitted according to the 

schedule specified in paragraph (f)(2) of this section.

(ii) The RIN generation verification reports shall include all the following information for each 

batch of renewable fuel produced or imported verified, where “batch” means a discrete quantity

of renewable fuel produced or imported and assigned a unique batch-RIN per §80.1426(d):

(A) The RIN generator's name.

(B) The RIN generator's EPA company registration number.

(C) The renewable fuel producer EPA facility registration number.

(D) The importer EPA facility registration number and foreign renewable producer company 

registration number, if applicable.

(E) The applicable reporting period.
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(F) The quantity of RINs generated for each batch according to §80.1426.

(G) The production date of each batch.

(H) The fuel type of each batch.

(I) The volume of denaturant and applicable equivalence value of each batch.

(J) The volume of each batch produced.

(K) The volume and type of each feedstock used to produce the batch.

(L) Which batches met the definition of Renewable Biomass.

(M) The quantity and type of co-products produced.

(N) Any additional information the Administrator may require.

(2) RIN verification activity reports shall be submitted to EPA according to the schedule 

specified in paragraph (f)(2) of this section. Each report shall summarize RIN verification 

activities for the reporting period. The quarterly RIN verification activity reports shall include all 

of the following information:

(i) The submitting party's name.

(ii) The submitting party's EPA company registration number.

(iii) The number of current-year RINs verified at the start of the quarter.

(iv) The number of prior-year RINs verified at the start of the quarter.

(v) The total current-year RINs verified.

(vi) The total prior-year RINs verified.

(vii) The number of current-year RINs verified at the end of the quarter.

(viii) The number of prior-year RINs verified at the end of the quarter.

(ix) A list of all RINs subject to the audit that were not verified or that were identified as 

Potentially Invalid RINs (PIRs) pursuant to 80.1474, along with a narrative description of why 

the RINs were not verified or were identified as PIRs.

(x) Any additional information that the Administrator may require.
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(3) All reports required under this paragraph (g) must be signed and certified as meeting all the 

applicable requirements of this subpart by the independent third-party auditor or a responsible 

corporate officer of the independent third-party auditor.

(h) All reports required under this section shall be submitted on forms and following procedures 

prescribed by the Administrator.

10. Section 80.1452 is amended by adding paragraph (g) as follows.

§ 80.1451 What are the requirements related to the EPA-Moderated Transaction System 

(EMTS)?

* * * * *

(g) Alternative method of reporting buy and sell transactions in EMTS. For buyers and sellers 

of assigned RINs that agree to utilize this alternative reporting method, the reporting 

requirements of paragraph(c) of this section are modified as follows:

(1) The seller of assigned RINs shall do the following:

(i) Report the sell transaction in EMTS within five (5) business days of shipping, and; 

(ii) Indicate that the alternative reporting method is being utilized; and

(iii)Report the date the renewable volume is shipped in place of the date of transfer (c)(7) 

in the EMTS sell transaction report; and 

(iv)Report a unique identifier and provide a product transfer document (PTD) that meets 

all requirement of § 80.1453 and that includes the unique identifier agreed upon by

the buyer and seller.

(2) The buyer of assigned RINS shall do the following: 

(i) Report the buy transaction in EMTS within five (5) business days of receipt;

(ii) Indicate that the alternative reporting method is being utilized; 

(iii)Include the unique identifier provided by the seller under paragraph (g)(1)(iii) in the 

EMTS buy transaction report; and

(iv) Report the date the renewable volume is received in place of the date of transfer 

(c)(7) in the EMTS buy transaction report. 

11. Section 80.1453 is amended as follows:

a. Revising paragraph (a) introductory text and paragraph (a)(5); and

b. Adding paragraphs (a)(12), and (a)(13).
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§80.1453 What are the product transfer document (PTD) requirements for the RFS 

program?

(a) On each occasion when any party transfers ownership of neat and/or blended renewable fuels 

or separated RINs subject to this subpart, the transferor must provide to the transferee documents 

identifying the renewable fuel, designated fuel uses, and any RINs generated for the fuel 

(whether assigned or separated) which include all of the following information, as applicable:

* * * *

(5) Name and blend level of all blending components in a product containing renewable fuel, 

if applicable.

* * * *

(12) For the transfer of renewable fuel with or without RINs, an accurate and clear statement 

on the product transfer document of the fuel type from Table 1 to § 80.1426, and 

designation of the fuel use(s) intended by the transferor, as follows: 

(i) Ethanol. “This volume of neat or blended ethanol is designated and intended for use 

as transportation fuel or jet fuel in the 48 U.S. contiguous states and Hawaii. Any use 

by the end user in another application in the 48 U.S. contiguous states and Hawaii is a 

violation of 40 C.F.R § 80.1460(g), unless the requirements in § 80.1433 are met.” 

