EPA schedules hearing on E15/RIN reform rule for March 29

The U.S. EPA has announced it will hold a public hearing on its proposed E15/RIN reform rule on March 29 in Ypsilanti, Michigan, at the Ann Arbor Marriott Ypsilanti at Eagle Crest. The event will begin at 9:00 a.m. and end when all parties present who wish to speak have had an opportunity to do so. Parties wishing to testify at the hearing must contact the EPA by March 26. Specific registration information is available in a notice published in the Federal Register on March 18.  

The EPA released the proposed E15/RIN reform rule March 12. It includes regulatory changes to allow gasoline blended with up to 15 percent ethanol to take advantage of the 1-pound-per-square-inch Reid vapor pressure (RVP) wavier that currently applies to E10 during the summer months.

The proposed rule also seeks to implement regulatory changes to modify certain elements of the renewable identification number (RIN) compliance system under the Renewable Fuel Standard. Within the rulemaking, the EPA proposes four specific RIN market reforms.

The first would require public disclosure when RIN holdings exceed specified thresholds. In the rulemaking, the agency proposes two RIN holdings thresholds that it said will work in tandem to prevent potential accumulation of market power. The thresholds would apply to holdings of separated D6 RINs only. The first would be triggered if a party’s end-of-day separated D6 RIN holdings exceed 3 percent of the total implied conventional biofuel requirement. Obligated parties that trigger this first threshold would then apply a second threshold by comparing its end-of-day separated D6 RIN holdings with 130 percent of its individual implied conventional renewable volume obligation (RVO). Obligated parties would make daily calculations and make a yes/no certification statement to EPA in a quarterly report. The EPA would then publish the names of any parties that reported exceeding the thresholds on its website.

Under the second proposed RIN market reform, the EPA would increase the compliance frequency of the program from once annually to quarterly. Within the proposed rule, the EPA explains that it would establish RIN retirement requirements for the first three quarters of the compliance year, calculated by an obligated party as its gasoline and diesel production and import volume through the end of the quarter multiplied by the current year renewable fuel standard. The EPA is proposing to discount the requirement to 80 percent of the calculated volume to provide necessary flexibility. Obligated parties would submit reports to the agency 60 days after the end of the quarter to demonstrate compliance with these requirements. The reform would not impact the current annual RVO calculations or compliance. Obligated parties that fell short of its quarterly RIN retirement in the current year would not be able to incur a deficit in its next year annual RVO.

The third reform proposes to prohibit certain parties from being able to purchase separated RINs. Under the rule, only obligated parties, exporters and certain non-obligated parties would be allow to purchase separated RINs. According to the EPA, non-obligated parties that would be exempt from this proposed restriction include those who are a corporate or contractual affiliate to an obligated party, including blenders who could demonstrate that they have contracts to deliver separated RINs to an obligated party for the purpose of compliance. Non-obligated parties that need to replace invalid RINs would also be exempt.

The fourth proposed RIN reform would limit the length of time a non-obligated party can hold RINs. Under the rule, a non-obligated party would be required to sell or retire as many RINs as it obtained in a quarter.

The public hearing scheduled for March 29 will provide interested parties the opportunity to present data, views or arguments concerning the proposal. The EPA may ask clarifying questions during the oral presentations, but will not respond to the presentations at that time. Written statements and supporting information submitted during the comment period will be considered with the same weight as any oral comments and supporting information presented at the public hearing.

Written comments on the proposed rule must be submitted by April 29 and can be filed online at www.Regulations.gov under Docket ID No. EPA-HQ-OAR-2018-0775.