EO12866_Qual Assurance Prog 2060-AR72 NPRM FRN_20130123.docx

*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

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

RIN 2060-AR72

RFS Renewable Identification Number (RIN) Quality Assurance Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

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

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

Several cases of fraudulently generated RINs, however, have 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 [insert date 30 days after date of public 

hearing].

Hearing: We will hold a hearing on XXXdateXXX at XXXlocationXXX, Washington, DC, 

beginning at 9:00 am 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 2 of 149

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

INFORMATION section of this document.

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

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

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

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

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

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

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

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

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

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

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

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

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

Quality Compliance Division; telephone number (734) 214-4343; E-mail address 

complianc@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: 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 3 of 149

Category NAICS1

Codes

SIC

2

Codes

Examples of Potentially Regulated Entities

Industry

Industry

Industry

Industry

Industry

Industry

Industry

324110

325193

325199

424690

424710

424720

454319

2911

2869

2869

5169

5171

5172

5989

Petroleum Refineries

Ethyl alcohol manufacturing

Other basic organic chemical manufacturing

Chemical and allied products merchant wholesalers

Petroleum bulk stations and terminals

Petroleum and petroleum products merchant 

wholesalers

Other fuel dealers

1 North American Industry Classification System (NAICS)

2

Standard Industrial Classification (SIC) system code.

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

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

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

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

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

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

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

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

1. Submitting CBI

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

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

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

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

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

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

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

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

2. Tips for Preparing Your Comments

When submitting comments, remember to:

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

heading, Federal Register date and page number).

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

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

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

requested changes.

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

used.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 4 of 149

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

sufficient detail to allow for it to be reproduced.

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

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

threats.

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

Outline of this preamble

I. EXECUTIVE SUMMARY .................................................................................................... 8

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

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

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

II. BACKGROUND AND PURPOSE...................................................................................... 12

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

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

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

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

2. Sufficiency of Existing Systems....................................................................................... 18

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

III. OVERVIEW OF THE PROPOSED PROGRAM............................................................ 20

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

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

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

D. Voluntary Participation......................................................................................................... 25

E. Treatment of RINs Prior to Final Rule Promulgation........................................................... 26

F. Request for Comment on Prohibiting Producers from Separating RINs.............................. 28

G. Summary of the Two QAP Options...................................................................................... 29

IV. PROVISIONS FOR RIN VERIFICATION UNDER OPTION A................................... 31

A. Requirements for Option A Quality Assurance Plans.......................................................... 32

1. Elements of an Option A QAP.......................................................................................... 32

a. Feedstock-related components...................................................................................... 33

b. Production process-related components ....................................................................... 34

c. RIN generation-related components............................................................................. 36

d. RIN separation-related components.............................................................................. 37

2. Approval and Use of Option A QAPs............................................................................... 38

a. Approval of Quality Assurance Plan ............................................................................ 38

b. Frequency of Updates or Revisions to QAPs ............................................................... 38

B. RIN Replacement Mechanisms Under Option A.................................................................. 38

1. Required Replacement Capability for RIN Replacement Mechanisms............................ 40

2. Financial Assurance Instruments...................................................................................... 41

3. RIN Banks......................................................................................................................... 43
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 5 of 149

4. A-RIN Escrow Accounts .................................................................................................. 44

C. Affirmative Defenses............................................................................................................ 45

D. Treatment of Invalid A-RINs................................................................................................ 48

1. Responsibilities for Replacement of Invalid Verified A-RINs......................................... 48

2. Invalid A-RIN Replacement ............................................................................................. 49

3. Process for Replacing Invalid Verified RINs ................................................................... 51

a. Types of RINs that Can Replace Invalid Verified RINs............................................... 52

b. Impacts of RIN Replacement on Renewable Fuel Demand ......................................... 52

4. Cap on RIN Replacement ................................................................................................. 53

V. PROVISIONS FOR RIN VERIFICATION UNDER OPTION B....................................... 55

A. Requirements for Option B Quality Assurance Plans........................................................... 55

1. Elements of an Option B QAP.......................................................................................... 55

a. Feedstock-related components...................................................................................... 56

b. Production process-related components ....................................................................... 57

c. RIN generation -related components............................................................................ 58

d. RIN separation-related components.............................................................................. 59

2. Approval and Use of QAPs............................................................................................... 59

a. Approval of Quality Assurance Plan ............................................................................ 60

b. Frequency of Updates/Revisions to QAPs.................................................................... 60

B. RIN Replacement Mechanisms............................................................................................. 60

C. Affirmative Defenses............................................................................................................ 60

D. Treatment of Invalid B-RINs................................................................................................ 62

1. Responsibilities for Replacement of Invalid Verified B-RINs......................................... 62

2. Invalid B-RIN Replacement ............................................................................................. 63

3. Process for Replacing Invalid Verified RINs ................................................................... 64

4. Temporary Limited Exemption for Invalid RIN Replacement......................................... 65

a. Determination of the Appropriate Exemption Level .................................................... 65

b. How Would the Limited Exemption be Applied? ........................................................ 67

VI. PROPOSED REQUIREMENTS FOR AUDITORS ........................................................ 70

A. Who Can Be An Auditor?..................................................................................................... 70

1. Independence .................................................................................................................... 70

2. Professionally Qualified to Implement a QAP ................................................................. 71

3. Errors and Omissions Insurance ....................................................................................... 73

B. Registration Requirements.................................................................................................... 73

C. Other Responsibilities of Auditors........................................................................................ 75

1. Notifying the Agency When There are Problems............................................................. 75

2. Indentifying Verified RINs in EMTS ............................................................................... 76

3. Recordkeeping, Reporting, and Attest Engagements ....................................................... 77

a. Recordkeeping Requirements....................................................................................... 77

b. Reporting Requirements ............................................................................................... 77

c. Attest Engagements ...................................................................................................... 78

d. Prohibited Activities for Third-party Auditors............................................................. 79

VII. PROPOSED REQUIREMENTS FOR AUDITS.............................................................. 80
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 6 of 149

A. Document Review and Monitoring................................................................................... 80

B. Buyer/Seller Contacts ....................................................................................................... 81

VIII. ADDITIONAL CHANGES RELATED TO THE DEFINITION AND TREATMENT OF 

INVALID RINS............................................................................................................................ 84

A. Export and Exporter Provisions............................................................................................ 84

1. Exporter RVO................................................................................................................... 84

2. Require Identification of Renewable Fuel Content .......................................................... 84

3. RIN Retirement Requirements.......................................................................................... 85

B. “Downstream” Invalidation and Product Transfer Documents............................................ 86

1. Designation of Intended Renewable Fuel Use.................................................................. 86

2. Required Actions Regarding Fuel for which RINs have been Generated that is Used for a 

Non-Qualifying Fuel Use.......................................................................................................... 89

3. RIN Generation for Fuel Made with Renewable Fuel Feedstock..................................... 89

4. Use of Renewable Fuel in Ocean-going Vessels.............................................................. 90

5. Treatment of Improperly Separated RINs......................................................................... 91

C. Treatment of Confidential Business Information ................................................................. 92

1. Overview........................................................................................................................... 92

2. Proposal to Disclose Aggregated RFS Registration Information ..................................... 93

a. Approach....................................................................................................................... 93

b. Rationale for Proposal................................................................................................... 94

3. Proposal to Disclose Aggregated RFS Report Information.............................................. 95

a. Approach....................................................................................................................... 95

b. Rationale for Proposal................................................................................................... 96

4. QAP Plans and Independent Engineering Reviews.......................................................... 98

5. Request for Comments...................................................................................................... 98

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

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

98

IX. IMPACTS ....................................................................................................................... 101

A. Direct Costs for Implementing QAPs................................................................................. 101

1. Time and Cost Assumptions........................................................................................... 103

2. Labor Cost Assumptions................................................................................................. 103

3. Cost Estimate Results ..................................................................................................... 104

B. Costs for RIN Replacement Mechanisms........................................................................... 104

X. PUBLIC PARTICIPATION............................................................................................... 106

A. How do I submit comments? .............................................................................................. 106

B. Will there be a public hearing? ........................................................................................... 107

XI. STATUTORY AND EXECUTIVE ORDER REVIEW................................................. 108

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

Improving Regulation and Regulatory Review .......................................................................... 108

B. Paperwork Reduction Act................................................................................................... 108

C. Regulatory Flexibility Act .................................................................................................. 109
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 7 of 149

D. Unfunded Mandates Reform Act........................................................................................ 110

E. Executive Order 13132 (Federalism).................................................................................. 111

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

111

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

Safety Risks ................................................................................................................................ 111

H. Executive Order 13211 (Energy Effects)............................................................................ 112

I. National Technology Transfer Advancement Act .............................................................. 112

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

Populations and Low-Income Populations................................................................................. 112

XII. STATUTORY AUTHORITY ........................................................................................ 113
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 8 of 149

I. Executive Summary

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

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

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

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

revisions to the regulatory requirements on March 26, 20101. 

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

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

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

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

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

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

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

Obligated parties demonstrate compliance with the renewable fuel volume standards in 

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

volumes of renewable fuels together with the associated Renewable Identification Numbers 

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

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

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

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

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

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

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

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

A. Purpose of this Action

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

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

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

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

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

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

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

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

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

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

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

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

 

1

75 FR 14670
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 9 of 149

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 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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 10 of 149

• 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 rulemaking2in terms of volumes of renewable fuel 

consumed or the associated GHG or energy security benefits. The primary impacts of the quality

assurance program would be improved liquidity and efficiency in today's RIN market and 

improved opportunities for smaller renewable fuel producers to sell their RINs.

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

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

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

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

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

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

 

2

75 FR 14670, March 26, 2010
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 11 of 149

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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 12 of 149

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 non-renewable fuels were responsible for ensuring that specified volumes of renewable fuel 

were used in the transportation sector. During the process of developing the regulatory program, 

stakeholders made it clear that requiring each separate obligated party to physically blend 

renewable fuels into its own gasoline and diesel 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 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 

 

3

See 72 FR 23929
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 13 of 149

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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 14 of 149

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 selfpolice 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 

 

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

Solutions Act. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 15 of 149

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 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 allegations in the 

indictment are mere accusations and all persons are presumed innocent until and unless proven 

guilty beyond a reasonable doubt in a court of law.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 16 of 149

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 20115. 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 

 

5 The statutory volume requirements for biomass-based diesel were 650 mill gal in 2010 and 800 mill gal in 2011.

6 The 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/erp-invalidrins.pdf.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 17 of 149

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 

• MVP: Murex Validity Program for RINs

• RIN Integrity Network by Genscape

• RINPlus by EM Biofuels, LLC

• RIN-tegrity Survey by Weaver

• RINTrust, LLC

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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 18 of 149

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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 19 of 149

verify the validity of RINs. These provisions would 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 20 of 149

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 third-parties 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 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 third-party auditor using an EPA-approved 

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

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

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

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

minimum volume requirements are met, so invalid RINs that are retired to fulfill a 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 21 of 149

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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 22 of 149

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

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

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

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

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

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

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

differing RIN replacement responsibility under the two QAPs.