(ii) Biodiesel. ” This volume of neat or blended biodiesel is designated and intended for 

use as transportation fuel, heating oil or jet fuel in the 48 U.S. contiguous states and 

Hawaii. Heating oil may only be used to heat interior spaces of homes or buildings. 

Any use by the end user in another application in the 48 U.S. contiguous states and 

Hawaii is a violation of 40 C.F.R § 80.1460(g), unless the requirements in § 80.1433 

are met.”

(iii) Renewable Heating oil. “This volume of heating oil is designated and intended to be 

used to heat interior spaces of homes or buildings. Any use by the end user in another 

application the 48 U.S. contiguous states and Hawaii is a violation of 40 C.F.R § 

80.1460(g), unless the requirements in § 80.1433 are met.” 

(iv) Renewable Diesel. “This volume of neat or blended renewable diesel is designated 

and intended for use as transportation fuel, heating oil or jet fuel in the 48 U.S.

contiguous states and Hawaii. Any use by the end user in another application in the 

48 U.S. contiguous states and Hawaii is a violation of 40 C.F.R § 80.1460(g), unless 

the requirements in § 80.1433 are met.” 

(v) Naphtha. ” This volume of neat or blended naphtha is designated and intended for use 

as transportation fuel or jet fuel in the 48 U.S. contiguous states and Hawaii. This 

naphtha may only be used as a gasoline blendstock or jet fuel. Any use by the end 

user in another application in the 48 U.S. contiguous states and Hawaii is a violation 

of 40 C.F.R §80.1460(g), unless the requirements in § 80.1433 are met.” 

(vi) Butanol. “This volume of neat or blended butanol is designated and intended for use 

as transportation fuel or jet fuel in the 48 U.S. contiguous states and Hawaii. This 

butanol may only be used as a gasoline blendstock or jet fuel. Any use by the end user 
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in another application in the 48 U.S. contiguous states and Hawaii is a violation of 40 

C.F.R § 80.1460(g), unless the requirements in § 80.1433 are met.” 

(vii) Renewable fuels other than ethanol, biodiesel, heating oil, renewable diesel, naptha 

or butanol. “This volume of neat or blended renewable fuel is designated and 

intended to be used as transportation fuel, heating oil, or jet fuel in the 48 U.S. 

contiguous states and Hawaii. Any use by the end user in another application in the 

48 U.S. contiguous states and Hawaii is a violation of 40 C.F.R §80.1460(g), unless 

the requirements in § 80.1433 are met.”

(13) For purposes of verification, in order for facilities to meet the renewable process 

electricity production requirement for the biogas-derived cellulosic diesel and cellulosic 

naphtha pathways, all conditions below apply. 

(i) The quantity of renewable process electricity produced must be measured by

continuous metering.

(ii) The electricity must be used to provide power to process units or process equipment 

at the facility.

(iii) The electrical energy must derive from raw landfill gas, waste heat from the 

production process, unconverted syngas from the F-T process, fuel gas from the 

hydroprocessing or combined heat and power (CHP) units that use non-fossil fuel 

based gas or other renewable sources.

12. Section 80.1454 is amended as follows:

a. By adding paragraph (b)(7).

b. By revising paragraphs (m), (n), (o), and (p).

c. By adding paragraph (q).

§ 80.1454 What are the recordkeeping requirements under the RFS program?

* * * * *

(b) * * * 

(7) Records related to the implementation of a QAP under §80.1469.

* * * * *

(m) Requirements for independent third-party auditors. Any independent third-party auditor (as 

described at §80.1471) must keep all of the following records for a period of at least five (5) 

years:

(1) Copies of all reports submitted to EPA under §80.1451(g), as applicable.

(2) Records related to the implementation of a QAP under §80.1469 for each facility

including records from facility audits and ongoing and quarterly monitoring activities. 
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(3) Records related to the verification of RINs under §80.1471(e).

(4) Copies of communications sent to and received from renewable fuel producers or foreign 

renewable fuel producers, feedstock suppliers, purchasers of RINs, and obligated parties.

(5) Copies of all notes relating to the implementation of a QAP under §80.1469.

(6) List of RINs reported to EPA and renewable fuel producers or foreign renewable fuel 

producers as potentially invalidly generated under §80.1474 compliance.

(7) Records related to the professional liability insurance requirement under §80.1471(c).

(8) Copies of all records related to any financial assurance instrument as required under 

§80.1470 under a quality assurance plan implemented under §80.1469(a).

(9) Such other records as may be requested by the Administrator.

(n) The records required under paragraph (e) of this section shall be kept through calendar year 

2022.

(o) On request by EPA, the records required under this section and under §80.1453 must be made 

available to the Administrator or the Administrator's authorized representative. For records 

that are electronically generated or maintained, the equipment or software necessary to read 

the records shall be made available; or, if requested by EPA, electronic records shall be 

converted to paper documents.

