Vol. 78 Thursday, 

No. 35 February 21, 2013 

Part II 

Environmental Protection Agency 

40 CFR Part 80 

RFS Renewable Identification Number (RIN) Quality Assurance Program; 

Proposed Rule 


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12158 Federal Register / Vol. 78, No. 35 / Thursday, February 21, 2013 / Proposed Rules 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 80 

[EPA–HQ–OAR–2012–0621; FRL–9758–7] 

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 led 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. Today’s action proposes 

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. The proposal 

includes a voluntary quality assurance 

program and related provisions 

intended to meet these goals. The 

proposed program also includes 

elements designed to make it possible to 

verify the validity of RINs for all of 

2013. Additionally, we are proposing a 

number of new regulatory provisions to 

ensure that RINs are retired for all 

renewable fuel that is exported and to 

address RINs that become invalid 

downstream of a renewable fuel 

producer. 

DATES: Comments must be received on 

or before April 18, 2013. 

Hearing: We will hold a hearing on 

March 19, 2013, Room 1153 EPA East, 

Washington, DC 20004, beginning at 

10:00 a.m. 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. 

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 email. The www.regulations.gov Web 

site 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 email 

comment directly to EPA without going 

through www.regulations.gov your email 

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; 

Email address: manners.mary@epa.gov, 

or the information line for the Office of 

Transportation and Air Quality 

Compliance Division; telephone number 

(734) 214–4343; Email address 

complianceinfo@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: 

Category NAICS1 codes SIC 2 codes Examples of potentially 

regulated entities 

Industry ......................................................................... 324110 2911 Petroleum Refineries. 

Industry ......................................................................... 325193 2869 Ethyl alcohol manufacturing. 

Industry ......................................................................... 325199 2869 Other basic organic chemical manufacturing. 

Industry ......................................................................... 424690 5169 Chemical and allied products merchant wholesalers. 

Industry ......................................................................... 424710 5171 Petroleum bulk stations and terminals. 


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Category NAICS1 codes SIC 2 codes Examples of potentially 

regulated entities 

Industry ......................................................................... 424720 5172 Petroleum and petroleum products merchant wholesalers. 

Industry ......................................................................... 454319 5989 Other fuel dealers. 

1 North American Industry Classification System (NAICS) 

2Standard 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 email. 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. 

• 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 

A. Purpose of This Action 

B. Summary of Major Provisions 

C. Impacts 

II. Background and Purpose 

A. Treatment of Invalid RINs Under the 

Current Regulations 

B. Recent Issues Regarding Liability for 

Invalidly Generated RINs 

C. Industry Systems That Conduct 

Oversight of RIN Generation 

1. Existing Systems 

2. Sufficiency of Existing Systems 

D. EPA Goals in Proposing New Regulatory 

Provisions 

III. Overview of the Proposed Program 

A. Requirements for a Quality Assurance 

Plan and QAP Audits 

B. Requirements for an Affirmative Defense 

C. Replacement of Invalid RINs 

D. Voluntary Participation 

E. Treatment of RINs Prior to Final Rule 

Promulgation 

F. Request for Comment on Prohibiting 

Producers From Separating RINs 

G. Summary of the Two QAP Options 

IV. Provisions for RIN Verification Under 

Option A 

A. Requirements for Option A Quality 

Assurance Plans 

1. Elements of an Option A QAP 

a. Feedstock-Related Components 

b. Production Process-Related Components 

c. RIN Generation-Related Components 

d. RIN Separation-Related Components 

2. Approval and Use of Option A QAPs 

a. Approval of Quality Assurance Plan 

b. Frequency of Updates or Revisions to 

QAPs 

B. RIN Replacement Mechanisms Under 

Option A 

1. Required Replacement Capability for 

RIN Replacement Mechanisms 

2. Financial Assurance Instruments 

3. RIN Banks 

4. A–RIN Escrow Accounts 

C. Affirmative Defenses 

D. Treatment of Invalid A–RINs 

1. Responsibilities for Replacement of 

Invalid Verified A–RINs 

2. Invalid A–RIN Replacement 

3. Process for Replacing Invalid Verified 

RINs 

a. Types of RINs That Can Replace Invalid 

Verified RINs 

b. Impacts of RIN Replacement on 

Renewable Fuel Demand 

4. Cap on RIN Replacement 

V. Provisions for RIN Verification Under 

Option B 

A. Requirements for Option B Quality 

Assurance Plans 

1. Elements of an Option B QAP 

a. Feedstock-Related Components 

b. Production Process-Related Components 

c. RIN Generation-Related Components 

d. RIN Separation-Related Components 

2. Approval and Use of QAPs 

a. Approval of Quality Assurance Plan 

b. Frequency of Updates/Revisions to 

QAPs 

B. RIN Replacement Mechanisms 

C. Affirmative Defenses 

D. Treatment of Invalid B–RINs 

1. Responsibilities for Replacement of 

Invalid Verified B–RINs 

2. Invalid B–RIN Replacement 

3. Process for Replacing Invalid Verified 

RINs 

4. Temporary Limited Exemption for 

Invalid RIN Replacement 

a. Determination of the Appropriate 

Exemption Level 

b. How would the limited exemption be 

applied? 

VI. Proposed Requirements for Auditors 

A. Who can be an auditor? 

1. Independence 

2. Professionally Qualified To Implement a 

QAP 

3. Errors and Omissions Insurance 

B. Registration Requirements 

C. Other Responsibilities of Auditors 

1. Notifying the Agency When There Are 

Problems 

2. Indentifying Verified RINs in EMTS 

3. Recordkeeping, Reporting, and Attest 

Engagements 

a. Recordkeeping Requirements 

b. Reporting Requirements 

c. Attest Engagements 

d. Prohibited Activities for Third-Party 

Auditors 

VII. Proposed Requirements for Audits 

A. Document Review and Monitoring 

B. Buyer/Seller Contacts 

VIII. Additional Changes Related to the 

Definition and Treatment of Invalid RINs 


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1 75 FR 14670. 

A. Export and Exporter Provisions 

1. Exporter RVO 

2. Require Identification of Renewable Fuel 

Content 

3. RIN Retirement Requirements 

B. ‘‘Downstream’’ Invalidation and Product 

Transfer Documents 

1. Designation of Intended Renewable Fuel 

Use 

2. Required Actions Regarding Fuel for 

Which RINs Have Been Generated That 

Is Used for a Non-Qualifying Fuel Use 

3. RIN Generation for Fuel Made With 

Renewable Fuel Feedstock 

4. Use of Renewable Fuel in Ocean-Going 

Vessels 

5. Treatment of Improperly Separated RINs 

C. Treatment of Confidential Business 

Information 

1. Overview 

2. Proposal To Disclose Aggregated RFS 

Registration Information 

a. Approach 

b. Rationale for Proposal 

3. Proposal To Disclose Aggregated RFS 

Report Information 

a. Approach 

b. Rationale for Proposal 

4. QAP Plans and Independent Engineering 

Reviews 

5. Request for Comments 

D. Proposed Changes to Section 80.1452— 

EPA Moderated Transaction System 

(EMTS) Requirements—Alternative 

Reporting Method for Sell and Buy 

Transactions for Assigned RINs 

IX. Impacts 

A. Direct Costs for Implementing QAPs 

1. Time and Cost Assumptions 

2. Labor Cost Assumptions 

3. Cost Estimate Results 

B. Costs for RIN Replacement Mechanisms 

X. Public Participation 

A. How do I submit comments? 

B. Will there be a public hearing? 

XI. Statutory and Executive Order Review 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132 (Federalism) 

F. Executive Order 13175 (Consultation 

and Coordination With Indian Tribal 

Governments) 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

H. Executive Order 13211 (Energy Effects) 

I. National Technology Transfer 

Advancement Act 

J. Executive Order 12898: Federal Actions 

To Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

XII. Statutory Authority 

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, 2010.1

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. 

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 export issues and 

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 be retiring 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 


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2 75 FR 14670, March 26, 2010. 3See 72 FR 23929. 

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 the 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. 

• 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 renewable 

fuel volumes mandated by Congress are 

actually used. In this respect, then, there 

would be no change to the expected 

impacts of the RFS program as projected 

in the RFS2 final rulemaking 2 in 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 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. 

II. Background and Purpose 

The structure of the RFS program, and 

in particular the regulatory provisions 

governing the generation and use of 

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 nonrenewable 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 fuel would 

require significant and costly changes to 

the distribution system, fuels markets, 

and the activities of all involved in the 

fuel supply chain. 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 as part of a 

notice-and-comment 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 

or 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 


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12162 Federal Register / Vol. 78, No. 35 / Thursday, February 21, 2013 / Proposed Rules 

4California takes a similar approach for 

addressing invalid carbon offset credits under the 

state’s Global Warming Solutions Act. 

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 his/her 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 led to the 

current reductions in the liquidity of the 

market for RINs, and the increased 

difficulty of small producers of 

renewable fuel, particularly smaller 

producers, to sell the RINs they 

generate. 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. We 

address these requests more fully in 

Section III. 

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 (has not 

been used for compliance in the year it 

was generated or the following year). 

• 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 RVO 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 

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 fuel programs. 

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 the 

MVNRLM diesel fuel program— 

§ 80.531–§ 80.536. 

In these other fuels programs, the 

buyer beware approach to credits has 

proven to be an effective mechanism for 

ensuring that program goals 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, albeit at a cost to the 

regulated parties.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 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 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 


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5The statutory volume requirements for biomassbased diesel were 650 mill gal in 2010 and 800 mill 

gal in 2011. 

6The Environmental Protection Agency’s Interim 

Enforcement Response Policy to Resolve Violations 

Arising from the Use of Invalid 2010 and 2011 

Biomass-Based Diesel Renewable Identification 

Numbers, March 2012, http://www.epa.gov/ 

compliance/resources/policies/civil/erp/erpinvalidrins.pdf. 

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 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 he 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 December 14, 2012, the owner of 

Absolute Fuels, LLC, and other 

corporate entities associated with 

Absolute Fuels pleaded guilty to an 

Indictment charging the owner of wire 

fraud, money laundering, and Clean Air 

Act false statements. The indictment 

alleges that this individual 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 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. 

The 140 million invalid RINs from 

these three companies represented 

about 13% of the nationwide biodiesel 

volume in 2010 and 4% in 2011.5 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 6 (IERP) 

for 2010 and 2011 biomass-based diesel 

RINs 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. However, 

in reaction to the fraudulent RIN 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 charged by the 

provider of the service. 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, LLC. 

• RIN Integrity Network by Genscape. 

• RINPlus by EM Biofuels, LLC. 

• RIN-tegrity Survey by Weaver. 

• RINTrust, LLC. 


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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 provide 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, we believe it is important that 

all systems used to verify RINs contain 

a certain minimum number of elements. 

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 of RINs. However, not 

all systems address all these aspects of 

production and RIN generation, or 

address them in the same way. Because 

these systems are generally designed to 

benefit only the obligated party that 

contracts with it, 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 civil violation. Thus there is 

still a significant reluctance to purchase 

RINs from some 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 Notice of Proposed 

Rulemaking (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. These provisions are 

intended to reduce the incidence of 

invalidly generated RINs entering the 

market, provide reasonable assurance of 

replacement of invalidly generated 

RINs, and increase 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. 

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 an EPA-registered auditor 

using an EPA-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 registered auditor using an 

EPA-approved QAP and which were not 

replaced by the original RIN generator 

could be replaced by the auditor or 

obligated party depending on the type of 

RIN verification system and associated 

RIN replacement mechanism. 

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. 

III. Overview of the Proposed Program 

EPA is proposing to add two 

compliance options to the RFS program 

to achieve the goals described above. 

Each option contains provisions for 

quality assurance plans (‘‘QAP’’) that 

would be created by independent thirdparties and used to verify the validity of 

RIN generation; provisions for an 

affirmative defense to civil liability for 

transfer or use of a verified RIN that is 

invalidly generated; and provisions 

addressing replacement of verified RINs 

that were invalidly generated. One of 

these options would also ensure that 

RIN owners could avoid liability for a 

civil violation for transferring or using 

invalidly generated RINs. 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 


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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 we are proposing 

today. However, we realize that 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 thirdparty auditor using an EPA-approved 

QAP would provide the basis for a RINholder’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 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 help 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 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, we are proposing 

new regulatory provisions that would 

create a total of three types of RINs in 

the RFS program: 

(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 (i.e. the current regulatory 

approach). 

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 would potentially apply to 

producers of renewable fuel and parties 

downstream of the producer that handle 

renewable fuel or RINs. Other parties 

that work with and support renewable 

fuel producers, such as feedstock 

suppliers, would not be subject to new 

requirements through the proposed 

quality assurance program. 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 thirdparty 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 thirdparty auditors at the time of registration 

and ongoing requirements that must be 

met as the third-party 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. 

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 

EPA-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. 

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 

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, such as 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 


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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 

EPA-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 had knowledge of the 

invalidity prior to the RIN being 

verified. For Option B RINs, the RIN 

owner must not have had knowledge 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 

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 any 

party attempting to establish an 

affirmative defense would be required to 

inform the Agency within the next 

business day 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. We 

seek comment on whether this time 

frame for informing the Agency is 

appropriate. 

Fourth, a party attempting to establish 

an affirmative defense would be 

required to demonstrate that it 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 it 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. As noted above, both 

Option A and Option B would be 

available for market participants under 

the proposed rule. RIN replacement is 

fully discussed in Sections IV.D and V.D 

of this preamble for Options A and B, 

respectively. 

We propose 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 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 

within the time frame set forth in the 

administrative process, either the thirdparty auditor or the obligated party that 

owns the invalid RINs would also be 

required to replace the invalid RINs, 

depending on whether the RINs were 

verified through an Option A or Option 

B audit, or whether the RINs were 

unverified. The RIN generator would 

always remain liable for replacing all 

invalid RINs that they generated. The 

third-party auditor or the obligated 

party would be required to replace the 

RINs in a specified time period after 

notification from EPA that the RIN 

generator failed to replace the invalid 

RINs. 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 if it successfully 

established an affirmative defense. 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 up to the last five years’ 

of A–RINs verified by the auditor. This 

cap on RIN replacement is proposed for 

RINs generated in 2013–2015, and the 

cap may change from 2016 onward. 

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 


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in Section IV of this preamble. We 

request comment on both the RIN 

replacement cap of 2% and the limited 

exemption of 2%. The generators of 

invalid RINs, on the other hand, would 

have neither a cap nor a limited 

exemption for their RIN replacement 

responsibility under the proposed 

program. 

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 

maintain a RIN replacement mechanism 

capable of replacing a minimum 

percentage of the A–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. If an auditor chooses to 

participate in the proposed program, it 

would be required to register with EPA 

and apply to EPA for approval of its 

QAP, which would provide the 

framework for the auditor’s verification 

process. Since the auditor would be 

responsible to implement the QAP as 

approved, verifying RINs without 

meeting the requirements of the EPAapproved QAP would be a prohibited 

act. At the same time, an 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. 

Likewise, RIN generators would be 

under no obligation to have their RINs 

verified under an EPA approved QAP. 