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 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 23 of 149

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 a 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. 

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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 24 of 149

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 third-party 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 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 25 of 149

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 EPA-approved 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 pre-approved by a 

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

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

However, we believe that it is up to the obligated parties to determine 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 QAP-verified even though the program is voluntary because most obligated parties in most 

situations will prefer not to take on the risk of using an unverified RIN. Therefore, making the 

program mandatory would provide only marginal gains in market stability when compared to a 

voluntary program. A mandatory program would also potentially drive up the overall cost of 

RINs by forcing all RIN generators to go through the QAP process, even in situations where 

there is little 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 26 of 149

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 EPAapproved QAP is a choice each obligated party would make on its own, depending on the level 

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

E. Treatment of RINs Prior to Final Rule Promulgation

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

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

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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 27 of 149

EPA is ready to facilitate the verification of RINs prior to the final rule’s effective date 

through a “pre-registration” process. EPA will informally review auditors’ registration 

information and proposed QAPs, and provide guidance on whether 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 website. 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 informal 

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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 28 of 149

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 QAP-based 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 website. 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 29 of 149

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. 

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 RINs7. 

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 

Affirmative defense requires the 

party did not know or have 

reason to know the RIN had 

been invalidly generated at the 

 

7 The generator of the invalid RIN is always responsible for replacement.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 30 of 149

before the RIN was verified 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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 31 of 149

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 third-party auditors responsible for verifying RINs 

under this Option would also be responsible for replacing those RINs if they are invalidly 

generated. In order to implement this approach, we are proposing detailed requirements for 

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 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 32 of 149

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 EPA-approved QAP, 

would be verified by the auditor as validly generating RINs. RINs that had been verified through 

this process would provide the basis for an affirmative defense against civil violations for 

transferring or using invalid RINs for compliance, as discussed more fully in Section IV.C. As a 

result, verified RINs would be more valuable than RINs from a facility that had not been verified 

through a third-party auditor. We also expect that RIN replacement costs should significantly 

decrease as a result of this program.

This section discusses the minimum requirements of Option A QAPs under the RFS 

program, the elements of review that an Option A QAP must contain, and timing considerations 

affecting the use of a QAP. 

1. Elements of an Option A QAP 

QAPs would be used by registered third-party auditors to audit renewable fuel production 

at 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 33 of 149

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 

 

8 The treatment of biomass that is or is derived from invasive species will be addressed in a separate rule-making.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 34 of 149

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 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 non-food grade corn oil) based on typical values from prior input/output values, or similar 

facilities if prior values are not available. Energy inputs from on-site energy creation (e.g., 

propane, natural gas, coal, 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 35 of 149

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 on-site, the QAP would be required to 

verify lab procedures and test methods. The QAP would be required to verify that renewable 

fuel being produced at the facility and that can be produced, matches information in 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. 

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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 36 of 149

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 X

2-9 Volume production consistent with storage and 

distribution capacity

X

2-10 Volume production capacity matches 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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 37 of 149

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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 38 of 149

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 EPA-approved QAP could be used by a third-party 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 39 of 149

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 self-financing a RIN replacement obligation. The obligated parties, on the other 

hand, are generally owners of major capital assets and are capable of self-financing a potential 

RIN replacement responsibility. While this may change in the future, it is appropriate at this 

point to ensure that there would be a reliable mechanism available to fulfill the auditor’s 

replacement obligation. We intend that the requirement of a RIN replacement mechanism would 

provide stability in the marketplace and ensure that the RIN replacement obligation would in fact 

be fulfilled.

Whatever mechanism is used must be capable of fulfilling the auditor’s potential 

replacement requirement for invalid RINs audited under an Option A QAP in a given calendar 

year 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 40 of 149

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 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 essentially no 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 41 of 149

Beginning January 1, 2016, the Option A RIN replacement mechanism cap may change 

from the initial 2%. As noted above, we will finalize the replacement cap for 2016 and later 

years in the final rulemaking, and we request comment on a level or levels of coverage for 2016 

and beyond. 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 refunded 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 

 

9 While 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 42 of 149

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 third-party agent to complete the purchase and retirement, or 

paying into a standby trust that could, in turn, fulfill the replacement responsibility on its own or 

by hiring a third-party agent to do so. A payment bond, similarly, could be established to pay

out to a standby trust authorized to purchase and retire RINs on demand by the EPA 

administrator, or to contract with a third-party 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 43 of 149

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 re-populating the 

bank to the required level.

A RIN bank could be established, funded and managed by members of the bank. 

Members would each purchase and contribute verified A-RINs to the bank. While such 

contributions could be proportional to each party's RIN replacement liability, it would be up to 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 44 of 149

the bank managers to stipulate how the bank would be populated, how withdrawals from the 

bank are administered and managed, how to re-populate the bank in the event that RINs are 

withdrawn to replace invalid RINs, and how to grant or revoke membership in the bank. 

A RIN bank would establish an EMTS account to identify the RINs contributed by the 

bank’s members. RINs would be held by the bank and be available to replace invalid RINs that 

were verified under Option A by a member of the bank. Each member of the bank would be 

required to have access to all of the RINs in the bank to replace A-RINs they had audited that 

were found to be invalid. If at any point the number of RINs held by the bank no longer met the 

EPA’s requirements, either due to the addition of a new member(s) to the bank, an increase in 

the liability of one of the members of the bank, or a withdrawal to replace invalid RINs, the 

members of the bank would again be required to contribute RINs to the bank until the minimum 

required level of RINs was reached.

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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 45 of 149

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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 46 of 149

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 EPAapproved QAP, whether Option A or Option B. Additionally, it is our intent that affirmative 

defenses would not be available to the generator of an invalid RIN. Since the quality assurance 

program would be voluntary, parties could still purchase RINs not verified by an EPA-approved 

QAP and transfer or use these unverified RINs, but they could not assert an affirmative defense 

if the RINs were found to be invalid, regardless of their level of good faith or any independent 

due diligence they perform prior to purchase. 

Once a RIN has been verified by the auditor, any person, other than the generator of the 

RIN, who transfers or uses that verified RIN would be eligible for an affirmative defense if the 

RIN was in fact invalidly generated and the person then 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 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 

 

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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 47 of 149

should again be noted that an affirmative defense is not available for a RIN that was not verified 

under an EPA-approved QAP. In other words, the system as it exists under the current 

regulations would continue to be an option for obligated parties who do not wish to purchase 

RINs verified by a QAP. 

As noted above 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 48 of 149

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 thirdparty 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. 

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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 49 of 149

For Option A we are proposing a system wherein RINs would be verified by a third-party 

auditor using an EPA-approved QAP, and the third-party auditor would be liable for replacing 

invalidly generated RINs. Obligated parties would not be liable for replacing invalid RINs under 

Option A, and could use invalid A-RINs for compliance. 

Obligated parties that purchase A-RINs would not be subject to civil liability if an A-RIN 

transferred or used for compliance purposes was later found to have been invalidly generated, if 

all the elements of an affirmative defense were successfully asserted, as described in Section 

IV.C. Moreover, obligated parties would be under no obligation to replace A-RINs used for 

compliance that were subsequently found to be invalid and could transfer and use invalidly

generated A-RINs (if they did not know or have reason to know the A-RINs were invalidly

generated prior to being verified) without violating the Prohibited Acts section, §80.1460.

Under Option A, the third-party auditor would be required to have a replacement 

mechanism capable of replacing invalidly generated A-RINs that were verified by that auditor.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

 

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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 50 of 149

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 D-type as the PIR, either by purchasing it or 

generating a new valid RIN and separating it from the physical volume that it 

represents; 

• Retire the invalidly generated RIN (if still in the RIN generator’s possession); or
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 51 of 149

• 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 or 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.

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 ARIN 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 52 of 149

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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 53 of 149

there is no limit to the size of deficit carryovers means that in theory there could be substantial 

differences between the volumes required in a given year and the actual demand for renewable 

fuel in that year. In addition, the applicable percentage standard set by EPA is based on 

projections of gasoline and diesel production, and to the extent the actual production varies from 

these projections, the actual volume of renewable fuel may be more or less than the national 

volume called for in section 211 (o)(2). Finally, under the current regulations, the future 

replacement of RINs may occur in the context of an enforcement action related to the transfer or 

use of invalid RINs. This replacement obligation under the proposed regulations has a similar 

effect as far as timing of RIN replacement, recognizing that under the proposal there should be 

many fewer invalid RINs generated, and therefore much less need for future RIN replacement.

Consistent with the effect of these various provisions, we believe it would also be 

appropriate to permit an invalid verified RIN to be replaced outside of the year in which it was 

generated. In the case of RIN replacement using valid RINs from a RIN escrow account or RIN 

bank, valid RINs are set aside before invalid RINs are generated and discovered. The small 

increase in demand for renewable fuel caused by setting aside these valid RINs would occur 

before RIN replacement, not after, and they would accrue at the same rate that RINs are being 

generated and verified. We believe that these features of RIN escrow accounts and RIN banks 

would mitigate the impacts of RIN replacement on the renewable fuel market, and thus the use of 

future year RINs to replace invalid RINs generated in the past would be very unlikely to create a 

difficulty in meeting the volume mandates in a given year.

4. Cap on RIN Replacement

Another mechanism 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 54 of 149

replacement cap should be equal to the minimum replacement coverage required for Option A 

auditors. We believe that this cap would ensure that most if not all of invalidly generated ARINs 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 55 of 149

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, 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 56 of 149

§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 feedstock-related 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 57 of 149

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 non-food grade corn oil) based on typical values from prior input/output values, or similar 

facilities if prior values are not available. Energy inputs from on-site energy creation (e.g., 

propane, natural gas, coal, biodiesel, heating oil, diesel, gasoline, etc) and/or energy bills, and 

mass inputs/outputs such as feedstocks, additional chemicals, water, etc., would be required as 

part of the mass and energy balances. 

