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

should also have the right to separate the RIN from the batch if he actually blends the
ethanol into gasoline. This would only apply to batches where the RIN had not already
been separated by an obligated party. Since blenders would in general not be obligated
parties under our proposed program, blenders who separate RINs from batches would
have no need to hold onto those RINs and thus could transfer them to an obligated party
for compliance purposes, or to any other party.
There may be occasions in which a downstream customer actually owns the batch
of ethanol when it is blended into gasoline. In such cases the blender will have custody
but not ownership of the batch. We propose that the RIN can be separated from the batch
of ethanol when the batch is blended into gasoline, but the RIN could only be separated
by the party that owns that batch of renewable fuel at the time of blending.
Once a RIN is separated from a batch of renewable fuel, the PTDs associated with
that batch could no longer list the RIN. Parties who subsequently take ownership of the
batch may not know if the RIN had been separated, or if a RIN had never been assigned
to the batch in the first place, contrary to regulatory requirements. To avoid concerns
about whether RINs assigned to batches have not been appropriately transferred with the
batch, we request comment on whether PTDs should include some notation indicating
that the assigned RIN has been removed.
As described in Section III.B, many different types of renewable fuel can be used
to meet the RFS volume obligations placed upon refineries and importers. Currently,
ethanol is the most prominent renewable fuel, and is most commonly used as a low level
blend in gasoline at concentrations of 10 volume percent or less. However, some
renewable fuels can be used in neat form (i.e. not blended with conventional gasoline or
diesel). The two RIN separation situations described above would capture any renewable
fuel for which ownership is assumed by an obligated party or a party that blends the
renewable fuel into gasoline or diesel. However, renewable fuels which are used in their
neat (unblended) form as motor vehicle fuel may not be captured. This would include
such renewable fuels as neat biodiesel (B100), methanol for use in a dedicated methanol
vehicle, biogas for use in a CNG vehicle, or renewable diesel used in its neat form.
As for ethanol and biodiesel, neat renewable fuels would be assigned a RIN by
the producer. However, in cases where the neat renewable fuel is never owned by an
obligated party or blended into gasoline or diesel before being used as a motor vehicle
fuel, no party would have the right to separate the RIN from the batch. The RIN would
therefore never become available to an obligated party for RFS compliance purposes.
Although the current use of these neat renewable fuels is minor in comparison to the
volumes of ethanol and lower blend levels of biodiesel, we nevertheless believe that they
should be allowed to help meet the volume requirements of the RFS program.
To address this issue, we propose to more broadly define the right to separate a
RIN from a batch. In addition to obligated parties and blenders, we believe that any party
holding a batch of renewable fuel for which the RIN has not been separated could
separate the RIN from the batch if the party designates it for use only as a motor vehicle
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