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

with the RFS requirements. However, there are a variety of ways in which RINs could be
transferred from the point of generation by renewable fuel producers to the obligated
parties that need them.
EPA’s proposal was developed in light of the somewhat unique aspects of the
RFS program. As discussed earlier, under this program the refiners and importers are the
parties obligated to comply with the renewable fuel requirements. At the same time,
refiners and importers do not generally produce or blend renewable fuels at their
facilities, and so are dependent on the actions of others for compliance. Unlike EPA’s
other fuel programs, the actions needed for compliance largely center on the production,
distribution, and use of a product by parties other than refiners and importers. In this
context, EPA believes the RIN transfer mechanism should focus first on facilitating
compliance by refiners and importers, and doing that in a way that imposes minimum
burden on other parties and minimum disruption of current mechanisms for distribution
of renewable fuels.
Our proposal does this by relying on the current market structure for ethanol
distribution and use, and avoiding the need for creation of new mechanisms for RIN
distribution that are separate and apart from this current structure. EPA’s proposal would
basically have the RIN follow with the ethanol until the point the ethanol is purchased by
the obligated party, or is blended into gasoline by a blender. This approach would allow
the RIN to be incorporated into the current market structure for sale and distribution of
ethanol, and would avoid requiring refiners to develop and use wholly new market
mechanisms. While the development of new market mechanisms to distribute RINs is
not precluded under our proposed program, it is also not required.
The Agency has also evaluated several other options for distributing RINs. We
are not proposing these alternatives because they tend to require the development of new
market mechanisms, as compared to relying on the current market structure for
distribution of ethanol, and they are less focused on facilitating compliance for the
obligated parties. At the same time, we recognize that all of the alternatives described
below, as well as our proposal, have differing positive and negative aspects, and we
invite comment on them, especially comments comparing and contrasting them with our
proposed program. Our proposal is described in subsections 1 through 3 below, and
alternative approaches in subsection 4.
1. Distribution Of RINs With Batches Of Renewable Fuel
We are proposing that standard-value RINs be transferred with actual batches of
renewable fuel as they move through the distribution system, until ownership of the batch
is assumed by an obligated party or by a party that converts the renewable fuel into motor
vehicle fuel. After such time, the RINs could be separated from the batch and freely
traded. This approach would place certain requirements on anyone who takes ownership
of renewable fuels, including renewable fuel producers, importers, marketers,
distributors, blenders, and terminal operators.
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