Finally, the QAP would be required to verify the accuracy of all process-related factors 

used in calculation of the feedstock energy (FE) under §80.1426(f)(3)(vi) or (f)(4), as applicable. 

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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 58 of 149

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. 

The QAP would be required to verify a number of things related to the fuel type. For 

instance, the QAP would include verification of the existence of certificates of analysis 

demonstrating that the renewable fuel being produced meets the applicable specifications and/or 

definitions in §80.1401, and would be required to verify contracts with lab(s) for certificates of 

analysis, unless a facility has an on-site laboratory. If on-site, the QAP would be required to 

verify lab procedures and test methods. The QAP would be required to verify that renewable 

fuel being produced at the facility and that can be produced, matches information in RFS2 

registration in terms of chemical composition, and would be required to sample and test the final 

fuel and compare to specifications. The QAP would be required to verify that renewable fuel 

being produced matches the D code being claimed under §80.1426, or approved petition under 

§80.1416.

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, 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 59 of 149

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 matches 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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 60 of 149

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 EPA-approved QAP could be used by a third-party auditor to provide audit services to 

renewable fuel producers. 

b. Frequency of Updates/Revisions to QAPs

We are proposing that a QAP approval by EPA only applies to the plan that was 

submitted to EPA, and there are specific cases in which we believe a QAP should be 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 61 of 149

Under the proposed quality assurance program, there would be two types of verified 

RINs: those verified through an Option A QAP by a third-party auditor who is required to 

replace invalidly generated RINs, and those verified through an Option B QAP by a third-party 

auditor who is not required to replace such RINs. The requirements for establishing an 

affirmative defense under Option B are described below. As discussed under Option A, we are 

proposing that when a person seeks to establish an affirmative defense, they would submit a 

written report to EPA, along with any necessary supporting documentation, that would 

demonstrate how the elements were met. The written report would need to be submitted within 

30 days of the person discovering the invalidity of the RIN. We welcome comment on the 

elements of the affirmative defense and the effects of establishing an affirmative defense.

In the event that invalidly generated B-RINs are transferred or used, the person could 

establish an affirmative defense to the prohibited act of transferring or using the invalid B-RINs 

for compliance with an RVO if the following elements were proven by a preponderance of 

evidence: 

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 ARINs, except for the element of knowledge, item (2), and for the element dealing with adjusting 

RVO calculations, item (6). Owners of verified B-RINs must not have known or had reason to 

know of the invalidity of the RIN at the time they either 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 62 of 149

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 BRIN 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 63 of 149

replacement of invalidly generated B-RINs. Obligated parties would not be permitted to transfer 

or use B-RINs they know or have reason to know have been invalidly generated. Any such 

transfer or use would be deemed a prohibited act, pursuant to §80.1460.

Option B would provide flexibility for obligated parties, producers, and third-party 

auditors to minimize the cost of verification services for RINs 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 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 64 of 149

would be required to take one of three possible corrective actions within 30 days of being 

notified of the PIR:

• Retire a valid B-RIN of the same D-type as the PIR, either by purchasing it or by

generating a new valid RIN and separating it from the physical volume it represents; 

• Retire the invalidly generated RIN (if still in the RIN generator’s possession); or

• If the RIN generator believed the PIR was in fact valid, it would submit a 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 or 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 65 of 149

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, 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 biomass-based diesel was set at 0.91% on January 9, 

2012, corresponding to a volume requirement of 1.0 bill gal. Since this percentage standard was 

the result of rounding to two decimal places, the actual calculated value could have been as high 

as 0.91499% and still round to 0.91%. Obligated party compliance with a standard of 0.91% 

instead of 0.91499% would mean that the actual volume of biodiesel consumed could be 0.9945 

 

12 Since the required volumes of cellulosic biofuel have been significantly less than the volumes specified in the 

statute, we have used three decimal places for the percentage standard for cellulosic biofuel.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 66 of 149

bill gal instead of 1.0 bill gal, a difference of 0.0055%. This same result can be obtained by 

dividing the maximum potential rounding error of 0.005% by the applicable percentage standard 

of 0.91%.

If we were to base the exemption for invalid RIN replacement on the roundoff error in the 

applicable percentage standards, the calculation would be carried out as follows:

     =

    (0.005%)

  

Table V.D.4.a-1 provides the results if this formula were applied to the applicable 2012 

standards. 

Table V.D.4.a-1

Exemption for Invalid RIN Replacement Based on Roundoff Error in Applicable Standards

Applicable 

Standard

Exemption for 

RIN Replacement

Cellulosic biofuel 0.006% 8.3%a

Biomass-based diesel 0.91% 0.55%

Advanced biofuel 1.21% 0.41%

Total renewable fuel 9.23% 0.05%

a Based on a maximum potential roundoff error of 0.0005% instead of 0.005%

Another source of uncertainty in whether the required volumes of renewable fuel will 

actually be consumed is the difference between the projected volumes of gasoline and diesel that 

are used to calculate the applicable percentage standards, and the volumes of gasoline and diesel 

that are actually consumed. Using EIA's Short-Term Energy Outlook (STEO), we determined 

that projections of the sum of gasoline and diesel have typically exceeded the actual volumes by 

an average of 1.7%.

Table V.D.4.a-2

Comparison of Projected Versus Actual Obligated Volumes

Projected (bill gal) Actual (bill gal) Difference

2011

2010

2009

2008

2007

2006

2005a

196.9

196.6

200.1

210.0

208.4

206.5

204.0

193.1

196.2

193.7

198.4

206.8

205.9

203.7

-1.9%

-0.2%

-3.2%

-5.5%

-0.7%

-0.3%

-0.2%

Average -1.7%

Source: EIA's Short Term Energy Outlook, Table 4a. Values represent the sum of 

motor gasoline and distillate fuel oil consumption. All projected volumes for a given 

year are from the October release in the previous year.

a

STEO for years prior to 2005 do not include projections.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 67 of 149

Based on the formula used to calculate the applicable percentage standards, a shortfall of 1.7% in 

actual gasoline + diesel consumption volumes will produce a 1.7% shortfall in the volume of 

renewable fuel consumed. Since Congress established the mechanism for calculating the 

applicable standards, including the use of projected volumes, this shortfall represents an 

acceptable source of uncertainty in the RFS program. As such, it may also represent an 

acceptable level of uncertainty in the context of establishing a limited exemption for invalid RIN 

replacement by parties other than the renewable fuel producer. 

Based on our review of potential sources of uncertainty, it appears that differences 

between projected and actual gasoline and diesel volumes is the largest source of uncertainty. 

Using the historical differences shown in Table V.D.4.a-2, we propose that the limited 

exemption for invalid RIN replacement be set at 2%, approximating the 1.7% value to account 

for the variability shown in Table V.D.4.a-2. However, we request comment on a different value 

based on one of the alternative methods described above.

b. How Would the Limited Exemption be Applied?

A primary purpose of the overall proposal would be to address the market liquidity

concerns discussed above, largely focused on the ability of small producers to sell RINs. As 

described in Section IV, QAP Option A addresses this by providing a significant degree of 

oversight on RIN generation, and placing the replacement obligation on the QAP auditor, not the 

obligated party. As a result, we do not believe that it would be necessary for the limited 

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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 68 of 149

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 biomass-based diesel for year i
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 69 of 149

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 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 70 of 149

VI. Proposed Requirements for Auditors

Today, we are proposing a number of requirements for the independent third-party 

auditors that would use approved quality assurance plans (QAPs) to audit renewable fuel 

production to verify that RINs were validly generated by the producer. Qualified, independent 

third-party auditors would be integral to the successful implementation of the combination of 

provisions EPA is proposing. Under both options, third-party auditors would need to meet 

minimum qualifications (e.g. independence and professional competency requirements). All 

third-party auditors would be required to register with EPA, similar to how other parties (e.g. 

gasoline refiners, renewable fuel producers, etc.) register for other EPA fuels programs. We are 

also proposing to require that third-party auditors under both options have professional 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 71 of 149

necessary to ensure that RINs are not inappropriately validated due to a conflict of interest 

between the third-party auditor and the renewable fuel producer. For example, if auditors were 

employed by the renewable fuel producers to validate RINs produced from a facility owned by 

the producer, the auditor would have an incentive to ensure that RINs produced from that facility

appeared valid, while the RINs may in fact be invalid. In the RFS2 final rule, we defined an 

independent third-party as a party that was not operated by the renewable fuel producer (or any 

subsidiary or employee of the producer) and free from any interest in the renewable fuel 

producer’s business. Similar provisions have also appeared in RFS1 and other fuels programs 

when a third-party is required to independently test fuel samples, audit reporting and 

recordkeeping requirements, and/or conduct in-use compliance surveys. Thus, we are proposing 

the same independent third-party definition for third-party auditors that we used in RFS2 for an 

independent third-party to conduct engineering reviews. Additionally, we are proposing that 

independent third-party auditors submit an affidavit attesting to their independence as part of 

registration (discussed below).

Although the proposed requirement for independence is limited to renewable fuel 

producers, it could be extended to include independence from other parties as well. However, 

we believe this is unnecessary. This proposed rulemaking is not intended to discourage any 

current efforts that an obligated party or other intermediary may take to ensure compliance with 

RFS requirements, and requiring that third-party auditors be independent of all parties may 

hamper existing efforts by industry to mitigate invalid RIN generation. However, some parties 

may have a conflict of interest with third-party auditors that might promote the improper 

validation of RINs. For example, a third-party auditor could also be acting on behalf of a RINowner, which may be an incentive to validate RINs fraudulently to sell to other parties. 

Therefore, we specifically seek comment over whether we should expand the proposed definition 

of independence to include other parties.

We also recognize that a conflict of interest may exist if the independent third-party 

implementing a QAP for a renewable fuel production facility was the same party that conducted 

the facility’s engineering review required under §80.1450(b)(2), since the auditor would 

essentially be verifying its own assessment of a facility. Similar reasoning could apply to the 

independent third-parties that do attest engagements. However, we recognize that, especially in 

the beginning, there may be a limited number of qualified independent-third party auditors 

capable of implementing QAPs for a facility if we do not allow independent third-parties that 

conducted engineering reviews or attest engagements to also implement QAPs for a given 

facility. Therefore, we specifically seek comment on whether we should exclude a third-party 

that has conducted an engineering review or attest engagement for a facility from implementing a 

QAP for that same facility. We also seek comment on whether any other situations present a 

conflict of interest for independent third-party auditors that may disqualify a third-party from 

being able to implement a QAP for a facility.

