Questions and Answers on the
Renewable Fuel Standard Program
Assessment and Standards Division
and
Compliance and Innovative Strategies Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
SER&
United States
Environmental Protection
Agency
EPA420-F-07-041a
August 2007
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Introduction
The final rulemaking for the Renewable Fuel Standard (RFS) program was signed
by the EPA Administrator on April 10, 2007 and published in the Federal Register on
May 1, 2007 [72 FR 23900]. Since the program begins on September 1, 2007, regulated
parties will need to design and implement their information technology (IT) systems in a
relatively short period of time. To assist these regulated parties, we have collected
questions pertaining to a variety of implementation issues and generated responses to
those questions.
This document was prepared by EPA's Office of Transportation and Air Quality
(OTAQ). It includes new questions not addressed in a previous version of this document
(see EPA document EPA420-F-07-041, May 2007). We will continue to update this
document periodically as new questions arise.
Regulated parties may use this document to aid in achieving compliance with the
RFS program regulations. However, this document does not in any way alter the
requirements of these regulations. While the answers provided in this document
represent the Agency's interpretation and general plans for implementation of the
regulations at this time, some of the responses may change as additional information
becomes available, or as the Agency further considers certain issues.
This question and answer document does not establish or change legal rights or
obligations. It does not establish binding rules or requirements and is not fully
determinative of the issues addressed. Agency decisions in any particular case will be
made applying the law and regulations on the basis of specific facts and actual action.
While we have attempted to include answers to all of the questions submitted to
us, the necessity for policy decisions and/or resource constraints may have prevented the
inclusion of certain questions. Questions not answered in this document will be answered
in subsequent updates. Questions that merely require a justification of the regulations, or
that have been previously answered in the preamble to the regulations and require no
further elaboration have been omitted.
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Table of Contents
List of Acronyms iii
New and Revised Questions iv
1. Valid renewable fuels and Equivalence Values 1
2. Generating RINs and assigning them to batches of renewable fuel 3
3. Transferring RINs with renewable fuel 11
4. Separating RINs from renewable fuel 18
5. Market for separated RINs 24
6. Obligated and nonobligated parties 27
7. Renewable Volume Obligations (RVO) 29
8. Company andFacility Registration 31
9. Recordkeeping and Product Transfer Documents (PTDs) 34
10. Reporting and the EPA's Central Data Exchange (CDX) 38
11. Other questions 42
12. Examples of RIN generation, assignment, and transfer 46
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List of Acronyms
BBBBB
BOL
CDX
CFR
E85
ETBE
EV
K
NRLM
PTD
RIN
RR
RVO
YYYY
RIN code identifying the batch number
Bill of lading
Central Data Exchange
Code of Federal Regulations
Blend of 85% ethanol and 15% gasoline
Ethyl tertiary butyl ether
Equivalence Value
RIN code indicating that the RIN is assigned or unassigned
Nonroad locomotive and marine diesel fuel
Product Transfer Document
Renewable Identification Number
RIN code identifying the Equivalence Value
Renewable Volume Obligation
RIN code identifying the year renewable fuel was produced or imported
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New and Revised Questions
Questions added or revised since the May 2007 version are as follows: 1.4, 2.4-2.6, 2.17-
2.24, 3.3-3.4, 3.8-3.15, 4.2, 4.6, 4.11-4.16, 5.4, 5.7-5.10, 6.1, 6.5-6.6, 7.5-7.7, 8.7-8.13,
9.7-9.13, 10.6-10.14, 11.1-11.2, and 11.5-11.13.
IV
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1. Valid renewable fuels and Equivalence Values
1.1 If I have a renewable fuel that was assigned a specific Equivalence Value in
regulation Section 80.1115, but I don't think that Equivalence Value is right for
my product, what options do I have?
A: Producers or importers of renewable fuel may submit a petition to the
EPA requesting a different Equivalence Value from that assigned in the
regulations. However, the petition must use the calculation methodology
described in regulation Section 80.1115(d). In short, if the energy content
or renewable content of a producer's or importer's product differs from
the values used by EPA to calculate the Equivalence Values specified in
regulation Section 80.1115(b), the party may be entitled to an alternative
Equivalence Value.
1.2 I will be making renewable gasoline from renewable crude. Section
80.1115(b)(6) of the regulations says I must use an Equivalence Value of 1.0 even
though renewable gasoline clearly warrants a higher Equivalence Value. Can I
submit a petition?
A: Yes. See regulation Section 80.1115(c)(2). However, for renewable fuels
other than renewable diesel which are made from renewable crudes,
information on the energy content and/or renewable content may be
difficult to obtain. This is why we designated the Equivalence Value for
such fuels as 1.0, and specified that the applicable volumes must be
measured according to the volume of renewable crude rather than the
volume of the final product. In cases where information on the energy
content and renew able content can be determined precisely, a different
Equivalence Value may be warranted.
In addition, regulation Section 80.1126(d)(6) allows a party to petition
EPA to use the volume of the renewable fuel produced as the basis for
generating PJNs rather than the volume of the renewable crude used to
make that product.
1.3 What is the Equivalence Value for E85? Is it 0.85 since its renewable content is
only 85 percent?
A: No. Equivalence Values are generated and apply to renewable fuel at the
point of production or importation, not at the point of blending. Thus it is
denatured ethanol, notE85 (nor El0) to which the Equivalence Value
applies. A party blending denatured ethanol into gasoline to produce E85
may receive assigned RINs with the denatured ethanol. Since the party is
producing motor vehicle fuel from the renewable fuel (analogous to an
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oxygenate blender), he will separate the RINsfrom the volume ofethanol
received and can then retain or transfer those RINs to any other party.
1.4 Do the regulations spell out the petition process to be used to determine
Equivalence Values for fuels not identified in the rule?
A: Yes. The provision is described in regulation Section 80.1115(c).
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2. Generating RINs and assigning them to batches of renewable fuel
2.1 Ethanol is imported on an undenatured basis. Do we assign the RINs to the
denatured volume or the undenatured volume?
A: Denatured. See regulation Sections 80.1101(d) (3) and 80.1115(b)(2).
2.2 We are importers who import ethanol without denaturant, but with the intent to
use it as motor fuel. When the RIN is generated, we maintain ownership of the
ethanol, but we do not have custody and we do not add the denaturant. Would we
include our company ID number and use the facility number of the denaturing
facility (i.e. they would have to be registered)?
A: The owner of the denaturing facility would not necessarily be a registered
party under the regulations. The company and facility IDs of the
importing party who owns the renewable fuel at the time a RIN is
generated (based on the volume of renewable fuel with denaturant) are the
company and facility IDs that must be included in the RIN. (The owner of
the renewable fuel should know the volume of the fuel coming out of the
denaturing facility since it owns and will either sell or use the denatured
fuel.) The importing company that owns the fuel would need to register
the facility, typically leased tankage, with which it has contracted to store
and denature the renewable fuel (i.e., has custody) as one if its own
facilities with its own facility ID number. This means that a facility owned
by a company that simply leases tankage may never be a registered party
but several registered importers may have a separate facility ID for that
tankage facility. This scenario would not apply to domestic producers
because ethanol intended to be used as motor fuel would be denatured at
the facility where it was produced.
2.3 A refinery can produce non-ester renewable diesel by processing renewable
feedstock through a distillate hydrotreater. In this situation, the refinery must
assign RINs based on the feed volume. I assume the refinery can follow the rules
for defining a batch (i.e. a batch can be up to the production volume of a month as
long as the batch total volume is less than 100 million gallons).
A: Yes. However, it is the total number ofgallon-RINs, not the total volume,
that must be less than 100 million. See regulation Section 80.1126(c).
2.4 When a plant determines the volume of ethanol for a first and last gallon of a
RIN, what's the reference point? Gallons at load-out through a metering system
like Determan Brownie? (Since this is the point where they're adjusting the
gallons to 60 degrees F)?
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A: Renewable fuel producers and importers have flexibility in terms of the
specific means through which they measure volumes for purposes of
generating RINs. However, the approach should ensure that gallons are
neither systematically ignored nor systematically double-counted. Also,
approaches that provide consistent volumes for both the RFS program and
other contexts such as reporting to the Energy Information Administration
are preferred. To the degree that measuring volumes at load-out through
a Determan Brownie metering system meets these criteria, it would be
acceptable.
Under the regulations, RINs must be generated for a volume of renewable
fuel by the time that that volume is transferred to another party (at which
time, the RINs are "assigned" to the renewable fuel pursuant to
regulation Section 80.1126(e)(2)). Thus the volume measurement used as
the basis of RIN generation can occur as the renewable fuel is produced,
as it resides in a tank awaiting transfer from the producer/importer, or as
it is pumped to a new owner. The method used must be consistent over
time for a facility.
2.5 Within the RIN, D = 2 for non-cellulosic biomass ethanol and D = 1 for cellulosic
biomass ethanol. How is biodiesel coded?
A: All renewable fuels that cannot be categorized as cellulosic biomass
ethanol should be assigned RINs with a D code value of 2. Thus biodiesel
would have D = 2. See regulation Section 80.1125(g).
2.6 Can an ethanol or biodiesel plant keep a RIN?
A: In general, producers of renewable fuel must assign all RINs that they
generate to volumes of renewable fuel and transfer those RINs with the
renewable fuel to another party. However, there are some exceptions.
First, producers of cellulosic or waste-derived ethanol can retain RINs
generated in excess of an Equivalence Value of 1.0 (see regulation Section
80.1126(e)(4)). Second, a renewable fuel producer who is also an
obligated party can retain RINs generated up to the level of their annual
RVO (see regulation Section 80.1129(b)(6)). Lastly, producers can
acquire an unlimited number ofunassignedRINs through the open RIN
market.
2.7 No Equivalence Value was provided for ETBE. What value do I use for
generating RINs for ETBE?
A: The RFS program prohibits a party from generating RINs if the renewable
feedstock used to make the renewable fuel was acquired from another party.
Any RINs acquired with the renewable feedstock (e.g., ethanol) must be
assigned to the renewable fuel product (e.g., ETBE) made from that feedstock.
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If the ethanol used to make ETBE does not have RINs associated with it (i.e.
the RINs have been properly separated prior to receipt of the ethanol by the
ETBE producer), then the ETBE producer would neither generate RINs for
the ETBE it producers, nor assign any RINs to that ETBE. Thus there is no
need for an Equivalence Value for ETBE. See regulation Section
80.1126(d)(8).
2.8 I will be making ethanol from both cellulosic feedstocks and corn in my plant.
How do I know what Equivalence Value to use, and how do I assign RINs to
batches?
A: There are two possible ways to address this situation. If the volume of
each type of ethanol can be measured independently and precisely (for
example, in a facility where the conversion of cellulosic feedstocks to
ethanol occurs through separate equipment from that used to convert corn
to ethanol), RINs can be generated separately for each type of ethanol
with a unique Equivalence Value. The same batch number (RIN code
BBBBB) can be used to represent all the gallon-RINs generated, but the
gallon-RINs representing the cellulosic ethanol will need to be listed
separately from the gallon-RINs representing the corn-ethanol, since the
two groups of RINs will have different RR codes (representing different
Equivalence Values).
Alternatively, we have created a regulatory mechanism through which the
producer may submit a petition to the Agency describing the renewable
fuel, its feedstock and production process, and the calculation of its
Equivalence Value. See regulation Section 80.1115. This petition process
can be used to identify an appropriate Equivalence Value for mixtures of
renewable fuels.
2.9 Are RINs generated at the end of the month based on actual quantities for that
period, or are they established at the beginning of the month based on estimates of
production that month (i.e. "x" gallons, and once "x" gallons are exceeded the
RIN starts over?)
A: All RINs represent actual production, not estimates. However, there is no
need to wait until the end of a month to generate RINs. Each producer
and importer should decide what the batch number (the BBBBB code in
the RIN) will represent. The regulations require only that each batch
represent no more than the volume produced or imported within a
calendar month, and less than 100 million gallon-RINs. One party may
decide to assign each week's production a unique batch number, while
another may decide to assign each tankfull a unique batch number.