RIN generators that do choose to have 

their RINs verified through the proposed 

quality assurance program would need 

to ensure that other parties with which 

they work closely, such as feedstock 

suppliers and fuel distributors, are 

providing the information needed by the 

auditor. Likewise, 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 preapproved 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 

how 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 QAPverified 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 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. However, we seek 

comment on whether the proposed 

compliance options should be voluntary 

or mandatory for RIN generators and 

obligated parties. 

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 

EPA-approved 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 proposal, determine 

what if any changes may be appropriate, 

and subsequently publish a final rule. 

Following the effective date of the final 

rule, auditors could apply to EPA for 

registration and 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. RIN verification would start once 

the elements of the plan were in place, 

including the execution of an initial site 

inspection and record review, and 

under Option A, the initiation of 

ongoing monitoring. At that point, RINs 

could be verified by the auditor. RIN 

auditors could, of course, operate 

without EPA approval, though the RINs 

they verified would not be eligible for 

the special treatment afforded to RINs 

verified by an EPA-approved QAP 

under the proposed rules. 

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 proposed provisions 

relating to the affirmative defense apply 

not only to RINs generated after 

promulgation of the final rule, but also 

to RINs generated from January 1, 2013 

onward. 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 would be the effect of an audit 

being performed in the interim period? 

Second, what QAP requirements would 

need to be met for a RIN audited prior 

to the final rule’s effective date to be 

considered verified after the final rule’s 

effective date? 

Regarding the first question, for RINs 

generated prior to the final rule’s 

effective date, EPA’s approval process 

regarding verifications would be 

different than the process effective after 

the final rule, 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 upon publication of this 

NPRM. We recognize that RIN 

generators and buyers likely will want 

to know whether 2013 RINs generated 

and audited prior to the effective date of 

the final rule would receive the 

proposed benefits and treatment given 

to RINs verified after the rule is in 

effect. 

EPA is ready to facilitate the 

verification of RINs generated in 2013 

prior to the final rule’s effective date 

through an informal ‘‘pre-registration’’ 

process. EPA will review auditors’ 

registration information and proposed 

QAPs, and provide guidance on whether 


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the plans appear to satisfy the proposed 

requirements. The names of those 

auditors and QAPs whose submissions 

are consistent with the applicable 

requirements in the proposed 

regulations will be published on EPA’s 

Web site. This will not signify a final 

agency decision or approval of any 

auditor or QAP and EPA will not be 

legally bound by this initial evaluation. 

It would instead be guidance to an 

auditor as to whether EPA has any 

concerns about its registration and QAP 

plan and whether they appear to be 

consistent with the requirements in the 

proposed regulations. Publication of the 

auditors’ names and available QAPs 

would provide useful information for 

outside parties who are evaluating the 

risk associated with RINs audited prior 

to the effective date of the final rule. 

Auditors would not be required to 

submit their QAPs to EPA for such 

guidance, and EPA’s guidance or 

feedback to the auditors would confer 

no legal rights or privileges to the 

auditors, or to the production facilities 

and RINs they review. 

RINs audited through 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 could only be deemed 

‘‘verified’’ after the final rule goes into 

effect, and after EPA 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 provisions and 

requirements proposed in this NPRM 

would apply to RINs verified 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. Similarly, it is important to 

note that the current regulatory 

provisions, including those regarding 

RIN replacement and civil liability, will 

remain in full effect until the final rule 

goes into effect. 

Regarding the second question of 

what QAP requirements would need to 

be met for a RIN audited prior to the 

final rule’s effective date to be 

considered verified after the final rule’s 

effective date, the substantive 

requirements for the QAPs used prior to 

the final rule may be slightly different 

from QAPs used after the final rule. As 

discussed above, after the final rule is 

effective, a RIN could be verified only 

after the auditor conducted a site 

inspection and document review of 

RINs already generated, and (for QAP A) 

initiated ongoing monitoring of 

feedstock qualifications and production 

processes. All RIN verification after the 

effective date of the final rule would 

thus be ‘‘prospective,’’ covering RINs 

that are not yet generated at the time the 

audit is conducted. For RIN verification 

prior to the final rule’s effective date, 

however, the requisite audit activities, 

including the site visit and setup of 

ongoing monitoring, might 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 prior to the final rule’s 

effective date, 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. Auditors would only be able to 

perform a retrospective audit if all the 

elements of the QAP were already in 

place and could only perform one 

retrospective audit of a given producer. 

This would ensure that auditors are not 

inappropriately taking advantage of this 

flexibility by doing retrospective audits 

only (which require less monitoring and 

work, especially for Option A QAPs) 

until the final rule is effective. Instead, 

they would be encouraged to get QAPbased audits up and running in their 

intended prospective form as soon as 

possible, while allowing reasonable 

flexibility to account for a start-up lag. 

We recognize that the retrospective 

audit process for RINs generated prior to 

the actual audit being conducted may 

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 number of RINs 

at issue, we believe the risk of invalidity 

in this short term transition period is 

reasonable in light of the benefits of 

giving a reasonable expectation of 

validity to RINs generated as of January 

1, 2013. 

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 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. 

However, as noted above, EPA intends 

to post the names of those auditors 

whose QAPs and registration materials 

appear consistent with the proposed 

regulations on EPA’s Web site. This 

public posting will confer no legal 

rights, privileges, or license, but will 

indicate that, at the time of EPA’s 

review, the QAP of the auditor in 

question appears to meet the proposed 

requirements for a QAP. 

Once the final rule is in effect, EPA 

will proceed to register auditors and 

approve QAPs 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 

replacement obligation provisions for 

verified RINs that are determined to be 

invalidly generated. 

F. Request for Comment on Prohibiting 

Producers From Separating RINs 

We request comment on a regulatory 

change 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. The 

intent of this provision was to avoid 

situations in which RINs were never 

separated from renewable fuel due to its 

use in neat form or some atypical blend. 


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7The generator of the invalid RIN is always 

responsible for replacement. 

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 without volume. 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 

Parties responsible for replacement of invalidly 

generated RINs 7.

Third-party auditor ............................................ Obligated party. 

Requirement for a RIN replacement mechanism 

as condition of registration.

Yes ................................................................... No. 

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. 

Limited exemption for invalidly generated RIN 

replacement.

None ................................................................. For 2013–14, up to 2% of the obligated party’s RVOs. 

Cap on RIN replacement .................................... For 2013–15, 2% of the most recent five 

year’s worth of verified RINs.

None. 

Requirements for QAPs ..................................... Detailed requirements including ongoing monitoring.Less detailed requirements. 

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 if 

they successfully established an 

affirmative defense, and could use 

invalidly generated RINs for compliance 

under certain conditions. The thirdparty 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 

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 under Option A would be 

required to demonstrate the existence of 

a 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 the 

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., for those production 

aspects that have sufficient variability 

such 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. Note 

that the components proposed for 

monitoring, whether on an ongoing or 

periodic basis, are components that are 

already regulated under the RFS 

program. 

We request comment on the 

components we propose for ongoing or 


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8The treatment of biomass that is or is derived 

from invasive species will be addressed in a 

separate rule-making. 

periodic monitoring, 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 

components could or should be subject 

to different schedules (e.g., annual, 

once), and what those schedules should 

be, and why. 

A. Requirements for Option A Quality 

Assurance Plans 

As described in Section III above, 

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 third-party 

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 EPAapproved 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 thirdparty 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 and RIN generation 

by 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 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 an 

Option 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. Feedstock-Related Components 

We propose 12 required elements in 

Option A QAPs designed to ensure that 

the feedstocks used in the production of 

renewable fuel qualify to generate 

RINs.8 As shown in Table IV.A.1.a–1, 

some elements would be required to be 

monitored on an ongoing basis, and 

some on a quarterly basis. 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 from the 

listing in § 80.1401. As with all 

components proposed for monitoring 

and verification under a QAP, except for 

provisions related to the quality 

assurance program, there are no 

additional requirements added to the 

RFS program, e.g., that feedstocks are 

required to meet the definition of 

renewable biomass in § 80.1401 is a 

current RFS requirement. 

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 Municipal Solid 

Waste (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. Note that 

requirements for these factors and 

calculations are specified in the RFS 

regulations. Under the QAP, the auditor 

reviews and verifies that the 

requirements of the regulations were 

followed. 

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 verify that the 

feedstock used to produce renewable 

fuel is not a renewable fuel from which 

RINs were already generated in 

accordance with the requirements at 

§ 80.1426(c)(6). 

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 


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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 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. Production Process-Related 

Components 

We propose t 10 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 each of the 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 nonfood 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, 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 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 

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 verification that the 

plant is running as stated. Staffing 

levels, or a reasonable metric such as 

whether the workforce is 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 easily accessible and 

useful data. 

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 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 onsite, 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 RFS registration 

in terms of chemical composition. 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. 

Finally, the QAP would be required to 

verify that production volume being 

claimed is consistent with storage and/ 

or distribution capacity and other 

applicable reports generated by the 

producer. 

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. 


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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 

calculation.

................................ X 

2–4 ........................................................................ Production process consistent with EMTS .......... X ................................

2–5 ........................................................................ Production process consistent with D code ......... X ................................

2–6 ........................................................................ Certificates of analysis verify fuel ........................ X ................................

2–7 ........................................................................ Verify existence of quality process controls ......... ................................ X 

2–8 ........................................................................ Volume production consistent with other reports 

required by EPA or other government entities.

................................ X 

2–9 ........................................................................ Volume production consistent with storage and 

distribution capacity.

................................ X 

2–10 ...................................................................... Volume production capacity is consistent with 

RFS registration.

................................ X 

c. RIN Generation-Related Components 

We propose nine 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. 

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 as 

transportation fuel, heating oil, and/or 

jet fuel as defined in § 80.1401. 

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. The QAP 

also would be required to verify the 

accuracy of all fuel-related factors used 

in calculation of the feedstock energy, 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 (see § 80.1426(f)(9)). 

The QAP would be required to verify 

that fuel shipments are consistent with 

production, and would be required to 

review, if applicable, purchases and 

storage of petroleum-based fuel, and 

contracts with any company that 

removes wastes, co-products, off-spec 

products or any other material other 

than renewable fuel from the facility. 

The QAP would be required to review 

bills of lading (BOL), invoices, product 

transfer documents (PTDs), EMTS 

inputs, EPA quarterly reports and 

Energy Information Administration 

data. 

Finally, the QAP must verify that 

appropriate RIN generation calculations 

are being followed under § 80.1426(f)(3), 

(4), or (5) as applicable, and that RIN 

generation was consistent with wet 

gallons produced. 

The RIN generation-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.c–1—OPTION A: QAP MONITORING FREQUENCY—RIN GENERATION-RELATED

Component Ongoing monitoring Periodic monitoring 

3–1 ........................................................................ Renewable fuel sold for qualifying uses .............. X ................................

3–2 ........................................................................ Standardization of volumes .................................. X ................................

3–3 ........................................................................ Renewable fuel matches D code or petition ........ X ................................

3–4 ........................................................................ RIN generation consistent with wet gallons ......... X ................................

3–5 ........................................................................ Fuel shipments consistent with production .......... X ................................

3–6 ........................................................................ Renewable content R is accurate ........................ X ................................

3–7 ........................................................................ Registration, reporting, recordkeeping ................. ................................ X 

3–8 ........................................................................ Equivalence value EV is accurate, appropriate ... X ................................

3–9 ........................................................................ RIN generation calculations ................................. X ................................

d. RIN Separation-Related Components 

We propose three required elements 

in Option A QAPs designed to verify 

RIN separation. First, 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. 

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. Finally, 

the QAP must verify the accuracy of the 

annual attestation. 

The RIN separation-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.D–1—OPTION A: QAP MONITORING FREQUENCY—RIN SEPARATION-RELATED

Component Ongoing monitoring Quarterly 

monitoring 

4–1 ........................................................................ Verify RIN separation ........................................... X ................................

4–2 ........................................................................ Exported fuel not used to generate RINs ............ X ................................

4–3 ........................................................................ Verify accuracy of annual attestation ................... ................................ X 

2. Approval and Use of Option A QAPs 

a. Approval of Quality Assurance Plan 

We are proposing that a third-party 

auditor choosing to verify RINs under 

the quality assurance program must 

submit a QAP to EPA for approval. A 

separate QAP is required for each 

different feedstock/production process/ 

fuel type combination (i.e., pathway). A 

QAP for a given pathway may be used 

for multiple facilities for which that 

pathway applies. 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 EPAapproved QAP could be used by a thirdparty auditor to provide audit services 

to renewable fuel producers. 

b. Frequency of Updates or 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 modified and resubmitted for 

approval. We are 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 

even one of these conditions, the plan 

submitted to EPA would no longer be 

applicable, and thus a 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 should 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 the RIN 

generator does not first replace them. 

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 invalidly generated 

RINs they verify as A–RINs. See Section 

VI.B of this preamble for full registration 

requirements. If the party who generated 

the invalid A–RINs did not replace 

them, 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 selffinancing 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 and the 

previous four years. The calculation of 

this potential replacement requirement 

is further discussed in Section IV.B.1, 

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 

proposing to leave the choice of the type 

of mechanism 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: traditional 

financial assurance instruments, RIN 

banks, and RIN escrow accounts. 

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 effectiveness 

and 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. 

1. Required 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 because we believe that 

properly functioning QAP audits will 

significantly reduce the chance of 

invalid A–RINs entering the market. We 

also recognize that the market will need 

time to evaluate the risk associated with 

bonds or other traditional financial 

assurance mechanisms and properly 

price these financial assurance 

instruments. Accordingly, we are 

proposing to phase in the RIN 

replacement mechanism over time to 

balance the benefits of encouraging 

early implementation of the more robust 

QAP A program with the cost of early 


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9While there is no statute of limitations on EPA 

taking enforcement actions with respect to invalid 

RINs, there is a five year limit on records retention. 

implementation. Under this approach, 

the minimum ‘‘replacement cap’’ will be 

set relatively low through 2015, and 

may change on January 1, 2016. 

We propose that an auditor using an 

Option A QAP must be capable of 

replacing 2% of the total A–RINs that it 

verifies during the first phase of the 

program, i.e. through 2015, and we will 

finalize a replacement cap for 

subsequent years in the final 

rulemaking. We believe incidences of 

invalid RINs will be significantly below 

historic levels. Invalid RINs in 2010 and 

2011 were generated when there was 

little due diligence being performed by 

downstream parties to ensure that RINs 

were valid, and we believe that 

incidences of invalidity would be 

significantly fewer in number once the 

QAP verification processes are in use. 

The auditor’s replacement responsibility 

is therefore equal to the ‘‘replacement 

cap’’ for this first phase of the program. 

For further information on the 

replacement cap, see Section IV.D.4, 

below. 

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. First, some auditors 

would not have to replace any of the 

RINs they verify, since many producers 

would have generated no invalid RINs. 

Second, 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. We therefore seek 

comment on the level of coverage 

required for RIN replacement 

mechanisms. We believe that the 

appropriate level of coverage for RIN 

replacement mechanisms should strike 

a balance between the benefits of 

ensuring that invalid RINs are replaced 

and reducing the risk of invalid RINs 

entering the market, and the costs 

associated with implementing RIN 

replacement mechanisms. We also seek 

comment on whether it would be 

appropriate to require a minimum dollar 

value as a floor for coverage. The 

minimum dollar value might help 

ensure that the auditors who participate 

in this program have the capital to 

function appropriately, but might also 

cause some qualified auditors to refrain 

from participating in the program 

because of the additional costs. We seek 

comment on whether to require an 

additional floor for the RIN replacement 

mechanism and the correct amount of 

the floor. 