2. Professionally Qualified to Implement a QAP

Another key element to ensure the effective implementation of QAPs at renewable fuel 

production facilities would be that auditors have the necessary professional expertise and 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 72 of 149

credentials. In RFS2, we require that each renewable fuel production facility undergo an 

engineering review by a licensed professional engineer as part of registration. In this NPRM, we 

are proposing a similar requirement for auditors since the verification of production capabilities 

of a quality assurance program should be similar to the type of review conducted in the 

engineering review process for RFS registration. Independent third-party auditors would 

demonstrate that they possess the required professional expertise during registration. 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 third-parties 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 thirdparties have developed sufficient expertise with RFS to provide useful validation services to 

obligated parties, and we believe that there exist adequate incentives for parties to ensure that 

third-party auditors understand the RFS program sufficiently to prepare and implement QAPs. 

Therefore, we are not proposing to create such a requirement for auditors, but we do seek 

comment on whether the Agency should be responsible for the development of a similarly

detailed professional competency standard to validate RINs.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 73 of 149

3. Errors and Omissions Insurance

An additional element to ensure the effective implementation of QAPs at renewable fuel 

production facilities would be to require independent third-party auditors to maintain 

professional liability insurance, commonly known as Errors and Omissions or E&O insurance. 

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 third-party auditors would be that they have to register 

with EPA as a regulated party through the Agency’s Central Data Exchange (CDX). We 

already require that obligated parties, renewable fuel producers, and RIN owners register with 

EPA, and that those parties provide us with production information, basic company information, 

and in the case of renewable fuel producers, third-party engineering reviews. Requiring third-
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 74 of 149

party 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 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 third-party auditor may contract with additional 

renewable fuel producers and facilities to implement QAPs after initial registration, and 

therefore, we are also requiring that a third-party auditor be required to update their registration 

each time they wish to verify RINs for additional renewable fuel producers or new facilities. This 

information would help the Agency ensure that QAPs submitted to the EPA as part of the 

registration process are consistent with the type of renewable fuel facilities being audited. 

Since we are proposing a requirement that third-party auditors implementing QAPs under 

both Options A and B have E&O insurance (see Section VI.A.3), third-party auditors would be 

required to provide copies of any applicable E&O insurance policies during the registration 

process. If a third-party auditor is implementing a QAP under Option A, they would need to also 

provide EPA with copies of pertinent documents and other evidence that demonstrate they have 

an adequate replacement mechanism in place. This information is necessary to ensure that thirdparty auditors have the ability to cover their RIN replacement responsibilities. Third-party 

auditors would also be expected to provide EPA with copies of professional certifications (see 

Section VI.A.2) and a signed affidavit that states that the third-party auditor is independent of 

and free from any conflicts of interest with any renewable fuel producer that for which they 

intend on verifying RINs. 

Third-party auditors would also be required to provide QAPs for Agency approval during 

registration, and EPA would be required to approve a QAP before a third-party auditor could be 

registered and use a QAP for a facility audit. EPA believes that it would be inappropriate to 

register a third-party auditor without an appropriate QAP. QAP details are discussed in more 

detail in Sections IV.A and V.A for Options A and B, respectively.

Recognizing that foreign third-party auditors may have unique challenges compared with 

domestic third-party auditors, EPA is proposing additional registration requirements for foreign 

third-party auditors. In the final RFS2 rulemaking, we outlined a number of requirements that 

applied to foreign RIN owners (see 40 CFR 80.1467). These additional requirements are 

designed to ensure enforcement of RFS regulations at the foreign RIN owner’s place of business 

and are similar to requirements for foreign parties under other fuels regulations. For example, 

under RFS, foreign RIN owners must submit reports in English and provide translated 

documents in English upon demand from EPA inspectors or auditors, must submit themselves to 

administrative and judicial enforcement powers and provisions of the United States without 

limitation based on sovereign immunity, and post a bond covering a portion of the gallon-RINs 

that a foreign RIN owner owns. EPA is proposing the same requirements be extended to foreign 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 75 of 149

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 EPA-approved QAP, 2) 

has informed EPA and RIN generators about all potentially invalid RINs that it discovered, and 

3) has fulfilled its RIN replacement obligation if applicable. Third-party auditors that fail to

accurately and completely renew their registrations will no longer be registered and therefore can 

no longer implement QAPs and verify RINs. We also propose that we may revoke a third-party 

auditor’s registration at any time if it determines that the third-party auditor has failed to meet its 

regulatory requirements. Furthermore, we are proposing that we can deny a registration 

application from any third-party auditor that employs any person that was involved in the 

verification of RINs for a third-party auditor whose registration was revoked. We seek comment 

on whether this approach is appropriate.

We also seek comment on whether we should require that third-party auditors’ 

registration information, including QAPs, be made publicly available. We believe that there is a 

positive correlation between the effectiveness of a quality assurance program and the amount of 

transparency in the third-party auditor’s registration and QAP implementation processes. By

making registration information publicly available, it would allow other parties to evaluate 

whether they have confidence in a QAP conducted by a third-party auditor. This would also 

allow affected stakeholders to notify EPA of concerns or deficiencies in a third-party auditor’s 

registration or QAP. Some third-party auditors may argue that such information is confidential 

business information. To address this concern, EPA could allow third-party auditors to submit 

both confidential and public versions of registration documents to ensure that sensitive 

information is protected. 

C. Other Responsibilities of Auditors

1. Notifying the Agency When There are Problems

We believe that an important element of today’s proposed quality assurance program is 

the timely notification and correction of problems that are identified during the facility audit 

process, and a requirement to communicate potential problems that are uncovered through this 

process. Historically, in other EPA fuels programs, such as the RFG, ULSD, and E15 Survey

Programs, we require that the independent party that implements the program report potential 

violations of standards within 24 hours of identifying the potentially non-compliant fuel sample. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 76 of 149

This has allowed the Agency to work with responsible parties to correct potential issues in a 

timely manner, thereby reducing the potential environmental impact of the non-compliant fuel. 

We believe that the utility of this third-party notification would enhance the effectiveness of 

today’s proposed quality assurance program. Therefore, we are proposing requirements that 

third-party auditors would be required to notify EPA and the renewable fuel producer of 

potential problems, including but not necessarily limited to fraud, errors, and/or omissions, 

within 24 hours after a problem has been identified. We seek comment on whether EPA should 

allow third-party auditors more or less time to report potential issues that arise during audits of 

renewable fuel production facilities. 

2. Indentifying Verified RINs in EMTS

The primary goal of today’s proposed quality assurance program is to allow downstream 

parties to feel confident that RINs are being appropriately generated at renewable fuel production 

facilities. Third-party auditors have an integral role in providing this assurance by verifying that 

facilities are in fact producing the type and quantity of renewable fuels from the appropriate 

feedstocks using specified pathways, and that the associated RINs have been validly generated. 

The next step would be for third-party auditors to identify RINs as having been verified so that 

downstream parties would know which RINs had been subjected to review by an auditor and 

thus can be the basis for an affirmative defense. To attain this goal, we are proposing 

requirements that third-party auditors would be responsible for tagging RINs as having been 

"verified" in a way that would be clearly visible in EMTS after they have been generated.

We propose that verifying a RIN in EMTS be prospective, meaning that a RIN could only

be verified after an auditor has audited a facility in accordance with an approved QAP and met 

other conditions discussed below. Apart from the verification of RINs during the interim period 

between release of the NPRM and the final rule, we do not believe that there are any benefits 

from allowing verification of RINs retroactively in EMTS that warrant the complication, 

confusion, and risks associated with it.

We also believe that before a QAP can be implemented by a third-party auditor, a 

relationship must be established in CDX between the third-party auditor and the renewable fuel 

producer or importer. This process would occur during the initial registration of a third-party

auditor and after any updates to a third-party auditor’s registration. This procedure would be 

necessary to ensure that both the third-party auditor and the renewable fuel producer or importer 

have agreed to establish a quality assurance program under a proposed affirmative defense 

option. Also as discussed in Section IV.B, EPA may not recognize this relationship unless the 

third-party auditor 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, 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 77 of 149

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, it

should have the ability to limit their liability should it 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 

third-party and EPA that newly generated RINs are valid.

As mentioned above, one key requirement for the effective implementation of a QAP by

a third-party party auditor would be that the third-party auditor must be free from conflicts of 

interest with renewable fuel producers that are being audited. However, some existing thirdparty auditors currently act as agents for renewable fuel producers by not only verifying that 

RINs are appropriately generated at renewable fuel producer’s facilities, but by also handling a 

renewable fuel producer’s reporting activities in EMTS (e.g. they submit reports to generate 

RINs in EMTS for renewable fuel volumes produced at a facility owned/operated by the 

renewable fuel producer). This may present a conflict of interest since those third-party auditors 

have a contractual relationship to act on behalf of the renewable fuel producer. On the other 

hand, since third-party auditors are going to be responsible for verifying all RINs generated at a 

facility in EMTS, they may be able to serve as an agent for a renewable fuel producer in this 

capacity without an apparent conflict of interest. We seek comment on whether we should allow 

third-party auditors to act as agents in the generation of RINs for renewable fuel producers. We 

also seek comment on any element of today’s proposal to require third-party auditors to validate 

RINs in EMTS.

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 third-party auditors would be required to implement 

EPA-approved QAPs and maintain records of all verification and validation activities related to 

the implementation of a quality assurance program. These records would serve to demonstrate 

that a QAP was appropriately implemented if invalid RINs are reported at a later date. 

b. Reporting Requirements
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 78 of 149

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 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 third-party auditors. Similar to current RFS 

requirements, the attest engagement could consist of an outside certified CPA or certified 

independent auditor following agreed upon procedures to determine whether underlying records, 

reported items, and transactions agree, and issuing a report as to their findings and that attest 

engagements occur annually. These requirements would be similar to those we require of other 

parties in RFS.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 79 of 149

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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 80 of 149

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 third-party 

engineering review and annual attestation report should also be reviewed. 

Reports submitted to EPA should be cross-checked with other records. For instance, the 

auditor should have access to certificates of analysis. The auditor must check recent feedstock 

receipts (if the producer uses a variety of feedstocks, then the auditor should be provided with 

receipts for each feedstock). Integrated facilities may not have internal sales receipts for 

feedstock usage, so an alternative paper trail will likely be required. Similar to the feedstock 

document review and crosscheck, renewable fuel and co-product delivery documentation should 

be part of any audit. 