Regardless, gallon-RINs can be generated as volumes are produced and
transferred. As more volume of renewable fuel is produced, additional
gallon-RINs are generated within the same batch, up to the self-imposed
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or regulatory limit for that batch. Then a new batch with a new BBBBB
code begins.
2.10 If a plant establishes RINs at the beginning of the month and defines it as one
month's production estimate (e.g. 8 million gallons), what happens if the plant
produces more than 8 million gallons by the end of the month? Does the plant
then start issuing a new batch number for the next 8 million gallon RIN? What if
this happens in the middle of filling a rail car?
A: RINs are not generated at the beginning of a month. Rather, gallon-RINs
must have been generated by the time a volume of renewable fuel is
transferred from the producer or importer to another party (at which point
the RINs are assigned to that volume). See regulation Section
80.1126(e)(2). A producer or importer of renewable fuel can decide on its
preferred approach of designating batch numbers (the BBBBB code in the
RIN), and then put this batch number into all gallon-RINs generated up to
a calendar month's production or 100 million gallon-RINs, whichever
comes first.
If a producer/importer had predefined a specific volume limit (such as 8
million gallons) for each batch, and this limit was exceeded in the middle
of filling a rail car, the producer/importer would have two options. Since
the 8 million gallon limit is self-imposed, he could simply exceed this limit
for this particular batch. Alternatively, he could generate a new set of
gallon-RINs having a new batch number for the volume that exceeded 8
million gallons. In this latter case, the renewable fuel in the rail car
would be transferred along with two separate batch-RINs, which differ
only in the batch number (i.e. the BBBBB code) and the number of gallon-
RINs they represent.
2.11 Do batch numbers have to be sequential? Do they have to correspond to the
month that they represent (i.e. 1 - 12)?
A: Batch numbers need not be sequential and need not represent a full
month. They need only be unique within a calendar year. Each producer
or importer of renewable fuel can define a batch in whatever way it
chooses, so long as each batch represents less than 100 million gallon-
RINs and no more than one calendar month's production. See regulation
Sections 80.1125(e) and 80.1126(c). Examples of permissible batch
numbering schemes include individual tankfulls, calendar day production,
weekly production, and volume sold to each customer each month.
2.12 When the program starts, will renewable fuels in the distribution system on
September 1, 2007 be valid for RFS compliance purposes?
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A: In some cases, yes. Renewable fuels that are valid for RFS compliance
purposes are those for which RINs have been generated. Under
regulation Sections 80.1104 and 80.1126(d)(l), RINs must be generated to
represent renewable fuels that are produced or imported on or after
September 1, 2007. However, our regulations do not define the point at
which production occurs. It could be the point of physical production,
loading into a tank, or transfer to another party. Thus, under regulation
Section 80.1126(d)(2), RINs can also be generated for renewable fuel that
a producer or importer owns on September 1, 2007 even if that renewable
fuel had been physically produced or imported prior to September 1.
Since some renewable fuel will be in the distribution system while
remaining under the ownership of a producer or importer on September 1,
2007, it may be assigned RINs even though it has already physically left
the originating production or importation facility. In such cases,
renewable fuel in the distribution system on September 1, 2007 may have
assigned RINs.
Parties other than renewable fuel producers and importers are not
allowed to generate RINs at any time (including for renewable fuel in the
distribution system on September 1, 2007). Renewable fuel producers and
importers may generate RINs for renewable fuel they own on September 1,
2007 that was produced or imported earlier, and must generate RINs for
renewable fuel produced or imported on or after September 1, 2007.
2.13 Can a producer aggregate multiple shipments into a single batch up to a threshold
quantity as long as the batch is within one calendar month?
A: Yes. In the context of generating RINs and specifying the BBBBB code,
producers and importers have the option to define a batch as being
comprised of several discreet shipments within a calendar month, so long
as the total number of gallon-RINs assigned a unique batch number is less
than 100 million. See regulation Sections 80.1125(e) and 80.1126(c).
2.14 When is a RIN generated for ethanol that is imported into the U. S.?
A: Ethanol imported for use as motor vehicle fuel would typically be
downloaded from a ship into on-shore tankage and then denatured.
(Ethanol shipped to the United States from other countries is not typically
denatured prior to or during shipment.) Importers should generate RINs
for imported ethanol when the denaturant is added at the off-loading
tankage. Thus, the facility number used to create these RINs would be the
tankage facility where the denaturant is added. See also question 2.2.
2.15 Regulation Section 80.1126(d)(l), which says "must," seems in conflict with
Section 80.1126(d)(2) which says "may". Is the correct reading that any volume
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of renewable fuel that leaves a producer's gate on or after 9/1/07 MUST have
RINs assigned?
A: Renewable fuel producers and importers may generate RINs for
renewable fuel they own on September 1, 2007 that was produced or
imported earlier, and must generate RINs for renewable fuel produced or
imported on or after September 1, 2007. Thus at the beginning of the
program, it is possible that some volumes of renewable fuel being
transferred by a renewable fuel producer or importer may not have
assigned RINs. However, this will not be the case in the longer term,
since all renewable fuel imported or produced must have assigned RINs.
2.16 What's the difference between generating a RIN and assigning it?
A: Generating a RIN refers to the process of creating a new RIN to represent
a particular type and volume of renewable fuel. See regulation Section
80.1126(d). Assignment occurs when the producer or importer of the
renewable fuel transfers a RIN to another party along with a volume of
renewable fuel. See regulation Section 80.1126(e).
Note that the regulations do not specify the point when generation of RINs
must occur. Under regulation Section 80.1126(e)(2), it is only at the point
when a volume of renewable fuel leaves the production or importation
facility where it originated that RINs must have been generated for,
assigned to, and transferred with that volume. Since the EPA does not
specifically define the point of production or importation, a producer can
generate RINs as the renewable is being physically produced, as it sits in
a tank awaiting transfer to another party, or even while the renewable fuel
is being transferred to another party.
2.17 Assume a plant decides to define a batch as 10 million gallons. He starts the
batch on September 1 and hits the 10 million gallon mark on September 20. He
then starts the second batch, but doesn't hit the 10 million gallon mark until
October 10. Since each batch is less than 31 day's worth of production, is this
OK?
A: No. Abatchof renewable fuel must meet both of the following criteria: 1)
a batch must represent less than 100,000,000 gallon-RINS, and 2) a batch
must represent no more than one calendar month's worth of production.
Thus a batch cannot represent production that spans two calendar
months, such as September and October. Even though the producer
decides to define a batch as 10 million gallons, if the end of a calendar
month is reached before the 10 million gallon mark is reached, a new
batch must be star ted at the beginning of the next calendar month.
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2.18 All I do is produce corn ethanol and sell it all to X Company, which is an ethanol
marketer. Do I have to do anything, or can X Company generate the RINs for
me?
A: Each producer of renewable fuel is responsible for generating the RINs
that represent that renewable fuel. This function cannot be delegated or
assigned to any other party, including a party to whom a producer sells its
product.
2.19 What happens to gallons of ethanol that are in the system August 31 without
assigned RINs?
A: The answer depends on who holds those gallons of ethanol. Only
producers or importers of renewable fuel can generate RINs for any
renewable fuel they own on September 1, 2007. See regulation section
80.1126(d)(2). Any volumes of renewable fuel in the distribution system
as of September 1, 2007 for which RINs were not generated by a producer
or importer, or which were not owned by a producer or importer on
September 1, 2007, will not have assigned RINs. Under the regulations, a
marketer can transfer a volume of renewable fuel without associated RINs
so long as the end-of-quarter check of RINs held and volumes held has
been met. See regulation section 80.1128(a) (5).
2.20 The following is a two-part question:
a. We are a petroleum refiner and recognize that we are an obligated party
under the regulation. We are considering importing ethanol that has not been denatured.
We will hold title to the un-denatured ethanol. Title and custody will pass to another
party who will denature the ethanol and transfer title back to us. We will sell it for use as
a motor fuel. Are we an importer of renewable fuel under the RFS program?
A: Un-denatured ethanol is not a renewable fuel. See 80.1101 (d) (3). Under
the described scenario, the party to whom custody is transferred and who
denatures the ethanol would be producer of the renewable fuel.
b. How would RINs be generated?
A: Under the described scenario, RINs would be generated by the party who
denatures the ethanol and produces the renewable fuel. See 80.1126(d).
If the petroleum refiner wishes to generate RINs, then the petroleum
refiner would have to keep title to the ethanol throughout the described
transaction.
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2.21 We are a marketer with an inventory of denatured ethanol stored at various
commercial facilities and terminals. We do not produce or import ethanol. We are
registered as a party who owns RINs. On September 1, 2007, do we assign RINs to our
stored inventory?
A: No. Only a producer or importer of renewable fuel may generate RINs for
volumes of renewable fuel that it owns on September 1, 2007. See
80.1126(d)(2).
2.22 Section 80.1151 (b)(3)(vii) requires retention of additional information related to
the details of RIN generation. What does this mean?
A: Companies vary in their internal recordkeepingpractices and not all
similar records will take identical form. Therefore, in several places in
the recordkeeping section (80.1151) we have required that "additional"
information be retained. We certainly do not wish to dictate how a
company keeps each and every record, as this would present an
unnecessary compliance burden. However, since one reason for retaining
company records is to be able to produce them should an enforcement
question arise, it is in a company's best interest to retain "additional
information" that may fully explain the details of RIN generation as
reported to EPA. These records must be presented to EPA upon request.
2.23 We are a producer of ethanol. If we have 10,000 gallons in inventory on
September 1, 2007 and 25,000 came from our production facility A, 25,000 came from
our production facility B, and the other 50,000 we own but received from various other
producers, how do we assign RINs to the other 50,000?
A: As an ethanol producer or importer, you may assign RINs to the product
you own on September 1, 2007. As far as how to handle the facility
identification number fields in the RIN, you will want to consistently
document and assign the other 50,000 RINs to one of your registered
facilities as of September 1, 2007.
2.24 We are a producer of ethanol. We have ownership of renewable fuel that is in
transit on September 1, 2007. How do we assign a RIN to that fuel?
A: As long as you actually own the fuel on September 1, 2007, it does not
matter that it is in transit. As a producer, you may assign RINs to product
you own on September 1, 2007. You may assign the RINs for ethanol that
you own but that is in transit to one of your registered facilities.
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3. Transferring RINs with renewable fuel
3.1 The final rule on page 23909 (Federal Register, volume 72) states that any non-
obligated party that takes ownership of the renewable fuel with RINs will be
required to transfer those RINs with a volume of renewable fuel. Does this refer
to oxygenate blenders?
A: No, as long as the blender actually blends the renewable fuel into gasoline
or diesel. In that case, the blender would be required to separate the
assigned RINs from the blended renew able fuel, and could then transfer
the RINs to any party without simultaneously transferring a volume of
renewable fuel. See regulation Sections 80.1128(a)(3) and 80.1129(b)(2).
3.2 If an oxygenate blender must transfer RINs with a volume of renewable fuel, who
are they transferring to, if they are the final/end-user?
A: If any oxygenate blender blends renewable fuel into gasoline or diesel, he
is no longer required to transfer RINs and renewable fuel together.
3.3 Do third party marketers like X Company need to track RINs from the ethanol
plant to the buyer?
A: IfX Company takes ownership of ethanol along with assigned RINs, it
would be required to register with the EPA and would be subject to the
recordkeeping, reporting, product transfer document and attest
engagement requirements of regulation Sections 80.1151(d), 80.1152(c),
80/1153 and 80.1164(c). The tracking required under the RFS rule
involves only transfers of title (ownership), not transfers of custody. IfX
Company never takes ownership of ethanol with assigned RINs and does
not participate in other ways in the RFS program (for example, through
the purchase and sale ofunassignedRINs), it would not be required to
register with, or report to, EPA under the RFS program.
3.4 Will ethanol and biodiesel plants have to track the RIN all the way to the refiner,
or just to the next owner of the renewable fuel?
A: Refer to the response to Question 3.3. Each party that owns assigned or
unassigned RINs, including an ethanol or biodiesel production plant, is
required only to keep records of and report transfers of ownership of those
RINs its receives and that is passes to the next owner. See sections
80.1151 and 80.1152 of the regulation.