Beginning January 1, 2016, the Option 

A RIN replacement mechanism cap may 

change from the initial 2%. Our goals 

for the cap in 2016 and later years, as 

they are for the cap in 2013, 2014, and 

2015, would be for it to ensure that most 

if not all of invalidly generated A–RINs 

would be replaced and at the same time 

provide assurance that the costs of a RIN 

replacement mechanism would not be 

excessive. We invite comment on what 

level would meet these goals, i.e., 

whether a lower cap, the same 2% cap, 

or a higher cap, for example 25%, 

would be appropriate. As noted above, 

we will finalize the replacement cap for 

2016 and later years in the final 

rulemaking. As described in greater 

detail in Section IV.D.4, below, we also 

propose that the auditor’s replacement 

responsibility extend back to cover no 

more than five years.9 Therefore, the 

auditor must maintain the ability to 

replace the cap percentage of A–RINs 

verified in the current year to date plus 

the cap percentage of A–RINs verified in 

the previous four calendar years. If the 

replacement cap changes in 2016, we 

expect that the auditor’s replacement 

responsibility for the years in the initial 

phase would not change. 

Maintenance of a RIN replacement 

mechanism is a condition of an 

auditor’s registration, which would be 

renewed annually. A failure to maintain 

the ability to replace up to the given cap 

percentage would therefore be a 

sufficient condition for denying a 

registration renewal or revoking an 

Option A auditor’s registration. 

However, we recognize that if an 

auditor’s replacement capacity has been 

significantly depleted by a replacement 

action, it might be difficult or even 

impossible for it to re-fund the 

replacement mechanism and maintain 

its registration in the short term. We 

therefore propose that the replacement 

mechanism be re-funded on an ongoing 

basis, i.e. by the given cap percentage of 

A–RINs verified, until the maximum 

required amount is again achieved. The 

formula for this calculation is in 

§ 80.1470(c) of the proposed regulations, 

and this re-funding mechanism is 

mirrored in the calculation of the 

replacement cap, see Section IV.D.4 

below. We request comment on all 

aspects of the calculation of the 

replacement mechanism and re-funding 

of a depleted replacement mechanism. 

2. Financial Assurance Instruments 

As noted above, we would not 

prescribe that auditors under Option A 

must use any particular RIN 

replacement mechanism, but would 

only require that the mechanism used 

be capable of covering an auditor’s 

potential replacement responsibility 

described above. 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 and retire the correct 

number and type of A–RINs, up to the 

replacement cap discussed above. 

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 may 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 mechanism 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 thirdparty agent to complete the purchase 

and retirement, or paying into a standby 


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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 to perform 

the replacement. 

In an effort to provide regulated 

parties with an option where the auditor 

could use a traditional liability policy as 

a RIN replacement mechanism while 

relieving the obligated party of 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 found 

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 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. 

3. RIN Banks 

Another 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 required to 

replace invalid RINs. As with any other 

replacement mechanism, the bank 

would have to be capable of fulfilling 

any member’s replacement requirement, 

meaning that it would have to contain 

RINs sufficient to meet the replacement 

responsibility of the member with the 

largest potential replacement 

requirement at any given point in time. 

The primary advantage of a RIN bank 

is that it would give 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 were used to 

replace RINs for which one of the bank’s 

members was responsible, the 

withdrawn RINs would have to 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 declared 

bankruptcy or was otherwise unable to 

reimburse the bank, the remaining 

members would be responsible for repopulating 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 repopulate 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 


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until the minimum required level of 

RINs was reached. 

RINs deposited in RIN banks would 

expire just like other RINs. We 

contemplated creating a special category 

of RINs that do not expire if deposited 

in a RIN bank which 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 limitation on the previous 

year’s RINs that may be used to meet the 

current year’s RVO (see § 80.1427(a)(5)) 

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. 

4. 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 the 

auditor’s replacement responsibility at 

any given point in time. 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. Thus, the 

RIN auditor would eventually be able to 

use the proceeds from the sale of RINs 

in the escrow account to fund the 

purchase of new RINs, reducing the 

total long-term costs of this RIN 

replacement instrument. 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 until the cumulative 

five year cap is reached (as further 

described in Section IV.D.4) 

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. 

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 EPA-approved QAP 

audit would be the foundation of an 

affirmative defense for parties that 

transfer or use QAP-verified RINs for 

compliance purposes. The affirmative 

defense would only be available to RIN 

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 


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10 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 EPA-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. 

person then transferred 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 for the 

purpose of asserting an affirmative 

defense.10 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. The proposed 

affirmative defense addresses violations 

of 40 CFR 80.1460(b)(2) and the use 

violation of 40 CFR 80.1460(c)(1). 40 

CFR 80.1460(b)(2) prohibits any person 

from transferring to any other person a 

RIN that is invalid. 40CFR 80.1460(c)(1) 

provides that no person shall use 

invalid RINs to meet the person’s RVO, 

or fail to acquire sufficient RINs to meet 

the person’s RVO. The proposed 

affirmative defense would apply to 

violations arising from a person’s use of 

invalid RINs whether or not his/her use 

of the invalid RINs caused them to fail 

to acquire sufficient RINs to meet their 

RVOs. 

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 EPAapproved 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 in 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 ‘‘B– 

RINs’’). 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, he/she 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: 

(1) The RINs in question were verified 

in accordance with an EPA-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 the next 

business day 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. 

An affirmative defense is a defense 

that precludes liability even if all of the 

elements of a claim are proven, and 

generally is asserted in an 

administrative or judicial enforcement 

proceeding. 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. 

We request comment on all the 

elements we are proposing as 

prerequisites to asserting an affirmative 

defense, and in particular the 

requirement to report invalid RINs to 

the EPA within the next business day of 

discovery. 

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 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. 

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 third-party auditor under Option A 

would also be required to replace the 

invalid RINs. 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, if they met the 

requirements of the affirmative defense. 

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, which 

under QAP Option A includes the RIN 

generator or auditor, but not the 

obligated party. See § 80.1474 of the 

proposed regulations for details of the 

administrative process for replacement 

of invalid RINs. 


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11 It should be noted that the replacement 

mechanism could not be funded by RINs that were 

both generated and verified by the same auditor. 

Auditor requirements are discussed in further detail 

in Section VI. 

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 EPAapproved 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.11 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 

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 approach. In 

particular, we seek comment on what 

types of entities would seek to serve as 

auditors, what the potential risk burden 

might be, and how this burden could be 

quantified. We further seek comment on 

the impact of the RIN replacement cap 

on the cost of the program. 

2. Invalid A–RIN Replacement 

The current regulations do not specify 

that an obligated party must replace 

invalid RINs. Rather, obligated parties 

choose to replace invalid RINs in order 

to meet their RVOs. 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. 

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, the generator of an 

invalid A–RIN would never be 

permitted to transfer verified A–RINs 

that are invalid. 

If the RIN generator failed to replace 

invalidly generated A–RINs in the time 

frame established in the administrative 

process specified in the proposed 

regulations, the third-party auditor 

would be required 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, i.e., the RIN generator 

or auditor, but not the obligated party. 

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 Dtype 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 written demonstration providing a 

basis for its claim of validity to either 

the third-party auditor or EPA, whoever 

identified the PIR. If the third-party 

auditor determined that the 

demonstration was sufficient, the RIN 

would not need to be replaced; 

however, EPA would reserve the right to 

make a determination regarding the 

validity of the RIN. If EPA determined 


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that the demonstration was sufficient, 

the RIN would not need to be replaced. 

However, if the third-party auditor 

determined it was not sufficient and if 

the EPA confirmed that determination, 

or if EPA determined it was 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 transferred or used 

for compliance by any party. 

If the RIN generator did not replace an 

invalidly generated A–RIN for any 

reason, the regulations would require 

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. 

Additionally, if an obligated party or 

other third-party owner of an A–RIN 

successfully established an affirmative 

defense, they would not be responsible 

for replacing the A–RIN if it was 

deemed invalidly generated. 

3. Process for Replacing Invalid Verified 

RINs 

When an auditor or EPA determines 

that a RIN is a PIR, the RIN generator 

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: 

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 transferred 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. We request comment on 

this approach. 

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 

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 


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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 we are proposing 

to reduce the costs associated with the 

Option A quality assurance program is 

a cap on RIN replacement. Such a cap 

would help to ensure that QAP Option 

A could be implemented at a reasonable 

cost, 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 

validates through an Option A QAP 

within a calendar year, and would apply 

separately to RINs of each D code. 

The level of the cap reflects 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 for RINs 

verified under an Option A QAP than 

they were over the previous few years. 

Since we are proposing that the required 

RIN replacement mechanism should 

provide coverage for 2% of each D code 

of A–RINs verified by an auditor in the 

current year and (up to) the previous 

four years (see Section IV.B above), we 

likewise believe it would be appropriate 

to cap the number of A–RINs that each 

auditor must replace at 2% of the A– 

RINs it has verified in the same period. 

In other words, the RIN replacement cap 

should be equal to the minimum 

replacement coverage required for 

Option A auditors. As stated above, we 

believe that this cap would ensure that 

most if not all of invalidly generated A– 

RINs would be replaced and would 

provide assurance that the costs of a RIN 

replacement mechanism would not be 

excessive. 

We are proposing that the cap apply 

to all A–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. (This table assumes the 2% cap 

continues into the second phase of the 

program, i.e. in 2016 and beyond, 

though as discussed above, we are 

proposing that the cap may change in 

2016.) 

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 

In 2018, the auditor’s responsibility 

for replacing any 2013 RINs would 

expire and be replaced by its 

responsibility for 2018 RINs. Therefore, 

assuming a relatively static number of 

A–RINs verified each year and a static 

replacement cap, the auditor’s 

replacement responsibility would 

plateau in year six of its auditing 

activities. 

Finally, we are proposing that the 2% 

cap on A–RIN replacement would not 

apply to invalid RINs that were 

erroneously verified based on 

negligence, error, or omission of the 

auditor, including any failure by the 

auditor to properly implement its QAP. 

This issue is discussed further in 

Section VI.A.3. 

V. Provisions for RIN Verification 

Under Option B 

As described in Section IV, the 

voluntary quality assurance program we 

are proposing today would include two 

compliance 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 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, 


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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 

Option B QAPs would be used by 

EPA-approved independent third-party 

auditors to audit renewable fuel 

production. The QAP would have to 

include a list of elements that the 

auditor would check 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. 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. Feedstock-Related Components 

We propose eight 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 feedstockrelated factors used in calculation of the 

feedstock energy 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 

feedstock-related elements that we are 

proposing to require for QAPs under 

Option B are shown in the table below. 

All items would be required to be 

monitored on a quarterly basis. 

TABLE V.A.1.a–1—OPTION B: QAP 

MONITORING FREQUENCY—FEEDSTOCK-RELATED

Component 

1–1 ...... Feedstocks are renewable biomass. 

1–2 ...... Separation plan for food or yard 

waste submitted and accepted. 

1–3 ...... Separation plan for municipal solid 

waste submitted and approved. 

1–4 ...... Feedstocks meet separation plan. 

1–5 ...... Crop, crop residue feedstocks meet 

land use restrictions. 

1–6 ...... Feedstock valid for D code, consistent with EMTS. 

1–7 ...... Feedstock is not renewable fuel 

where RINs generated. 

1–8 ...... Accuracy of feedstock energy calculation. 

b. Production Process-Related 

Components 

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, i.e., is 

consistent with the D code being used 

as permitted under Table 1 to § 80.1426 

or a petition approved through 

§ 80.1416. 

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 nonfood 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. 

The production process-related 

elements that we are proposing to 

require for QAPs under Option B are 

shown in the table below. All items 

would be required to be monitored on 

a quarterly basis. 

TABLE V.A.1.b–1—OPTION B: QAP 

MONITORING FREQUENCY—PRODUCTION PROCESS-RELATED

Component 

2–1 ...... Production process consistent with 

EMTS. 

2–2 ...... Production process consistent with 

D code. 

2–3 ...... Mass and energy balances appropriate. 

2–4 ...... Accuracy of process-related factors 

used in feedstock energy (FE) 

calculation. 

c. RIN Generation-Related Components 

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 as 

transportation fuel, heating oil, and/or 

jet fuel as defined in § 80.1401. 


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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 onsite, 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. 

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. The QAP also would 

be required to verify the accuracy of all 

fuel-related factors used in calculation 

of the feedstock energy, 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 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. Finally, the QAP must 

verify that appropriate RIN generation 

calculations are being followed under 

§ 80.1426(f)(3), (4), or (5) as applicable, 

and that RIN generation was consistent 

with wet gallons produced. The RIN 

generation-related elements that we are 

proposing to require for QAPs under 

Option B are shown in the table below. 

All items would be required to be 

monitored on a quarterly basis. 

TABLE V.A.1.c–1—OPTION B: QAP 

MONITORING FREQUENCY—RIN 

GENERATION-RELATED

Component 

3–1 ...... Renewable fuel sold for qualifying 

uses. 

3–2 ...... Certificates of analysis. 

3–3 ...... Renewable fuel matches D code or 

petition. 

3–4 ...... Renewable content R is accurate. 

3–5 ...... Equivalence value EV is accurate, 

appropriate. 

3–6 ...... Volume production capacity is consistent with registration. 

3–7 ...... RIN generation calculations. 

d. RIN Separation-Related Components 

We propose three required elements 

in Option B QAPs to verify RIN 

separation. First, 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. 

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. Finally, 

the QAP must verify the accuracy of the 

annual attestation. 

The RIN separation-related elements 

that we are proposing to require for 

QAPs under Option B are shown in the 

table below. All items would be 

required to be monitored on a quarterly 

basis. 

TABLE V.A.1.d–1—OPTION B: QAP 

MONITORING FREQUENCY—RIN 

SEPARATION-RELATED

Component 

4–1 ...... Verify RIN separation. 

4–2 ...... Exported fuel not used to generate 

RINs. 

4–3 ...... Verify accuracy of annual attestation. 

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, i.e., a third-party auditor 

choosing to verify RINs under the 

quality assurance program must submit 

a QAP to EPA for approval. A separate 

QAP is required for each different 

feedstock/production process/fuel type 

combination (i.e., pathway). A QAP for 

a given pathway may be used for 

multiple facilities for which that 

pathway applies. 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 EPAapproved QAP could be used by a thirdparty 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 modified and resubmitted for 

approval. We are 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 

even one of these conditions, the 

original plan submitted to EPA would 

no longer be applicable, and thus a 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 should 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 thirdparty auditor who is not required to 

replace such RINs. The requirements for 

establishing an affirmative defense 


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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: 

(1) The RINs in question were verified 

in accordance with an EPA-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 the next 

business day 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 A–RINs, 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 

transferred 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 B–RIN 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 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 B- 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 B–RINs according to the 

administrative process, the obligated 

party would be required to replace the 

invalid RINs if the RINs were verified 

under Option B or 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 B–RIN transferred 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 thirdparty auditors to minimize the cost of 

verification services for RINs they deem 

to be 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 


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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. 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 in the time 

frame established in the administrative 

process specified in the proposed 

regulation, the obligated party would be 

responsible for replacing 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 

transferred 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 Dtype 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 written demonstration providing a 

basis for its claim of validity to either 

the third-party auditor or EPA, whoever 

identified the PIR. If the third-party 

auditor determined that the 

demonstration was sufficient, the RIN 

would not need to be replaced; 

however, EPA would reserve the right to 

make a determination regarding the 

validity of the RIN. If EPA determined 

that the demonstration was sufficient, 

the RIN would not need to be replaced. 

