EPA to defend renewable credits program roiled by fraud cases

Source: Amanda Peterka, E&E reporter • Posted: Wednesday, July 11, 2012

U.S. EPA today on Capitol Hill will defend a renewable fuels credit program that has been at the center of several high-profile fraud cases since last October.

At a hearing today, representatives from EPA plan to tell lawmakers that the agency has been “diligently working with industry” to alleviate uncertainties in the biodiesel marketplace caused by the fraud, according to testimony released by the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations.

EPA’s Byron Bunker, acting director of the compliance division in the Office of Transportation and Air Quality, accompanied by Phillip Brooks, director of the air enforcement division, will also highlight a new enforcement policy and a settlement the agency reached with oil refiners that purchased fake credits.

“We are committed to taking action to make necessary adjustments to the program in a timely manner,” Bunker says in written testimony.

The hearing comes amid an investigation by GOP members of the Energy and Commerce Committee over EPA’s handling of the fraud cases, which have rocked the biodiesel industry and ground the credit market to a halt for small producers.

In all, EPA has accused three companies of faking about 140 million credits worth $150 million. On June 25, a federal jury found a Maryland man guilty of selling $9 million worth of fake renewable fuel credits with one of those companies, Clean Green Fuels LLC (E&ENews PM, June 25).

Earlier this year, EPA also separately accused two Texas-based companies, Absolute Fuels LLC and Green Diesel LLC, of peddling fake credits, which are represented by unique 38-digit Renewable Identification Numbers (RINs) that are tied to gallons of biodiesel.

At today’s hearing, lawmakers will hear from executives at small biodiesel companies, the CEO of the National Biodiesel Board and the president of the American Fuel & Petrochemicals Association.

The producers will highlight their difficulties in the marketplace and call on EPA to provide certainty to the marketplace by validating the various credit certification programs that have sprung up over the past half-year.

They will also criticize EPA’s “buyer beware” policy, or the provision of the renewable fuel standard regulations that requires oil refiners to conduct due diligence before buying credits to comply with the biofuels mandate — and puts them at fault for buying fake ones in good faith.

“We have been facing financial ruin and the closure of our businesses because everyone in the biodiesel industry feared what action the EPA was going take on the innocent participants of the EPA’s own RIN system,” Andy Sprague, owner of Union Biodiesel Co. LLC and Midwest Biodiesel Producers LLC, says in written testimony.

Joe Jobe, CEO of the National Biodiesel Board, is expected to defend the renewable fuel standard and tell lawmakers that he thinks EPA has done an “adequate job” in enforcing the regulations.

He will highlight private-sector solutions to address the fraud and will maintain that the standard is working despite the actions by a “handful of bad actors.”