EPA Investigates Renewable Fuel Producers

By Leah Douglas

(Reuters) – The U.S. Environmental Protection Agency (EPA) has begun investigations into at least two renewable fuel producers due to concerns about potential fraud regarding feedstocks used for biodiesel, which may enable them to secure valuable government subsidies.

EPA spokesperson Jeffrey Landis confirmed to Reuters that these audits were initiated over the past year, but he refrained from naming the companies under investigation since the processes are ongoing.

Producing biodiesel from sustainable sources, such as used cooking oil, allows refiners to benefit from state and federal environmental and climate subsidies, particularly the tradable credits available through the EPA’s Renewable Fuel Standard (RFS). However, there are rising fears that some entities might be using cheaper and less sustainable virgin palm oil instead of genuine used cooking oil, a situation linked to deforestation and environmental harm.

This concern emerged following a notable increase in used cooking oil exports from Asia in recent years, with analysts pointing out unrealistic export volumes compared to the region’s actual cooking oil usage and recovery. The European Union is also scrutinizing feedstocks amid fraud suspicions.

The EPA’s audits stem from updated domestic supply-chain accounting requirements introduced in July 2023 for those renewable fuel producers wanting to obtain credits under the RFS.

Landis stated, “EPA has conducted audits of renewable fuel producers since July 2023, which includes an evaluation of the locations that used cooking oil for renewable fuel production was collected. These investigations, however, are ongoing and we are not able to discuss ongoing enforcement investigations.”

U.S. senators from agricultural states have urged for stricter oversight of biofuel feedstocks. They emphasize that federal agencies should verify imports with the same rigor they apply to domestic supply chains.

“The Biden administration has created vigorous standards to verify, not just trust, American producers, and it is imperative that the same scrutiny is applied to imported feedstocks,” wrote six U.S. senators, led by Roger Marshall and Sherrod Brown, in a letter to federal agencies on June 20.

Additionally, a letter from 15 senators to the Treasury Department on July 30 requested that the administration exclude imported feedstocks such as used cooking oil from an expanded clean fuel tax credit program introduced in the Inflation Reduction Act.