3.5 The RIN is too long to fit onto my bill of lading. What are my options?
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A: An assigned RIN must appear in its entirety on product transfer
documents (PTDs) identifying a transfer of ownership of a volume of
renewable fuel. Substitute codes are not permitted. See regulation
Section 80.1153. (In general PTDs would not include bills-of-lading,
which are used for transfers of custody rather than transfers of
ownership.) However, the PTD transferring the PJNs can be a separate
and parallel PTD from that used to transfer the renewable fuel to which
those PJNs are assigned. In this case, the PTD transferring the renewable
fuel must include the number of gallon-PJNs being transferred and a
unique reference to the PTD which is transferring the assigned PJNs, but
need not list the actual PJNs. See regulation Section 80.1153(a)(5)(ii).
PTDs can be electronic, including computer spreadsheets.
3.6 How do owners of the ethanol account for product samples taken at the plant and
downstream relative to RINs? Likewise, how is standard product shrinkage (i.e.
when ethanol is transferred to a terminal) handled relative to RINs?
A: In general, the PJNs associated with small volumes removed for sampling
and testing, or lost due to evaporation, leakage, or metering imprecision,
remain valid for RFS compliance purposes. Small volume losses can be
accommodated through the regulatory provision which allows up to 2.5
gallon-PJNs to be transferred with each gallon of renewable fuel. See
regulation Section 80.1128(a)(4). For larger volumes losses resulting
from spills or other accidents, a provision exists for retiring the associated
RINs. See regulation Section 80.1132.
3.7 How does a marketer split RINs that go to downstream buyers (i.e. next owners
like a refiner)?
A: Parties such as marketers that are required to transfer assigned PJNs with
renewable fuel are not required to align the number of gallon-PJNs
transferred with the number of gallons transferred for every transaction.
Rather, the regulations require only that the number of assigned gallon-
PJNs (with a K code of 1) transferred with each gallon of renewable fuel
be no more than 2.5. See regulation Section 80.1128 (a) (4) and preamble
discussion at page 23939, column 3. Within this limit, a marketer is free
to allocate gallon-RINs to volumes of renewable fuel in whatever way he
chooses, so long as an end-of-quarter check on the balance of RINs versus
renewable fuel in inventory is met. See regulation Section 80.1128(a)(5).
3.8 Does regulation Section 80.1128(a)(4) allow a marketer to change the K code
from 1 to 2 and then not transfer the RIN with the renewable fuel as long as he
sells the RINs to anyone by the end of the quarter?
A: Marketers who buy and sell renewable fuel without blending it into
gasoline or diesel cannot separate RINs from volumes, and thus cannot
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change the K code from 1 to 2. All conditions under which a party can
separate RINsfrom volumes are set forth in regulation Section
80.1129(b). However, a marketer can indeed decide not to transfer a
particular BIN with a volume of renewable fuel so long as the end-of-
quarter check described in regulation Section 80.1128(a)(5) is fulfilled.
3.9 Will non-obligated parties that can hold title to RINs be required to balance them
each quarter?
A: Every party that owns assigned RINs must comply with the end-of-quarter
check described in regulation Section 80.1128(b)(5). This provision
ensures that RINs must be transferred with renewable fuel as renewable
fuel moves through the distribution system. However, this provision
applies to assigned RINs only (with a K code of 1). Any party can own
any number ofunassignedRINs (with a K code of 2) and unassigned RINs
are not subject to any end-of-quarter check.
3.10 What happens if a marketer sells a batch with one RIN to two different refiners?
Can he divide the RIN? If so, how?
A: The basic unit of compliance in the RFS program is the gallon-RIN.
However, for shorthand we allow multiple sequential gallon-RINs to be
represented by a single batch-RIN through the appropriate designation of
the start (SSSSSSSS) and end (EEEEEEEE) codes in the RIN. As physical
volumes of renewable fuel are split or merged, the assigned batch-RINs
can likewise be split or merged in various ways, with the primary
restriction being that no more than 2.5 assigned RINs can be transferred
with every physical gallon of renewable fuel (see regulation Section
80.1128(a) (4)). See also question 3.7.
3.11 How can a marketer transfer RINs with a K code of 1 and fulfill the requirement
that "No person may transfer a RIN that has a K code of 1 without transferring an
appropriate volume of renewable fuel to the same person on the same day"?
A: A party may transfer any volume of renewable fuel to any other party
without simultaneously transferring any assigned RINs to that same party.
However, assigned RINs can only be transferred to another party in
association with the transfer of a volume of renewable fuel. Under
regulation Section 80.1128(a)(4), the ratio of assigned RINs transferred to
gallons transferred can be anywhere between zero and 2.5.
3.12 The following is a two-part question:
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a. We are a wholesaler of El 00 and B100. We do not do any blending. We
purchase and sell El00 and B100 and sell it to anyone who needs it. What in the RIN
code must be changed to document the change of ownership?
A: Nothing changes in the RIN code to document a change of ownership.
b. What would the wholesaler put on his PTDs when he transfers title to
another party?
A: Section 80.1153 describes the requirements for PTDs, which generally
include the name and address of the transferor and transferee, the
company registration number of each, the volume of renewable fuel being
transferred, the date of the transfer, and information about any assigned
RINs.
3.13 The following is a two part question. We are a marketer of ethanol products.
Sometimes personnel at ethanol plants make mistakes as to the number of gallons being
loaded or produced. How do we "recall" erroneous RINs if:
a. the number of gallons we receive exceeds the number of RINs?
A: PTD documents may be corrected to reflect the appropriate volume
associated with the volume received. The additional volume with assigned
RINs may be addressed with a second PTD.
b. the number of RINs exceeds the number of gallons we receive?
A: The parties (producers) selling ethanol to you have an obligation to
transfer appropriate RINs to you. A producer who is also a marketer may
assign up to 2.5 RINs per gallon of renewable fuel. A producer who is not
a marketer may only assign RINs up to the renewable equivalence value
(EV). If a company receives an excess number of RINs assigned to a
gallon, then the producer would be in violation. To rectify this, a
producer may ask a recipient to retire the excess RINs. There is a
retirement code on the reporting form for RINs generated in error and
that code should be used.
3.14 The following is a two part question.
a. We would describe ourselves as an ethanol marketer, but we import gasoline
into one of the 48 contiguous United States. Does this make us an obligated party and, as
an obligated party, are we able to separate RINs?
A: If a party is an importer of gasoline into the 48 contiguous United States,
then that party is an obligated party. Section 80.1129(b)(6) allows an
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obligated party to separate RINs they generated from volumes of
renewable fuel, if the number of gallon-RINs separated is less than or
equal to the annual RVO. This section applies to assigned RINs
generated by the obligated party through the production or importation of
renewable fuel. Section 80.1129(b)(6) does not cover marketers who buy
renewable fuel with assigned RINs since these RINs were not generated by
the obligated party. Therefore, an obligated party who also markets
renewable fuel, must separate assigned RINs, not generated by the
obligated party, from any renewable fuel acquired as stated in Section
80.1129(b)(l). The obligated party may use the separated RINs or
transfer them.
However, if an obligated party is a marketer and is also an importer (or
producer) of renewable fuel, per section 80.1129(b)(6), they may separate
RINs which they generate when importing or producing the renewable
fuel, only up to the associated RVO.
b. If the answer to part a. is "no," may I use my minority ownership in a
cooperative refinery to be considered an obligated party, able to separate RINs?
A: With regard to the second part of the question, the answer is "no. "
Typically, obligated parties are registered on a corporate level.
Therefore, the obligated party would be the refinery on a corporate level
rather than on an individual shareholder level.
3.15 Are companies that are both producers and marketers of ethanol subj ect to the
RIN transfer requirements of 40 CFR 80.1128(a)(5), or the more stringent requirements
of 80.1128(a)(6)? These issues have surfaced because a number of independent gasoline
marketers who blend ethanol as part of their normal business practices have indicated that
they would rather not take ownership of RINs and not participate in the RFS program.
Presumably, if such parties never take ownership of RINs, they would not have to register
as regulated parties with the Environmental Protection Agency (EPA) as required under
the RFS regulations and would, therefore, not be subject to RFS reporting requirements
or to other enforcement-related requirements of the regulations, such as attest
engagements (audits) and record-keeping requirements. We would like confirmation
from EPA regarding this interpretation of the regulations, and also seek clarification as to
whether companies that both produce and market ethanol are able to transfer ethanol with
zero assigned RINs in the same manner as companies that are only involved in marketing
operations.
A: Under section 80.1128(a) of the RFS regulations, a party owning ethanol
with assigned RINs cannot, (unless they are an obligated party, renewable
fuel exporter, a per son that converts renewable fuel into motor vehicle
fuel, or a cellulosic ethanol producer), transfer RINs without transferring
a volume of ethanol. This section also places a maximum number of RINs
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(2.5) that can be transferred with any gallon of renewable. The
regulations, however, do not prohibit the transfer of ethanol from a
marketer to another party, for example, an independent gasoline marketer,
with no RINs attached. In other words, a marketer can transfer ethanol
with anywhere from zero to 2.5 RINs attached to each gallon of renewable
fuel. If a transaction is made where the marketer sells ethanol without
RINs attached, the party purchasing the ethanol need not be registered
with EPA as a regulated party if that party never owns any RINs during
the course of the reporting period. Therefore, if an independent gasoline
marketer who blends ethanol purchases ethanol without RINs from an
ethanol marketer, and never owns RINs during a reporting period, then
that gasoline marketer/blender need not be registered with EPA and need
not comply with the reporting requirements and other enforcement
requirements applicable to RIN owners, such as attest engagements
(audits) and recordkeeping requirements as outlined in the regulations.
It is important to note however, that ethanol marketers are responsible to
assure that RINs will be passed along to ethanol purchasers over the
course of a reporting period, typically one quarter of a year. Any party
owning ethanol with assigned RINs and covered under section 80.1128(a),
typically a marketer of ethanol, must meet the RIN inventory requirements
at section 80.1128(a)(5). These essentially oblige the ethanol marketer to
transfer all RINs acquired during a quarter with an associated renew able
fuel volume, except for the RINs associated with the volume which is held
in the marketer's inventory at the end of the quarter. In other words, all
RINs acquired by the marketer must be transferred to some purchaser
during the quarter, except for those RINs associated with end-of-quarter
inventory.
Unlike marketers, ethanol producers have certain additional
responsibilities regarding the transfer of RINs with product. Under
section 80.1128(a)(6), producers (and importers) of renewable fuels must
transfer ownership of the RINs associated with a volume of renewable fuel
whenever that renewable fuel is sold. Accordingly, it is not possible for an
ethanol producer to transfer ethanol without associated RINs, and all
parties to whom they transfer ethanol must be registered with EPA to
participate in the RFSprogram.
You asked for clarification regarding the RIN-transfer requirements that
apply to a company that both produces and markets ethanol. EPA
believes that the RFS regulations are ambiguous in this regard. In
interpreting the regulations at this time, EPA is mindful of both the
original purpose of the more restrictive RIN-transfer requirements
applicable to producers, which was to minimize the possibility of short-
term hoarding, and the benefits to marketers and distributors of ethanol
that is reflected in the more flexible requirements of 40 CFR
80.1128(a)(5). See 72 Fed. Reg. 23939 - 23942. (May 1, 2007), EPA is
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also cognizant of the concerns of some gasoline marketers who may wish
to purchase ethanol without associated RINs, so as to avoid the costs
associated with the registration, reporting and attest engagement
requirements of the RFSprogram. Finally, EPA 's wish throughout the
implementation of the RFS program has been to minimize disruption of
currently-established business patterns. Accordingly, EPA does not wish
its program to act as a disincentive to firms that wish to both produce and
market ethanol. Balancing these various concerns, EPA is interpreting
the RFS regulations to allow any producer that is also in business as an
ethanol marketer, to utilize the more flexible RIN-transfer requirements of
40 CFR 80.1128(a)(5)for all of the ethanol that they sell In order to
qualify for this treatment, the producer must market ethanol of other
producers as well as its own. Thus, producers who only market and sell
the ethanol that they produce must comply with the RIN transfer
requirements of 40 CFR 80.1128(a)(6). Producers who market and sell
their own ethanol and that of others must comply with the RIN-transfer
requirements of 40 CFR 80.1128(a) (5).