(p) The records required in paragraphs (b)(3) and (c)(1) of this section must be transferred with 

any renewable fuel sent to the importer of that renewable fuel by any foreign producer not 

generating RINs for his renewable fuel.

(q) Copies of all reports required under §80.1464.

13. Section 80.1460 is amended as follows:

a. By revising paragraphs (c)(2) and (c)(3).

b. By adding paragraphs (g), (h), and (i).

§ 80.1460 What acts are prohibited under the RFS program?

* * * * *

(c) * * *
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(2) Use a validly generated RIN to meet the person's RVOs under §80.1427, or separate and 

transfer a validly generated RIN, if the person using the validly generated RIN to meet 

the person’s RVO used the fuel for a non-qualifying purpose, but failed to retire an 

appropriate number of RINs as required by 80.1433.

(3) Use a validly generated RIN to meet the person's RVOs under §80.1427, or separate and 

transfer a validly generated RIN, if the person using the validly generated RIN to meet 

the person’s RVO, at the time they purchased the RIN, knew or had reason to know that 

the fuel associated with the purchased RINs was used for a non-qualifying purpose and 

that the party or parties engaged in that non-qualifying use failed to retire an appropriate 

number of RINs as required by 80.1433.

* * * * *

(g) Failing to retire RINs when fuel for which RINs have been generated is used or designated 

for use in an application other than transportation fuel, heating oil or jet fuel. No person shall 

use or designate for use fuel for which RINs were generated, in an application other than 

transportation fuel, heating oil, or jet fuel unless the requirements of 80.1433 have been met.

(h) RIN Separation Violations. No person shall do any of the following:

(1) Separate RINs in EMTS using the wrong separation reason code

(2) Separate RINs in EMTS without having a qualifying separation event pursuant to 

80.1429

(3) Separate more than 2.5 RINs per gallon of renewable fuel that has a valid qualifying 

separation event pursuant to §80.1429.

(4) Separate RINs outside of the requirements in §80.1452(c).

(5) [Reserved]

(6) Improperly separate RINs in any other way not listed in paragraphs (i)(1)-(5) of this 

section. 

(i) Independent third-party auditor violations. No person shall do any of the following:

(1) Fail to fully and competently implement a QAP approved under §80.1469.

(2) Fail to notify appropriate parties of potentially invalid RINs under §80.1474(b).

(3) Identify a RIN as verified in accordance with §80.1471(e) that is invalid under §80.1431.

14. Section 80.1461 is amended by revising paragraphs (a)(1) and (a)(2) as follows.

§ 80.1461 Who is liable for violations under the RFS program?

* * * * *
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(a) * * * 

(1) Any person who violates a prohibition under §80.1460(a) through (d) or §80.1460(g) 

through (h) is liable for the violation of that prohibition.

(2) Any person who causes another person to violate a prohibition under §80.1460(a) 

through (d) or §80.1460(g) through (h) is liable for a violation of §80.1460(e).

15. Section 80.1469 is added as follows:

§80.1469 Requirements for Quality Assurance Plans

This section specifies the requirements for two types of Quality Assurance Plan (QAP).

(a) Option A QAP Requirements. 

(1) Feedstock-related components.

(i) Components requiring ongoing monitoring:

(A) Feedstocks are renewable biomass as defined in §80.1401.

(B) Feedstocks are being separated according to a separation plan, if applicable under 

§80.1426(f)(5)(ii).

(C) Crop and crop residue feedstocks meet land use restrictions, or alternatively the 

aggregate compliance provisions of §80.1454(g).

(D) If applicable, verify that feedstocks with additional recordkeeping requirements 

meet requirements of §80.1454(d).

(E) Feedstocks are valid for the D code being used, and are consistent with 

information recorded in EMTS.

(F) Feedstock is not renewable fuel for which RINs were previously generated.

(G) Feedstock is consistent with production process and D code being used as 

permitted under Table 1 to Section 80.1426 or a petition approved through section 

80.1416. 

(ii) Components requiring quarterly monitoring:

(A) Separated food waste or separated yard waste plan is accepted and up to date, if 

applicable under §80.1426(f)(5)(ii).

(B) Separated municipal solid waste plan is approved and up to date, if applicable 

under §80.1426(f)(5)(ii).(C) Contracts or agreements for feedstock acquisition are 

sufficient for facility production.

(D) Feedstock processing and storage equipment are sufficient and are consistent with 

engineering review.

(E) If applicable, accuracy of feedstock energy (FE) calculation factors related to 

feedstocks, including average moisture content m and feedstock energy content E.
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(2) Production process-related components.

(i) Components requiring ongoing monitoring:

(A) Production process is consistent with that reported in EMTS.

(B) Production process is consistent with D code being used as permitted under Table 

1 to §80.1426 or a petition approved through §80.1416.

