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

aspects of the RIN. We are not proposing any mechanism for simplifying the RIN in the
case of a batch merger, such as combining two different RINs into a single RIN or
replacing a collection of different RINs with a new single RIN. We believe that such
approaches would be likely to create significant difficulties in tracking RINs and
verifying their validity.
Parties that have two or more batches of renewable fuel that have been merged
into a single batch will be free to determine how the RINs will be subsequently split and
assigned to new daughter batches during a batch split. We are not proposing a specific
protocol for such cases, beyond the general requirement that RINs that have been
assigned to parent batches remain assigned to a daughter batch after splitting has
occurred. However, it may be helpful for RINs to be ordered on PTDs in the order in
which the batches were combined, and then assigned to daughter batches on a first-in,
first-out basis. Thus as individual parent batches are added to, for instance, a tank
already containing renewable fuel, the RINs associated with the newly added batch could
be added below the existing RINs on the documentation. As product was drawn back out
of the tank, the RINs assigned to the removed product would be those at the top of the list
of RINs on the tank documentation. This FIFO approach would ensure that RINs
assigned to parent batches continue to move through the distribution system, and batch
splits could occur straightforwardly even in cases that begin with merged batches. We
request comment on whether this FIFO approach should remain guidance or whether
instead it should be a regulatory requirement.
2. Separation Of RINs From Batches
Separation of a RIN from a batch means that the RIN would no longer be
included on the PTD, and could be traded independently from the batch to which it had
originally been assigned.
We believe that the regulatory program should be structured around facilitating
compliance by obligated parties with their renewable fuel obligation. This means that
obligated parties should have the right to market the renewable fuel separately from the
RIN originally assigned to it. We are therefore proposing that a refiner or importer would
have the right to separate the RIN from the batch as soon as he assumes ownership of that
batch. In the case of ethanol blended into gasoline at low concentrations (≤ 10 volume
percent), stakeholders have informed us that a large volume of the ethanol is purchased
by refiners directly from ethanol producers, and is then passed to blenders who carry out
the blending with gasoline. Therefore, in many cases RINs assigned to batches will pass
directly from the producers who generated them to the obligated parties who need them.
However, significant volumes of ethanol are also blended into gasoline without
first being purchased by a refiner. In some cases, the blender itself purchases the ethanol.
In other cases, a downstream customer purchases the ethanol and contracts with the
blender to carry out the blending. Regardless, the ethanol may never be held or owned by
an obligated party before it is blended into gasoline. Thus we believe that a blender
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