For all documentation reviews, we would expect the auditor to analyze reports to 

determine whether a producer is reporting volumes consistently, and to require (from the 

producer) explanation for missing or inaccurate reports. The auditor should investigate 

discrepancies between volumes reported and processed. Other reports the auditor should 

consider as part of its review include the EIA M22 Survey, any state reports, federal and state tax 

returns, and association dues reports. 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 81 of 149

could decide to review all documentation. Furthermore, and in order to ensure that renewable 

fuel producers will maintain their records in a manner that will allow third party auditors and the 

EPA to efficiently evaluate whether RINs were properly generated, we are also proposing to 

change § 80.1426 to state that RINs may only be generated for fuel that is demonstrated pursuant 

to the reporting requirements of § 80.1451, the recordkeeping requirements of § 80.1454, or in 

other records maintained by the producer, to be produced in accordance with the applicable 

pathway listed in Table 1 to § 80.1426(f) or a petition approved by EPA pursuant to § 80.1416.

Finally, for those components of the audit that we propose to require ongoing, or batchlevel 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 82 of 149

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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 83 of 149

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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 84 of 149

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.

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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 85 of 149

As background, the Federal Trade Commission, as directed by EISA established labeling 

requirements for biofuel blends13. 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. 

 

13 Automotive Fuel Ratings, Certification and Posting Final Rule, 73 FR 40154, July 11, 2008.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 86 of 149

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 carryforward 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 non-qualifying fuel. 

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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 87 of 149

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 

RIN-generating 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 and 

that is composed of homogenous hydrocarbons are highly likely to be used as transportation fuel, 

heating oil or jet fuel. Accordingly, we are proposing that validly generated RINs for these fuels 

will remain valid regardless of the downstream use of the fuel. 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 “drop-in” 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 88 of 149

inspection of a renewable fuel facility. We request comment on limiting the definition of nonester 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 non-qualifying 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 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 this new registration requirements should 

apply to currently-registered 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 89 of 149

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 RIN-generating 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 non-qualifying 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 non-qualifying 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 C.F.R. § 80.1426(c)(6)(ii) 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 90 of 149

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 for “double 

discounting” for non-renewable 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 Ocean-going Vessels 

Another issue the Agency is aware of concerns the use of renewable fuel-containing 

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 “‘fuels 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 oceangoing 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 

 

14

 This 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 91 of 149

used to produce ECA fuel for ocean-going 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 C.F.R. 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 92 of 149

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 final rule has been handled in that fashion. The EPA typically makes 

confidentiality determinations on a case-by-case basis. However, subsequent to the 

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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 93 of 149

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 co-products. This information would be 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§ 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

Coproducts

Example 

Ethanol 

Company

Example 

Ethanol 

Facility

Ethanol 125000 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 125000 500 Canola Oil Transesterification 

using natural 

gas or biomass 

for process 

energy

4 None

At this time, the EPA is not proposing to publish registration information at the company 

or batch-level. 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). 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. The EPA is interested in stakeholder views on this approach. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 94 of 149

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 websites and issue press releases broadcasting this 

information. Regardless of whether a company is publicly traded or posts this information on its 

website, 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 website. Since 

this information is already publicly available, it would not be eligible for confidential treatment 

under the Agency’s existing CBI regulations 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 in 

required under Part 80 consist of information on renewable fuel producer’s facility fuel product, 

total permitted capacity, production volume, production process type, feedstocks, D-Code, and 

co-products. 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, D-Code, 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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 95 of 149

information. Releasing total permitted capacity and production volumes do not 

disclose actual production rates; nor could it be used to determine facility-level 

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 coproducts from wet mill process does not disclose proprietary information. Wet 

mill processing is widely known to result in the co-production 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, D-Code). 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 96 of 149

 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:

Table VIII.C.3.a-1

Example “Reporting” Report

RIN 

Generati

ng 

Compan

y

Compan

y Name

Renewa

ble Fuel 

Original 

Produce

r

Facility 

Name 

and 

Addres

s

Locatio

n in 

Latitude

/

Longitu

de

Renewab

le Fuel 

Productio

n Year/

Month

D Code/ 

Fuel Type

Feedstock

s Used

Production 

Process

Coproduc

ts

Volu

me of 

Denat

urant

Amount 

of Fuel 

Produced 

(in 

gallons?)

RINs 

Generated

Example 

Ethanol 

Compan

y

Example 

Ethanol 

Compan

y

Exampl

e 

Ethanol 

Compan

y

111 

Ethanol 

Street, 

City, 

State, 

ZIP

Lat/Lon

g

2010/July 5 –

Renewabl

e Fuel/10 

– Noncellulosic 

ethanol 

(EV 1.0)

888 –

Feedstock 

not listed 

(used at a 

grandfathe

red 

facility 

100%)

888 –

Grandfather

ed (Other)

Distille

rs 

grains, 

corn 

oil

549.5

2

27,476 27,476

Example 

Biodiesel 

Compan

y

Example 

Biodiese

l 

Compan

y

Exampl

e 

Biodies

el

Compan

y

222 

Biodies

el Way, 

City, 

State, 

ZIP

Lat/Lon

g

2010/July 4 –

BiomassBased 

Diesel/ 20 

–

Biodiesel 

(EV 1.5)

160 –

Biogenic 

Waste 

Oils/Fats/

Greases 

100%

180 –

Transesterifi

cation, 

Dedicated 

Renewable 

Biomass 

Facility 

21,934 32,902

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 

facility-level information is the appropriate level of aggregation or whether it might be more 

appropriate to publish batch-level information. 

b. Rationale for Proposal
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 97 of 149

The EPA finds 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, RINgenerating 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 98 of 149

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 nonCBI publicly available 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.

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

(EMTS) Requirements – Alternative Reporting Method for Sell and Buy 

Transactions for Assigned RINs
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 99 of 149

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;
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 100 of 149

 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 101 of 149

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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 102 of 149

associated with this type of quality assurance program which was used to inform our cost 

calculations.

For those biofuel producers who opt into the quality assurance program, each biofuel 

production facility must be visited and assessed as part of any audit conducted under the 

proposed quality assurance program. An auditor would use an approved QAP as the basis for the 

verification of biofuel produced and RINs generated at a facility. In order to verify production, 

the auditor must conduct site visits, review documents, and contact entities that do business with 

the facility. The proposed components of audits are described in Section VII.

We are proposing that production facilities should be visited on a quarterly basis. New 

production facilities would be visited prior to verification of any RINs and, subsequently, 

according to the standard quarterly schedule. We expect that each visit could take from one to 

several days, depending on the size and complexity of the facility, the availability of records, 

changes since the last audit, etc. For some components of the audit, we propose to require 

ongoing, or batch-level, monitoring. The QAP would be required to provide details of the means 

for collection and evaluation of the data collected on an ongoing basis.

Tables IX.A-1, IX.A-2, and IX.A-3 below itemize the activities anticipated for each 

biofuel production facility audit. The estimates include costs incurred by the biofuel producer 

(Table IX.A-1), the auditor (Table IX.A-2), and the EPA (Table IX.A-3). This table does not 

include costs associated with the RIN replacement mechanism that some QAP providers may

acquire to cover loss in the event of RIN fraud. These costs are discussed separately below. 

Table IX.A-1

Costs to the Biofuel Producer for Implementing a QAP

Category

Manager

Time

Prof./Tech.

Time

Clerical

Time

No.

Per yr.

Capital

$

Total

Hours

Total

$

Site Visit 1 16 4 2 42 3,588

Reporting 2 12 4 3 54 4,560

Recordkeeping 0 0 2 3 6 222

TOTAL 102 8,370

Table IX.A-2

Costs to the QAP Auditor for Implementing a QAP

Category

Manager

Time

Prof./Tech.

Time

Clerical

Time

No.

Per yr.

Capital

$

Total

Hours

Total

$

Auditor:

Contract Init. 4 4 2 1 530 10 1,428

Site Visit 4 16 0 1 1,060 20 3,036

Follow-up 2 28 5 3 1,060 105 12,459

Monitoring 2 50 0 52 5,020

Consultants 4 1,000 4,000

Reporting 0 4 12 16 1,656

QAP Prep 2 16 4 22 3,808
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 103 of 149

EMTS 0 25 0 25 2,400

Recordkeeping 0 12 25 37 2,077

TOTAL 250 38,839

Table IX.A-3

Costs to the EPA for Implementing a QAP

Category

Manager

Time

Prof./Tech.

Time

Clerical

Time

Capital

$

Total

Hours

Total

$

Implementation 3 3 267

EMTS Data 

Management

1 1 89

TOTAL 4 356

1. Time and Cost Assumptions

The specific times estimated for each task are shown in Tables IX.A-1, IX.A-2, and 

IX.A-3. These estimates are based on a number of basic assumptions. An initial site visit of the 

facility to be audited is assumed to require two days, and include estimated travel and per diem 

costs. For simplicity, we have estimated an average $600 for airfare, $150 for lodging, and $80 

for the per diem expenses. It is assumed that a plant manager would meet briefly with the 

auditor, and that a plant chemist or other professional would escort the auditor throughout the 

visit. Some clerical support would be required to locate files for the related document reviews. 

It was assumed that an auditor would travel and spend half a day on contract initiation. 

Any follow up site visits were assumed to be shorter in duration, as the auditor would now be 

familiar with the facility and its normal operation. A substantial amount of the auditor’s time 

would be spent in follow up documentation of the facility, such as checking feedstock suppliers, 

process fuel suppliers, doing volume and mass balances, and monitoring the ongoing operation 

of the facility. It was assumed that an auditor would employ specialized consultants and/or local 

agents to perform some portion of the audit support.

In addition to tracking facility operation, an auditor would also be responsible for 

preparing the QAP, maintaining recordkeeping, monitoring and/or brokering activities on EMTS, 

and assisting with RFS reporting requirements. 

2. Labor Cost Assumptions

The labor costs used in this cost estimation are average mean wages for each labor 

category, as provided in the Bureau of Labor and Statistics Report dated May 2011. Based on 

this data, we used the following hourly wages for each employee type:

Managerial $55.04 per hour

Technical/Professional $47.81 per hour

Clerical $18.35 per hour
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 104 of 149

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 perRIN 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 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 will be the same regardless 

of D code.

