Survey Indicates that 81% of Renewable Fuel Suppliers are Out of Compliance

Author: Clayton McMartin

EPA issued a guidance document pertaining to Improper and Illegal RIN Trading Practices on June 26, 2008. In this document they addressed 3 different situations pertaining to improper and illegal RIN trading practices. I would like to take a few minutes and provide you with some specific insight into Situation No. 3. In particular let’s spend a few minutes investigating the issue of transmitting ownership of assigned RINs on the same day as the transfer of title to the renewable fuel product.

To give you an idea of how widespread this problem is, consider the following graph:

The guidance document states that:
The regulations also require that assigned RINs must be recorded on the PTD used to transfer ownership of the fuel or on a separate document that is transferred to the same party on the same day as the PTD used to transfer ownership of the fuel. The regulations are clear with regard to this issue. See §80.1128(a)(7); Q&As 9.7 and 9.12.

The data comprising the pie graph was collected during one of our RINSTAR sponsored Web Seminars on January 17, 2008. 134 individual companies were in attendance and participated in the anonymous polling to this question - “What Percentage of RIN Transfers do you Receive on the Same Day as Your PTD?”. Only 19% indicated that they received data in a timely manner.

What is even more enlightening is the fact that the very same question was asked of essentially the same group of participants during our October 2007 Webinar, with those results showing that 39% of participants were receiving their data in a timely manner. That is a relative drop of 50%, which is exactly contrary to what one would hope for. It would seem that with benefit of experience this practice would have improved with time, instead it appears to have worsened.

Apparently EPA sees this as a big enough issue now to step in and render an official opinion through the guidance documents. This is certainly a step in the right direction when it comes to improving efficiencies throughout the supply chain. Now the big question - Are fines in the near future?

What are your thoughts? Do you think EPA will start issuing fines? How will this impact your business?