(ii) Components requiring quarterly monitoring:

(A) Mass and energy balances are appropriate for type and size of facility.

(B) Workforce size is appropriate for type and size of facility, and sufficient workers 

are on site for facility operations.

(C) If applicable, process-related factors used in feedstock energy (FE) calculation are 

accurate, in particular the converted fraction CF.

(3) Renewable fuel-related components.

(i) Components requiring ongoing monitoring:

(A) Standardization of volumes pursuant to §80.1426(f)(8) are accurate.

(B) Renewable fuel type matches the D code being used.

(C) RIN generation matches wet gallons produced.

(D) Fuel shipments match production volumes.

(E) If applicable, renewable content R is accurate pursuant to 80.1426(f)(9).

(F) Equivalence value EV is accurate and appropriate.

(ii) Components requiring quarterly monitoring:

(A) Renewable fuel was intended and sold for qualifying uses as transportation fuel, 

heating oil, or jet fuel.

(B) Certificates of analysis verifying fuel type and quality, as applicable.

(C) Verify existence of quality process controls designed to ensure that fuel continues 

to meet applicable property and quality specifications.

(D) Volume production is consistent with that reported to EPA and EIA, as well as 

other federal or state reporting.

(E) Volume production is consistent with storage and distribution capacity.

(F) Volume production capacity matches RFS registration.

(4) RIN generation and separation-related components.

(i) Components requiring ongoing monitoring:

(A) If applicable, verify that RIN separation is appropriate under §80.1429.

(B) Verify that appropriate RIN generation calculations are being followed under 

§80.1426(f)(3), (4), or (5) as applicable.
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(ii) Components requiring quarterly monitoring:

(A) Verify that annual attestation report is accurate.

(B) Verify that fuel that is exported was not used to generate RINs, or alternatively

that were generated but retired.

(b) Option B QAP Requirements.

(1) Feedstock-related components requiring quarterly monitoring:

(i) Feedstocks are renewable biomass as defined in §80.1401.

(ii) Feedstocks are being separated according to a separation plan, if applicable under 

§80.1426(f)(5)(ii).

(iii) Crop and crop residue feedstocks meet land use restrictions, or alternatively the 

aggregate compliance provisions of §80.1454(g).

(iv) Feedstocks are valid for the D code being used, and are consistent with 

information recorded in EMTS.(E) Feedstock is consistent with production 

process and D code being used as permitted under Table 1 to Section 80.1426 or a 

petition approved through section 80.1416. 

(v) Feedstock is not renewable fuel for which RINs were previously generated.

(vi) Separated food waste or separated yard waste plan is accepted and up to date, if 

applicable under §80.1426(f)(5)(ii).

(vii) Separated municipal solid waste plan is approved and up to date, if applicable 

under §80.1426(f)(5)(ii).

(viii) If applicable, accuracy of feedstock energy (FE) calculation factors related to 

feedstocks, including average moisture content m and feedstock energy content E.

(2) Production process-related components requiring quarterly monitoring:

(i) Production process is consistent with that reported in EMTS.

(ii) Production process is consistent with D code being used as permitted under Table 

1 to §80.1426 or a petition approved through §80.1416.

(iii) Mass and energy balances are appropriate for type and size of facility.

(iv) If applicable, process-related factors used in feedstock energy (FE) calculation 

are accurate, in particular the converted fraction CF.

(3) Renewable fuel-related components requiring quarterly monitoring:

(i) Renewable fuel type matches the D code being used.

(ii) RIN generation matches wet gallons produced.

(iii) If applicable, renewable content R is accurate pursuant to 80.1426(f)(9).

(iv) Equivalence value EV is accurate and appropriate.

(v) Renewable fuel was intended and sold for qualifying uses as transportation fuel, 

heating oil, or jet fuel.

(vi) Certificates of analysis verifying fuel type and quality, as applicable.
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(vii) Volume production capacity matches RFS registration.

(4) RIN generation and separation-related components requiring quarterly monitoring:

(i) If applicable, verify that RIN separation is appropriate under §80.1429(b)(4).

(ii) Verify that appropriate RIN generation calculations are being followed under 

§80.1426(f)(3), (4), or (5) as applicable.

(iii) Verify that fuel that is exported was not used to generate RINs, or alternatively

that were generated but retired.

(c) Each QAP shall represent a specific RIN-generating pathway as provided in Table 1 to 

§80.1426 or as approved by the Administrator pursuant to §80.1416, and shall contain elements 

specific to particular feedstocks, production processes, and fuel types as applicable.

(d) Submission and approval of a QAP.

(1) Each independent third-party auditor shall annually submit a QAP to the EPA which 

demonstrates adherence to the requirements of paragraphs (a) and (c) or (b) and (c) of 

this section, as applicable, and request approval on forms and using procedures specified 

by the Administrator. 