However, if the third-party auditor 

determined it was not sufficient and if 

the EPA confirmed that determination, 

or if EPA determined it was 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 transferred 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 

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 

transferred 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 be 

above the number of invalid B–RINs 

generated, given that our proposed 

quality assurance program is expected 

to reduce incidences of invalidly 

generated RINs. 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 generator/ 

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. 

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, 


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12Since 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. 

2007, we determined that the applicable 

percentage standards would be specified 

to two decimal places.12 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 biomassbased 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: 

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 

(percent) 

Exemption 

for RIN 

replacement 

(percent) 

Cellulosic 

biofuel .... 0 .006 a 8 .3 

Biomassbased 

diesel ..... 0 .91 0 .55 

TABLE V.D.4.a–1—EXEMPTION FOR

INVALID RIN REPLACEMENT BASED

ON ROUNDOFF ERROR IN APPLICABLE STANDARDS—Continued 

Applicable 

standard 

(percent) 

Exemption 

for RIN 

replacement 

(percent) 

Advanced 

biofuel .... 1 .21 0 .41 

Total renewable 

fuel ........ 9 .23 0 .05 

aBased on a maximum potential roundoff 

error of 0.0005% instead of 0.005% 

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 

(percent) 

2011 ......................................................................................................................................................... 196.9 193.1 ¥1.9 

2010 ......................................................................................................................................................... 196.6 196.2 ¥0.2 

2009 ......................................................................................................................................................... 200.1 193.7 ¥3.2 

2008 ......................................................................................................................................................... 210.0 198.4 ¥5.5 

2007 ......................................................................................................................................................... 208.4 206.8 ¥0.7 

2006 ......................................................................................................................................................... 206.5 205.9 ¥0.3 

2005 a ....................................................................................................................................................... 204.0 203.7 ¥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. aSTEO 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, 


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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 

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 

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, where RINs are not 

verified by an EPA-approved 

independent auditor, 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 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 not 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 not 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 biomassbased 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 it owns falls below 2% of 

his RVOs. However, if at any time 

within a calendar year the number of 

invalid RINs it owns exceeded 2% of his 

RVOs, it 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 RINs verified 

under Option B in 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 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. But 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 


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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. We request 

comment on this approach and whether 

it should apply for a period longer than 

two years. 

VI. Proposed Requirements for 

Auditors 

Today, we are proposing a number of 

requirements for the independent thirdparty 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 thirdparty auditors would be integral to the 

successful implementation of the 

combination of provisions EPA is 

proposing. Under both options, thirdparty auditors would need to meet 

minimum qualifications (e.g. 

independence and professional 

competency requirements). All thirdparty 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 liability errors and 

omissions 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 

third-party 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 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 thirdparty 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 thirdparty 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 thirdparty auditors that might promote the 

improper validation of RINs. For 

example, a third-party auditor could 

also be acting on behalf of a RIN-owner, 

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 and 

credentials. In RFS2, we require that 

each renewable fuel production facility 

undergo an engineering review by a 


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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. We are not 

proposing that companies that register 

as a third-party auditor be solely 

constituted of professional engineers to 

implement an EPA-approved QAP and 

conduct facility audits; however, a 

licensed professional engineer would 

need to supervise and or work in a team 

with other employees of the third-party 

auditing company. 

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 thirdparties that implement QAPs 

demonstrate that CPAs conduct audits, 

we are seeking comments over whether 

third-parties must have any additional 

qualifications (e.g. minimum years of 

experience, professional licensing in 

states where audited facilities are 

located, etc.) 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 third-parties 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 thirdparty auditors to maintain professional 

liability insurance, commonly known as 

Errors and Omissions or E&O insurance. 

We are proposing this as a registration 

requirement for both QAP Option A and 

Option B. The amount of insurance 

should be, at a minimum, equal to 2% 

of the RINs the auditor verifies in a year 

to cover the 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. 

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 as defined in the E&O 

policy. 

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 what that minimum 

amount should be based on. 

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 thirdparty 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 indentify RINs as having been 

verified in EMTS so other parties may 

recognize RINs as having been verified 

under an EPA-approved QAP. 

During registration, we propose that 

third-party auditors would need to 


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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 legitimate legal entity. 

Third-party auditors would be required 

to indicate which facilities they intend 

to audit. EPA recognizes that a thirdparty 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 

third-party 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 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 EPAapproved 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 thirdparty 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 thirdparty 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 noncompliant 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 

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audits of renewable fuel production 

facilities. 

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 thirdparty 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 satisfies 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 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 thirdparty and EPA that newly generated 

RINs are valid. 

As mentioned above, one key 

requirement for the effective 

implementation of a QAP by a thirdparty 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 third-party 

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. 

Finally, as pointed out elsewhere, 

Option A RINs may have more value in 

the marketplace than Option B RINs. We 

seek comment on mechanisms that the 

market will employ to differentiate such 

RINs across the supply chain and how 

EPA may facilitate such transfers in the 

context of EMTS. 

3. Recordkeeping, Reporting, and Attest 

Engagements 

a. Recordkeeping Requirements 

Under both options, we propose thirdparty 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 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 


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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 

since failure to fulfill reporting 

requirements may constitute a violation 

to the Clean Air Act and may subject the 

responsible party to the penalties 

discussed below. 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 thirdparty 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 

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. 

VII. Proposed Requirements for Audits 

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 

review documents, monitor facility 

activity, contact entities that do 

business with the facility, and conduct 

onsite visits. All of these components 

constitute an audit of the facility. The 

elements of a QAP are discussed in 

some detail in sections IV and V. The 

following provides some additional 

detail on the proposed elements of an 

audit. 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 with respect to foreign 

producers, and specifically request 

comment on possible additional 

program elements that may only be 

applicable to foreign producers. 

A. Document Review and Monitoring 

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 thirdparty 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 coproduct 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. 

The auditor should also determine if 

there is any import or foreign biofuel 

producer documentation. 

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 


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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, 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. 

We request comment on whether and 

how the document review and 

monitoring 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. 

B. 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. 

C. Onsite Visits 

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 International 

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. 

The proposed requirements for onsite 

visits are the same for Option A QAP 

and Option B QAPs. We are proposing 

that an auditor conduct at least four (4) 

onsite visits per year, or every three (3) 

months. We request comment on this 

proposed onsite visit frequency. In 

addition, we request comment on 

whether, over time, less frequent audits 

would be reasonable under an Option B 

QAP. We are proposing that new 

production facilities should be audited 

before verification of RINs. 

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. The proposed 

required visits are the minimum. There 

may be value in visiting more often. 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 would have on the effectiveness of 

the program and its associated costs. 

D. RIN Verification 

We are proposing that RINs would be 

verified only for a specified period 

following an audit. Although 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. RINs generated after 

the completion of the audit could then 

be verified until the next audit is 

completed, but for no longer than 100 

days after completion of the audit. We 

believe this prospective approach is 

appropriate for the proposed quality 

assurance program because the audit 

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 set of conditions. In addition, 

it could place a serious impediment in 

the market for RINs if their verification 

followed RIN generation by any 

significant 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 100 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 conducted within 

100 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. We 

request comment on whether, in the 

event of discovery of invalid RINs, a 

more frequent onsite visit schedule 

should be required. We are not inclined 

to require such an outcome at this point 

because one of the purposes of the 

quality assurance programs is to 

proactively identify invalidly-generated 

RINs. In addition, it is highly 

anticipated that there will also be 

situations where no invalid RINs have 

been generated for an extended period 

of time for a given facility. Under this 

scenario, less frequent onsite visits may 

be warranted. We request comment on 

whether lower audit frequency levels 

should be allowed after a significant 

period of time with no invalidly 

generated RINS, and suggestions as to 

appropriate reduced onsite visit 

frequencies. 

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: Exporter RVO 

requirements, identification of 

renewable fuel content for all fuel 

transfers, and retirement of RINs at the 

time of export. The Agency is proposing 

to address these issues primarily 

because the export of renewable fuel, 

particularly ethanol and biodiesel, has 

become more prevalent in the 

transportation fuel market. These 

proposed changes address how RINs 

should be handled when renewable fuel 

is exported. In addition, it will provide 

EPA with the data needed to track 

renewable fuel exports. The intent is to 

ensure that exported renewable fuel is 

not included in meeting the mandated 

domestic annual renewable fuel volume 

requirement. 


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Federal Register / Vol. 78, No. 35 / Thursday, February 21, 2013 / Proposed Rules 12193 

13Automotive Fuel Ratings, Certification and 

Posting Final Rule, 73 FR 40154, July 11, 2008. 

1. Exporter RVO 

Any volume of renewable fuel which 

is exported, either neat or blended, 

requires calculation of an export RVO. 

In this rule, we are making minor 

changes to the regulations to address 

concerns that some regulated parties 

may be misinterpreting the regulations 

and only establishing an RVO for 

exported renewable fuel that is ‘‘in its 

neat form or blended with gasoline or 

diesel.’’ The opening clause of 40 CFR 

80.1430(a) clearly provides that an RVO 

must be satisfied by any party that 

‘‘owns any amount of renewable fuel’’ 

that is exported, and 40 CFR 80.1430(f) 

also states that ‘‘each exporter of 

renewable fuel’’ must satisfy an RVO. 

The portion of 80.1430(a) that provides 

that the regulation applies ‘‘whether 

[the exported renewable fuel] is in its 

neat form or blended with gasoline or 

diesel’’ was intended to make the point, 

through specific examples, that the 

regulation applies to both neat 

renewable fuels and renewable fuel 

blends that are exported. Thus, the 

reference to ‘‘gasoline or diesel’’ blends 

is illustrative, and does not exclude 

other exported renewable fuel blends, 

such as biodiesel blended into fuel oils, 

from the scope of the regulation. We are 

proposing changes to 40 CFR 80.1430(a) 

to remove the references to examples of 

fuel blended with ‘‘gasoline and diesel,’’ 

and state in this section of the 

regulations that the requirement to 

establish an RVO applies whether the 

exported renewable fuel is in its neat 

form or blended. 

We seek comment on what additional 

amendments, if any, should be made to 

the export provisions at 80.1430, the 

recordkeeping requirements at 80.1454, 

and the reporting requirements at 

80.1451, to ensure that exporter RVOs 

adequately make the RIN market whole 

for any exported biofuel for which RINs 

may have been generated. In particular 

EPA seeks comment on whether EPA 

should limit exporter RVO requirements 

in situations where exporters can 

document that either no RINs were ever 

generated for the exported fuel, or that 

any such RINs were previously retired. 

2. Require Identification of Renewable 

Fuel Content 

As background, the Federal Trade 

Commission, as directed by EISA 

established labeling requirements for 

biofuel blends.13 EISA specifically 

addressed 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 biomass-based diesel or 

biodiesel in quantities between five 

percent and 20 percent.’ ’’ EISA Sec. 

205(b)(2) (emphasis added). Finally, 

blends containing more than 20 percent 

biodiesel or biomass-based diesel ‘‘shall 

be labeled ‘contains more than 20 

percent biomass-based diesel or 

biodiesel.’ ’’ EISA Sec. 205(b)(3) 

(emphasis added). As fuel blends 

containing no more than five percent 

biomass-based diesel are not required to 

be labeled, it is possible that some 

exporters may believe that the fuel they 

are exporting has a lower biofuel 

content than it actually does or they 

may be claiming that it’s straight diesel 

fuel. 

To better document and communicate 

the biodiesel content of any biofuel 

blend throughout the fuel supply chain 

(not just biofuel blends containing more 

than five percent biomass-based diesel), 

we propose to extend the existing 

product transfer document requirements 

at 40 CFR 80.1453 to fuel blends such 

that any person that sells or otherwise 

transfers title to any biomass-based 

diesel blend or biodiesel blend to any 

other person for resale of the product 

shall prepare a product transfer 

document evidencing such transfer. 

Such product 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 

The current RFS regulations require 

exporters to demonstrate compliance 

with their exporter RVOs on an annual 

basis, by February 28 of the year 

following the compliance year in 

question. 40 CFR 80.1451(a). EPA is 

seeking comment on the period of time 

that should be allowed for retirement of 

RINs as a result of renewable fuel 

export, and whether the current deficit 

carry-over provision in 

80.1451(a)(1)(xii) should be eliminated 

for exporters. Given the volatility in the 

renewable fuel export market, a shorter 

time period may ease concerns for 

related uncertainty in the RIN market. 

This 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.’’ This provision was 

included to allow flexibility for 

exporters. However, EPA is considering 

whether a change is required at this 

time to prevent instability and abuse. 

One approach under consideration 

would require exporters to clearly 

demonstrate on a quarterly basis that 

they have acquired RINs sufficient to 

cover volumes exported in the quarter. 

This shorter time frame would 

significantly reduce the window of 

opportunity for large exports of 

renewable fuel without exporters having 

obtained the RINs that must ultimately 

be retired. Alternatively, EPA could 

require the immediate retirement of 

RINs, at the time of export or within a 

limited window such as 30 days after 

export. This would prevent rolling 

deficits carried by exporters, and guard 

against unanticipated market changes, 

or even ‘‘shell companies’’ closing up 

shop in order to avoid the cost of 

meeting their export RVO. Eliminating 

the deficit carry-forward provision as it 

applies to exporters would also further 

the same objectives. EPA solicits 

comment on these options. 

B. ‘‘Downstream’’ Invalidation and 

Product Transfer Documents 

The definition of ‘‘renewable fuel’’ 

requires that the fuel be used to replace 

or reduce the quantity of fossil fuel 

present in transportation fuel, heating 

oil, or jet fuel. Several stakeholders have 

requested that the EPA amend the 

regulations to address concerns that 

properly generated RINs may become 

invalid as a result of the fuel not being 

used in or as transportation fuel, heating 

oil, or jet fuel ‘‘downstream’’ of the 

renewable fuel producer or importer, 

that is after it has left the custody of the 

producer or importer. In response to 

these concerns, EPA is proposing 

amendments to clarify and expand on 

existing requirements regarding the 

designation of qualifying renewable 

fuel, and is also proposing new 

limitations on RIN generation for those 

types of renewable fuel that can be 

expected to be used in or as nonqualifying fuel. 


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12194 Federal Register / Vol. 78, No. 35 / Thursday, February 21, 2013 / Proposed Rules 

1. 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 to § 80.1426(f) or has 

been approved by a petition 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, i.e., for a ‘‘nonqualifying fuel use’’. 