Given our view of the regulations as explained above, we believe there is
more than sufficient flexibility for gasoline marketer/blenders who do not
want to participate in the RFS program to purchase ethanol without RINs.
Such companies would therefore not have to participate in the
registration/reporting requirements and other enforcement requirements
of the RFS program. EPA also recognizes that there are many gasoline
marketers that blend ethanol who are very enthusiastic about
participating in the RFS program. Nothing in this clarification of the
regulations changes their ability to participate now or in the future.
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4. Separating RINs from renewable fuel
4.1 Does blending biodiesel into agricultural diesel (or other nonroad diesel such as
NRLM diesel) allow the RIN to be separated?
A: EPA believes that most fuel that can be used as motor vehicle fuel and
which otherwise meets the definition of "renewable fuel" (such as
biodiesel and ethanol) will ultimately be used as motor vehicle fuel.
Therefore, producers of such products can assume that they meet the
definition of "renewable fuel" and can assign RINs to them without
tracking their ultimate use.
However, if fuel with assigned RINs is actually blended into gasoline or
diesel that is known to be destined for use in a nonroad application such
as agricultural equipment, the presumption that led the fuel producer to
assign RINs to the product is no longer valid. Such fuel cannot be
considered a motor vehicle fuel and thus is not in fact a "renewable fuel"
that is valid for RFS compliance purposes. In such cases, the blender
should treat the RINs associated with the blended fuel in the same way as
for fuel with assigned RINs that is used in a heater or boiler (see question
4.2). See also preamble Section III.B.l and Summary and Analysis of
Comments Sections 3.1.2 and 3.1.4.
4.2 If renewable fuel is produced (or imported) and sold as motor vehicle fuel, what
happens if it is actually used in a heater or boiler? What if, instead of a heater or boiler,
the fuel is actually used in a non-road vehicle?
A: Renewable fuel is defined as "motor vehicle fuel" and does not include
fuel used in heaters and boilers or in non-road vehicles. However, due to
the operation of reasonable presumptions, RINs may be generated for fuel
that is ultimately used in a heater, boiler or non-road vehicle, and use of
those RINs for compliance purposes depends on the circumstances.
If a producer or importer transfers fuel to another party with the intent or
expectation that it will be used in a heater, boiler or non-road vehicle, the
producer or importer cannot generate RINs for that volume. Likewise,
fuel used onsite in a boiler or heater by a renewable fuel producer or
importer is not a renewable fuel in the context of the RFS program, and
thus no RINs can be generated for that volume.
However, if a producer or importer transfers fuel to another party with the
intent or expectation that it will be used as a motor vehicle fuel, and such
fuel otherwise meets the definition of "renewable fuel, " RINs will
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legitimately be generated to represent that volume. Nevertheless, it is
possible that the fuel would subsequently be used in a heater, boiler, or
non-road vehicle. Since such fuel is not considered motor vehicle fuel or,
therefore, renewable fuel, in general the RINs generated to represent that
fuel should be not be used for RFS compliance purposes. If the party who
used the renewable fuel in a heater, boiler or non-road vehicle did not
receive RINs with the renewable fuel (for example, if RINs were separated
from the fuel upstream), we would not require any further action from the
party who used the renewable fuel in a heater or boiler and the separated
RINs could be used for compliance purposes by the upstream party that
separated them or to whom they were transferred, provided that they were
not aware that the fuel would ultimately be used in a heater, boiler or non-
road vehicle. However, if the party that used the fuel in a heater, boiler or
non-road vehicle received assigned RINs with that fuel, the party cannot
use the RINs for compliance purposes or transfer those RINs to any other
party. Such RINs would be considered "invalid" under regulation
Sections 80.1131(a)(6) and 80.1101(d)(5) and should be retired according
to80.1129(e).
4.3 Can an oxygenate blender separate RINs from batches of renewable fuel and
participate in trading?
A: Yes, if the blender actually blends renewable fuel that it owns into
gasoline or diesel. Separated RINs then become unassigned RINs that can
be traded without renewable fuel. See regulation Section 80.1129(b)(2).
See also questions 3.1 and 3.2.
4.4 A refinery can produce non-ester renewable diesel by processing renewable
feedstock through a distillate hydrotreater. In this situation, the refinery must
assign RINs based on the feed volume. The refiner is then both an obligated party
and a renewable fuel producer and as such can separate the RIN immediately. Is
this correct?
A: Yes, since under regulation Section 80.1129(b)(l) all obligated parties
must separate RINs from batches they own. However, an obligated party
can only separate RINs that it generates from volumes of renewable fuel if
the number of gallon-RINs separated is less than or equal to its annual
RVO. See regulation Section 80.1129(b)(6).
4.5 Do we have to keep some type of spreadsheet listing the assigned RINs and the
"flipping" of the K code to designate that we stripped them?
A: Under the regulations at Section 80.1151, a party that separates RINs
from volumes of renewable fuel is subject to certain recordkeeping
requirements. There is no specific recordkeeping requirement to show the
timing or conditions under which the K code for a RIN was changed from
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1 to 2. However, RINs received with a K code of 1 that were separated by
a party should be reported with K codes of 2. The format of records (e.g.
spreadsheets versus paper records) is left to the discretion of the party.
4.6 Since they receive 1.5 RINs per gallon, can a biodiesel plant separate the RIN
from a physical gallon?
A: No. Producers and importers of renewable fuel must assign all RINs
generated to renewable fuel, and transfer those RINs when transferring
volumes of renewable fuel to another party. See section 80.1126(e)(l) of
the regulation. There are limited exceptions to this rule that do not apply
to biodiesel, including the exception for producers or importers of
cellulosic biomass ethanol or waste-derived ethanol. See section
80.1126(e)(4) and the response to Question 2.6.
4.7 I am a small refiner who is exempt from meeting the standard. Am I allowed to
separate RINs from batches of renewable fuel?
A: Exempt small refiners and refineries are not obligated parties. As a
result, they cannot separate assigned RINs from volumes of renewable fuel
upon ownership of the renewable fuel. However, if the exempt small
refiner/refinery blends renewable fuel into gasoline or diesel, they are
operating as a blender andean separate the RINs associated with the
renewable fuel added to the blended product. A small refiner/refinery that
waives its exemption becomes an obligated party and must also separate
assigned RINs from volumes of renewable fuel upon ownership.
4.8 If I import ethanol for someone else, and they blend the ethanol into gasoline, do I
get the RINs?
A: In general, all rights and responsibilities under the RFSprogram that are
tied to renewable fuel are based on ownership of fuel, not custody. Thus if
you own the ethanol even though another party blends it into gasoline,
then you would separate the RINs associated with the ethanol and would
retain or transfer them to another party depending on the situation. If,
however, your involvement was only to physically supply the ethanol while
never taking ownership of it, then you would not own the RINs and could
not separate them upon blending - that would be the responsibility of the
owner of the ethanol.
4.9 At our terminal, we transfer ownership of ethanol to our customers
simultaneously with blending that ethanol into gasoline. Who owns the RINs?
A: A RIN assigned to a volume of renewable fuel is separated by the party
that owns that volume of renewable fuel at the time of blending. If a
downstream customer is the owner of the volume of renewable fuel when it
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is blended into gasoline or diesel, he will own the separatedRINs and be
subject to all the registration, recordkeeping, and reporting requirements.
In the case of a blender and a downstream customer who might both lay
claim to the right to separate any assigned RINs, these two parties would
need to come to agreement between themselves regarding which party will
own the separated RINs.
4.10 Are refiners required to separate RINs from renewable fuel? If a refiner doesn't
want the RINs, why can't he just let the blender have them?
A: Obligated parties are required to separate a RINfrom a volume of
renewable fuel if they take ownership of that volume. See regulation
Section 80.1129(b)(l) and the limited exception in regulation Section
80.1129(b)(6). The requirement to separate RINs, rather than merely
giving obligated parties the right to separate RINs, is intended to promote
the availability of RINs on the open RIN market. Given that most ethanol
is consumed in the midwest, the program is intended to promote access to
RINs by obligated parties elsewhere that may lack access to renewable
fuel.
An obligated party that separates a RINfrom a volume of renewable fuel
has the option of transferring that RIN to a blender in parallel with a
transfer of renewable fuel. However, in this case, the RIN would be an
unassigned RIN with a K code of 2, and would be transferred on a PTD
separate and independent from that used to transfer the renewable fuel.
4.11 I am a marketer and a blender. If I receive 10,000 RINs with 10,000 gallons of
ethanol that I buy from a producer, can I sell 5000 gallons without RINs and blend 5000
gallons but, in essence, give (from me as a marketer) all 10,000 RINs to me (as a
blender)?
A: Yes, under section 80.1128(a)(4) of the regulation, you may transfer
anywhere from zero to 2.5 assigned RINs with each gallon of renewable
fuel transferred to another party. We interpret the regulations to also
allow a party that is both a marketer and a blender of renewable fuel to
blend renewable fuel with zero to 2.5 RINs per gallon. Therefore,
referring to your example, you may transfer 5000 gallons of renewable
fuels to others with zero RINs. You may also blend 5000 gallons of
renewable fuel with 2.5 assigned RINs per gallon. Upon blending the
renewable fuel, the assigned RINs must, pursuant to section
80.1129(b)(2), be separated and may be traded separately. At the end of
the quarter, you will have met your inventory obligations under section
80.1128(a)(5), since all the assigned RINs associated with the original
10,000 gallons will have become separated, and you will own no more
assigned RINs than your renewable fuel inventory (which is zero in your
example).
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4.12 If a marketer purchases E100 or B100 and becomes the blender, does he retain the
RIN? Can that marketer trade those RINs on the open market? What other
purpose would those RINs serve the marketer if they cannot be traded?
A: A party that converts renewable fuel such as B100 or El 00 (which in
reality will be E95 due to the presence of a denaturant) into motor vehicle
fuel through blending with conventional gasoline or diesel must separate
the RINs associated with the renewable fuel. See regulation Section
80.1129(b)(2). The blender must change the K code in the RINs from 1 to
2 to re-designate the RINs as unassigned RINs which can be freely traded
without renewable fuel.
4.13 Under regulation at Section 80.1129(b)(6), if an obligated party generates some
RINs, his RVO determines the maximum number of self-generated RINs that he
can separate. However, the RVO isn't determined until the end of the year while
the separation of RINs occurs throughout the year. Will EPA consider it a
violation if an obligated party separates too many self-generated RINs because he
overestimated his RVO in the middle of a year?
A: Yes. Obligated parties should take into account the uncertainty in RVO
estimates prior to the endof the year. However, if an unforeseen
disruption to gasoline production results in a refiner's estimated RVO
being significantly different from its actual RVO, EPA may consider
extenuating circumstances in exercising enforcement discretion.
4.14 If a company imports gasoline into the 48 contiguous United States, then it is an
obligated party. If the company also imports renewable fuel (e.g. ethanol), then it
generates RINs. For purposes of this question, assume that the company separates
RINs by blending the ethanol into its own imported gasoline. The company can
only separate RINs that it generates up to the level of its RVO. Assuming the
company imports much more ethanol than gasoline, its RVO will be much smaller
than the number of RINs it generates. What happens to the RINs the company
cannot separate?
A: RINs that cannot be separated by the company per regulation section
80.1129(b)(6) can be transferred with volumes of ethanol when the
company transfers that ethanol to another party. This is consistent with
the requirements applicable to parties that only import ethanol: such
parties cannot separate any RINs they generate for imported volumes, and
must transfer those RINs when the party transfers ethanol to the next
owner. (Also see Question 3.14.)
4.15 The following is a two-part question:
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a. We are a blender. If we purchase a load of B100 (100% biodiesel) over
the quarter and sell 200 loads of B5 (5% biodiesel), what is the easiest way for us to
complete the RIN activity report as it relates to separation of RINs?
A: Please refer to the RFS Activity Report, Form Number RFS0100, posted at
http://www. epa.gov/otaq/regs/fuels/rfs forms,htm. Detailed instructions
for completing the form are available on our website.
b. Our quarterly report would indicate the purchase of the load of B100.
