WASHINGTON – Late last week, the Environmental Protection Agency (EPA) released a final rule providing for a voluntary quality assurance program (QAP) for verifying the validity of Renewable Identification Numbers (RINs) under the Renewable Fuel Standard (RFS). 

The rulemaking is in response to several cases of fraudulently generated RINs in the last several years, which lead some obligated parties under the RFS to limit their RIN purchases to renewable fuel produced by larger entities with stronger balance sheets that are very likely to generate valid RINs. This development hurt smaller renewable fuel producers, and significantly reduced the RIN market’s overall liquidity. 

The rule finalizes a voluntary third-party quality assurance option for RINs that regulated parties may exercise as a supplement to the “buyer beware” liability that exists under current regulations. The program provides a means for ensuring that RINs are properly generated through audits of renewable fuel production conducted by independent third parties using QAPs. It also provides an affirmative defense for the transfer or use of invalid RINs that had been verified under an approved QAP, establishes conditions under which RINs must be replaced and a process for determining who is obligated to replace them.

Until the end of this year, EPA is finalizing the two QAP options (QAP-A and QAP-B) it proposed in February 2013; beginning January 1, 2015, after this “interim period” is complete, there will be only one QAP option. This option closely resembles the less onerous QAP-B option from EPA’s proposal. NACS had urged EPA to take a similar course of action.