We are proposing amendments to 

§ 80.1426(a) and (c), and conforming 

amendments to the product transfer 

document (PTD) regulations in 

§ 80.1453, to require all renewable fuel 

producers and importers to designate all 

RIN-generating renewable fuel as 

transportation fuel, heating oil or jet fuel 

on the PTDs that a renewable fuel 

producer or importer prepares to 

accompany a fuel shipment. These 

changes would standardize the existing 

‘‘designation’’ requirement for RIN 

generators by specifying the location 

and content of the designations. The 

requirement to designate intended fuel 

uses in PTDs would operate as a 

constant reminder to renewable fuel 

producers and importers that RINs may 

only be generated for fuel intended for 

use as transportation fuel, heating oil or 

jet fuel, i.e., qualifying fuel uses, and 

would facilitate EPA enforcement of the 

designation requirement. The 

regulations would require that 

designations be made in good faith. 

Parties designating fuel for a qualifying 

fuel use who in fact knew that the fuel 

would likely be used in a fuel other than 

transportation or jet fuel or heating oil 

(a ‘‘non-qualifying fuel use’’) would be 

in violation of this proposed regulation, 

and subject to civil penalties. 

We are also proposing to include 

special conditions, in addition to the 

PTD requirements, related to the 

distribution and sale of any renewable 

fuel that is not typically sold for use in 

or as transportation fuel, jet fuel, or 

heating oil. We propose that these 

conditions would apply to all RINgenerating renewable fuels other than 

ethanol, biodiesel, and ‘‘drop in’’ 

renewable diesel. Biogas and renewable 

electricity would also be excluded from 

these conditions since sections 

80.1426(f)(10) and (11) include specific 

conditions designed to ensure that these 

fuels are used in transportation fuel. 

These special conditions must be 

satisfied in order for RINs to be 

generated for those fuels. We are 

proposing to include these new 

requirements together with other 

conditions for RIN generation in 

§§ 80.1426(a) and (c), and conforming 

amendments to the registration, 

reporting and recordkeeping sections. 

EPA believes that denatured ethanol, 

biodiesel that meets the ASTM 6751 

specifications and renewable diesel that 

meets the ASTM D 975 Grade No. 1–D 

or No. 2–D specifications are highly 

likely to be used as transportation fuel, 

heating oil or jet fuel. Accordingly, to 

relieve burdens associated with 

identifying what we expect to be de 

minimis volumes of these fuels used for 

non-qualifying purposes, and to avoid 

the potential for downstream 

invalidation of RINs for such fuels and 

associated detrimental impacts that 

such potential may have on RIN 

markets, we are proposing that validly 

generated RINs for these fuels will 

remain valid regardless of the 

downstream use of the fuel. However, 

parties upstream from the ultimate 

consumer who re-designate any 

renewable fuel for which RINs were 

generated for a non-qualifying use 

would be subject to the proposed RIN 

retirement provisions in 80.1433 that 

are discussed below. We seek comment 

on whether these fuels are highly likely 

to be used only as transportation fuel, 

heating oil or jet fuel, and on whether 

other biofuel types should be similarly 

recognized. We also seek comment on 

whether biodiesel and renewable fuel 

diesel producers who generate RINs 

should be required to sample and test 

their fuels to ensure that the fuel is 

appropriate for use as transportation 

fuel, and what specific sampling and 

testing requirements would be 

appropriate. For all other fuels, we think 

that it is appropriate to limit the 

opportunity for RIN generation to 

circumstances where the producer or 

importer has taken actions to ensure 

that the fuel is used for transportation 

fuel, heating oil or jet fuel. Where such 

actions are taken, we are proposing that 

RINs generated for qualifying renewable 

fuel will remain valid regardless of the 

final downstream use. 

While we are proposing that the 

special conditions related to renewable 

fuel that is not typically sold for use in 

or as transportation fuel, jet fuel, or 

heating oil would not apply to ‘‘drop 

in’’ renewable diesel, we also recognize 

that there is at least one circumstance in 

which renewable diesel may benefit 

from being subject to the same special 

conditions. Renewable diesel is a 

product that was originally introduced 

by companies attempting to create a 

‘‘drop-in’’ transportation fuel made from 

renewable sources that met the same 

specifications as petroleum based 

transportation diesel. Some renewable 

fuel producers are currently generating 

RINs for fuel that they claim meets the 

exiting definition of renewable diesel, 

but which is not chemically equivalent 

to a petroleum diesel fuel under the 

renewable diesel definition. This 

product is primarily composed of 

triglycerides that have not been 

chemically converted to a hydrocarbon, 

and can be produced through simple 

filtration of vegetable oils with little 

processing equipment or effort. Further, 

this product cannot be used as a ‘‘dropin’’ transportation fuel but instead can 

only be used at blend levels with diesel 

fuel that are approved under 40 CFR 

part 79, and moreover it is commonly 

used for non-qualifying fuel uses. To 

address these issues, we are proposing 

to clarify in the definition of ‘‘non-ester 

renewable diesel’’ that qualifying 

products must be approved under 40 

CFR part 79 at specific blend levels with 

diesel fuel. However, it may also be 

necessary to differentiate between the 

two types of renewable diesel (‘‘drop 

in’’ and triglycerides) so industry may 

easily determine which product and 

which RINs they are purchasing, and to 

allow EPA enforcement to differentiate 

between the two products upon 

inspection of a renewable fuel facility. 

We request comment on limiting the 

definition of non-ester renewable diesel, 

or renewable diesel, to fuel that meets 

the ASTM D 975 Grade No. 1–D or No. 

2–D, and that are homogenous 

hydrocarbons. We could then refer to all 

other fuels that meet the current 

definition of renewable diesel as viscous 

non-ester renewable diesel, and they 

would be subject to the special 

conditions related to the distribution 

and sale of renewable fuel that is not 

typically sold for use in or as 

transportation fuel, heating oil or jet 

fuel. This approach would not remove 

anyone from the program and could give 

greater certainty to the industry. 

The new regulatory requirements are 

designed to ensure that these fuels are 

in fact used in or as transportation fuel, 

heating oil or jet fuel, and therefore that 

RINs are appropriately generated for 

these fuels. These requirements are 

necessary because these other renewable 

fuels are commonly used in nonqualifying fuels. For instance, butanol is 

a common chemical feedstock but can 

also be used in transportation fuel. The 

EPA believes that the only current 

allowable use for these other fuels 

(insofar as RINs are associated with 

them) would be as a blending 


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Federal Register / Vol. 78, No. 35 / Thursday, February 21, 2013 / Proposed Rules 12195 

component or additive for gasoline or 

diesel fuels. We are proposing two 

options for generating valid RINs for 

these fuels. First, the renewable fuel 

producer or importer of these fuels may 

generate RINs if they maintain 

contemporaneous records 

demonstrating that they used the fuel as 

a blendstock or additive and that the 

final product is a transportation fuel, 

heating oil or jet fuel that met all 

applicable standards. Second, if the 

renewable fuel producer or importer 

does not use the fuel itself as a 

blendstock or additive for gasoline or 

diesel fuel, they may still generate RINs 

if they enter into a contract that requires 

the party who purchases the fuel to use 

it as a blendstock or additive for 

gasoline or diesel fuel, and that meets 

certain requirements designed to assure 

that the buyer does, in fact, use the fuel 

as a blendstock or additive in a 

transportation fuel, heating oil or jet fuel 

that meets all applicable standards. 

In order to verify that these fuels are 

produced for use as a transportation 

fuel, heating or jet fuel, EPA is 

proposing conforming registration, 

recordkeeping and reporting 

requirements. We are proposing that 

parties who generate RINs for the 

production of these renewable fuels will 

have to include information in their 

registration stating if they will be using 

the fuel as a blendstock or additive at 

their facility or if they will be selling the 

fuel to another party who will be using 

the fuel as a blendstock or additive. If 

the renewable fuel producer or importer 

will be using the fuel as a blendstock or 

additive, they will be required to 

describe their blending activities in 

their registration application. If the 

renewable fuel producer or importer 

will be selling the fuel to another party 

who will be using the fuel as a 

blendstock or the fuel was blended into 

a qualifying fuel downstream of the 

renewable fuel producer or importer, 

these parties will need to provide 

additional information to verify that the 

fuel was, in fact, blended for a 

qualifying fuel use. We solicit comment 

on how these new registration 

requirements should apply to currentlyregistered entities. Options include 

requiring an immediate (within 30–60 

days) registration update, or allowing 

the new submissions to occur at the 

facilities’ next 3-year registration 

update. We propose that renewable fuel 

producers or importers who contract 

with a downstream party to blend their 

product to make a qualifying renewable 

fuel be required to include affidavits in 

their reports from the downstream 

parties to verify that the fuel was used 

in or as a qualifying fuel. This concept 

is modeled after the existing regulations 

relating to RIN generation for biogas and 

renewable electricity, which require the 

use of downstream affidavits to verify 

proper use of the fuel. We also propose 

that any party who produces or blends 

these fuels will need to keep records 

relating to the blending activities to 

allow the QAP providers and the EPA 

to verify that RINs were properly 

generated. We seek comment on 

whether these requirements are 

appropriate for renewable fuels that are 

not highly likely to be used for 

qualifying RFS fuels or whether there 

are other mechanisms that could 

provide adequate assurance that these 

fuels are used for transportation fuel, 

heating oil or jet fuel. 

2. Required Actions Regarding Fuel for 

Which RINs Have Been Generated That 

Is Used for a Non-Qualifying Fuel Use 

Section 80.1429(f) of the existing 

regulations provides that any person 

who uses or designates a renewable fuel 

for an application other than 

transportation fuel, heating oil or jet fuel 

(i.e., a non-qualifying fuel use) must 

retire any RINs received with that 

renewable fuel. Section 80.1429(f) was 

intended to require the person using or 

designating RIN-generating fuel in or for 

a non-qualifying fuel use to retire the 

RINs received with the fuel so that they 

cannot be used for RFS compliance. 

This approach, however, places the 

burden of using fuel for a qualifying fuel 

use on the end user when the fuel has 

already been designated upstream as 

either a qualifying or non-qualifying 

fuel. In other words, once the fuel 

reaches the end user, it has already been 

designated as transportation fuel, 

heating oil or jet fuel, or has been 

redesignated for a non-qualifying fuel 

use. The end user has no part in the 

designation or redesignation of the fuel. 

In order to ensure that RINs generated 

with renewable fuels are retired if the 

fuel is redesignated for a non-qualifying 

fuel use, we propose to tighten the 

requirements for RIN retirement for any 

party that redesignates a renewable RINgenerating fuel for a non-qualifying fuel 

use, and to relieve end users of such an 

obligation. To accomplish this, we 

propose to remove and reserve 

paragraph 80.1429(f) of the regulations 

and to add a new section 80.1433 to 

require parties that designate fuel for 

which RINs were generated for a nonqualifying fuel use, i.e. for something 

other than transportation fuel, heating 

oil, or jet fuel, to retire an appropriate 

number and type of RINs. We believe 

that any person designating 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 RINs. This approach 

places the burden of ensuring an 

appropriate number of RINs are retired 

on a party in the fuel distribution 

business, rather than an end user. Such 

parties tend to have greater expertise in 

complying with regulatory 

requirements, and the potential number 

of parties potentially subject to these 

requirements is far reduced by placing 

the burden for RIN retirement upstream 

of end users. We further propose new 

subsection 80.1460(g) which would 

prohibit a person from designating a 

qualifying renewable fuel for which 

RINs were generated for a nonqualifying fuel use, unless the 

requirements of section 80.1433 have 

been met. The proposed amendments 

would require retirement of applicable 

RINs within a 10 day period. 

3. 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 CFR 

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 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. 

We also propose to amend 

§ 80.1426(f)(4) to address the potential 


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12196 Federal Register / Vol. 78, No. 35 / Thursday, February 21, 2013 / Proposed Rules 

14This does not change the fact that the blend of 

fuel that results from blending MVNRLM or NRLM 

with ECA marine fuel would still be ECA marine 

fuel and subject to the sulfur limits that apply to 

such fuel. 

for ‘‘double discounting’’ for nonrenewable feedstocks when renewable 

fuel is produced by co-processing 

renewable biomass and non-renewable 

feedstocks to produce a fuel that is 

partially renewable. Specifically, we 

have discovered that the existing 

regulations may 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 under § 80.1415(c)(1), 

and the second would be in the 

calculation of the number of RINs 

generated under § 80.1426(f)(4)(i). To 

correct this problem, we are proposing 

to add a new paragraph (f)(4)(iii) so that 

for purposes of § 80.1426(f)(4) only, the 

equivalence value does not include a 

discount for non-renewable feedstocks. 

4. Use of Renewable Fuel in OceanGoing Vessels 

Another issue the Agency is aware of 

concerns the use of renewable fuelcontaining MVNRLM in ocean-going 

vessels. The definition of 

‘‘transportation fuel’’ specifically 

excludes ‘‘fuel for use in ocean-going 

vessels.’’ 40 CFR 80.1401. In the 

preamble to the March 26, 2010 RFS 

rule, the Agency stated that ‘‘ ‘for use in 

ocean-going vessels’ means residual or 

distillate fuels other than Motor Vehicle 

Nonroad Locomotive and Marine 

(MVNRLM) intended to be used to 

power large ocean-going vessels.’’ 75 FR 

14670, 14721 (March 26, 2010). The rule 

also defines ‘‘fuel for use in ocean going 

vessels’’ as including ECA marine fuel. 

40 CFR 80.1401. Some parties have 

questioned whether MVNRLM that is 

blended into ECA marine fuel is ‘‘fuel 

for ocean going vessels’’ such that RINs 

generated for the renewable fuel 

component of MVNRLM become invalid 

upon that use. It is the Agency’s 

interpretation that the definition of 

‘‘fuel for use in an ocean-going vessel’’ 

in § 80.1401 does not include MVNRLM 

that is blended into ECA marine fuel. 

This is based on the definitions of fuel 

for use in an ocean-going vessel and of 

ECA marine fuel, as explained in the 

March 2010 rulemaking.14 Therefore, 

RINs that have been or are properly 

generated for any renewable fuel 

component of MVNRLM that is blended 

to produce ECA fuel remain valid. EPA 

notes that the vast majority of MVNRLM 

is used for qualifying RFS purposes, and 

that only a trivial quantity of such fuels 

is used to produce ECA fuel for oceangoing vessels. Given the complexity and 

regulatory burden that would be 

involved in tracking trivial quantities of 

MVNRLM that may be used in ECA fuel, 

the RFS regulations appropriately treat 

all properly generated RINS for 

renewable fuel blended into MVNRLM 

as valid, regardless of the possible 

downstream blending of MVNRLM with 

ECA fuel. In addition, under today’s 

proposal, additional regulatory 

requirements designed to ensure that 

renewable fuel is put to a qualifying use 

would be imposed on certain types of 

renewable fuel, as discussed above. 

These new requirements would further 

limit the quantity of renewable fuel that 

could ultimately be blended with ECA 

fuel used in ocean going vessels. 

We seek comment on whether our 

interpretation of ‘‘fuel for use in an 

ocean-going vessel’’ creates any 

potential problems. 

