Comment period on RIN QAP closes, industry weighs in

By Erin Voegele | April 24, 2013

The comment period of the U.S. EPA’s proposed rules for a voluntary renewable identification number (RIN) integrity program closed on April 18. The proposed rule creates a structured process for buyers of RINs to verify their validity.

The proposal included six major provisions, including:

- The establishment of minimum requirements for quality assurance programs

- Qualifications for independent third-party auditors

- Audit requirements for biorefineries

- The establishment of conditions under which regulated parties would have an affirmative defense against liability for civil violations for using or transferring invalid RINs

- Identifying parties responsible for replacing invalid RINs

- Mechanisms to assure invalid RINs are replaced with valid RINs.

Several representatives of the biofuels industry weighed in on the proposal, including the Biotechnology Industry Organization. “The RFS is the single most important federal policy driving investment and commercialization of conventional and advanced biofuels. Investment spurred by the RFS has led to the development of commercial-scale advanced and cellulosic biofuel facilities that are currently in the process of starting up production of qualifying renewable fuel,” wrote Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section in the comments. “Federal policies, including the proposed QAP, should clear a path for companies making investments, building new biorefineries and bringing innovative technologies to the marketplace.”

According to Erickson, the quality assurance program (QAP) would places unnecessary and burdensome costs on biofuel producers, especially smaller producers just achieving commercial status. To help ensure the proposed QAP helps ensure the renewable fuels standard (RFS) continues to encourage all biofuel producers to generate RINs, Erickson described several changes to the QAP recommended by BIO.

Specifically, BIO recommends that changes be made to ensure the program is truly voluntary and does not enable anti-competitive behavior. According to the comment, BIO’s suggested changes would also aim to ensure that the program does not impose duplicative and unnecessary regulatory requirements on producers that are in the early stages of commercial development.

“Small producers, in particular, are being asked to incur costly and duplicative reviews of their facilities in exchange for verified status for RINs. There is no guarantee in the proposed QAP that verified RINs will provide a return on those costs. Yet, there is the potential that competitors can force these costs on small producers as a condition for RIN trading, thereby increasing costs to an intolerable level,” Erickson wrote.

The Renewable Fuels Association also submitted public comments on the proposal. According to the RFA’s comment, it is concerned the QAP will add unnecessary cost and administrative burden to its members’ operations without necessarily providing additional regulatory or societal benefit. The RFA points out that the QAP fails to account for distinctions among renewable fuel types and their associated RIN types. The RFA also states it is concerned that the voluntary nature of the program will be nullified because obligated parties are likely to only purchase RINs for which an affirmative defense against civil penalties is obtainable. In addition, the RFA expresses concern over the EPA’s proposal to disclose certain confidential business information could harm the competitive position of some producers while failing to provide any regulatory benefit.