What if we decide to blend 50% of that B100 with dyed (non-road) diesel. How do we
document the retirement of those RINs?
A: Retirement of those RINs is part of the information supplied on both the
RFS Activity Report, Form Number RFS0100 and the RIN Transaction
Report, Form Number RFS0200. Detailed instructions for completing the
form are posted at http://www. epa.gov/otaq/regs/fuels/rfsforms. htm.
4.16 Should a biodiesel blender who blends B5 into diesel for a party that they know
will use it for a non-road use separate or retire the associated RINs?
A: The RINs should be retired. Renewable fuel is defined as "motor vehicle
fuel, " and does not include fuel intended for non-road uses. Also refer to
the Question 4.2 and our response.
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5. Market for separated RINs
5.1 Will non-obligated parties in possession of RINs create a RIN shortage?
A: The in-use production volumes of renewable fuel are expected to exceed
the requirements of the RFSprogram by a substantial margin. As a result,
we expect there to be a surplus of RINs for at least the first few years of
the program, and this surplus means it is highly unlikely that non-
obligated parties could acquire and retain enough RINs to cause a
shortage. In addition, we expect refiners and other obligated parties to
take ownership of renewable fuel with assigned RINs directly from
producers in a majority of cases. Nevertheless, EPA will monitor
program implementation to ensure that RINs that have been generated are
making their way to the obligated parties that need them.
5.2 If blenders either opt not to trade or are not allowed to trade, who will be
responsible for tracking these RINs through the system?
A: The blender must submit quarterly RIN transaction reports to EPA that
will document all RIN transactions, including RIN purchases, RIN sales,
and expired RINs. RINs that are reported purchased and thereafter are
not sold will be identifiable through these reports. See regulation Section
80.1152(c).
5.3 Which non-obligated parties are allowed to participate in the credit trading
program? Producers (with extra value RINs), oxygenate blenders, marketers?
A: Anyone can participate in the RIN trading program, subject to the
requirement that the party first register with the EPA and then adhere to
other regulatory requirements, including submitting required reports
(such as quarterly reports on RINs held).
5.4 Can RINs at a plant expire? Or does expiration only refer to RINs held by
obligated parties?
A: Expiration of a RIN is tied to the amount of time that has elapsed since the
RIN was generated by the producer and not to who owns the RIN. RINs
are valid for compliance purposes for the compliance year in which they
were generated (i.e. the YYYY code in the RIN) or the following year. No
matter who owns a RIN at the end of its valid life, it expires if it is not used
for compliance purposes for the year generated or the follow ing year. See
regulation Section 80.1127(a)(3). Since non-obligated parties (other than
renewable fuel blenders) must transfer assigned RINs with renewable fuel
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(see section 80.1128(a)(3)-(5)), it is expected that most RINs that expire
will do so in the hands of obligated parties and renew able fuel blenders.
This question raises the associated issue of when a RIN is generated.
RINs are generated when a batch is created by the producer and are
assignedwhen the batch is transferred. See section 80.1126(d)-(e) of the
regulation. Since when a batch is created is entirely under the control of
the producer, we expect that producers will create batches in a timely
manner that will not result in their expiration prior to their transfer to
downstream parties.
5.5 A RIN generated in 2007 is valid for compliance purposes for both 2007 and
2008, but obligated parties are given until February, 2009 to demonstrate
compliance for 2008. How do they use a 2007 RIN that expired at the end of
2008 for compliance purposes if they don't acquire that 2007 RIN until January of
2009?
A: The expiration date of a RIN refers only to the calendar year for which it
can be used for compliance. There is no limitation or expiration date for
trading purposes other than the deadline for the obligated party's annual
compliance demonstration report. Thus a RIN generated in 2007 can
continue to be traded in 2009, but if acquired in 2009 by an obligated
party it could only be used for a 2008 compliance demonstration.
5.6 Who reports expired RINs?
A: Every party must report RINs owned that have expired as of the end of the
fourth quarter of each year. This report is due on February 28 of the
following year and will identify RINs that expired in the fourth quarter of
the previous calendar year. Since RINs always expire at the end of a
calendar year, all expired RINs will be reported.
Since obligated parties have until February 28 to submit their annual
compliance demonstrations to EPA (or, for 2007 compliance only, May
31), we allow RINs to be traded between January 1 and February 28 even
if they were generated two year previous. This means that RINs that are
reported by a party as expired on December 31 can still be transferred to
another party after December 31. Designating a RIN as expired is only a
means of categorizing the RIN and does not mean that the RIN has been
relinquished, frozen, or surrendered to the EPA. Since this requirement
may cause some confusion, we intend to promulgate a technical correction
to the RFS rule to eliminate the requirement that RINs be reported as
"expired."
5.7 Can a non-cellulosic ethanol producer have unassigned RINs?
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A: Any party can own unassigned RINs (with a K code of 2). However, only
producers or importers ofcellulosic ethanol can designate a BIN as
unassigned immediately upon generating that BIN. In this case, the
producer or importer is limited in the number of RINs they can designate
as unassigned. See regulation Section 80.1126(e)(4).
5.8 A tank of ethanol has become contaminated and must be disposed of. How would
we treat this situation for RIN reporting under the RFS program?
A: The RFS regulation envisions various scenarios under which RINs might
be retired. The reporting section in the regulation names a few examples:
retirement in satisfaction of enforcement action, spill, and use in a boiler
or heater. We recognize that there are various other situations where RINs
may need to be retired. Ethanol that has become contaminated and that
requires disposal is one such situation where the RINs would be retired.
The reporting forms contain a field for retired RINs. Reporting forms and
instructions are now available on our website at
http://www. epa. sov/otaci/ress/1uels/rfsforms. htm.
5.9 Can anyone own RINs and participate in the RIN market?
A: There is no restriction on who may own RINs. Anyone can own RINs,
including private citizens. However, parties who own or intend to own
RINs must register with us under 80.1150(c) and recordkeeping, reporting
and attest engagement requirements related to RIN transactions apply.
See 80.1151 (d), 80.1152(c) and 80.1164(c).
5.10 Biodiesel may be blended into non-road diesel or denatured ethanol may be
blended into gasoline designated for non-road use. How are the RINs retired and
reported to EPA by the blender?
A: The blender would report the RIN purchase transaction and then would
report the RINs as retired when he blends the renewable fuel associated
with the RINs into the non-road fuel. The appropriate forms to use are the
RFS Activity Report, Form Number RFS0100, and the RFS RIN
Transaction Report, Form Number RFS0200. These forms and
instructions are located on our website at
http://www.epa.gov/otaq/regs/fuels/rfsforms.htm . Also refer to the
regulation at sections 80.1152(c)(l)(x) and (c)(2)(xii)for guidance on
retirement of RINs. In the case of the same RINs transferred, mistakenly
or otherwise, to two or more parties, all such RINs, by all parties holding
them, should be reported as retired unless EPA determines that some
portion of them are valid..
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6. Obligated and nonobligated parties
6.1 Are gasoline blenders no longer considered obligated parties? I have seen
references to gasoline refiners and importers only. Gasoline refiners may also
serve as blenders.
A: Any party that produces gasoline (broadly defined at 80.110 7(c)) from
non-renewable feedstocks or blendstocks is an obligated party under the
RFSprogram. This would include gasoline blenders unless their sole
activity is adding renew able fuels to gasoline. See sections 80.1106(a)(l)
of the regulation. For more information about small refiners, see the
answer to Question 6.6 below.
6.2 I am a small volume renewable fuel producer, and so should be exempt from the
requirement to generate RINs and assign them to renewable fuel that I produce.
Do I need to submit a form to EPA proving that I produce less than 10,000
gallons a year?
A: No. Small volume producers are automatically exempt. How ever, if a
small volume producer chooses to register as a renewable fuel producer
under the RFS program, they will be subject to all the regulatory
provisions that apply to all renewable fuel producers, including the
requirement to assign RINs to batches. See regulation Section 80.1126(b).
6.3 Who is a renewable fuel producer? Will the EPA recognize ethanol marketing
companies as producers? Can the term "producer" apply to a marketing company
who represents various producing plants?
A: Renewable fuel producers are parties that produce renewable fuel (i. e.
convert a renewable feedstock into a renewable fuel). RINs must be
generated by the producer and assigned to renewable fuel by the time title
to the renewable fuel is transferred from the producer to another party
such as a marketer. See regulation Sections 80.1126(d)(l) and (e)(2). In
turn, the marketer must transfer assigned RINs to the party to whom the
marketing company sells the ethanol.
Marketing companies who "represent" renewable fuel producers are not
producers unless the marketing company produces renewable fuel, and
such a company would only generate RINs for that part of the renewable
fuel that they actually produced. Ethanol marketing companies that do
not produce or import renewable fuels are not renewable fuel producers
or importers and cannot generate RINs.
6.4 Is an ethanol plant that splash blends into gasoline an obligated party?
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A: If a facility only blends ethanol into gasoline, they are not an obligated
party and thus do not have a Renewable Volume Obligation (RVO).
However, they are still regulated parties and are thus subject to the
registration, recordkeeping, and reporting requirements.
6.5 The following is a two-part question about the responsibilities of exporters.
a. We are a foreign company that markets ethanol. We do not produce
ethanol, nor do we import it into the U.S. What is our obligation when we move product
(export) out of the U.S.?
A: Section 80.1130 describes the responsibilities of exporters. Note that if
any party owns renewable fuel that is exported from the region described
in 80.1126(a) [currently the 48 contiguous United States, although Hawaii
has requested to opt in], sufficient RINs must be acquired to offset an RVO
representing the exported fuel. There are also registration,
recordkeeping, reporting, and attest engagement requirements applicable
to exporters, and set forth at 40 CFR 80.1150(a), 80.1151(a), 80.1152(a)
and80.1164(a).
b. How do we figure out batch and facility numbers for reporting purposes?
A: Batch numbers are 5-digit numbers that are part of the RIN and are
described in 80.1125(e). Unless you are an importer or producer of
renewable fuel, you do not need a facility number. Renewable fuel
exporters do, however, require a company identification number. See 40
CFR80.1150(a)&(c).
6.6 We are best described as a "terminal blender" or "terminal refiner." We do not
operate a distillation tower and we do not process crude oil. We produce gasoline from
blending components that have been previously certified by another refiner and that are
not considered "gasoline" under EPA's definition. We produce less than 75,000 barrels
per day and are not owned or affiliated with anyone else. Are we a "small refinery"
under the RFS regulation and not an obligated party until 2011, unless we opt into the
program?
A: No. You are an obligated party now. EPA's definition of "small refinery"
is identical to the definition used in EPAct, as it was intended to
implement the EPAct provisions. EPAct clearly treats refineries
separately from blenders. (See EPAct sections 211(o)(3)(B)(ii)(I) and
(o) (2) (A) (Hi) (I) for examples of this separate treatment.) EPA reads the
EPAct definition of "small refinery" to specifically exclude entities such as
yours that produce gasoline solely through blending.
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7. Renewable Volume Obligations (RVO)
7.1 If a specific refinery is the producer of renewable diesel, I assume they need a
facility ID number, but we can use the RINs for aggregate company compliance.
A: Yes. The facility ID number is used to generate the RIN, but the RIN can
be separated and used for compliance on a company-wide aggregate
basis, subject to any applicable restrictions in the regulations such as
regulation Sections 80.1106(c) and 80.1129 (b) (6).
7.2 If an ethanol producer imports a truckload of gasoline, they are an obligated party
and have an RVO. Does this mean that they can separate RINs from all the
ethanol they produce?
A: Not necessarily. Obligated parties can only separate RINs they generated
for renewable fuel they produced or imported up to the level of their RVO.
They are not allowed to separate additional RINs that they generated.
However, obligated parties must separate all RINs from renewable fuel
that they own if they did not generate those RINs. See regulation Sections
80.1129(b)(l) and (b)(6).
7.3 Who actually calculates the RVO? The refinery or EPA?
A: Each obligated party calculates the RVO itself, based on its annual
gasoline volume. See regulation Sections 80.1152(a)(l)(v) and (vi).