5. Treatment of Improperly Separated 

RINs 

Section 80.1431(a)(1)(viii) currently 

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 to 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 continue to be a prohibited act 

under the regulations. 

EPA 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 in or for a 

qualifying fuel. 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 CFR part 80, subpart I. 

In general, under Subpart I, each time 

custody of fuel is transferred from one 

facility to another, the transferor must 

designate the fuel and record its 

volume. The party who receives 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 way 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. 

C. Treatment of Confidential Business 

Information 

1. Overview 

In the March 26, 2010 RFS2 final rule, 

the EPA addressed a number of 

confidentiality concerns raised by 

comments to the rule proposed on May 

26, 2009 (74 FR 24904). At the time, the 

Agency explained that renewable fuel 

producers would need to submit 

information to support their registration 

and report information to the Agency for 

implementation of the RFS program. 

The EPA also confirmed that we would 

treat any information submitted with a 

claim that it was confidential business 

information (‘‘CBI’’) as CBI in 

accordance with existing Agency 

regulations at 40 CFR part 2, subpart B. 

Information submitted to the Agency in 

compliance with the RFS2 regulations 

has been handled in that fashion. The 

EPA typically makes confidentiality 

determinations on a case-by-case basis. 

However, subsequent to the 


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implementation of the RFS program, we 

have received hundreds of requests for 

information; the need for case-by-case 

determinations has prevented timely 

release of non-CBI information. 

Due to the high level of interest in 

RFS compliance information, the EPA is 

considering approaches to increasing 

public access to information collected 

by the RFS program. At the same time, 

we want to ensure that we continue to 

properly process CBI claims and protect 

company’s confidential information. 

The EPA is now proposing to make 

certain RFS registration and reporting 

information publicly available because 

we believe that greater transparency will 

work hand-in-hand with our QAP 

process to improve the integrity of 

information submitted for RFS 

compliance and deters fraudulent 

behavior. As discussed in more detail 

below, today’s action provides affected 

businesses subject to Part 80, other 

stakeholders, and the general public an 

opportunity to comment on the proposal 

to publish RFS registration and 

reporting information that would be 

aggregated into monthly, quarterly, and 

annual reports. This action is part of a 

broader effort to increase transparency 

and provide information to the public 

that would promote greater liquidity in 

the RIN market in a way that assures 

reasonable oversight of RIN generation. 

Notably also, many interested 

parties—including renewable fuel 

producers—have asked the EPA to 

publish this information. Since 

implementation of the RFS program, the 

Agency has received numerous requests 

for this information. Not only are 

members of the public and interested 

stakeholders interested in reviewing this 

information, many parties to the RFS 

program are requesting that the Agency 

release this information in order to 

make the RFS program more 

transparent. The EPA is soliciting 

comments on whether, for any 

information in the format proposed for 

release, there are unique circumstances 

where disclosing this information 

would cause substantial harm to a 

company’s competitive position. 

2. Proposal To Disclose Aggregated RFS 

Registration Information 

a. Approach 

The EPA is proposing to summarize 

and publish aggregated registration and 

QAP information required under 40 CFR 

80.1450(b), (c), and (g) from 

independent third-party auditors and 

renewable fuel producers and importers 

that are registered with the RFS 

program. We propose to publish this 

information by facility and on a 

monthly basis. Each monthly report of 

registration information will disclose 

certain registration information for each 

producer, importer, and QAP. The 

monthly reports would be cumulative 

reports of all registrations accepted by 

the EPA; they would include existing 

registrations, new registrations, and 

registration updates. For each facility, 

we would publish the company name, 

facility name, facility type/fuel product, 

total permitted capacity, production 

volume, production process type, 

feedstocks, D-Code, and any coproducts. This information would not 

reveal proprietary production processes. 

For example, the production process 

would be identified by the production 

process description used in Table 1 to 

40 CFR part 1426, or for a production 

process approved through the Agency’s 

pathway petition process, it would be 

identified by the name associated with 

that process in OTAQReg. An example 

of what information we intend to 

publish appears below: 

TABLE VIII.C.2.a–1—EXAMPLE REGISTRATION REPORT

Company name Facility name Facility type 

Total permitted capacity 

Production 

volume Feedstock Process type D code Co-products 

Example Ethanol Company.Example Ethanol Facility.Ethanol .......... 125,000 20 Corn Starch ... Wet mill process using 

biomass or 

biogas for 

process energy.

6 Distillers 

grains, 

corn oil. 

Example Biodiesel Company.Example Biodiesel Facility.Biodiesel ........ 125,000 500 Canola Oil ...... Transesterification 

using natural gas or 

biomass for 

process energy.

4 None. 

After publishing these monthly 

registration reports, we intend to 

summarize and update the information 

so that we can publish quarterly and 

annual registration reports of the same 

type of information. At this time, the 

EPA is not proposing to publish 

registration information at the broader 

company-level or more specific batchlevel. We also are not proposing, at this 

time, to publish registration 

submissions or information from 

supplemental registration documents 

(e.g., heat plans, separated food waste 

plans). The EPA is interested in 

stakeholder views on this approach. 

b. Rationale for Proposal 

The EPA believes that the information 

elements as described above are not 

entitled to confidential treatment for a 

number of reasons. First, this type of 

registration information is already 

available through other public outlets. 

For example, for publicly-traded 

companies, this information is filed 

with the U.S. Security Exchange 

Commission in their annual 10–K and 

quarterly 10–Q reports in the company’s 

overview. In those reports, companies 

identify their fuel products, production 

facilities, co-products, production 

processes, production capacities, actual 

production volumes, and feedstocks. 

Additionally, many producers currently 

post this type of information on their 

public Web sites and issue press 

releases broadcasting this information. 

Regardless of whether a company is 

publicly traded or posts this information 

on its Web site, all renewable fuel 

producers report this information to the 

U.S. Department of Energy’s National 

Renewable Energy Laboratory, which 

publishes the information on their Web 

site. Since this information is already 

publicly available, it would not be 

eligible for confidential treatment under 

the Agency’s existing CBI regulations 


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under 40 CFR part 2, subpart B, and 

therefore, it could be released. 

Second, the EPA believes that release 

of this information would not cause 

substantial harm to the competitive 

position of a Part 80 business submitter. 

The information elements, submitted 

under Part 80, and proposed to be made 

publicly available consist of information 

on renewable fuel producers’ facility 

fuel product, total permitted capacity, 

production volume, production process 

type, feedstocks, D-Code, and coproducts. These information elements 

do not reveal any proprietary 

information, or any other information 

that would likely provide insight for 

competitors to gain an advantage. For 

example, consider the Example Ethanol 

Facility: 

• Example Ethanol Facility is a 

renewable fuel producer that produces 

ethanol from corn starch using a wet 

mill process and generates D-Code 6 

RINs for its ethanol. The production of 

ethanol from cornstarch using a wet mill 

process is typical of an ethanol 

production facility, widely-known, and 

demonstrates that the facility meets RFS 

regulatory requirements for RIN 

generation. The feedstock, process, and 

fuel product must comply with an 

approved RFS pathway, which are 

specific to these three information 

elements and identified in Table 1 to 

section 1426 or a publicly-available EPA 

petition approval. These information 

elements are necessary for a producer to 

determine if it meets RFS requirements. 

These information elements describe 

commonly used renewable fuel 

production information and do not 

describe any particular specifications 

about an individual facility’s unique 

processing. Because these information 

elements are widely known and do not 

reveal details about the precise 

production processes used, they are not 

the type of information that a 

competitor could use to develop 

marketing strategies to undermine the 

producer’s competitive position. Thus, 

disclosing information elements 

containing feedstock, process type, DCode, and fuel type would not reveal— 

and could not be used to determine—an 

individual facility’s production 

efficiency, production costs, or pricing 

structure. 

• That the Example Ethanol Facility 

is permitted to produce 125,000 gallons 

of ethanol but only produces 20 gallons 

of ethanol does not disclose proprietary 

information. Releasing total permitted 

capacity and production volumes do not 

disclose actual production rates; nor 

could it be used to determine facilitylevel production rates or the quantity of 

feedstock used to produce that volume. 

This information would not provide a 

competitor with business insights and/ 

or any competitive advantage over the 

Example Ethanol Facility. Accordingly, 

the EPA believes that disclosing 

permitted capacity and production 

volumes would not cause substantial 

harm to a business submitter’s 

competitive position. 

• That the Example Ethanol Facility 

produced distillers grains and corn oil 

as co-products from wet mill process 

does not disclose proprietary 

information. Wet mill processing is 

widely known to result in the coproduction of distillers grains and corn 

oil, and these co-products must be 

disclosed to the EPA with the 

producer’s registration for compliance 

with 40 CFR 80.1426. This is not the 

type of information that could be used 

by a competitor to gain business insights 

or advantage over the Example Ethanol 

Producer. Co-product information is 

widely known among the renewable 

fuel industry and would not contain 

details regarding co-product 

characteristics, production volume, 

quality, quantity, production efficiency, 

costs, or pricing structure. Therefore, 

the EPA believes that disclosing a 

facility’s co-product would not cause 

substantial harm to business submitter’s 

competitive position. 

3. Proposal To Disclose Aggregated RFS 

Report Information 

a. Approach 

In addition to publishing monthly, 

quarterly, and annual registration 

reports, we are also proposing to 

publish monthly, quarterly and/or 

annual report of information that is 

required to be reported to the EPA 

under 40 CFR 80.1452(b) for renewable 

fuel producers and importers. We are 

proposing to publish this information in 

the same manner as registration 

information—on a corporate and/or 

facility-by-facility basis, as described in 

the chart below. The EPA intends to 

publish: 

• The name of the renewable fuel 

producer or importer and associated 

registration information (i.e., name, 

address, feedstock, process, fuel type, DCode). The EPA also intends to depict 

this information in a variety of formats, 

including geographically (i.e., maps) or 

tables to identify where renewable fuel 

production facilities are located (40 CFR 

80.1450(b) and 80.1452(b)(1)). 

• The EPA company and facility 

registration numbers and the associated 

registration information of the 

renewable fuel producers, foreign 

ethanol producers and importers that 

generated RINs in EMTS during the 

applicable time period(s) (40 CFR 

80.1450(b), 80.1452(b)(2), 80.1452(b)(3), 

80.1452(b)(4), and 80.1452(b)(5)). This 

information will be provided for each 

facility where renewable fuel was 

produced. 

• The D-code of RINs generated by 

the facility during the time period (40 

CFR 80.1452(b)(6)). For each D-code 

generated at a facility, the EPA will 

publish the number of RINs generated 

(40 CFR 80.1452(b)(12)), volume of fuel 

produced (40 CFR 80.1452(b)(10)), fuel 

type (40 CFR 80.1452(b)(9)), production 

process (40 CFR 80.1452(b)(7)), 

feedstocks (40 CFR 80.1452(b)(13)), and 

co-products (40 CFR 80.1452(b)(15)). 

• The EPA also intends to release the 

volume of denaturant (for ethanol), 

applicable equivalence value, and 

whether all the feedstocks used during 

the time period were claimed to have 

met the definition of renewable biomass 

(40 CFR 80.1452(b)(11), and 

80.1452(b)(14)). 

An example of the ‘‘reporting’’ 

information the EPA proposes to 

publish appears in the chart below: 


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TABLE VIII.C.3.a–1—EXAMPLE ‘‘REPORTING’’ REPORT

RIN 

generating 

company 

Company 

name 

Renewable 

fuel 

original 

producer 

Facility 

name and 

address 

Location in 

latitude/ 

longitude 

Renewable 

fuel 

production 

year/month 

D code/fuel 

type 

Feedstocks 

used 

Production 

process 

Co-products Volume of denaturant Amount of fuel produced (in gallons?) RINs generated 

Example 

Ethanol Company.

Example 

Ethanol Company.

Example 

Ethanol Company.

111 Ethanol 

Street, City, State, ZIP.

Lat/Long .. 2010/July 5—Renewable 

Fuel/ 10— Non-cellulosic ethanol (EV 1.0).

888— 

Feedstock not listed (used at a grandfathered facility 100%).

888—Grandfathered 

(Other).

Distillers 

grains, corn oil.

549.52 27,476 27,476 

Example 

Biodiesel Company.

Example 

Biodiesel Company.

Example 

Biodiesel Company.

222 Biodiesel 

Way, City, State, ZIP.

Lat/Long .. 2010/July 4—BiomassBased 

Diesel/ 20—Biodiesel (EV 1.5).

160—Biogenic 

Waste Oils/ Fats/ Greases 100%.

180— 

Transesterification, Dedicated Renewable Biomass Facility.

21,934 32,902 


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As with registration information, the 

EPA proposes to publish ‘‘reporting’’ 

information in only an aggregated form 

(at the facility level, not the batch level), 

and only on a monthly, quarterly, and/ 

or annual basis. The EPA will continue 

to consider the confidential nature of 

the batch-level information and may 

take further action to provide additional 

programmatic transparency. The EPA is 

interested in stakeholders’ views on this 

approach, including whether facilitylevel information is the appropriate 

level of aggregation or whether it might 

be more appropriate to publish batchlevel information. 

b. Rationale for Proposal 

The EPA believes that the disclosure 

of certain aggregated RFS report 

information is not entitled to 

confidential treatment for a number of 

reasons. First, the information elements 

in this category consist of publicly 

available and widely known 

information on renewable fuel 

producer’s company name, facility 

name, RIN-generating name, location, 

production year, fuel product type, RIN 

D-Code, production volume, production 

process type, feedstocks, equivalence 

value, and number of RINs generated. 

Furthermore, disclosing this 

information is not likely to cause 

substantial harm to the competitive 

position of the business required to 

report these information elements under 

Part 80 because these elements of 

information do not reveal any 

proprietary information, or any other 

information that would likely provide 

insight for competitors to gain an 

advantage. Furthermore, because these 

information elements would be 

aggregated to the facility level and 

further aggregated for the time period of 

the EPA-published report, the 

information would not be presented in 

a form that any company’s competitors 

could use to gain a competitive 

advantage. Aggregating this information 

at the facility level and for the monthly, 

quarterly, and/or annual time period 

would prevent competitors from reverse 

engineering the information to 

determine information that could be 

considered confidential (e.g., exact 

amounts of feedstocks used, which 

could potentially be used to reveal 

production efficiencies). Accordingly, 

disclosing aggregate information would 

not cause substantial harm to the 

submitter’s competitive position. For 

example: 

• The name of the renewable fuel 

producer or importer and associated 

registration information, including 

facility name, registration identification 

numbers, RIN-generating name, 

location, production year, fuel type, RIN 

D-Code, production process type, and 

feedstock is non-specific information 

that is submitted for RFS program 

registration. These information elements 

are necessary for a producer to 

determine if it meets RFS requirements. 

These information elements describe 

commonly used renewable fuel 

production information and do not 

describe any particular specifications 

about an individual facility’s unique 

processing. Because this information 

does not reveal details about the precise 

production processes used, they are not 

the type of information that a 

competitor could use to develop 

marketing strategies to undermine the 

producer’s competitive position. These 

information elements do not reveal— 

and could not be used to determine—an 

individual facility’s production 

efficiency, production costs, or pricing 

structure. Accordingly, the EPA believes 

that disclosing the name of the 

renewable fuel producer or importer, 

the facility name, registration 

identification numbers, RIN-generating 

name, location, production year, fuel 

type, RIN D-Code, production process 

type, and feedstock would not cause 

substantial harm to business submitter’s 

competitive position. 