(2) No third-party independent auditor may present a QAP as approved by the EPA without 

having received written approval from the EPA.

(3) A QAP is approved on the date that EPA notifies the third-party independent auditor of 

such approval.

(4) EPA may revoke its approval of a QAP for cause, including, but not limited to, an EPA 

determination that the approved QAP has proven to be inadequate in practice.

(5) EPA may void ab initio its approval of a QAP upon EPA’s determination that the 

approval was based on false information, misleading information, or incomplete 

information, or if there was a failure to fulfill, or cause to be fulfilled, any of the 

requirements of the QAP.

(e) Conditions for revisions of a QAP.

(1) A new QAP shall be submitted to EPA according to paragraph (d) of this section 

whenever the following changes occur at a production facility audited by a third-party 

independent auditor using an approved QAP: 

(i) Change in feedstock.

(ii) Change in type of fuel produced.

(iii) Change in facility operations or equipment that may impact the capability of the 

QAP to verify that RINs are validly generated.
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(2) A new QAP shall be submitted to EPA according to paragraph (d) of this section 

whenever RINs are discovered to have been invalidly generated after they were verified by a 

third-party independent auditor.

(3) An original QAP ceases to be valid as the basis for verifying RINs until a new QAP, 

submitted to EPA under this paragraph (e), is approved pursuant to paragraph (d).

16. Section 80.1470 is added as follows:

§80.1470 RIN Replacement Mechanisms for Option A Independent Third Party 

Auditors.

(a) Applicability. This section applies to independent third party auditors using a QAP approved 

under Option A pursuant to §80.1469(a) and (c). 

(b) Requirements. An independent third party auditor must establish or participate in the 

establishment of a RIN replacement mechanism. The RIN replacement mechanism must fulfill, 

at a minimum, the following conditions: 

(1) The RIN replacement mechanism must be capable of fulfilling the independent third 

party auditor’s RIN replacement responsibility, as described in section 1474(c) of this 

subpart. 

(2) The independent third party auditor is responsible for calculating and maintaining the 

minimum coverage afforded by the RIN replacement mechanism at all times. 

(3) RINs held by the RIN replacement mechanism (if any) must be identified in a unique 

EMTS account designated for the exclusive use of the replacement mechanism. 

(4) Distribution and removal of RINs from the replacement mechanism may not be under the 

sole operational control of the third-party auditor. 

(5) An originally signed duplicate of the agreement or contract establishing the RIN 

replacement mechanism must be submitted to EPA by the independent third party auditor 

in accordance with 40 CFR § 1450(g)(7). 

(6) Any substantive change to the agreement establishing the RIN replacement mechanism 

must be submitted to EPA within 30 days of the change. 
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17. Section 80.1471 is added as follows:

§80.1471 Requirements for QAP Auditors

(a) QAP audits conducted pursuant to §80.1472 must be conducted by an independent third-party

auditor that is a professional engineer, as specified in paragraphs §80.1450(b)(2)(i)(A) and 

§80.1450(b)(2)(i)(B). 

(b) To be considered an independent third-party auditor under paragraph §80.1471(a):

(1) The independent third-party auditor shall not be owned or operated by the renewable fuel 

producer or foreign ethanol producer, or any subsidiary or employee of the renewable 

fuel producer or foreign ethanol producer.

(2) The independent third-party auditor shall be free from any interest in the renewable fuel 

producer or foreign ethanol producer's business.

(3) The renewable fuel producer or foreign renewable fuel producer shall be free from any 

interest in the third-party auditor's business.

(4) The independent third-party auditor must not be debarred, suspended, or proposed for 

debarment pursuant to the Government-wide Debarment and Suspension regulations, 40 

CFR part 32, or the Debarment, Suspension and Ineligibility provisions of the Federal 

Acquisition Regulations, 48 CFR, part 9, subpart 9.4.

(c) Independent third-party auditors shall maintain professional liability insurance, as defined in 

31 CFR 50.5(q), in amounts reasonably related to the risk of invalid verified RINs due to auditor 

error, omission, or negligence. Independent third-party auditors shall use insurance providers 

that possess a financial strength rating in the top four categories from either Standard & Poor’s or 

Moody’s, i.e., AAA, AA, A or BBB for Standard & Poor’s and Aaa, Aa, A, or Baa for Moody’s. 

Replacement of any such invalid verified RINs is not subject to the cap on RIN replacement set 

forth in §80.1474(e). 

(d)(1) In the event that an independent third-party auditor identifies a RIN that may have been 

invalidly generated, the independent third-party auditor shall, within 24 hours, send 

notification of the potentially invalidly generated RIN to EPA and the renewable fuel 

producer that generated the RIN.

