Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

obligated parties. However, there is no provision in the Act that would permit EPA to
reduce or eliminate any obligations under the RFS program specifically for parties
located within the state that petitioned for the waiver. Thus all refiners, importers, and
blenders located in the state would still be obligated parties if they produce gasoline. In
addition, an approval of a state's petition for a waiver may not have any impact on
renewable fuel use in that state, since it would not be a prohibition on the sale or
consumption of renewable fuels in that state. In fact the Act prohibits the regulations
from restricting the geographic areas in which renewable fuels may be used. Renewable
fuel use in the state in question would thus continue to be driven by natural market
forces.
Given that state petitions for a waiver of the RFS program are unlikely to affect
renewable fuel use in that state, we are not proposing regulations providing more
specificity regarding the criteria for a waiver, or the ramifications of Agency approval of
such a waiver in terms of the level or applicability of the standard. However, states can
still submit petitions to the Agency for a waiver of the RFS requirements under the
provision in the Energy Act. We request comment on this approach.
D. How Do Obligated Parties Comply With The Standard?
Under the Act, EPA is to establish a renewable fuel standard annually, expressed as a
percentage of gasoline sold or introduced into commerce, that will ensure that overall a
specified total national volume of renewable fuels will be used in gasoline in the U.S. The
Act does not require each obligated party to necessarily do the blending themselves in order
to comply with this obligation. The Act envisions a regulatory program that would ensure
the national volume is met as long as a refiner or importer ensured that someone used a
certain volume of renewable fuel, whether it was themselves or another party. Under the
credit trading program required by the Act, each obligated party is allowed to satisfy its
obligations either through its own actions or through the transfer of credits from others who
have more than satisfied their individual requirements.
This section describes our proposed compliance program. It is based on the use of
unique renewable identification numbers (RINs) assigned to batches of renewable fuel by
renewable fuel producers. These numbers could then be sold or traded, and ultimately used
by any obligated party to demonstrate compliance with the applicable standard. Excess RINs
would be identical to the credits envisioned by the Act. As described below, we believe that
our approach is consistent with the language and intent of the Act and preserves the natural
market forces and blending practices that keep renewable fuel costs to a minimum.
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