7.4 CARBOB doesn't appear in the list of fuels comprising the RVO
(regulation Section 80.1107). However, in the Preamble, EPA mentions RBOB
and CBOB. Is CARBOB considered a subset of RBOB?
A: The regulations include in the list of products to be included in the volume
used to calculate the RVO "Any gasoline, or any unfinished gasoline that
becomes finished gasoline upon the addition of oxygenate, that is
produced or imported to comply with a state or local fuels program. "
CARBOB would fall under this category. See regulation Section
80.1107(c)(6).
7.5 To whom does the 20% limit on previous year RINs apply?
A: This limit applies only to obligated parties. Under regulation Section
80.1127(a)(2), no more than 20% of the gallon-RINs used by an obligated
party to meet its RVO can be previous-year RINs (having a YYYY code
that is one year earlier than the year for which the RIN is being used to
show compliance with an RVO).
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7.6 What happens if, after submitting his annual compliance demonstration report, a
refiner discovers that he exceeded the 20% cap on the use of previous-year RINs
in meeting his RVO? Is he required to replace those RINs with new valid RINs at
the old market price?
A: Annual compliance demonstrations must include a showing that the RINs
used to comply with the RVO include no more than 20%previous-year
RINs. If it is determined that this showing was incorrect due to either a
mathematical error or the discovery that some of the current-year RINs
were invalid, or for any other reason, the obligated party must revise the
compliance demonstration by adding additional current-year RINs to the
compliance demonstration until the 20% maximum is met. If sufficient
current-year RINs are not already owned by the obligated party, he will
need to acquire them through transfers from other parties. If the
obligated party cannot acquire sufficient additional current-year RINs to
meet the 20% criterion, he may be able to reduce the number of previous-
year RINs used below the 20% level and then carry a deficit into the next
year.
If a party discovers an error and must submit a corrected report, it may
download the appropriate form and instructions from our website at
http://www. epa. gov/otaq/regs/fuels/rfsforms. htm. There is afield that the
reporting party marks for resubmissions.
7.7 It appears we are creating an automatic non-compliance period for September,
2007. If I own ethanol on September 1, 2007, it will not have assigned RINs. As
an obligated party, I will be blending this ethanol into gasoline at my terminal, but
I won't be getting any RINs for that ethanol.
A: It may be the case that some ethanol blended into gasoline at the
beginning of the program will not have assigned RINs. However, the RVO
is determined annually, not quarterly or monthly, and in general ethanol
purchased after September 1, 2007 will have assigned RINs. Obligated
parties can also acquire RINs in the first few months of 2008 that can be
used to demonstrate compliance with their 2007 RVO.
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8. Company and Facility Registration
8.1 When will the EPA registration forms be ready to obtain the plant and facility ID
numbers?
A: Registration forms may be submitted any time after May 1, 2007, the
publication date of the final RFS rules. See regulation Section
80.1150(a). Registration forms and instructions are linked to our RFS
page at http://www.epa.gov/otaq/renewablefuels/. Potential registrants
can fill the form out on the web site, submit it electronically to EPA and
print out a copy which then must be signed by the responsible corporate
officer and sent to EPA (directions for sending are on the forms). When
EPA receives the signed copy of the registration, EPA will email the
registrant with confirmation of registration and an appropriate ID
number.
8.2 If my company and facilities are already registered with EPA under another
program, do I have to register for RFS?
A: No, but you are responsible for updating your company or facility
information within 30 days of a change. See regulation Section
80.76(e)(l). Registration forms and instructions are linked to our RFS
page at http://www.epa.gov/otaq/renewablefuels/.
8.3 If my company or facility information changes, how do I correct that in the EPA
registration system?
A: You are responsible for notifying EPA of any changes to your information.
You may do so by filing the online registration form indicating that you
are updating an existing registration, and mailing a printed copy of the
form to the EPA.
8.4 How will I know that my registration has been processed by EPA?
A: EPA will provide you with company and facility ID numbers after we have
received a mailed copy of your registration form(s). Since you need these
numbers prior to engaging in transactions involving RINs, it is advisable
to register as early as possible.
8.5 Will third party marketers have different registration forms to complete than
producers?
A: No. The registration form for third party marketers is the same form as
the producer registration form. However, third party marketers are only
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required to obtain an EPA company identification number and not a
facility identification number.
.6 Could a marketing company register as a producer with the EPA to represent
multiple plants?
A: No. Each renewable fuel producer must register and is responsible for
generating BINs (with an exception for some producers/importers that
produce or import less than 10,000 gallons of renewable fuel each year).
8.7 What business activity should producers and marketers register under?
A: Producers and marketers should register as RIN owners and, as
appropriate as an ethanol producer/importer, biodiesel
producer/importer, and under any other category that applies to them.
Registration is available on-line at
http://www. epa. gov/otaq/regs/fuels/fuelsregistration. htm. If a party is
unsure how to register after reviewing the forms and instructions, we have
staff who can assist them and their contact information is given on the
webpage.
8.8 Are plants blending E-85 considered oxygenate blenders?
A: Such parties should register as RIN owners. See our response to Question
8.7 regarding availability of registration forms, instructions, and
assistance.
8.9 Must an importer of renewable fuels register with EPA for each facility that it
imports to?
A: Yes. Such a party should register each import facility or the facility where
the denaturant is added. See section 80.1150(b) of the regulation.
8.10 What qualifies as a facility for an importer - e.g., the receiving port, the storage
tank, or both?
A: In order to be registered, the facility must have a name and a physical
street address. For example, one cannot register its facility as "Port of
Baltimore, " but may register a terminal facility located at an address
within the Port of Baltimore. Registration forms, instructions, and staff
contacts for assistance are available on our website at
http://www.epa.gov/otaq/regs/fuels/fuelsregistration.htm.
8.11 If ethanol is imported from Brazil and the denaturant is added in Brazil, does the
Brazil facility need to register?
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A: No, but the importer of the ethanol must register.
8.12 Do terminals need to register?
A: Terminals do not need to register. However, terminals that engage in
activities that require registration must be registered. For example, if the
terminal takes ownership ofRINs, then it must be registered as a RIN
owner.
8.13 My plant makes ethanol, but only through recycling contaminated batches of
existing ethanol ("waste" ethanol), not through fermentation. Do we need to
register under the RFS program? Are we subject to reporting requirements?
A: The RINsfor the contaminated ethanol should have been retired.
Assuming they have been, then you would be a renewable fuels producer,
subject to registration as a producer and responsible for generating and
assigning RINs. You would also be subject to recordkeeping, reporting,
and attest engagement requirements Any production claimed as "waste
derived" would have to undergo certification, including an engineering
review, under section 80.1155 of the regulation.
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9. Recordkeeping and Product Transfer Documents (PTDs)
9.1 How is a Product Transfer Document defined? Must it be an invoice, bill of
lading (BOL), or can it be either?
A: The regulations do not specify the form of a product transfer document
(PTD), but do include a list of information that must appear on the PTD.
See regulation Section 80.1153(a). In the context of the RFSprogram,
PTDs must identify a transfer of ownership of a volume of renewable fuel.
In general this would mean invoices. PTDs would in most cases not
include a bill of lading, which is used primarily for a transfer of custody
rather than a transfer of ownership.
9.2 As RINs are transferred, do they have to be attached to a PTD (i.e. printed on a
BOL), or can they be transferred in an electronic spreadsheet that references a
PTD?
A: The PJN must appear in its entirety on PTDs identifying a transfer of
ownership of a volume of renewable fuel. (In general PTDs would not
include BOLs, which are used for transfers of custody rather than
transfers of ownership.) However, the PTD transferring the RINs can be a
separate and parallel PTD from that used to transfer the renewable fuel to
which those RINs are assigned. PTDs can be electronic, including
computer spreadsheets. See regulation Section 80.1153(a)(5).
9.3 If I am an oxygenate blender who purchases directly from a renewable fuels
producer, RINs are transferred with ownership of the batch. Therefore, I will be
in possession of the RINs. How will these RINs be accounted for in my records?
A: You must keep a database of all RINs that you take ownership of at any
time during a compliance period, and report those RINs to EPA quarterly.
See regulation Sections 80.1151(d) and 80.1152(c).
9.4 The regulations at Section 80.1151(b)(5) say that producers must keep "records
related to the production or importation of renewable fuel that the renewable fuel
producer or importer designates as motor vehicle fuel and the use of the fuel as
motor vehicle fuel." What does this mean?
A: This requirement is limited to cases in which a producer or importer
wants to separate assigned RINs from a volume of renewable fuel under
the provisions at regulation Section 80.1129(b)(4). If the renewable fuel
that the producer or importer produces or imports can be used in its neat
(unblended) form, it can be designed a motor vehicle fuel without being
blended with conventional gasoline or diesel. In order to claim the right
to separate the RINs that have been generated and assigned to such fuel,
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the producer or importer must retain records demonstrating that the
renewable fuel has been used as motor vehicle fuel in its neat form.
9.5 Can RIN tracking and transfer be handled completely electronically? If so, can
we choose the software and the report format?
A: You may keep the records in any format you wish. How ever, you must be
able to provide readable copies to EPA representatives upon request and
you must retain records and the means to read them for at least five (5)
years. You must either be able to convert the records to a readable format
or provide them in a usable electronic or paper format as requested by
EPA. (For the purpose of reporting, you may use any commercially
available format or comma delimited-text. Please refer to Section 10 of
this Q&A document - Reporting and the EPA 's Central Data Exchange.)
Note that on product transfer documents (PTDs) (which are required
when ownership of a renewable fuel is transferred to another party),
certain information may be conveyed to some parties through the use of
product codes; however, information regarding assigned RINs transferred
with the renewable fuel must always be included on the PTDs. See
regulation Section 80.1153(a)(5) and (b).
9.6 If there's a partial gallon on the BOL, how do companies handle rounding when
tracking RINs?
A: The number of assigned gallon-RINs being transferred by parties other
than renewable fuel producers or importers need not correspond exactly
to the number of gallons being transferred. See regulation Section
80.1128(a)(4). Thus in general the presence of a partial gallon on aPTD
will not affect the tracking of RINs. For producers and importers of
renewable fuel who are required by regulation Section 80.1128(a)(6) to
transfer a specified number of gallon-RINs with each gallon of renewable
fuel, partial gallons can be rounded to the nearest whole gallon so long as
the number of renewable fuel gallons is consistent with the number of
gallon-RINs.
9.7 A marketer communicates RINs transferred to a buyer via the invoice. Is it
possible for the invoice to follow the transfer of title to the buyer by a few days? Must
the same PTD be used to transfer the RINs and the renewable fuel volume?
A: The PTD may take the form of an invoice, bill of lading, or other
document meeting the requirements of section 80.1153 of the regulation.
The PTD identifying the RINs must be transferred to the buyer on the
same day as the transfer of title of the fuel. Separate PTDs may be used,
but the PTD transferring the fuel must reference the PTD transferring the
RINs.
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9.8 Are PTDs given to third party terminals and pipelines by obligated parties and
that reflect custody transfers only, required to identify RINs?
A: No, such PTDs are not required to identify RINs. PTDs consistent with
80.1153 are required only for transfers of ownership of renewable fuel.
9.9 The RFS regulation requires that, where RINs are transferred via a separate
document from the PTD used to transfer ownership of the renewable fuel, the PTD
transferring the fuel must state the number of gallon-RINs being transferred and must
also have a unique reference to the PTD which is transferring the assigned RINs. What
does EPA require for a "unique reference?" See section 80.1153(a)(5)(ii).
A: There is no EPA-pr escribed method for a unique reference. The intent of
the unique reference is to tie the two PTDs together - i.e., to join the
records for the volume transaction and the PJN transaction in some
manner. Some companies who engage in few of these transactions might
be able to use simple document names as their unique reference. Those
parties with many of these transactions might incorporate date and time
or other useful information into their unique reference. Each company is
in the best position to determine what they need to do.
9.10 We engage in blending and refining and expect to be purchasing RINs separately
from purchases of renewable fuel. The PTD requirements of section 80.1151(d)(l)
indicate that a PTD is only required when title to a renewable fuel is transferred. If so,
then what document would be sent to us with RINs purchased separately from purchases
of renewable fuels?
