Stoel Rives LLP, a national energy and biofuels law firm, has published a white paper that provides a comprehensive overview of proposed regulatory changes to the renewable fuel standard (RFS) program, specifically the renewable identification number (RIN) market. The U.S. EPA initiated these proposed changes following its revelation that several individuals and companies had fraudulently issued millions of invalid RINs.

While the EPA’s rulemaking process is still underway, with a Washington, D.C., hearing scheduled for March 19, the agency has emphasized that portions of the proposed rules, including new affirmative defense provisions, will apply retroactively from Jan. 1 of this year. Stoel Rives attorneys present their white paper as background for those who need to plan for compliance now and those who may want to submit testimony.

The RIN program, first established by Congress in 2005, calls for RINs to be assigned to every gallon of biofuel produced in or imported into the U.S. and track information such as biofuel type. Under the RFS, refiners and importers of gasoline and diesel fuel for U.S. consumption must regularly demonstrate that they have sufficient RINs to meet their annual renewable fuel volume obligations. The objective of the program is to further RFS program goals of energy security, reduced GHG emissions and expansion of the domestic biofuels industry. 

Initially, the EPA adopted a “buyer beware” approach to the issuance of invalid RINs, imposing strict liability on all obligated parties that transferred or used invalid RINs. This approach failed to prevent a significant number of invalid RINs from entering the marketplace, which led to unintended adverse consequences for smaller, less established biofuels producers. As obligated parties weighed the increased risk of EPA enforcement actions, they began to shift away from smaller-volume biofuels producers in favor of more established producers.

The Stoel Rives white paper reviews how the EPA’s proposed quality assurance plans (QAP) rule seeks to leverage and refine third-party verification systems, improve RIN market liquidity and provide greater assurance that the RFS program will meets its volumetric goals.

“The proposed revisions may allow for more robust RIN trading and thus a more effective RFS program,” said coauthor Graham Noyes. The paper describes how the proposed rule introduces a means for obligated parties to assert an affirmative defense where RINs are found to have been invalidly generated, establishes third-party RIN auditors and promotes tagging of verified RINs in order to demonstrate verification downstream. Differences between the rule’s QAP Option A and QAP Option B are also highlighted.

To download your copy of the Stoel Rives Proposed RIN Program Rule Changes white paper, click here.