(2) The independent third-party auditor shall provide the notification required under 

paragraph (d)(1) of this section in writing (which includes e-mail or facsimile) and, if 

requested by the party being notified of a potentially invalidly generated RIN, by 

telephone.
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(e) The independent third-party auditor shall identify RINs generated from a renewable fuel 

producer or foreign renewable fuel producer as having been verified under a QAP.

(1) For RINs verified under QAP Option A pursuant to §80.1469(a), RINs shall be 

designated as A-RINs.

(2) For RINs verified under QAP Option B pursuant to §80.1469(b), RINs shall be 

designated as B-RINs.

(3) The independent third-party auditor shall not indentify RINs generated from a renewable 

fuel producer or foreign renewable fuel producer as having been verified under a QAP if 

a revised QAP must be submitted to and approved by EPA under §80.1469(e).

(f) (1) Except as specified in paragraph (f)(2) of this section, auditors may only verify RINs that 

have been generated after the audit required under §80.1472 has been completed.

(i) For A-RINs, ongoing monitoring must have been initiated.

(ii) Verification of RINs may continue for no more than 100 days following an audit.

(2) Auditors may verify RINs that were generated before the audit required under §80.1472 

has been completed, under the following conditions:

(i) The RINs in question were generated between January 1, 2013 and December 31, 

2013 inclusive. 

(ii) The audit is completed between January 1, 2013 and December 31, 2013.

(iii) The audit is performed in accordance with the elements specified in a QAP that has 

been approved by the EPA per §80.1469(c).

(iv) The audit requirements of §80.1472(e)(1) are met for every batch of renewable fuel 

for which RINs were generated and are being verified.

(g) The independent third-party auditor shall permit any representative of EPA to monitor at any

time the implementation of QAPs and renewable fuel production facility audits.

(h) Any person who fails to meet a requirement under (f)(1) of this section shall be subject to a 

separate violation pursuant to section 1460(f) of this subpart.

18. Section 80.1472 is added as follows:

§80.1472 Requirements for Quality Assurance Audits
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(a) General requirements.

(1) A quality assurance audit shall be performed in accordance with the elements specified in 

a Quality Assurance Plan (QAP). 

(i) An audit based on an Option A QAP per §80.1469(a) shall meet the requirements in 

paragraphs (b) and (c) of this section.

(ii) An audit based on an Option B QAP per §80.1469(b) shall meet the requirements in 

paragraphs (b) and (d) of this section.

(2) An audit shall be performed by an auditor who meets the requirements of §80.1471.

(b) A QAP must have been approved by EPA per §80.1469(c) prior to its use in a quality

assurance audit, unless the following circumstances apply:

(1) The audit was conducted prior to the effective date of this section and

(2) The audit was based on an Option B QAP. 

(c) Frequency of audits.

(1) Regular schedule.

(i) The auditor shall audit a renewable fuel production facility at least 4 times per 

calendar year.

(ii) The audits specified in paragraph (b)(1)(i) of this section shall be spaced at least 60 

days apart. The 60 day period shall start the day after the previous audit ends.

(2) Amended schedule due to invalid RINs.

(i) In the event that invalid RINs are identified, the auditor shall audit the renewable fuel 

production facility at least 12 times over the following 365 days, beginning the day after 

the invalid RINs are discovered.

(ii) The audits specified in paragraph (b)(2)(i) of this section shall be spaced at least 20 

days apart. The 20 day period shall start the day after the previous audit ends.

(d) Requirements for an audit based on an Option A QAP.

(1) Each audit of a renewable fuel production facility shall verify every element contained in 

an applicable and approved Option A QAP.

(2) (i) Each facility audit shall include an on-site visit to the renewable fuel production 

facility.

(ii) An on-site visit shall include verification of all QAP elements that require inspection 

or evaluation of the physical attributes of the renewable fuel production facility, except 
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for any physical attribute that is verified through remote monitoring equipment per the 

applicable QAP.

(3) Each audit shall include direct contact with all feedstock suppliers to the facility to obtain 

documents related to the feedstocks used in the production of renewable fuel at the facility.

(4) Each audit shall include a review of documents generated by the renewable fuel producer.

(5) Each audit shall include direct contact with all purchasers of renewable fuel produced at 

the facility to obtain documents related to renewable fuel purchased from the facility.

(e) Requirements for an audit based on an Option B QAP.

(1) Each audit of a renewable fuel production facility shall verify every element contained in 

an applicable and approved Option B QAP.

(2) (i) Each facility audit shall include an on-site visit to the renewable fuel production 

facility.

(ii) An on-site visit shall include verification of all QAP elements that require inspection 

or evaluation of the physical attributes of the renewable fuel production facility.

(3) Each audit shall include direct contact with all feedstock suppliers to the facility to obtain 

documents related to the feedstocks used in the production of renewable fuel at the facility.

(4) Each audit shall include a review of documents generated by the renewable fuel producer.

