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

Section IV. In the context of demonstrating compliance, all gallon-RINs would have the
same compliance value, i.e. there would be no distinction between standard-value RINs and
extra-value RINs for compliance purposes. The Agency could then verify that the RINs used
for compliance purposes were valid by simply comparing RINs reported by producers to
RINs claimed by obligated parties. We could also verify simply that any given gallon-RIN
was not double-counted, i.e., used by more than one obligated party for compliance purposes.
In order to be able to identify the cause of any double-counting, however, additional
information would be needed on RIN transactions as discussed in Section IV.
If an obligated party has acquired more RINs than it needs to meet its RVO, then in
general it could retain the excess RINs for use in complying with its RVO in the following
year, or transfer the excess RINs to another party. The conditions under which this would be
allowed are determined by the valid life of a RIN, described in more detail in Sections
III.D.3.b below. If alternatively an obligated party has not acquired sufficient RINs to meet
its RVO, then under certain conditions it could carryover a deficit into the next year. Deficit
carryovers are discussed in more detail in Section III.D.3.d.
The regulations would prohibit any party from creating or transferring invalid
RINs. Invalid RIN could not be used in demonstrating compliance regardless of the good
faith belief of a party that the RINs were valid. These enforcement provisions are
necessary to ensure the RFS program goals are not compromised by illegal conduct in the
creation and transfer of RINs.
As in other motor vehicle fuel credit programs, the regulations would address the
consequences if an obligated party was found to have used invalid RINs to demonstrate
compliance with its RVO. In this situation, the refiner or importer that used the invalid
RINs would be required to deduct any invalid RINs from its compliance calculations.
The refiner or importer would be liable for violating the standard if the remaining number
of valid RINs was insufficient to meet its RVO, and the obligated party might be subject
to monetary penalties if it used invalid RINs in its compliance demonstration. In
determining what penalty was appropriate, if any, we would consider a number of factors,
including whether the obligated party did in fact procure sufficient valid RINs to cover
the deficit created by the invalid RINs, and whether the purchaser was indeed a good
faith purchaser based on an investigation of the RIN transfer. A penalty might include
both the economic benefit of using invalid RINs and/or a punitive component.
Although an obligated party would be liable under our proposed program for a
violation if it used invalid RINs for compliance purposes, we would normally look first to
the generator/seller of the invalid RINs both for payment of penalty and to procure
sufficient valid RINs to offset the invalid RINs. However, if that party was found to be
out of business, then attention would turn to the obligated party who would have to obtain
sufficient valid RINs to offset the invalid RINs.
As for RIN generators, we are proposing that obligated parties be required to conduct
attest engagements for the volume of gasoline they produce and the number of RINs
procured to ensure compliance with their RVO. In most cases, this should amount to little
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