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Key Additional Provisions and Issues


Registration Process for Producers and Importers

The EPA is proposing a revision of the registration process for renewable fuel producers and importers.  The proposed measures will require producers to provide information on their feedstocks, facilities, and products.  The EPA has developed the comprehensive proposed set of requirements in the document entitled “Proposed Information Collection Request.”

It is also notable that the EPA intends to collect RIN price information for transactions involving both separated RINs and RINs assigned to a renewable volume.  The EPA states that this information will be of programmatic value to enable the EPA to anticipate and react to market disruptions and other compliance challenges.  NPRM at 154.

Penalties

The prohibition and liability provisions of RFS 2 are similar to those of RFS 1.  The proposed rule identifies prohibited acts, including failure to acquire sufficient RINs to meet a party’s obligations, producing or importing a renewable fuel that is not assigned a proper RIN category, improperly assigning RINs to renewable fuel that was not produced with renewable biomass, failing to assign RINs to qualifying fuel, or creating or transferring invalid RINs.  Under the proposed rule, any person who violates any prohibition or requirement of the RFS 2 program may be subject to civil penalties of $32,500 for every day of each violation and the amount of economic benefit or savings resulting from the violation.  These provisions provide for strict liability, and there is no defense even where the willful violation occurred upstream and the downstream participant proceeded in good faith.  The penalties extend to failure to comply with reporting requirements.

EMTS

The EPA proposes an EPA Moderated Transaction System (“EMTS”).  It acknowledges that that 38-digit standardized RIN system has proved confusing to market participants.  Once an error occurs with a RIN, it is often propagated throughout the system.  Under the strict liability of RFS 2, all downstream parties are also in violation.  EMTS would be a closed, EPA-managed system that would provide a mechanism for screening RINs and a structured environment for conducting RIN transactions.  Once registration was established, individual RIN accounts would be maintained on the system for each individual party.


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