(5) Each audit shall include direct contact with all purchasers of renewable fuel produced at 

the facility to obtain documents related to renewable fuel purchased from the facility.

19. Section 80.1473 is added as follows:

§80.1473 Affirmative Defenses

(a) Any person deemed liable for a violation of the provisions of either §80.1460(b)(2) or (c)(1), 

other than the generator of an invalid RIN, will not be deemed in violation if the person 

demonstrates that the criteria under §80.1473 (c) or (d) are met.

(b) Applicability of affirmative defenses. The following provisions apply to affirmative defenses 

asserted under subsection (a) of this section:
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(1) Affirmative defenses only apply to RINs that were invalidly generated and verified 

through a quality assurance audit using an EPA-approved Option A or Option B QAP. 

(2) Affirmative defenses only apply in situations where an invalidly generated verified RIN 

is either transferred to another person (violation of §80.1460(b)(2)) or used for 

compliance for an obligated party’s RVO (violation of §80.1460(c)(1)). 

(3) Affirmative defenses do not apply to the generator of an invalid RIN.

(c) Asserting an affirmative defense for invalid A-RINs. To establish an affirmative defense to a 

violation of §80.1460 (b)(2) or (c)(1) involving invalid A-RINs, the person must meet the 

notification requirements of §80.1473(e) and prove by a preponderance of evidence that:

(1) The RIN in question was verified through a quality assurance audit pursuant to §80.1472 

using an approved Option A QAP as defined in §80.1469(a).

(2) The person did not know or have reason to know that the RINs were invalidly generated 

prior to being verified by the independent third-party auditor.

(3) If the person self-identified the RIN as having been invalidly generated, the person 

notified EPA within 24 hours of discovering the invalidity.

(4) The person did not cause the invalidity.

(5) The person did not have a financial interest in the company that generated the invalid 

RIN.

(d) Asserting an affirmative defense for invalid B-RINs. To establish an affirmative defense to a 

violation of §80.1460 (b)(2) or (c)(1) involving invalid B-RINs, the person must meet the 

notification requirements of §80.1473(e) and prove by a preponderance of evidence that:

(1) The RIN in question was verified through a quality assurance audit pursuant to §80.1472 

using an approved Option B QAP as defined in §80.1469(b).

(2) The person did not know or have reason to know that the RINs were invalidly generated 

at the time of transfer or use for compliance, unless a remedial action as defined in 

§80.1474 was implemented.

(3) If the person self-identified the RIN as having been invalidly generated, the person 

notified EPA within 24 hours of discovering the invalidity.

(4) The person did not cause the invalidity.

(5) The person did not have a financial interest in the company that generated the invalid 

RIN.
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(6) If the person used the invalid B-RIN for compliance, the person adjusted its records, 

reports, and compliance calculations in which the invalid B-RIN was used as required by 

§80.1431, unless a remedial action as defined in §80.1474 was implemented.

(e) Notification Requirements. A person asserting an affirmative defense to a violation of 

§80.1460 (b)(2) or §80.1460(c)(1), arising from the transfer or use of an invalid A-RIN or BRIN, must submit a written report to the EPA, including all pertinent supporting documentation, 

demonstrating that the requirements of §80.1473(c) or (d) were met. The written report must be 

submitted within 30 days of the person discovering the invalidity.
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20. Section 80.1474 is added as follows:

§ 80.1474 Replacement Requirements for Invalidly Generated RINs.

(a) Responsibility for replacement of invalid verified RINs.

(1) The generator of the A-RIN and the independent third-party auditor that verified the ARIN are required to replaceinvalidly generated A-RINs with valid RINs pursuant to the 

procedures specified in paragraph (b) of this section.

(2) The generator of the B-RIN and the obligated party that owns the B-RIN are required to 

replace invalidly generated B-RINs with valid RINs pursuant to the procedures specified 

in paragraph (b) of this section. 

(3) The producer of an unverified RIN and the obligated party that owns an unverified RIN 

are required to replace invalidly generated and unverified RINs pursuant to the 

procedures specified in paragraph (b) of this section.

(b) Identification and treatment of Potentially Invalid RINs (PIRs)

(1) Any RIN can be identified as a PIR by the RIN generator, an independent third-party

auditor that verified the RIN, or EPA.

(2) For PIRs identified by the RIN generator, the generator is required to notify EPA within 

24 hours of the identification, including a detailed explanation of why the RIN is 

believed to be invalid, and is required to take one of the following corrective actions 

within 30 days:

(i) Retire the PIR, or 

(ii) Retire a valid RIN meeting the requirements of paragraph (c) of this section.

(3) For PIRs identified by the independent third-party auditor that verified the RIN, the 

independent third-party auditor is required to notify EPA and the RIN generator in 

writing within 24 hours of the identification, including a detailed explanation of why 

the RIN is believed to be invalid. 