• The volume of denaturant, 

applicable equivalence value, and 

whether all the feedstocks used during 

the time period were claimed to have 

met the definition of renewable biomass 

(40 CFR 80.1452(b)(11), and 

80.1452(b)(14)) is widely-known 

information that is submitted to 

demonstrate RFS program compliance. 

The volume of denaturant used must be 

less than 2% to meet RFS requirements 

for RIN generation. The equivalence 

value is a number that is used to 

determine how many gallon-RINs can be 

generated for a gallon of renewable fuel 

according to 40 CFR 80.1426. An 

affirmation that that the feedstocks a 

producer used meets the definition of 

renewable biomass is required to 

demonstrate that the feedstocks a 

facility registered to use, pursuant to 40 

CFR 80.1450, were actually used. 

Revealing the volume of denaturant, 

equivalence value, and confirming that 

a producer affirmed use of renewable 

biomass would not reveal anything 

proprietary or otherwise about the 

precise production process a given 

producer is using, and would not 

provide any insight that competitors 

might use to gain competitive 

advantage. Rather, this information is 

commonly-known information about the 

renewable fuel produced that 

demonstrates RFS regulatory 

compliance for RIN generation. 

4. QAP Plans and Independent 

Engineering Reviews 

At this time, the EPA is not proposing 

to publish QAP plans or independent 

engineering reviews that are submitted 

for RFS registration. For QAP plans and 

independent engineering reviews that 

are claimed as CBI, the EPA proposes to 

require submission of two versions of 

those documents: One clearly marked 

‘‘CBI version,’’ with appropriate areas 

denoted as CBI, and a second ‘‘public 

version,’’ with CBI information 

redacted. We would require the 

submission of both versions of QAP 

plans and engineering reviews begin 

with the effective date of this rule. For 

engineering reviews filed pursuant to 40 

CFR 80.1450(b)(2), we would require 

submission for new registrations, and as 

necessary for updates pursuant to 40 

CFR 80.1450(d)(3). Based on the 

Agency’s experience with the RFS 

program, the EPA notes that certain 

information should not fall under a 

claim of CBI because this information is 

generally available to the public or 

widely-known within the industry, and 

disclosure of this information would not 

likely cause harm to the competitive 

position of any submitting renewable 

producer, importer, or any other party to 

a RIN transaction. 

If the EPA receives a Freedom of 

Information Act (FOIA) request for the 

CBI version of an engineering review or 

QAP plan, the EPA would process the 

FOIA request pursuant to its CBI 

regulations under 40 CFR part 2, subpart 

B. Submission of the two versions of 

QAP plans and engineering reviews 

(CBI and public versions) would allow 

the Agency to clearly understand what 

information is claimed as CBI, and 

would also allow the Agency to make 

public versions available to the public 

without unnecessary delay. The EPA is 

interested in stakeholder views on this 

approach. 

5. Request for Comments 

The added transparency of making 

certain registration and reporting 

information available to the public in 

the form of EPA-published reports, 

along with the implementation of the 

QAP process, will strengthen the RFS 

program and act as a deterrent to 

fraudulently generated RINs. The EPA 

solicits comment on all aspects of these 

proposals. 


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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. 

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. 

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 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 

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 


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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 

Number 

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 

Number 

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 

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. 


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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 

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 

we do not expect that there would be 

any economies of scale in terms of the 

number of RINs verified by an auditor. 

However, we do expect that the per-RIN 

cost would vary depending on the 

number of RINs generated by each fuel 

producer since the effort involved in 

validating many aspects of renewable 

fuel production are the same regardless 

of the size of the facility. 

We do not expect that the costs of 

participation in the proposed quality 

assurance program would vary 

significantly by the D code of RINs. 

While RINs with different D codes may 

command different prices in the market, 

the verification process for each RIN is 

expected to be similar regardless of D 

code, with the biggest cost differences in 

feedstock verification. 

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 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 perRIN 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 cost 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 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. 

X. Public Participation 

We request comment by April 18, 

2013 on all aspects of this proposal, 

including but not limited to the 

following: 

• The RIN replacement cap of 2% and 

the limited exemption of 2%. 

• A potential regulatory change in 

which renewable fuel producers would 

be prohibited from separating RINs. 

• The proposed components of QAPs. 

• The proposed elements of RIN 

replacement mechanisms, including the 

inclusion of E&O insurance. 

• The costs associated with 

indemnifying auditor verification of 

RINs. 

• Mechanisms to ensure that auditors 

are not complicit in fraud. 

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 April 18, 

2013. 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 


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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 a hearing on March 19, 

2013, Room 1153 EPA East, 

Washington, DC 20004, beginning at 

10:00 a.m. local time. 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. 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. 

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 

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 EPA–HQ–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 


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days after February 21, 2013, a comment 

to OMB is best assured of having its full 

effect if OMB receives it by March 25, 

2013. 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 

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: NAICSa codes 

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. 

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. 

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 


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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 

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 low-income 

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. 

RFS Renewable Identification Number 

(RIN) Quality Assurance Program 

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: January 31, 2013. 

Lisa P. Jackson, 

Administrator. 

For the reasons set forth in the 

preamble, 40 CFR part 80 is proposed 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, 7521(1), 7545 

and 7601(a). 

Subpart M—[ Renewable Fuel 

Standard] 

■ 2. Section 80.1401 is amended by 

adding in alphabetical order the 

definitions of ‘‘A–RIN’’, ‘‘B–RIN’’, 

‘‘Independent Third-Party Auditor’’, 

‘‘Non-qualifying fuel’’, ‘‘Quality 

assurance audit’’, ‘‘Quality assurance 

plan’’, and ‘‘Verified RIN’’ and revising 

the definition of ‘‘Non-ester renewable 

diesel’’. 

The added and revised text 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. 

* * * * * 

Non-ester renewable diesel, also 

known as renewable diesel, means 

renewable fuel which is all of the 

following: 

(1) A fuel which can be used at a 

blend level approved under 40 CFR Part 

79 in an engine designed to operate on 

conventional diesel fuel, or be heating 

oil or jet fuel. 

(2) Not a mono-alkyl ester. 

Non-qualifying fuel use means a use 

of renewable fuel in an application 

other than transportation fuel, heating 

oil, or jet fuel. 

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. 

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. 

* * * * * 

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. 

■ 3. Section 1402 is added to read as 

follows. 

§ 80.1402 Information Submitted under 40 

CFR part 80 Subpart M. 

Sections 2.201 through 2.215 of 40 

CFR part 2, subpart B, do not apply to 

the following information: 

(a) Registration information submitted 

pursuant to §§ 80.1450(b), (c), and (g) 

that is not entitled to confidential 

treatment includes company name, 

facility name, facility type, fuel type, 

permitted capacity, production volume, 

feedstocks, production process, D-Code, 

and co-products. 

(b) Reporting information submitted 

pursuant to reporting requirements in 

40 CFR 1452(b) that is not entitled to 

confidential treatment includes 

company name, RIN-generating 

company name, renewable fuel 

producer, facility name and address, 

facility location, renewable fuel 

production month and year, fuel type, 

D-Code, feedstocks, production process, 

volume of fuel produced, and number of 

RINs generated. 

■ 4. Section 80.1426 is amended as 

follows: 

■ a. By revising paragraph (a)(1)(i) and 

(a)(1)(ii); 

■ b. Adding paragraphs (a)(1)(iii); 

■ 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); 

■ f. By revising paragraph (f)(12); and 

■ g. By adding paragraph (f)(14). 

The additions and revisions reads as 

follows: 


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§ 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 as otherwise approved 

by EPA, 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. 

(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 

(iii) For renewable electricity, biogas, 

and any renewable fuel other than 

ethanol, biodiesel, or renewable diesel, 

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 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 °F, 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 °F, in gallons, 

calculated in accordance with paragraph 

(f)(8) of this section. 

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, 

any renewable fuel other than ethanol, 

biodiesel, or renewable diesel is 

considered renewable fuel and the 

producer or importer may generate RINs 

for such fuel only 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 

been otherwise approved by the 

Administrator; 

(B) The fuel producer or importer 

maintains records demonstrating that 

the fuel was produced for use as a 

transportation fuel, heating oil or jet fuel 

by: 

(1) Blending the renewable fuel into 

gasoline or diesel fuel to produce a 

transportation fuel, heating oil or jet fuel 

that meets all applicable standards; 

(2) Entering into a written contract for 

the sale of a the renewable fuel, which 

specifies the purchasing party shall 

blend the fuel into gasoline or diesel 

fuel to produce a transportation fuel, 

heating oil or jet fuel that meets all 

applicable standards; or 

(3) Entering into a written contract for 

the sale of the renewable fuel, which 

specifies that the fuel shall be used in 

its neat form as a transportation fuel, 

heating oil or jet fuel that meets all 

applicable standards. 

(C) The fuel was sold for use in or as 

a transportation fuel, and for no other 

purpose; and 

(ii) Reserved. 

(iii) Reserved. 

* * * * * 

(14) 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. 

(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. 

■ 5. Section 80.1429 is amended by 

adding paragraph (b)(10) and removing 

and reserving 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 that party retires the 


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separated RINs to replace invalid RINs 

according to § 80.1474. 

* * * * * 

■ 6. In § 80.1430 revise paragraph (a), 

(b), and (e) to read as follows: 

§ 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. 

k = A discrete volume of renewable fuel that 

is advanced biofuel (including biomassbased 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: 

* * * * * 

■ 7. Section 80.1431 is amended by 

removing and reserving paragraph 

(a)(1)(viii) and revising paragraph (b) 

introductory text 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: 

* * * * * 

■ 8. Section 80.1433 is added to read as 

follows: 

§ 80.1433 Requirements for parties that 

designate fuel for which RINs were 

generated for an application that is not 

transportation fuel, heating oil, or jet fuel. 

(a) Any party that designates 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 in (a)(5), 

Cellulosic biofuel. 

RINRETCB,i = S(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 

designated for use 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 fuel use. 

VOLk = The standardized volume of discrete 

volume k, in gallons, calculated in 

accordance with paragraph (c) of this 

section and § 80.1426(f)(8). 

EVk = The equivalence value associated with 

discrete volume k. 

(2) Except as provided in (a)(5), 

Biomass-based diesel. 

RINRETBBD,i = S(VOLk* EVk)i

Where: 

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 

designated for use 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 fuel 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 = S(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 

designated for use 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 fuel use. 

VOLk = The standardized volume of discrete 

volume k, in gallons, calculated in 

accordance with paragraph (c) of this 

section and § 80.1426(f)(8). 

EVk = The equivalence value associated with 

discrete volume k. 

(4) Renewable fuel. 

RINRETRF,i = S(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 

designated for use 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 fuel 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 nonqualifying fuel use, it must choose 

either the formula specified in 

paragraph (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 


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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 of a fuel for which RINs 

were generated for a use other than as 

transportation fuel, heating oil, or jet 

fuel. 

(f) Any volume of fuel which is 

designated for a purpose other than as 

transportation fuel, heating oil or jet fuel 

cannot be redesignated as renewable 

fuel. 

■ 9. Section 80.1450 is amended as 

follows: 

■ a. By adding paragraph (b)(1)(ix); and 

■ b. By revising paragraph (g) and 

■ c. By adding paragraph (h). 

The revisions and additions read as 

follows: 

§ 80.1450 What are the registration 

requirements under the RFS program? 

* * * * * 

(b)* * * 

(1)* * * 

(ix) For a producer or importer or any 

renewable fuel other than ethanol, 

biodiesel, renewable diesel, biogas or 

renewable electricity: 

(A) A description of the renewable 

fuel and how it will be blended to into 

gasoline or diesel fuel to produce a 

transportation fuel, heating oil or jet fuel 

that meets all applicable standards; 

(B) A statement regarding whether the 

renewable fuel producer or importer 

will blend the renewable fuel into 

gasoline or diesel fuel or enter into a 

written contract for the sale and use of 

a specific quantity of the renewable fuel 

with a party who blends the fuel into 

gasoline or diesel fuel to produce a 

transportation fuel, heating oil or jet fuel 

that meets all applicable standards; 

(C) If the renewable fuel producer or 

importer enters into a written contract 

for the sale and use of a specific 

quantity of the renewable fuel with a 

party who blends the fuel into gasoline 

or diesel fuel to produce a 

transportation fuel, heating oil or jet 

fuel, provide 

(1) the name, location and contact 

information for the party that will blend 

the renewable fuel, and 

(2) a copy of the contract that requires 

the party to blend the renewable fuel 

into gasoline or diesel fuel to produce 

a transportation fuel, heating oil or jet 

fuel that meets all applicable standards; 

* * * * * 

(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 (or under 

contract) by the independent third-party 

auditor to conduct audits or verify RINs, 

as well as the name and contact 

information for the Professional 

Engineer performing the review. 

(10) Registration updates.— 

(i) Any independent third-party 

auditor who makes changes to its 

quality assurance plan(s) that will allow 

it 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 its 

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. 

(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 its 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 thirdparty 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 third-party 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. 


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(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: 

U.S. Mail: U.S. Environmental 

Protection Agency, Fuels Programs 

Registration (6406J), 1200 

Pennsylvania Avenue NW., 

Washington, DC 20460. 

Commercial Delivery: U.S. 

Environmental Protection Agency, 

Fuels Programs Registration, Room 

647C, 202–343–9038, 1310 L Street 

NW., Washington, DC 20005. 

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 thirdparty auditor whose registration was 

revoked. 

* * * * * 

(h) Registration shall be on forms, and 

following policies, established by the 

Administrator. 

■ 10. Section 80.1451 is amended as 

follows: 

■ a. By revising paragraphs (a)(1)(ix) 

through (xiii); 

■ b. By adding paragraphs (a)(1)(xiv) 

through (xvi); 

■ c. By revising paragraph (b)(1)(ii)(T); 

■ d. By revising paragraphs (c)(2)(x) 

through (xvi); 

■ e. By adding paragraphs (c)(2)(xvii) 

and (c)(2)(xviii); 

■ f. By revising paragraph (g); and 

■ g. By adding paragraph (h). 

The revisions and additions read as 

follows: 

§ 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. 

* * * * * 

(b) * * * 

(1)(i) * * * 

(ii) * * * 

(T) Producers or importers of any 

renewable fuel other than ethanol, 

biodiesel, renewable diesel, biogas or 

renewable electricity, shall report, on a 

quarterly basis, all the following for 

each volume of fuel: 

(1) Total volume of renewable fuel 

produced or imported, total volume of 

renewable fuel blended into gasoline 

and diesel fuel by the producer or 

importer, and the percentage of 

renewable fuel in each batch of finished 

fuel; 

(2) If the renewable fuel producer or 

importer enters into a written contract 

for the sale of a specific quantity of the 

renewable fuel to a party who blends 

the fuel into gasoline or diesel fuel to 

produce a transportation fuel, heating 

oil or jet fuel, or who uses the neat fuel 

for a qualifying fuel use, the name, 

location and contact information for 

each puchasing party, and one or more 

affidavits from that party including the 

following information: 

(i) Quantity of renewable fuel 

received from the producer or importer; 

(ii) Date the renewable fuel was 

received from producer; 

(iii) A description of the fuel that the 

renewable fuel was blended into and the 

blend ratios for each batch, if 

applicable; 

(iv) A description of the finished fuel, 

and a statement that the fuel meets all 

applicable standards and was sold for 

use as a transportation fuel, heating oil 

or jet fuel; 

(v) Quantity of assigned RINs received 

with the renewable fuel, if applicable; 

and 

(vi) Quantity of assigned RINs that the 

end user separated from the renewable 

fuel, if applicable. 