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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 105 of 149

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 per-RIN value of banked RINs plus some fractional percentage to cover 

management costs.

A RIN escrow account would work very much like a RIN bank, but would be funded by a 

single auditor instead of a group of auditors, and would be supervised and managed by a thirdparty escrow agent. The advantage of this option is that an auditor would have total control over 

the funding of the escrow. However, an auditor using an escrow account would be solely

responsible for the funding of the account, and so would be required to maintain a balance equal 

to a much larger percentage of its potential replacement responsibility than it might be if using a 

RIN bank. The cost of a RIN escrow account is entirely dependent upon the number and value 

of the RINs covered by the escrow. 

Traditional financial instruments, such as surety bonds, letters of credit, or expanded 

insurance coverage, are also options under Option A. The 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. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 106 of 149

X. Public Participation

We request comment by [INSERT DATE 30 DAYS AFTER DATE OF PUBLIC 

HEARING], which is 30 days following the date of the public hearing, 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 auditor 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 [INSERT DATE 30 DAYS AFTER DATE OF PUBLIC HEARING]. If 

you have an interest in the program described in this document, we encourage you to comment 

on any aspect of this rulemaking. We request comment on various topics throughout this 

proposal. 

Your comments will be most useful if you include appropriate and detailed supporting 

rationale, data, and analysis. If you disagree with parts of the proposed program, we encourage 

you to suggest and analyze alternate approaches to meeting the goals described in this proposal. 

You should send all comments, except those containing proprietary information, to our Air 

Docket (see ADDRESSES) before the end of the comment period. If you submit proprietary

information for our consideration, you should clearly separate it from other comments by 

labeling it ‘‘Confidential Business Information (CBI).’’ You should send CBI directly to the 

contact person listed under FOR FURTHER INFORMATION CONTACT instead of the public 

docket. This will help ensure that no one inadvertently places proprietary information in the 

docket. If you want us to use your confidential information as part of the basis for the final rule, 

you should send a non-confidential version of the document summarizing the key data or 

information. We will disclose information covered by a claim of confidentiality only through the 

application of procedures described in 40 CFR Part 2. If you do not identify information as 

confidential when we receive it, we may make it available to the public without notifying you.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 107 of 149

B. Will there be a public hearing?

We will hold a hearing on February 27, 3013 at XXXlocationXXX Washington, DC, at 

9:00 am 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 108 of 149

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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 109 of 149

quality assurance program for RINs would provide a means for regulated parties to ensure that 

RINs are properly generated, through audits of production facilities conducted by independent 

third parties using quality assurance plans (QAPs). 

The annual public reporting and recordkeeping burden for this collection is estimated to 

be 320 hours per response. A document entitled “Supporting Statement for Renewable Fuels 

Standard (RFS2) Voluntary RIN Quality Assurance Program (Proposed Rule)” has been placed 

in the public docket. The supporting statement provides a detailed explanation of the Agency’s 

estimates by collection activity. The estimates contained the supported statement are briefly 

summarized here:

TOTAL NO. OF RESPONDENTS: 485

TOTAL BURDEN HOURS: 192,270

TOTAL COST TO RESPONDENTS: $ 4,062,000 

Burden is defined at 5 CFR 1320.3(b).

An agency may not conduct or sponsor, and a person is not required to respond to, a 

collection of information unless it displays a currently valid OMB control number. The OMB 

control numbers for EPA's regulations in 40 CFR are listed in 40 CFR Part 9. 

To comment on the Agency's need for this information, the accuracy of the provided 

burden estimates, and any suggested methods for minimizing respondent burden, EPA has 

established a public docket for this rule, which includes this ICR, under Docket ID number EPAHQ-OAR-2012-0621. Submit any comments related to the ICR to EPA and OMB. See 

ADDRESSES section at the beginning of this notice for where to submit comments to EPA. 

Send comments to OMB at the Office of Information and Regulatory Affairs, Office of 

Management and Budget, 725 17th Street, NW, Washington, DC 20503, Attention: Desk Office 

for EPA. Since OMB is required to make a decision concerning the ICR between 30 and 60 days 

after [Insert date of publication in the Federal Register.], a comment to OMB is best assured 

of having its full effect if OMB receives it by [Insert date 30 days after publication in the 

Federal Register.]. The final rule will respond to any OMB or public comments on the 

information collection requirements contained in this proposal.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act generally requires an agency to prepare a regulatory

flexibility analysis of any rule subject to notice and comment rulemaking requirements under the 

Administrative Procedure Act or any other statute unless the agency certifies that the rule will 

not have a significant economic impact on a substantial number of small entities. Small entities 

include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of this rule on small entities, small entity is defined as: (1) 

A small business as defined by the Small Business Administration’s (SBA) regulations at 13 

CFR 121.201 (see table below); (2) a small governmental jurisdiction that is a government of a 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 110 of 149

city, county, town, school district or special district with a population of less than 50,000; and (3) 

a small organization that is any not-for-profit enterprise which is independently owned and 

operated and is not dominant in its field. The following table provides an overview of the 

primary SBA small business categories potentially affected by this regulation: 

Industry Defined as small 

entity by SBA if:

NAICS acodes

Petroleum refineries ≤1,500 employees. 324110

a North American Industrial Classification System.

The program proposed in today’s action is a voluntary quality assurance program 

intended to provide a more structured way to assure that RINs entering commerce are valid. As 

a result of the recent fraud issue, obligated parties are reluctant to purchase RINs from smaller 

refiners because of the uncertainty of their validity. While this voluntary program could be 

beneficial for both larger and smaller refineries it could be particularly beneficial for smaller 

petroleum refineries if they choose to participate. In the current climate, these smaller producers 

have been forced to offer their RINs at a significant discount relative to RINs from larger 

producers, assuming they can find obligated parties or distributors willing to purchase them at 

all. While there will be some cost to opt into the program, we believe these costs will be offset 

by leveling the playing field between larger producers and small producers, allowing small 

producers to effectively compete in the market. 

After considering the economic impacts of this action on small entities, I certify that this 

action will not have a significant economic impact on a substantial number of small entities. 

This action will not impose any requirements on small entities. We continue to be interested in 

the potential impacts of the proposed rule on small entities and welcome comments on issues 

related to such impacts.

D. Unfunded Mandates Reform Act

This rule does not contain a Federal mandate that may result in expenditures of $100 

million or more for State, local, and tribal governments, in the aggregate, or the private sector in 

any one year. The agency has determined that this action does not contain a Federal mandate that 

may result in expenditures of $100 million or more for the private sector in any one year. 

Because the program outlined in this proposal is optional, entities subject to this rule will have 

the flexibility to participate or not. Thus, this action is not subject to the requirements of sections 

202 or 205 of the UMRA. This action is also not subject to the requirements of section 203 of 

the UMRA because it contains no regulatory requirements that might significantly or uniquely 

affect small governments. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 111 of 149

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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 112 of 149

H. Executive Order 13211 (Energy Effects)

This action is not a “significant energy action” as defined in Executive Order 13211 (66 

FR 28355 (May 22, 2001)), because it is not likely to have a significant adverse effect on the 

supply, distribution, or use of energy. We have concluded that any energy impacts of this rule 

will be negligible because the voluntary QAP audit process would ensure that the volume 

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

program that have resulted in inefficiencies and poor liquidity in the RIN market.

I. National Technology Transfer Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 

(“NTTAA”), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs the agencies to use 

voluntary consensus standards in its regulatory activities unless to do so would be inconsistent 

with applicable law or otherwise impractical. Voluntary consensus standards are technical 

standards (e.g., materials, specifications, test methods, sampling procedures, and business 

practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA 

directs EPA to provide Congress, through OMB, explanations when the EPA decides not to use 

available and applicable voluntary consensus standards.

This proposed rulemaking does not involve technical standards. Therefore, EPA is not 

considering the use of any voluntary consensus standards. 

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

Populations and Low-Income Populations

Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive 

policy on environmental justice. Its main provision directs federal agencies, to the greatest 

extent practicable and permitted by law, to make environmental justice part of their mission by

identifying and addressing, as appropriate, disproportionately high and adverse human health or 

environmental effects of their programs, policies, and activities on minority populations and lowincome populations in the United States. 

Today’s action proposes a voluntary set of regulatory provisions that could provide 

regulated parties with a specific mechanism for demonstrating that they have conducted due 

diligence to verify the validity of RINs. Therefore, EPA has determined that this action will not 

have disproportionately high and adverse human health or environmental effects on minority or 

low-income populations. 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During 

Review ***

XII. Statutory Authority

Statutory authority for the rule finalized today can be found in section 211 of the Clean 

Air Act, 42 U.S.C. 7545. Additional support for the procedural and compliance related 

aspects of today’s rule, including the recordkeeping requirements, come from Sections 

114, 208, and 301(a) of the Clean Air Act, 42 U.S.C. 7414, 7542, and 7601(a).

List of Subjects in 40 CFR Part 80

Administrative practice and procedure, Air pollution control, Diesel fuel, Environmental 

protection, Fuel additives, Gasoline, Imports, Oil imports, Petroleum.

Dated: _______________________

______________________________

Lisa P. Jackson,

Administrator.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

For the reasons set forth in the preamble, 40 CFR part 80 is amended as follows:

PART 80—REGULATION OF FUELS AND FUEL ADDITIVES

1. The authority citation for part 80 continues to read as follows:

Authority: 42 U.S.C. 7414, 7542, 7545, and 7601(a).

Subpart M—[Amended]

2. Section 80.1401 is amended by adding the definitions of "A-RIN", "B-RIN", "Independent 

Third-Party Auditor", "Quality assurance plan", "Quality assurance audit", and "Verified RIN" to 

read as follows:

§80.1401 Definitions.

* * * * *

A-RIN means a RIN verified by a registered independent third-party auditor using a QAP that 

has been approved under §80.1469(a) following the audit process described in §80.1472.

B-RIN means a RIN verified by a registered independent third-party auditor using a QAP that 

has been approved under §80.1469(b) following the audit process described in §80.1472.

Independent Third-Party Auditor means a party meeting the requirements of §80.1471(b) that 

conducts QAP audits and verifies RINs. 

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 Plan, or QAP, means the list of elements that an independent third-party 

auditor will check to verify that the RINs generated by a renewable fuel producer or importer are 

valid. 

