The Renewable Fuel Standard (RFS) program, established under the Energy Independence and Security Act of 2007, plays a crucial role in advancing the use of renewable fuels in the United States. Central to this program is the Renewable Identification Number (RIN) system, a tracking mechanism designed to ensure compliance and facilitate the trade of renewable fuels. A RIN is a 38-character number assigned by the EPA to each gallon of renewable fuel produced or imported. While the RIN system has been instrumental in advancing the RFS goals, it also presents various challenges for obligated parties, especially for newcomers in the industry.  

We asked our compliance specialists and technicians to list out some common issues they saw when our clients first enlist in our services and what strategies they would recommend. RINSTAR believes that by understanding these challenges and implementing effective solutions, that any obligated party can navigate the complexities of the RIN system without fear of an audit or costly compliance penalty.  

RIN Price Volatility 
RIN prices can fluctuate significantly due to supply and demand dynamics, regulatory changes, and speculation. Market speculation in this industry is often reactionary and can exacerbate price swings by driving RIN prices up or down. We saw this most recently with the EPA’s Proposed Partial Waiver of 2024 Cellulosic Biofuel Volume Requirement and Extension of 2024 Compliance Deadline. The mere rumors of this proposition by the EPA caused a significant drop in price in the D3 RIN market in late 2024.   

While it’s impossible to eliminate RIN price volatility entirely, we believe the simplest strategy to mitigate the volatility is to have a variety of renewable fuels to reduce the reliance on a single RIN category.  

RIN Fraud 
One of the key challenges in RIN tracking is the risk of fraud. Fraudulent RINs are generated without the actual production or import of qualifying renewable fuel. There are a couple of ways that fraudsters can create fake RINs. One common scheme is called “strip and ship” fraud, where RINs are assigned or separated prematurely. This often happens when fuel is exported without properly retiring the associated RINs. Another type of fraud occurs when RINs are generated for fuel that doesn’t actually meet the required quality standards. RIN fraud undermines the integrity of the RFS program and has the potential to create severe market distortions, therefore it is taken very seriously by EPA.  

To mitigate RIN fraud, the EPA has implemented several measures, including: 

  • Engineering Reviews: Independent third-party reviews, written reports, and site visits to renewable fuel producers completed at the time of registration and every three years thereafter. These reviews help ensure that producers meet the RFS program’s requirements and that the fuel they produce meets the necessary quality standards. 
  • Attest Engagements: Annual third-party audits of company records and RFS reports submitted to the EPA. These audits help verify the accuracy of RIN generation and ensure that companies comply with RFS regulations. 

In addition to these measures, our team recommends that obligated parties take the following proactive steps to reduce their risk of RIN fraud by: 

  • Conducting Due Diligence: Thoroughly vetting RIN sellers and verifying the legitimacy of RINs before purchase. This can involve reviewing the seller’s EPA registration, checking their RIN generation history, and verifying the existence of the underlying renewable fuel.  For example, obligated parties can contact the producer or importer of the renewable fuel to confirm the validity of the RINs. 
  • Implementing Internal Controls: Establishing strong and well communicated standards of operating procedures for RIN generation, recordkeeping, and reporting.  This can include segregating and rotating duties, implementing checks and balances, and conducting regular internal audits.

     

  • Utilize EMTs’ Blocked List feature. This list allows you to block transactions that contain RINs generated by a specific fuel producer or importer.
    RINSTAR has an improved version of the Blocked List feature that enables users to better track blocked RIN generators and transactions that interact with them. Users will be able to block or whitelist RIN generators, be notified of any transactions that contain blocked RIN generators, and  to customize their settings to automatically cancel these transactions.  
  • Staying Informed: Stay in the know of updated or new EPA regulations. This can involve attending industry conferences, subscribing to newsletter and blogs, participating in webinars, and attending EPA hearings (they are often online).  

Regulatory Complexity
The RFS program is subject to complex regulations and reporting requirements, which can be challenging for obligated parties to navigate. Staying informed about regulatory changes and ensuring compliance can be a significant business burden for the average business owner.  

To overcome regulatory complexity, obligated parties can: 

  • Utilize Compliance Tools: Employing software and services that help track regulatory changes and manage RFS compliance obligations, such as RINSTAR. These tools can automate reporting requirements, provide alerts on regulatory updates, and offer guidance on compliance best practices. 
  • Seek Advice: Consulting with legal and regulatory experts to ensure proper interpretation and implementation of RFS regulations in your business. Experts can provide guidance on specific compliance requirements, help navigate complex regulatory issues, and assist with RFS reporting. 
  • Engage with Regulators: Participating in public comment periods and engaging with EPA officials to provide input on RFS rulemaking. This allows obligated parties to voice their concerns, offer suggestions for improvement, and stay informed about upcoming regulatory changes. 

 The RIN system is an essential component of the RFS program, but it presents various challenges for any obligated party.  By understanding these challenges and implementing effective solutions, obligated parties and other participants can navigate the complexities of RIN tracking. 

RINSTAR Renewable Fuel Registry and our team can take many of these measures off your plate and allow you to focus on what you do best, running your business. RINSTAR offers a comprehensive suite of RFS compliance solutions, including efficient RIN management, expert remedial action consultation, simplified compliance reporting, and seamless registration services. Our user-friendly platform provides a centralized hub for managing all aspects of RIN tracking. With seamless integration with the EMTS system, RINSTAR ensures accurate data transfer and simplifies compliance reporting, making it easier than ever to meet your RFS obligations.  Reach out today to see how RINSTAR can help your business succeed: services@cfch.com