A: There is no PTD requirement for transfers of separated RINs, but records
related to RIN transactions must be kept. The RIN transaction would have
to be reported and underlying records must be retained. See
80.1151(d)(3) and80.1152(c).
9.11 The recordkeeping requirements in section 80.1151 state that we must keep
records of the parties involved in each transaction, including the transferor, transferee,
and any broker or agent. What identifiers are required for transferor and transferee? Do
we need both the EPA issued company and facility ID numbers?
A: For recordkeeping purposes, you want to retain records that help explain
what appears on your PTDs and in your reports to EPA. This would
include the name of the party and any applicable EPA issued ID numbers,
but you may wish to keep additional identifying information in your
records as well.
9.12 We sell ethanol by the truck load (870 gallons at a time). Each pick-up is
considered a transaction, so if a company picks up 20 loads in a day they send us 20
electronic invoices. Under 80.1128(a)(7)(ii) can we create a new PTD and send the
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company a bill at the end of the day showing 20 pick ups but one total each for gallons
and RINs?
A: You could create one PTD, but it would have to be transferred to the
receiving party on the same day as the transfer of ownership. The single
PTD would list all the RINs transferred for the day and the 20 invoices
would also have to reference the single PTD document.
9.13 Is a PTD required for transferring an unassigned RIN?
A: No. PTDs are not required when transferring unassigned PJNs.
However, PTDs are required whenever there is a transfer of ownership of
a renewable fuel. Where the fuel is being transferred with assigned RINs,
then the PTD must include information relating to the RINs. See section
80.1153 of the regulation. If the renewable fuel is being transferred
without the RINs, then the PTD must state "no RINs transferred. "
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10. Reporting and the EPA's Central Data Exchange (CDX)
10.1 Is the RIN transaction report tracked daily but reported quarterly?
A: With regard to reporting to EPA, each RIN transaction (i.e., BIN sale or
purchase, retired or expired BIN) must be reported on a separate RIN
transaction report. The RIN transaction report for each transaction must
be submitted to EPA by the end of the second month after the quarter in
which the transaction occurred. See regulation Section 80.1152(c)and
(d). The reports for RIN transactions that occurred within a quarter may
be submitted all together, individually, or in groups at any time, so long as
the transaction reports for all transactions that occurred during the
quarter are submitted to EPA by the end of the second month after the
quarter in which the transactions occurred. With regard to transfer of
RINs between parties, such transfers must be included on some type of
product transfer documentation as explained in the section of this
document dealing with Recordkeeping and Product Transfer Documents
(PTDs).
10.2 For parties that take ownership of assigned RINs and then separate them, do they
report those RINs with K code of 1 or 2?
A: The regulations state that, in most cases, (1) a party that is an obligated
party must separate any RINs that have been assigned to a volume of
renewable fuel if they own that volume, (2) any party that owns a volume
of renewable fuel must separate any RINs that have been assigned to that
volume once the volume is blended with gasoline or diesel to produce a
motor vehicle fuel, and (3) the party responsible for separating a RIN
from a volume of renewable fuel shall change the K code in the RIN from
a value of 1 to a value of 2 prior to transferring the RIN to any other
party.
In the case of an obligated party, Company A, that has accepted a volume
of renewable fuel with an assigned RIN, Company A must change the K
code from 1 to 2. However, in a transaction report filed by Company A
concerning receipt of the RIN, the RIN would be reported with a K code of
1 (i.e., as it was received). If the RIN is transferred to another party by
Company A during the reporting period, Company A would report the RIN
on a transaction report for that transfer with a K code of 2. If the RIN was
used for compliance, Company A would report the RIN with a K code of 2
on its annual compliance report.
In the case of a blender, the RIN would be reported with a K code of 1 for
the transaction relating to the receipt of the renewable fuel. After the
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blender blends the renewable fuel into motor vehicle fuel, the RIN would
be reported with a K code of 2 for a transaction relating to the transfer of
the RIN to another party.
In EPA 's reporting instructions, it will be made clear how a party should
report the K code for any given report.
10.3 What is the process to retire a RIN? Is this a reporting function that is done with
the EPA?
A: RINs are retired for reasons specified in the regulations and must be
reported to EPA. A retired RIN may not be used for compliance purposes
or traded to another party. A retired RIN is reported to EPA in a RIN
transaction report and the total number of RINs retired during a quarter is
reported to EPA in the gallon-RIN activity report. A RIN transaction
report that reports a retired RIN must describe the reason for retiring the
RIN. Potential reasons include reportable spills under regulation Section
80.1132, import volume corrections under regulation Section
80.1166(e)(2), renewable fuel used in boiler or heater under regulation
Section 80.1129(e), RINs that are invalid (other than expired RINs) or
RINs required to be retired in the context of an enforcement action. For
reporting requirements, see regulation Section 80.1152.
10.4 I haven't seen a reference to the EPA CDX system. Is the CDX system already
established or can we submit reports in our choice of electronic formats?
A: The Central Data Exchange (CDX) is an established portal through which
electronic data are submitted. All registered parties will have to first
register with CDX in order to receive a CDX registration number. A link
to the CDX web site will be provided from our RFSweb site at
http://www. epa.gov/otaq/renewablefuels. RFS reports can be produced by
vendor software or by using spreadsheet templates or other data templates
following instructions linked to the RFSweb site.
10.5 Do I have to register to use CDX and is this a separate registration process?
A: You will have to register with CDX. (Registering with CDX is not the
same as registering under regulation Section 80.1150.) Instructions are
available via our RFS web page at
http://www.epa.gov/otaq/renewablefuels/.
10.6 When will the template report forms for all of the RFS-required reports be
available; will these be posted on the website?
A: They are available now at http://epa.gov/otaq/regs/fuels/rfsforms.htm.
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10.7 If you have a spill, does the K code change to 2 for the spilled volume?
A: No, the K code is not changed as the result of a spill. (Refer to section
80.1132 of the regulation regarding retirement ofRINs due to a spill.)
10.8 What recordkeeping and reporting requirements do exempt small refineries and
small refiners have?
A: Exempt small refineries and small refiners have no recordkeeping and
reporting requirements until 2011, unless they choose to own RINs.
10.9 Is there any benefit to aggregating refineries for reporting purposes?
A: Aggregation does not provide any "advantage " under our regulation.
Whether or not to aggregate refineries for reporting purposes is a
practical decision that we have left up to the individual companies. For
example, some companies have one integrated recordkeeping and
reporting system for all their refineries, whereas others do not.
10.10 If a transaction must be reversed for some reason, does the reversal have to track
specific RINs or will fungible RINs work? How is this reported?
A: The original transaction (involving the specific RINs) should be nullified
and, if already reported to EPA, corrected reports should be submitted. If
discovered prior to being reported to EPA, then all associated records
must be corrected. If a transaction must be reversed for any reason, then
PTDs must be corrected and must track the specific RINs.
10.11 What happens if a party registers with EPA then engages in no activities that must
be reported during a given compliance period?
A: There is no obligation to report if no activity occurs.
10.12 If an obligated party (a refiner) imports non-denatured ethanol and denatures it, is
the refiner considered a renewable fuel producer and is the refiner obligated to
establish RIN numbers and file quarterly reports for the ethanol it denatures?
A: The party would be identified as a renewable fuel importer rather than a
renewable fuel producer, and would need to establish RIN numbers and
file reports required of an importer. The party in this example would
also be required to file reports required of a refiner.
10.13 Is it correct that an obligated party must still file the quarterly RIN activity report
even though all RINs held are separated (or unassigned, with a K code of 2)?
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A: Yes. Although obligated parties are not subject to the end-of-quarter
check described in regulation Section 80.1128(a)(5) (because all RINs
become unassigned immediately upon ownership by an obligated party),
they must still report all of their RIN activities quarterly, including RIN
purchases and sales. See regulation Section 80.1152(c).
10.14 Does a plant have to have their EPA-issued company ID number before they
register for CDX?
A: Yes, this ID will be necessary to complete the CDX registration process.
You may look up your company ID number at
http://epa.gov/otaq/regs/fuels/rfs-list.xls (in Excel spreadsheet format).
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11. Other Questions
11.1 What entity retires the RIN if the same RIN is mistakenly transferred to two or
more parties? Does the plant retire the RIN? Does the EPA have to be notified?
A: Where a RIN is invalid because the same BIN was transferred to two or
more parties, all such RINs are deemed invalid unless EPA determines
that some portion of them is valid. See regulation Section 80.1131(b)(4).
In the absence of such determination by EPA, all parties with such RINs
must under regulation Section 80.1131(b)(2), adjust their records, reports
and compliance calculations as necessary to reflect the deletion of the
invalid RINs. "Deletion " refers to annual compliance reports since an
invalid RIN cannot be used to show compliance. In the case of RINs
transferred to two or more parties, all such RINs, by all parties holding
them, should be reported as retired unless EPA determines that some
portion of them are valid.
11.2 Regulation Section 80.1131 (b)(4) states that, in the event that the same RIN is
transferred to two or more parties, "all such RINs will be deemed to be invalid,
unless EPA in its sole discretion determines that some portion of these RINS is
valid". What's the process to determine if a portion of RINs are valid?
A: In many circumstances, EPA will be able to determine whether any of the
RINs (or particular gallon-RINs within a batch-RIN) are valid from the
information submitted to EPA in the RIN generation and transaction
reports. Through these reports, it is possible to track a RIN from the point
of generation by the renewable fuel producer or importer through each
transaction until the RIN is used for compliance, retired or has expired. If
EPA determines that a RIN is invalid, EPA would contact the submitter of
the report(s) with the invalid RIN and advise the party how to proceed.
11.3 If a party buys a batch of ethanol, and through testing determines that the ethanol
is synthetic (non-renewable), what happens to the RINs?
A: If a volume of renewable fuel for which RINs have been generated is found
to not be a valid renew able fuel under the RFS program, then the
associated RINs are likewise deemed invalid. See regulation Section
80.1131. If a party determines that a batch of fuel that they own does not
meet the definition of renewable fuel under the RFS program, the RINs
received with such fuel must be deleted from records, reports and
compliance demonstrations. See regulation Section 80.1131. In general,
RINs received with such fuel must be reported as retired and such invalid
RINs must be deleted from any compliance reports. Parties that learn of
such a situation should promptly inform EPA. EPA will investigate the
source of the fuel and take appropriate action.
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11.4 What metering system does the plant use to measure gallons? Is it a production
meter, a load-out meter, etc.?
A: EPA regulations provide flexibility in terms of the specific mechanisms
through which producers and importers measure volumes for purposes of
generating RINs. However, the approach should ensure that gallons are
neither systematically ignored nor systematically double-counted. Also,
approaches that provide consistent volumes for both the RFS program and
other contexts such as reporting to the Energy Information Administration
are preferred.
11.5 Are only owners of small refineries as of January 1, 2004 allowed to claim the
small refinery exemption? If so, how is this date justified?
A: Only owners of small refineries as of January 1, 2004 are eligible, As
explained in the preamble (see 72 FR 29525)EPA believes that small
refinery eligibility should be based on 2004 data rather than on 2005
data, since it was the first full year prior to passage ofEPAct. In addition,
some refineries' production may have been affected by Hurricanes Katrina
and Rita in 2005.
11.6 How is the small refinery verification letter structured?
A: The structure of the letter is left up to the individual. The letter must
address the items in section 80.1141(b)(2) of the regulation.
11.7 What is the estimated value of a RIN?
A: There is no way to estimate the "market value " of a RIN, as this will be a
changing value and entirely determined by the marketplace.
11.8 What mechanisms exist to suspend RFS program requirements, should renewable
supply be limited due to natural disasters?
A: EPAct contains a provision to address unforeseen circumstances that may
occur which result in a shortage of renewable fuel and available RINs and
we believe that the statutory provision is sufficient to address unforeseen
circumstances that may occur on a nationwide or regional scale.
Specifically, EPAct provides that on petition by one or more States, EPA,
in consultation with the Departments of Agriculture and Energy, may
waive the required aggregate renewable fuels volume obligation in whole
or in part upon a sufficient showing of economic or environmental harm,
or inadequate supply. As explained in the preamble to the rule (see 72 FR
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23927) the RFS rule is a flexible program that permits trading ofRINs
and deficit carryovers.