(4) Within 30 days of being notified by EPA or the independent third-party auditor that 

verified the RIN that a RIN is a PIR, the RIN generator is required to take one of the 

following corrective actions:

(i) Retire the PIR,

(ii) Retire a valid RIN following the requirements of paragraph (c) of this section, or

(iii) Submit a demonstration in writing to EPA that the PIR is valid.
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(A)If EPA determines that the demonstration is satisfactory, the PIR will be deemed 

to be a valid RIN.

(B) If EPA determines the demonstration is not satisfactory, the PIR will be deemed 

invalid and the PIR generator must retire the PIR or a valid RIN following the 

requirements of paragraph (c) of this section within 30 days of notification by

EPA.

(5) Within 60 days of receiving a notification from EPA that a PIR generator has failed to 

perform a corrective action required pursuant to this section,

(i) For A-RINs, the independent third-party auditor that verified the PIR is required to 

retire valid RINs meeting the requirements of paragraph (c) of this section.

(ii) For B-RINs and unverified RINs, the obligated party that owns the PIR is required to 

either

(A) Retire the PIR.

(B) If the PIR has already been used for compliance with the obligated party’s RVO, 

correct the RVO to subtract the PIR.

(c) The following specifications apply when retiring valid RINs to replace PIRs or invalid RINs:

(1) When a RIN is retired to replace a PIR or invalid RIN, it must be of the same verification 

type, either A-RIN,B-RIN, or unverified, and of the same D code as the PIR or invalid 

RIN it is replacing.

(2) The number of RINs retired must be equal to the number of PIRs or invalid RINs being 

replaced, subject to paragraphs (d) and (e) of this section.

(d) Limited Exemption for invalid B-RINs.

(1) In the event that an obligated party is required to retire or replace a PIR that is a B-RIN 

pursuant to paragraph (b) of this section, the obligated party will be afforded a “limited 

exemption” equal to 2% of its annual Renewable Volume Obligation (RVO) for calendar 

years 2013 and 2014. 

(2) Limited examptions are calculated as follows:

LECB,i = 0.02 × RVOCB,i

LEBBD,i = 0.02 × RVOBBD,i

LEAB,i = 0.02 × RVOAB,i

LERF,i = 0.02 × RVORF,i

Where:
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LECB,i = Limited exemption for cellulosic biofuel for year i

LEBBD,i = Limited exemption for biomass-based diesel for year i

LEAB,i = Limited exemption for advanced biofuel for year i

LERF,i = Limited exemption for renewable for year i

RVOCB,i = The Renewable Volume Obligation for cellulosic biofuel for the obligated 

party for calendar year i, in gallons, pursuant to §80.1407.

RVOBBD,i = The Renewable Volume Obligation for biomass-based diesel for the obligated 

party for calendar year i after 2010, in gallons, pursuant to §80.1407.

RVOAB,i = The Renewable Volume Obligation for advanced biofuel for the obligated 

party for calendar year i, in gallons, pursuant to §80.1407.

RVORF,i = The Renewable Volume Obligation for renewable fuel for the obligated party

for calendar year i, in gallons, pursuant to §80.1407.

(3) If the number of invalidly generated B-RINs required to be retired or replaced in a 

calendar year is less than or equal to LE as calculated in paragraph (d)(2) of this section, 

the entire RIN retirement obligation is excused.

(4) If the number of invalidly generated B-RINs required to be retired or replaced in a 

calendar year is greater than LE as calculated in paragraph (d)(2) of this section, the 

retirement of a number of B-RINs equal to 2% of the obligated party's RVO is excused.

(5) The limited exemption applies only in calendar years 2013 and 2014.

(e) Cap on RIN Replacement for Independent Third Party Auditors of A-RINs. 

(1) If required to replace an invalid A-RIN pursuant to paragraph (b) of this section, the 

replacement obligation of the independent third party auditor who verified the A-RIN in 

question shall be no greater than the larger of:

(i) The aggregate of:

(A) 2% of the A-RINs verified by the auditor in the current year, and

(B) 2% of the number of A-RINs verified by the auditor in each of the previous four 

(4) calendar years; or

(ii) The aggregate of:

(A)The largest number of A-RINs that were generated by a single renewable fuel 

producer and verified by the auditor in the current year, and

(B) The largest number of A-RINs that were generated by a single renewable fuel 

producer and verified by the auditor in the previous four (4) calendar years.

(2) The cap on RIN replacement does not apply when invalid verified RINs are a result of 

auditor error, omission, or negligence.
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Page 139 of 139

(f) Failure to Take Corrective Action. Any person who fails to meet a requirement under 

paragraph (b)(5) of this section shall be liable for full performance of such requirement, and each 

day of non-compliance shall be deemed a separate violation pursuant to section 1460(f) of this 

subpart.