(c) * * * 

(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 batchRIN 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. 

(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. 


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(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 coproducts 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. 

(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. 

■ 11. Section 80.1452 is amended by 

revising paragraph (d) and adding 

paragraph (e), to read as follows. 

§ 80.1452 What are the requirements 

related to the EPA-Moderated Transaction 

System (EMTS)? 

* * * * * 

(d) 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. 

(e) All information required under 

this section shall be submitted on forms 

and following procedures prescribed by 

the Administrator. 

■ 12. Section 80.1453 is amended as 

follows: 

■ a. Revising paragraph (a) introductory 

text; and 

■ b. Adding paragraphs (a)(5), and 

(a)(12) 

The revisions and additions read as 

follows: 

§ 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 that 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 other use in the 

48 U.S. contiguous states and Hawaii is 

a violation of 40 CFR 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. Any other 

use in the 48 U.S. contiguous states and 

Hawaii is a violation of 40 CFR 

80.1460(g), unless the requirements in 

§ 80.1433 are met.’’ 

(iii) Renewable Heating oil. ‘‘This 

volume of heating oil is designated and 

intended for use as heating oil in the 48 

U.S. contiguous states and Hawaii. Any 

other use in the 48 U.S. contiguous 

states and Hawaii is a violation of 40 

CFR 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 other use in the 48 U.S. 

contiguous states and Hawaii is a 

violation of 40 CFR 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 other use in the 48 U.S. 

contiguous states and Hawaii is a 

violation of 40 CFR 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 other use in the 48 U.S. 

contiguous states and Hawaii is a 

violation of 40 CFR 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 

other use in the 48 U.S. contiguous 

states and Hawaii is a violation of 40 

CFR 80.1460(g), unless the requirements 

in § 80.1433 are met.’’ 

■ 13. Section 80.1454 is amended as 

follows: 

■ a. By adding paragraph (b)(7); 

■ b. By revising paragraphs (l), (m), (n), 

(o), and (p); and 

■ c. By adding paragraphs (q) and (r). 

The revisions and additions read as 

follows: 


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§ 80.1454 What are the recordkeeping 

requirements under the RFS program? 

* * * * * 

(b) * * * 

(7) Records related to the 

implementation of a QAP under 

§ 80.1469. 

* * * * * 

(l) Requirements for producers or 

importers of any renewable fuel other 

than ethanol, biodiesel, renewable 

diesel, biogas or renewable electricity. A 

renewable fuel producer that generates 

RINs for any renewable fuel other than 

ethanol, biodiesel, renewable diesel, 

biogas or renewable electricity shall 

keep all of the following additional 

records: 

(1) Documents demonstrating the total 

volume of renewable fuel produced, 

total volume of renewable fuel blended 

into gasoline and diesel fuel, and the 

percentage of renewable fuel in each 

batch of finished fuel; 

(2) Contracts and documents 

memorializing the sale of renewable fuel 

to parties who blend the fuel into 

gasoline or diesel fuel to produce a 

transportation fuel, heating oil or jet 

fuel, or who use the renewable fuel in 

its neat form for a qualifying fuel use; 

and 

(3) Such other records as may be 

requested by the Administrator. 

(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. 

(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 

paragraphs (a) through (d) and (f) 

through (l) of this section and under 

§ 80.1453 shall be kept for five years 

from the date they were created, except 

that records related to transactions 

involving RINs shall be kept for five 

years from the date of the RIN 

transaction. 

(o) The records required under 

paragraph (e) of this section shall be 

kept through calendar year 2022. 

(p) 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. 

(q) 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. 

(r) Copies of all reports required 

under § 80.1464. 

■ 14. Section 80.1460 is amended by 

adding paragraphs (g), (h), and (i) to 

read as follows. 

§ 80.1460 What acts are prohibited under 

the RFS program? 

* * * * * 

(g) Failing to retire RINs when fuel for 

which RINs have been generated is 

designated for use in an application 

other than transportation fuel, heating 

oil or jet fuel. No person shall designate 

fuel for which RINs were generated for 

a non-qualifying fuel use, unless the 

requirements of 80.1433 have been met. 

(h) RIN Separation Violations. No 

person shall do any of the following: 

(1) Identify separated RINs in EMTS 

with the wrong separation reason code. 

(2) Identify separated 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. 

■ 15. Section 80.1461 is amended by 

revising paragraphs (a)(1) and (a)(2) to 

read as follows. 

§ 80.1461 Who is liable for violations 

under the RFS program? 

* * * * * 

(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). 

* * * * * 

■ 16. Section 80.1469 is added to read 

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 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. 

(G) Feedstock is not renewable fuel 

for which RINs were previously 

generated. 

(ii) Components requiring quarterly 

monitoring: 

(A) Separated food waste or separated 

yard waste plan is accepted and up to 


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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 

under § 80.1450(b)(2). 

(E) 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. 

(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. 

(C) Certificates of analysis verifying 

fuel type and quality, as applicable. 

(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). 

(D) Verify existence of quality process 

controls designed to ensure that fuel 

continues to meet applicable property 

and quality specifications. 

(E) Volume production is consistent 

with that reported to EPA and EIA, as 

well as other federal or state reporting. 

(F) Volume production is consistent 

with storage and distribution capacity. 

(G) Volume production capacity is 

consistent with RFS registration. 

(3) RIN generation-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 is consistent with 

wet gallons produced or imported. 

(D) Fuel shipments are consistent 

with production volumes. 

(E) If applicable, renewable content R 

is accurate pursuant to 80.1426(f)(9). 

(F) Equivalence value EV is accurate 

and appropriate. 

(G) Renewable fuel was intended and 

sold for qualifying uses as 

transportation fuel, heating oil, or jet 

fuel. 

(H) Verify that appropriate RIN 

generation calculations are being 

followed under § 80.1426(f)(3), (4), or 

(5), as applicable. 

(ii) Components requiring quarterly 

monitoring: 

(A) Registration, reporting and 

recordkeeping components. 

(4) RIN separation-related 

components. 

(i) Components requiring ongoing 

monitoring: 

(A) If applicable, verify that RIN 

separation is appropriate under 

§ 80.1429(b)(4). 

(B) If applicable, verify that RINS 

were retired for any fuel that the 

producer produced and exported. 

(ii) Components requiring quarterly 

monitoring: 

(A) Verify that annual attestation 

report is accurate. 

(b) Option B QAP Requirements. 

All components specified in this 

paragraph (b) require quarterly 

monitoring. 

(1) Feedstock-related components. 

(i) Feedstocks are renewable biomass 

as defined in § 80.1401. 

(ii) If applicable, separated food waste 

or separated yard waste plan under 

§ 80.1426(f)(5)(ii) is accepted and up to 

date. 

(iii) If applicable, separated municipal 

solid waste plan under § 80.1426(f)(5)(ii) 

is approved and current. 

(iv) Feedstocks are being separated 

according to a separation plan, if 

applicable under § 80.1426(f)(5)(ii). 

(v) Crop and crop residue feedstocks 

meet land use restrictions, or 

alternatively the aggregate compliance 

provisions of § 80.1454(g). 

(vi) 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, and is 

consistent with information recorded in 

EMTS. 

(vii) Feedstock is not renewable fuel 

for which RINs were previously 

generated. 

(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. 

(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) RIN generation-related 

components. 

(i) Renewable fuel was intended and 

sold for qualifying uses as 

transportation fuel, heating oil, or jet 

fuel. 

(ii) Certificates of analysis verifying 

fuel type and quality, as applicable. 

(iii) Renewable fuel type matches the 

D code being used. 

(iv) If applicable, renewable content R 

is accurate pursuant to 80.1426(f)(9). 

(v) Equivalence value EV is accurate 

and appropriate. 

(vi) Volume production capacity is 

consistent with RFS registration. 

(vii) Verify that appropriate RIN 

generation calculations are being 

followed under § 80.1426(f)(3), (4), or 

(5), as applicable. 

(4) RIN separation-related 

components. 

(i) If applicable, verify that RIN 

separation is appropriate under 

§ 80.1429(b)(4). 

(ii) Verify that fuel that is exported 

was not used to generate RINs, or 

alternatively that were generated but 

retired. 

(iii) Verify that annual attestation 

report is accurate. 

(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 


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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. 

(2) 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). 

■ 17. Section 80.1470 is added to read 

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(b)(5)(i) 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. 

(c) Cap on RIN Replacement for 

Independent Third Party Auditors of A– 

RINs. 

(1) If required to replace invalid A– 

RINs pursuant to paragraph (b) of this 

section, the independent third party 

auditor shall be required to replace no 

more than the percentage specified in 

paragraph (c)(2) of this section of each 

D code of A–RINs verified by the 

auditor in the current calendar year and 

four previous calendar years. 

(2)(i) The cap on RIN replacement for 

auditors of A–RINs shall be 2% for A– 

RINs generated in 2013, 2014, and 2015. 

(ii) The cap on RIN replacement for 

auditors of A–RINs shall be [to be 

determined] for A–RINs generated in 

2016 and beyond. 

(3) The auditor’s potential 

replacement responsibility for a given 

RIN will expire at the end of the fourth 

calendar year after the calendar year in 

which the RIN was verified. 

(4) The minimum RIN replacement 

coverage (RRC) that must be held by the 

third-party auditor’s RIN replacement 

mechanism is the lesser of: 

(i) 

Where: 

RRCy = RIN replacement coverage in year y 

in units of A–RINs that the mechanism 

is capable of replacing 

y = The current year 

ARINVERy-i = The sum of all A–RINs of a 

particular D code verified by the thirdparty auditor in year y-i 

or 

(ii) 

RRCy = 0.02 × ARINVERy + RRCy-1 ¥ 

ARINREPy-1, 

Where: 

RRCy = RIN replacement coverage in year y 

in units of A–RINs that the mechanism 

is capable of replacing 

y = The current year 

ARINVERy = The sum of all A–RINs of a 

particular D code verified by the thirdparty auditor in year y 

RRCy-1 = RIN replacement coverage in year y1 in units of A–RINs that the mechanism 

is capable of replacing 

ARINREPy-1 = The sum of all A–RINs of a 

particular D code that were replaced by 

the third-party auditor in year y-1 

(d) The cap on RIN replacement does 

not apply when invalid verified RINs 

are a result of auditor error, omission, 

negligence, fraud, collusion with the 

renewable fuel producer, or a failure to 

implement the QAP properly or fully. 

■ 18. Section 80.1471 is added to read 

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), 

of a minimum amount equal to 2% of 

the RINs the auditor verifies in a year to 

cover replacement of any 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 email 

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 the effective date of 

the final rule. 

(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. 

(v) The auditor may not perform more 

than one (1) audit under this 

subparagraph for any single RIN 

generator. 

(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. 

■ 19. Section 80.1472 is added to read 

as follows: 

§ 80.1472 Requirements for Quality 

Assurance Audits 

(a) General requirements. 

(1) An audit shall be performed by an 

auditor who meets the requirements of 

§ 80.1471. 

(2) An audit shall be based on either 

an Option A QAP per § 80.1469(a) or an 

Option B QAP per § 80.1469(b). 

(3) Each audit shall verify every 

element contained in an applicable and 

approved QAP. 

(4) 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. 

(5) Each audit shall include a review 

of documents generated by the 

renewable fuel producer. 

(6) 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. 

(b) On-site visits. 

(1) Option A QAP. 

(i) The auditor shall conduct an onsite visit at the renewable fuel 

production facility at least 4 times per 

calendar year. 

(ii) The on-site visits specified in 

paragraph (b)(1)(i) of this section shall 

occur at least 60 days apart. The 60-day 

period shall start the day after the 

previous on-site ends. 

(iii) The 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 for any 

physical attribute that is verified 

through remote monitoring equipment 

per the applicable QAP. 

(2) Option B QAP. 

(i) The auditor shall conduct an onsite visit at the renewable fuel 

production facility at least 4 times per 

calendar year. 

(ii) The on-site visit specified in 

paragraph (b)(2)(i) of this section shall 

occur at least 60 days after the previous 

on-site visit. The 60-day period shall 

start the day after the previous on-site 

visit ends. 

(iii) 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. 

■ 20. Section 80.1473 is added to read 

as follows: 

§ 80.1473 Affirmative Defenses 

(a) Any person who engages in actions 

that would be 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: 

(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 (use 

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 the next 

business day 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 the next 

business day of discovering the 

invalidity. 

(4) The person did not cause the 

invalidity. 


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(5) The person did not have a 

financial interest in the company that 

generated the invalid RIN. 

(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 B–RIN, 

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. 

■ 21. Section 80.1474 is added to read 

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 A–RIN are required to 

replace invalidly 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 thirdparty 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 actions: 

(i) In the event that EPA identifies a 

RIN as a PIR: 

(A) Retire the PIR, 

(B) Retire a valid RIN following the 

requirements of paragraph (c) of this 

section, or 

(C) Submit a demonstration in writing 

to EPA that the PIR is valid. 

(1) If EPA determines that the 

demonstration is satisfactory, the PIR 

will be deemed to be a valid RIN. 

(2) If EPA determines that 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. 

(ii) In the event that the independent 

third-party auditor identifies a RIN as a 

PIR: 

(A) Retire the PIR, 

(B) Retire a valid RIN following the 

requirements of paragraph (c) of this 

section, or 

(C) Submit a demonstration in writing 

to the independent third-party auditor 

that the PIR is valid. 

(1) If the independent third-party 

auditor determines that the 

demonstration is satisfactory, the PIR 

will be deemed to be a valid RIN; 

however, EPA reserves the right to make 

a determination regarding the validity of 

the RIN. 

(2) If the independent third-party 

auditor determines that the 

demonstration is not satisfactory, EPA 

will then make a determination whether 

the demonstration is not satisfactory, 

and if so, 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 thirdparty 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. The D code of the 

retired RIN must be eligible to be used 

towards meeting all the renewable 

volume obligations as the PIR or invalid 

RIN it is replacing, as specified in 

paragraph (a)(2) of § 80. 1427. 

(2) The number of RINs retired must 

be equal to the number of PIRs or 

invalid RINs being replaced, subject to 

paragraph (d) of this section and 

paragraph (c) of § 80.1470. 

(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 exemptions 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: 

LECB,i = Limited exemption for cellulosic 

biofuel for year i 

LEBBD,i = Limited exemption for biomassbased 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. 


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(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) 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. 

[FR Doc. 2013–03206 Filed 2–20–13; 8:45 am] 

BILLING CODE 6560–50–P 


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