11.9 Which market indicators will cause EPA to change the RFS standard?
A: EPA will use information from the Energy Information Agency (ElA) that
projects volumes of gasoline and renewable fuel in order to calculate the
standard. Please refer to section 80.1105 of the regulation.
11.10 Since ethanol use is expected to surpass the mandated EPAct levels, is there any
mechanism available to EPA to allow compliance on a national collective basis,
as was done under the 2006 default rule?
A: No. The Energy Policy Act included a specific default provision for 2006
that was to go into effect if the RFS program regulations were not in
place. That provision was expressed in general terms, allow ing EPA to
structure the program for 2006 on a national collective basis. The statute
has much more specific requirements for subsequent years. We are
required to calculate the annual standard as explained in section 80.1105
of the regulation. Also see the answer to Question 11.9.
11.11 How do refiners meet blend mandates on the unleaded fuel sold to a wholesaler
where the ethanol is blended at a fuel terminal?
A: The RFS program does not directly mandate blending. Instead, it requires
only that obligated parties such as refiners acquire sufficient RINs to
offset their Renewable Volume Obligation (RVO). Refiners can purchase
ethanol, separate and retain the RINs, and then provide the ethanol to a
terminal for blending. However, in the context of the RFS program, the
refiner need not track ethanol to the point of blending. If a refiner, as an
obligated party, wishes to utilize RINs acquired by an oxygenate blending
facility, the refiner could negotiate a contract with the oxygenate blender
(wholesaler in the question above) to acquire those RINs.
11.12 We are an association. Many of our members are blenders who are small and
who find the attest engagement (audit) requirement difficult and expensive to comply
with. We would like to engage a CPA who would be able to perform the required review
of our members' records, in hopes of generating a cost savings to them. The following
two part question related to our handling of reporting and attest engagements on behalf of
our members:
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a. Could we become the delegated authority for submission of reports on behalf
of our members?
A: Individual blenders could rely on your association to submit reports to
EPA on their behalf. . However you should understand that if any reports
are not submitted or are submitted improperly then responsibility would
fall upon the individual blender.
b. Could we hire a CPA and pay for the annual attest engagements for our
members?
A: We also believe it may be appropriate for individual blenders to pay for
CPA services through their association and recognize that this may result
in a cost savings to them. Section 80.125(a), which is referenced by
80.1164, says: "Any [blender] subject to to the [attest] requirements shall
engage an independent certified public accountant.... "Although his
provision could be read to require that a blender must have a contract
with the CPA, EPA believes that the purpose of the attest requirements is
that an attest is performed by an independent CPA that is given access to
all necessary records, and in turn submits a report to EPA. Whether the
association or the blender pays the CPA is unimportant to EPA and if the
association is capable of making a more cost-effective deal on behalf of its
members, we believe that is appropriate. However you should under stand
that if the attest engagement is not performed or is performed improperly,
responsibility would fall upon the individual blender (ie., the regulated
party).
11.13 Section 80.1164(a)(l)(ii) of the regulation states that the CPA conducting the
attest engagement must obtain documentation of any volumes of renewable fuel used in
gasoline during the reporting year; compute and report as a finding the volumes of
renewable fuel represented in these documents. What does this mean?
A: This provision is intended to require the CPA to include in his or her
report any volume of renewable fuel actually used in gasoline produced at
the refinery or imported by the importer, but is not intended to include
renewable fuels added at a terminal downstream. The requirement is part
of the attest engagement because renewable fuels are to be excluded from
the volume of gasoline used to determine the refiner's or importer's RVO.
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12. Examples of RIN generation, assignment, and transfer
All examples use fictional names, company IDs, and facility IDs.
Example RIN codes have been separated by hyphens for clarity.
12.1 Examples of renewable fuel producers and importers
Example A-l
September 1: Producer Jones makes 2000 gallons of denatured ethanol from corn in
2007. He stores all 2000 gallons in a tank.
September 2: Producer Jones generates 2000 gallon-RINs to represent the 2000 gallons.
Equivalence value of 1.0 x 2000 gallons = 2000 gallon-RINs
Batch-RIN: 1 -2007-1234-12345-00001 -10-2-00000001 -00002000
September 3: Producer Jones sells 2000 gallons to Marketer Smith.
Producer Jones uses a single PTD to transfer the volume and also transfer
assigned 2000 gallon-RINs, summarized in a single batch-RIN.
Example A-2
September 4: Producer Jones makes another 3000 gallons of denatured ethanol from
corn in 2007. As the ethanol is being metered into a tank, he generates 3000
gallon-RINs to represent the 3000 gallons.
Equivalence value of 1.0 x 3000 gallons = 3000 gallon-RINs
Batch-RIN: 1-2007-1234-12345-00001-10-2-00002001-00005000
September 5: Producer Jones sells 1000 gallons to Marketer Smith.
Producer Jones uses a PTD to transfer the volume, indicating that 1000 assigned
gallon-RINs will be transferred in parallel, and containing a unique reference to
another PTD.
Producer Jones sends a spreadsheet as the parallel PTD to Marketer Smith later
on the same day, transferring batch-RIN 1-2007-1234-12345-00001-10-2-
00002001-00003000
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Example A-3
September 6: Producer Jones makes another 1000 gallons of denatured ethanol from
corn in 2007. He stores the 1000 gallons in a tank that already contains 2000
gallons.
September 7: Producer Jones sells 3000 gallons to Marketer Smith.
As the ethanol is being metered into a railcar, Producer Jones generates 1000
gallon-RINs under a new batch number to represent 1000 gallons.
Equivalence value of 1.0 x 1000 gallons = 1000 gallon-RINs
Batch-RIN: 1 -2007-1234-12345-00002-10-2-00000001 -00001000
Producer Jones uses a single PTD to transfer the 3000 gallons and also transfer
3000 assigned gallon-RINs, summarized in two batch-RINs:
1-2007-1234-12345-00001-10-2-00003001-00005000
1-2007-1234-12345-00002-10-2-00000001-00001000
Example B-l
September 1: Producer Davis makes 2000 gallons of biodiesel in 2007.
He stores all 2000 gallons in a tank.
September 2: Producer Davis makes another 5000 gallons of biodiesel.
He adds the 5000 gallons to the tank already holding the 2000 gallons.
September 3: Producer Davis generates 1500 gallon-RINs to represent 1000 gallons.
Equivalence value of 1.5 x 1000 gallons = 1500 gallon-RINs
Batch-RIN: 1-2007-4321-12345-00003-15-2-00000001-00001500
September 4: Producer Davis sells 1000 gallons to Marketer Johnson.
Producer Davis uses a single PTD to transfer the volume and also transfer 1500
assigned gallon-RINs, summarized in a single batch-RIN.
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Example B-2
September 5: Producer Davis generates 9000 gallon-RINs under a new batch number to
represent 6000 gallons of biodiesel that were produced in 2007.
Equivalence value of 1.5 x 6000 gallons = 9000 gallon-RINs
Batch-RIN: 1 -2007-4321 -12345-00005-15-2-00000001 -00009000
September 6: Producer Davis sells 4000 gallons to Marketer Johnson.
Producer Davis uses a single PTD to transfer the volume and also transfer 6000
assigned gallon-RINs, summarized in a single batch-RIN:
1-2007-4321-12345-00005-15-2-00000001-00006000
September 7: Producer Davis sells 2000 gallons to Marketer Williams.
Producer Davis uses a PTD to transfer the volume, indicating that 3000 assigned
gallon-RINs will be transferred in parallel, and containing a unique reference to
another PTD.
Producer Davis sends the parallel PTD to Marketer Williams later on the same
day, transferring batch-RIN 1-2007-4321-12345-00005-15-2-00006001-
00009000
Example C-l
September 1: Producer Brown makes 4000 gallons of denatured ethanol from cellulosic
biomass in 2007. As the ethanol is being metered into a tank, he generates
10,000 gallon-RINs in two separate batches to represent the 4000 gallons.
Equivalence value of 2.5 x 4000 gallons = 10,000 gallon-RINs
First batch-RIN: 1-2007-5678-12345-00001-25-1-00000001-00005000
Second batch-RIN: 1-2007-5678-12345-00002-25-1-00005001-00010000
September 2: Producer Brown sells 1000 gallons to Marketer Miller.
Producer Brown uses a single PTD to transfer the volume to Marketer Miller and
also transfer 1000 assigned gallon-RINs, summarized in a single batch-RIN:
1-2007-5678-12345-00002-25-1-00006001-00007000
September 3: Producer Brown sells 1500 unassigned gallon-RINs to Broker Wilson
without ethanol. The PTD includes the following two batch-RINs:
2-2007-5678-12345-00001-25-1-00000001-00000700
2-2007-5678-12345-00002-25-1-00007001-00007800
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Example C-2
September 4: Producer Brown makes 1000 gallons of denatured ethanol from cellulosic
biomass in 2007. He stores 500 gallons in one tank, and 500 gallons in another
tank.
September 5: Producer Brown generates 2500 gallon-RINs to represent the 1000
gallons. He adds the gallon-RINs to a pre-existing batch.
Equivalence value of 2.5 x 1000 gallons = 2500 gallon-RINs
Batch-RIN: 1-2007-5678-12345-00001-25-1-00005001-00007500
Producer Brown sells 2000 gallons to Marketer Miller.
Producer Brown uses a single PTD to transfer the volume to Marketer Miller and
also transfer 3000 assigned gallon-RINs, summarized in a single batch-RIN:
1-2007-5678-12345-00001-25-1-00004501-00007500
12.2 Examples of marketers and distributors of renewable fuel
Example D-l
September 10: Marketer Moore takes ownership of 5000 gallons of denatured ethanol
with 5000 assigned gallon-RINs in a single batch-RIN:
1-2007-8765-12345-00022-10-2-00004055-00009054
September 15: Marketer Moore sells 3000 gallons of ethanol to Blender Taylor without
any assigned RINs. The PTD states, "No RINs transferred."
September 30: Marketer Moore verifies that his end-of-quarter gallon-RINs do not
exceed his end-of-quarter gallons adjusted for their Equivalence Value.
5000 gallon-RINs < 2000 gallons x Equivalence Value of 2.5
5000 gallon-RINs < 5000 gallons (adjusted)
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Example D-2
October 1: Marketer Moore takes ownership of 2000 gallons of biodiesel with 3000
assigned gallon-RINs in two batch-RINs:
1-2007-9876-12345-00022-15-2-00002001-00003000
1-2007-0987-12345-00022-10-2-00012001-00014000
November 15: Marketer Moore takes ownership of 3000 gallons of denatured ethanol
with 7500 assigned gallon-RINs in one batch-RIN:
1-2007-1122-12345-00150-15-2-00001001-00008500
December 15: Marketer Moore sells 1000 gallons of biodiesel to Blender Taylor with
1500 gallon-RINs in two batch-RINs:
1-2007-8765-12345-00022-10-2-00004055-00005054
1 -2007-9876-12345-00022-15-2-00002001 -00002500
December 31: Marketer Moore verifies that his end-of-quarter gallon-RINs do not
exceed his end-of-quarter gallons adjusted for their Equivalence Value.
14,000 gallon-RINs < 5000 gallons x Equivalence Value of 2.5
+ 1000 gallons x Equivalence Value of 1.5
14,000 gallon-RINs < 14,000 gallons (adjusted)
Example E-l
January 10: Marketer Anderson takes ownership of 5000 gallons of denatured ethanol
with 5000 assigned gallon-RINs in one batch-RIN:
1-2008-6543-12345-00088-10-2-00556701-00561700
February 20: Marketer Anderson sells 2000 gallons of ethanol to Blender Jackson with
5000 assigned gallon-RINs:
1-2008-6543-12345-00088-10-2-00556701-00561700
March 31: Marketer Anderson verifies that his end-of-quarter gallon-RINs do not
exceed his end-of-quarter gallons adjusted for their Equivalence Value.
0 gallon-RINs ^ 3000 gallons x Equivalence Value of 2.5
0 gallon-RINs < 7500 gallons (adjusted)
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