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

traded, and used for compliance would be recorded electronically in an Agency database,
these types of investigations would be straightforward. The number of RIN trades, and
the parties between whom the RINs are being traded, would only have the effect of
increasing the size of the database.
As with other credit-trading programs, the business details of RIN transactions,
such as the conditions of a sale or any other transfer, RIN price, role of mediators, etc.
would be at the discretion of the parties involved. The Agency would be concerned only
with information such as who holds a given RIN at any given moment, when transfers of
RINs occur, who the party to the transfers are, and ultimately which obligated party relies
on a given RIN for compliance purposes. This type of information would therefore be
the subject of various recordkeeping and reporting requirements as described in Section
IV, and these requirements would generally apply regardless of whether RIN has been
separated from a batch.
The means through which RIN trades would occur would also be at the discretion
of the parties involved. For instance, parties with RINs could create open auctions,
contract directly with those obligated parties who seek RINs, use brokers to identify
potential transferees and negotiate terms, or just transfer the RINs to any other willing
party. Brokers involved in RIN transfer could either operate in the role of arbitrator
without holding the RINs, or alternatively could receive the RINs from one party and
transfer them to another. If they are the transferee of any RINs, they would also be
subject to the registration, recordkeeping, and reporting requirements. We do not believe
that it would be appropriate or useful for the EPA to become directly involved in RIN
transfers, other than in the role of providing a database within which transfers can be
recorded. Thus EPA would not plan on establishing a clearinghouse or centralized
brokerage for the management of RIN transfers, nor contract with a private firm through
whom all RIN buyers and sellers would arrange transfers. Our experience with other
credit trading programs suggests that, left to themselves, natural free-market mechanisms
will arise to handle RIN transfers, and that these mechanisms will maximize the
efficiency of the market while minimizing the transaction costs for transfers of RINs.
4. Alternative Approaches To RIN Distribution
During the development of our proposed RFS trading and compliance program,
stakeholders offered a variety of alternative program design approaches. Most of these
alternatives recognize the value of a RIN-based system of compliance, but they differ in
terms of which parties would be allowed to separate a RIN from a batch and the means
through which the RINs should be transferred to obligated parties. We invite comment
on all of these options.
Our primary concern with the alternative approaches is that we believe they
would be less effective than our proposed program at ensuring that RINs would get to the
obligated parties who need them in a timely fashion. As described above, stakeholders
have expressed serious concerns about any program structure that could allow non-
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