Quality Assurance Audit means an audit of a renewable fuel production facility conducted by an 

independent third-party auditor in accordance with a QAP that meets the requirements of 

§80.1469.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

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, currently reserved, is amended 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, DCode, feedstocks, production process, volume of fuel produced, and number of 

RINs generated.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 116 of 149

4. Section 80.1426 is amended as follows:

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

b. adding paragraphs (a)(1)(iii) and (a)(1)(iv).

c. By revising paragraphs (c)(1) and (c)(6).

d. By revising paragraphs (f)(4)(i)(A)(1) and (f)(4)(i)(B).

e. By adding paragraph (f)(4)(iii).

e. By revising paragraph (f)(12).

f. By adding paragraph (f)(13).

§ 80.1426 How are RINs generated and assigned to batches of renewable fuel by 

renewable fuel producers or importers?

(a) * * *

(1) * * *

(i) Qualifies for a D code pursuant to § 80.1426(f), or EPA has approved a petition for 

use of a D code pursuant to § 80.1416, and is demonstrated pursuant to the reporting 

requirements of § 80.1451 and the recordkeeping requirements of § 80.1454, or other 

records maintained by the producer, to be produced in accordance with the applicable 

pathway in § 80.1426(f) or a petition approved by EPA pursuant to § 80.1416.

* * *

(ii) Is designated on a product transfer document (PTD) for use as transportation fuel, 

heating oil, or jet fuel in accordance with §80.1453(a)(12); and 

(iv) For renewable electricity, biogas, 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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 117 of 149

submitted pursuant to §80.1416 and the petition approval specifies a mechanism to 

prevent double counting of RINs.

* * * * *

(f) * * *

(4) * * *

(i) * * *

(A) * * *

(1) VRIN shall be calculated according to the following formula:

VRIN = EV * Vs * FER / (FER + FENR)

Where:

VRIN = RIN volume, in gallons, for use in determining the number of gallon-RINs 

that shall be generated for the batch.

EV = Equivalence value for the batch of renewable fuel per §80.1415, subject to 

qualification in paragraph (f)(4)(iii) of this section.

Vs = Standardized volume of the batch of renewable fuel at 60 oF, in gallons, 

calculated in accordance with paragraph (f)(8) of this section.

FER = Feedstock energy from renewable biomass used to make the transportation 

fuel, in Btu.

FENR =Feedstock energy from non-renewable feedstocks used to make the 

transportation fuel, heating oil, or jet fuel, in Btu.

* * * * *

(B) Method B. VRIN shall be calculated according to the following formula:

VRIN = EV * Vs * R

Where:

VRIN = RIN volume, in gallons, for use in determining the number of gallon-RINs 

that shall be generated for the batch.

EV = Equivalence value for the batch of renewable fuel per §80.1415, subject to 

qualification in paragraph (f)(4)(iii) of this section.

Vs = Standardized volume of the batch of renewable fuel at 60 oF, in gallons, 

calculated in accordance with paragraph (f)(8) of this section.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 118 of 149

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 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 received approval for use of a D code by the Administrator;

(B) The fuel producer or importer demonstrates 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 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; or

(3) Demonstrating that the fuel is being 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 a transportation fuel, and for no other purpose; and

(ii) Reserved.

(iii) Reserved.

(13) For purposes of Table 1 to this section, process heat produced from combustion of gas at 

a renewable fuel facility is considered derived from biomass if the gas is biogas.

(i) For biogas directly transported to the facility without being placed in a commercial 

distribution system, all of the following conditions must be met:

(A) The producer has entered into a written contract for the procurement of a 

specific volume of biogas with a specific heat content.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 119 of 149

(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 revising paragraph (f) to read as 

follows:

§ 80.1429 Requirements for separating RINs from volumes of renewable fuel.

* * * * *

(b) * * *

(10) Any party that produces a volume of renewable fuel may separate any RINs that have been 

generated to represent that volume of renewable fuel or that blend if that party retires the 

separated RINs to replace invalid RINs according to §80.1474.

* * * * *

(f) [Reserved]
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 120 of 149

* * * * *

6. Section 80.1430 is amended by .... 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
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 121 of 149

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 

biomass-based diesel, renewable diesel, cellulosic biofuel and other 

advanced biofuel) and is exported in a single shipment.

VOLk= The standardized volume of discrete volume k, in gallons, calculated in 

accordance with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

(4) Renewable fuel. 

ERVORF,i= VOLk* EVk

Where:

ERVORF,i= The Renewable Volume Obligation for renewable fuel for discrete volume 

k, in gallons.

k = A discrete volume of exported renewable fuel that is exported in a single 

shipment.

VOLk= The standardized volume of discrete volume k, in gallons, calculated in 

accordance with §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

* * * * *

(e) For renewable fuels that are in the form of a blend at the time of export, the exporter shall 

determine the volume of exported renewable fuel based on one of the following:

* * * * *

7. Section 80.1431 is amended by revising paragraph (a)(1)(viii) and paragraph (b) to read as 

follows:

§ 80.1431 Treatment of invalid RINs.

(a) * * *

(1) * * *

(viii) [Reserved]

* * * *
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(b) Except as provided in § 80.1473, the following provisions apply in the case of RINs that are 

invalid:

(1) Upon determination by any party that RINs owned are invalid, the party must keep 

copies and adjust its records, reports, and compliance calculations in which the invalid 

RINs were used. The party must retire the invalid RINs in the applicable RIN transaction 

reports under § 80.1451(c)(2) for the quarter in which the RINs were determined to be 

invalid.

(2) Invalid RINs cannot be used to achieve compliance with the Renewable Volume 

Obligations of an obligated party or exporter, regardless of the party's good faith belief 

that the RINs were valid at the time they were acquired.

(3) Any valid RINs remaining after invalid RINs are retired must first be applied to 

correct the transfer of invalid RINs to another party before applying the valid RINs to 

meet the party's Renewable Volume Obligations at the end of the compliance year.

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= Σ(VOLk* EVk)i

Where:

RINRETCB,i= The quantity of cellulosic biofuel RINs that must be retired for day i, in 

gallons.

k = A discrete volume of fuel which the party 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 §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(2) Except as provided in (a)(5), Biomass-based diesel. 

RINRETBBD,i= Σ(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= Σ(VOLk* EVk)i

Where:

RINRETAB,i= The quantity of advanced biofuel RINs that must be retired for day i, in 

gallons.

k = A discrete volume of fuel which the party 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 §80.1426(f)(8).

EVk= The equivalence value associated with discrete volume k.

(4) Renewable fuel. 

RINRETRF,i= Σ(VOLk* EVk)i

Where:

RINRETRF,i= The quantity of renewable fuel RINs that must be retired for day i, in 

gallons.

k = A discrete volume of fuel which the party 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).
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

EVk= The equivalence value associated with discrete volume k.

(5) If the party has reason to know that the fuel would have qualified as cellulosic diesel if 

not put to a non-qualifying 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 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).

b. By revising paragraph (g) and adding paragraph (j).

§ 80.1450 What are the registration requirements under the RFS program?
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

* * * * *

(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).
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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 third-party auditors expire at the 

end of the calendar year, December 31, after EPA has approved a registration under this 

paragraph (g) unless:
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(i) The independent third-party auditor resubmits all information, updated as necessary, 

described in §80.1450(g)(1) thru (g)(7) no later than October 31; and

(ii) The independent third-party auditor submits an affidavit affirming that he or she has 

only verified RINs using a QAP approved under §80.1469, notified all appropriate 

parties of all potentially invalid RINs as described in §80.1471(d), and fulfilled all of 

his or her RIN replacement obligations under §80.1474.

(12) Revocation of Registration.

(i) The Administrator may issue a notice of intent to revoke the registration of a thirdparty auditor if the Administrator determines that the auditor has failed to fulfill any

requirement of this subpart. The notice of intent shall include an explanation of the 

reasons for the proposed revocation.

(ii) Within 60 days of receipt of the notice of intent to revoke, the independent third-party 

auditor may submit written comments concerning the notice, including but not limited to 

a demonstration of compliance with the requirements which provide the basis for the 

proposed revocation. Communications should be sent to the following address: XX The 

Administrator shall review and consider any such submission before taking final action 

concerning the proposed revocation.

(iii) If the auditor fails to respond in writing within 60 days to the notice of intent to 

revoke, the revocation shall become final by operation of law and the Administrator shall 

notify the independent third-party auditor of such revocation.

(iv) EPA may deny the registration of an independent third-party auditor if the 

independent third-party auditor employs any person that was previously employed by an 

independent third-party auditor whose registration was revoked.

* * * 

(j) 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), (a)(1)(x), (a)(1)(xi), (a)(1)(xii), and (a)(1)(xiii).

b. By adding paragraphs (a)(1)(xiv), (a)(1)(xv), and (a)(1)(xvi).

c. By adding paragraph (b)(1)(ii)(T).

d. By revising paragraphs (c)(2)(x), (c)(2)(xi), (c)(2)(xii), (c)(2)(xiii), (c)(2)(xiv), (c)(2)(xv), and 

(c)(2)(xvi).

e. By adding paragraphs (c)(2)(xvii) and (c)(2)(xviii).

f. By revising paragraph (g).

g. By adding paragraph (h).

§ 80.1451 What are the reporting requirements under the RFS program?
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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 fuel produced, total volume of renewable fuel blended into gasoline and 

diesel fuel, and the percentage of renewable fuel blended into each batch of finished fuel;

(2) 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, the name, location and contact 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

information for each party the blends the fuel, and affidavits from the party that include 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

(iv)A description of the finished fuel, and a statement that the fuels met 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(ii) The RIN generation verification reports shall include all the following information for each 

batch of renewable fuel produced or imported verified, where “batch” means a discrete quantity

of renewable fuel produced or imported and assigned a unique batch-RIN per §80.1426(d):

(A) The RIN generator's name.

(B) The RIN generator's EPA company registration number.

(C) The renewable fuel producer EPA facility registration number.

(D) The importer EPA facility registration number and foreign renewable producer company 

registration number, if applicable.

(E) The applicable reporting period.

(F) The quantity of RINs generated for each batch according to §80.1426.

(G) The production date of each batch.

(H) The fuel type of each batch.

(I) The volume of denaturant and applicable equivalence value of each batch.

(J) The volume of each batch produced.

(K) The volume and type of each feedstock used to produce the batch.

(L) Which batches met the definition of Renewable Biomass.

(M) The quantity and type of co-products produced.

(N) Any additional information the Administrator may require.

