Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

a. Responsibilities Of Renewable Fuel Producers And Importers
The initial generation of RINs and their assignment to specific batches of
renewable fuel would be the sole responsibility of renewable fuel producers and
renewable fuel importers. As described in Section III.D.1, volumes of renewable fuel can
be measured most accurately and be more readily verified at these originating locations.
They would construct each batch-RIN based on the particular circumstances associated
with each batch, including the creation of a unique serial number for the batch and
specifying its Equivalence Value. The batch-RIN would also identify the specific
number of gallons in the batch, thereby summarizing the gallon-RINs assigned to every
gallon in the batch. See Section III.D.2.a for details on our proposed format for RINs.
Only standard-value RINs would have to be assigned to batches. Extra-value
RINs could be generated by the renewable fuel producer in cases where the renewable
fuel in question has an Equivalence Value greater than 1.0 (see Section III.D.2.c for
further discussion). However, the extra-value RINs would not need to be assigned to the
batch. Instead, they could be transferred to another party independent of the batch. This
requirement would in general result in a one-to-one correspondence between gallons in a
batch and the volume block numbers in the batch-RIN assigned to that batch. As a result,
the process of dividing and combining RINs during batch splits and mergers would be
simplified, and the fungibility of RINs in the distribution system would be maintained.
For example, a marketer who took custody of ethanol batches from several different
producers, including a producer of cellulosic biomass ethanol, and combined them all in a
single tank could then withdraw batches of any size from the tank, and assign a number
of gallon-RINs to each batch that is equivalent to the number of actual gallons in that
batch. This approach would also provide an incentive for producers to produce
renewable fuels with higher Equivalence Values, since they could transfer the extra-value
RINs to any party.
However, we are also proposing that producers have the option of assigning even
extra-value RINs to batches if they chose to do so. Under these circumstances, the extravalue
RINs would be treated just like standard-value RINs, and thus would be subject to
the same limitations on who can separate the RIN from the batch. The assignment of
extra-value RINs to batches would also mean that the number of gallon-RINs assigned to
the batch would be greater than the number of gallons in the batch. As a result, care
would have to be taken during batch splits and batch mergers to appropriately pass RINs
assigned to a parent batch on to the daughter batches. We request comment on allowing
extra-value RINs to be assigned to batches.
There are two other cases in which the gallon-RINs assigned to a batch would not
exactly correspond to the number of gallons in that batch. First, if a renewable fuel has
an Equivalence Value less than 1.0, then RINs could only be assigned to a portion of the
batch. Such potential circumstances are described in Section III.D.2.d. RINs may also
not correspond exactly to gallons if the density of the batch changes due to changes in
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