The US Environmental Protection Agency released a proposal designed to ensure that renewable identification numbers (RINs), which refiners and other motor fuel suppliers buy to help meet federal Renewable Fuel Standard quotas, are authentic.
The Oct. 31 proposal includes a quality assurance program that could be used to verify that RINs have been properly generated, the notice said. Independent third parties would develop and implement quality assurance plans (QAP) based on requirements specified in regulations EPA intends to propose by yearend, it indicated.
An American Petroleum Institute official said EPA's announcement of a draft RIN verification plan was a constructive first step. "However, EPA needs to address the issue of RIN validity and restore confidence in the RIN market quickly," Bob Greco, API downstream group director, said on Nov. 1.
"EPA has the responsibility to develop a regulatory solution that provides for an efficient and cost effective process, avoids unnecessary complexity, and is implemented by Jan. 1, 2013," he continued. "Our industry remains concerned about potentially invalid RINs remaining in the system. We urge EPA to issue a proposed rule as soon as possible while also providing enforcement assurance until the rule is finalized."
Rich Moskowitz, general counsel at the American Fuel & Petrochemical Manufacturers, said the notice clearly showed EPA recognizes that the RIN fraud problem is significant. AFPM also has some concerns, primarily about how the agency intends to address potential liability that continues to accrue in 2012 under EPA's ongoing investigations, he told OGJ.
Cost concerns
"Our members are still reviewing the specific elements in EPA's posted QAPs, and they have concerns that some of the specific components will increase the cost of RIN validation without significantly reducing the risk of invalid RINs," Moskowitz said.
"It's important for the agency to create a validation program that is cost-effective," he explained. "Obviously, if the program's due diligence is very expensive, it may not solve the problem that small biofuel producers are experiencing in marketing their RINs."
EPA's notice said it issued the early draft of the types of QAP requirements it is considering to let third-party entities which are considering participating in the program begin to make preparations to conduct audits.
"While the QAP requirements in this document represent our current thinking, some elements could change in the [notice of proposed rulemaking] as we continue to gather information and develop other aspects of the proposed program requirements," it added.
"Once EPA releases the NPRM containing the proposed requirements for QAPs, stakeholders can provide the agency with comments on all aspects of the proposal, including the specific proposed requirements for QAPs," the notice said. "Any final rule will reflect EPA's consideration of comments received on the proposed rule and/or further consideration by EPA."