(2) RIN verification activity reports shall be submitted to EPA according to the schedule 

specified in paragraph (f)(2) of this section. Each report shall summarize RIN verification 

activities for the reporting period. The quarterly RIN verification activity reports shall include all 

of the following information:

(i) The submitting party's name.

(ii) The submitting party's EPA company registration number.

(iii) The number of current-year RINs verified at the start of the quarter.

(iv) The number of prior-year RINs verified at the start of the quarter.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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 adding paragraph (g) as follows.

§ 80.1452 What are the requirements related to the EPA-Moderated Transaction System 

(EMTS)?

* * * * *

(g) Alternative method of reporting buy and sell transactions in EMTS. For buyers and sellers 

of assigned RINs that agree to utilize this alternative reporting method, the reporting 

requirements of paragraph(c) of this section are modified as follows:

(1) The seller of assigned RINs shall do the following:

(i) Report the sell transaction in EMTS within five (5) business days of shipping, and; 

(ii) Indicate that the alternative reporting method is being utilized; and

(iii)Report the date the renewable volume is shipped in place of the date of transfer (c)(7) 

in the EMTS sell transaction report; and 

(iv)Report a unique identifier and provide a product transfer document (PTD) that meets 

all requirement of § 80.1453 and that includes the unique identifier agreed upon by

the buyer and seller.

(2) The buyer of assigned RINS shall do the following: 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 132 of 149

(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. 

12. Section 80.1453 is amended as follows:

a. Revising paragraph (a) introductory text and paragraph (a)(5); and

b. Adding paragraphs (a)(12), and (a)(13).

§80.1453 What are the product transfer document (PTD) requirements for the RFS 

program?

(a) On each occasion when any party transfers ownership of neat and/or blended renewable fuels 

or separated RINs subject to this subpart, the transferor must provide to the transferee documents 

identifying the renewable fuel, designated fuel uses, and any RINs generated for the fuel 

(whether assigned or separated) which include all of the following information, as applicable:

* * * *

(5) Name and blend level of all blending components in a product containing renewable fuel, 

if applicable.

* * * *

(12) For the transfer of renewable fuel with or without RINs, an accurate and clear statement 

on the product transfer document of the fuel type from Table 1 to § 80.1426, and 

designation of the fuel use(s) intended by the transferor, as follows: 

(i) Ethanol. “This volume of neat or blended ethanol is designated and intended for use 

as transportation fuel or jet fuel in the 48 U.S. contiguous states and Hawaii. Any

other use in the 48 U.S. contiguous states and Hawaii is a violation of 40 C.F.R § 

80.1460(g), unless the requirements in § 80.1433 are met.” 

(ii) Biodiesel. ” This volume of neat or blended biodiesel is designated and intended for 

use as transportation fuel, heating oil or jet fuel in the 48 U.S. contiguous states and 

Hawaii. Any other use in the 48 U.S. contiguous states and Hawaii is a violation of 40 

C.F.R § 80.1460(g), unless the requirements in § 80.1433 are met.”

(iii) Renewable Heating oil. “This volume of heating oil is designated and intended for 

use as heating oil. Any other use in the 48 U.S. contiguous states and Hawaii is a 

violation of 40 C.F.R § 80.1460(g), unless the requirements in § 80.1433 are met.” 

(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 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 133 of 149

Hawaii is a violation of 40 C.F.R § 80.1460(g), unless the requirements in § 80.1433 

are met.” 

(v) Naphtha. ” This volume of neat or blended naphtha is designated and intended for use 

as transportation fuel or jet fuel in the 48 U.S. contiguous states and Hawaii. This 

naphtha may only be used as a gasoline blendstock or jet fuel. Any other use in the 48 

U.S. contiguous states and Hawaii is a violation of 40 C.F.R §80.1460(g), unless the 

requirements in § 80.1433 are met.” 

(vi) Butanol. “This volume of neat or blended butanol is designated and intended for use 

as transportation fuel or jet fuel in the 48 U.S. contiguous states and Hawaii. This 

butanol may only be used as a gasoline blendstock or jet fuel. Any other use in the 48 

U.S. contiguous states and Hawaii is a violation of 40 C.F.R § 80.1460(g), unless the 

requirements in § 80.1433 are met.” 

(vii) Renewable fuels other than ethanol, biodiesel, heating oil, renewable diesel, naptha 

or butanol. “This volume of neat or blended renewable fuel is designated and 

intended to be used as transportation fuel, heating oil, or jet fuel in the 48 U.S. 

contiguous states and Hawaii. Any other use in the 48 U.S. contiguous states and 

Hawaii is a violation of 40 C.F.R §80.1460(g), unless the requirements in § 80.1433 

are met.”

13. Section 80.1454 is amended as follows:

a. By adding paragraph (b)(7).

b. By revising paragraphs (l), (m), (n), (o), and (p).

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

§ 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 

blended into each batch of finished fuel;
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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

relied upon in § 80.1426(f)(X);

(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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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) 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) Separate RINs in EMTS using the wrong separation reason code

(2) Separate RINs in EMTS without having a qualifying separation event pursuant to 

80.1429

(3) Separate more than 2.5 RINs per gallon of renewable fuel that has a valid qualifying 

separation event pursuant to §80.1429.

(4) Separate RINs outside of the requirements in §80.1452(c).

(5) [Reserved]

(6) Improperly separate RINs in any other way not listed in paragraphs (i)(1)-(5) of this 

section. 

(i) Independent third-party auditor violations. No person shall do any of the following:

(1) Fail to fully and competently implement a QAP approved under §80.1469.

(2) Fail to notify appropriate parties of potentially invalid RINs under §80.1474(b).

(3) Identify a RIN as verified in accordance with §80.1471(e) that is invalid under §80.1431.

15. Section 80.1461 is amended by revising paragraphs (a)(1) and (a)(2) as follows.

§ 80.1461 Who is liable for violations under the RFS program?

* * * * *

(a) * * * 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 136 of 149

(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 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 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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 matches 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:
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(vi) Volume production capacity matches 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 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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 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) The cap on RIN replacement for auditors of A-RINs shall apply to A-RINs generated in 

2013, 2014, and 2015. 

(2) 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 2% of each D code 
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

of A-RINs verified by the auditor in the current calendar year and four previous calendar 

years. 

(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)

 = 0.02 × 





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 y-1 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

18. Section 80.1471 is added as follows:

§80.1471 Requirements for QAP Auditors

(a) QAP audits conducted pursuant to §80.1472 must be conducted by an independent third-party

auditor that is a professional engineer, as specified in paragraphs §80.1450(b)(2)(i)(A) and 

§80.1450(b)(2)(i)(B). 

(b) To be considered an independent third-party auditor under paragraph §80.1471(a):

(1) The independent third-party auditor shall not be owned or operated by the renewable fuel 

producer or foreign ethanol producer, or any subsidiary or employee of the renewable 

fuel producer or foreign ethanol producer.

(2) The independent third-party auditor shall be free from any interest in the renewable fuel 

producer or foreign ethanol producer's business.

(3) The renewable fuel producer or foreign renewable fuel producer shall be free from any 

interest in the third-party auditor's business.

(4) The independent third-party auditor must not be debarred, suspended, or proposed for 

debarment pursuant to the Government-wide Debarment and Suspension regulations, 40 

CFR part 32, or the Debarment, Suspension and Ineligibility provisions of the Federal 

Acquisition Regulations, 48 CFR, part 9, subpart 9.4.

(c) Independent third-party auditors shall maintain professional liability insurance, as defined in 

31 CFR 50.5(q), 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 e-mail or facsimile) and, if 

requested by the party being notified of a potentially invalidly generated RIN, by 

telephone.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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 as follows:
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

§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 on-site 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 on-site 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 be 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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 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 (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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

(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.

(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 BRIN, must submit a written report to the EPA, including all pertinent supporting documentation, 

demonstrating that the requirements of §80.1473(c) or (d) were met. The written report must be 

submitted within 30 days of the person discovering the invalidity.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 147 of 149

21. Section 80.1474 is added as follows:

§ 80.1474 Replacement Requirements for Invalidly Generated RINs.

(a) Responsibility for replacement of invalid verified RINs.

(1) The generator of the A-RIN and the independent third-party auditor that verified the ARIN are required to 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 third-party auditor is required to notify EPA and the RIN generator in 

writing within 24 hours of the identification, including a detailed explanation of why

the RIN is believed to be invalid. 

(4) Within 30 days of being notified by EPA or the independent third-party auditor that 

verified the RIN that a RIN is a PIR, the RIN generator is required to take one of the 

following 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 148 of 149

(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.

(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 third-party auditor that verified the PIR is required to 

retire valid RINs meeting the requirements of paragraph (c) of this section.

(ii) For B-RINs and unverified RINs, the obligated party that owns the PIR is required to 

either

(A) Retire the PIR.

(B) If the PIR has already been used for compliance with the obligated party’s RVO, 

correct the RVO to subtract the PIR.

(c) The following specifications apply when retiring valid RINs to replace PIRs or invalid RINs:

(1) When a RIN is retired to replace a PIR or invalid RIN, it must be of the same verification 

type, either A-RIN, B-RIN, or unverified. 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.
*** E.O. 12866 Review - Revised Version - Do Not Cite, Quote, or Release During Review ***

Page 149 of 149

(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 biomass-based diesel for year i

LEAB,i = Limited exemption for advanced biofuel for year i

LERF,i = Limited exemption for renewable for year i

RVOCB,i = The Renewable Volume Obligation for cellulosic biofuel for the obligated 

party for calendar year i, in gallons, pursuant to §80.1407.

RVOBBD,i = The Renewable Volume Obligation for biomass-based diesel for the obligated 

party for calendar year i after 2010, in gallons, pursuant to §80.1407.

RVOAB,i = The Renewable Volume Obligation for advanced biofuel for the obligated 

party for calendar year i, in gallons, pursuant to §80.1407.

RVORF,i = The Renewable Volume Obligation for renewable fuel for the obligated party

for calendar year i, in gallons, pursuant to §80.1407.

(3) If the number of invalidly generated B-RINs required to be retired or replaced in a 

calendar year is less than or equal to LE as calculated in paragraph (d)(2) of this section, 

the entire RIN retirement obligation is excused.

(4) If the number of invalidly generated B-RINs required to be retired or replaced in a 

calendar year is greater than LE as calculated in paragraph (d)(2) of this section, the 

retirement of a number of B-RINs equal to 2% of the obligated party's RVO is excused.

(5) The limited exemption applies only in calendar years 2013 and 2014.

(e) 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.