Lawmakers press FTC to probe credit market manipulation

Source: Marc Heller, E&E News reporter • Posted: Wednesday, November 8, 2017

Senate Environment and Public Works Committee ranking member Tom Carper (D-Del.) and a bipartisan group of lawmakers yesterday asked the Federal Trade Commission to probe potential price manipulation in renewable fuel credits, echoing complaints by refiners about recent price spikes.

Prices for renewable fuel credits, which companies trade to comply with the federal renewable fuel standard, have climbed 200 percent since earlier this year, the lawmakers wrote.

“This price volatility creates great uncertainty for obligated parties, especially for merchant refineries like the ones along the East Coast that have limited capability to blend biofuels into their products and need RINs to comply with the RFS program’s requirements,” they said, using the acronym for renewable identification numbers, which are fuel credits.

Although U.S. EPA and the Commodity Futures Trading Commission (CFTC) signed a memorandum of understanding last year to address the issue, there has been little collaboration between the agencies to crack down, the lawmakers said.

Companies buy renewable fuel credits rather than actual fuel in order to meet biofuel volumes required by the RFS.

The RIN system was adopted with the RFS after enactment in 2005; the law was updated in 2007.

In addition to Carper, Sens. Chris Coons (D-Del.), Bob Casey (D-Pa.) and Cory Booker (D-N.J.) and Reps. Lisa Blunt Rochester (D-Del.) and Patrick Meehan (R-Pa.) signed the letter.

Critics of the RFS point to the high cost of RINs as one of the reasons to repeal or revamp the program, or to switch the obligation for meeting the mandates to fuel blenders, rather than refiners.

Biofuel advocates have said they agree that the RIN market may be out of balance but that big changes to the RFS aren’t necessary.

A spokeswoman at the Renewable Fuels Association, representing biofuel companies, didn’t have a comment on the lawmakers’ letter, but the association has called for a more transparent RIN system.

Among other changes, the federal government could put RIN trading under the oversight of CFTC, RFA President and CEO Bob Dinneen has said.

In August 2016, Dinneen wrote to CFTC and EPA, describing suspicious developments in the RIN market and thanking the agencies for working together, including EPA’s sharing RIN data with CFTC, so that the commission could recommend ways to avoid fraud, for instance.

In their letter, the lawmakers asked acting FTC Chairman Maureen Ohlhausen to respond in writing outlining steps the commission will take to address their concerns.