IBJNews

U.S. invalidates 33.5M renewable fuel credits after fraud

Back to TopCommentsE-mailPrintBookmark and Share

The U.S. Environmental Protection Agency said it has invalidated 33.5 million renewable-fuel credits sold by an Indiana company for biofuel it didn’t produce, the fourth time the agency has alleged fraud in the program.

The filing Wednesday follows fraud charges filed against the former owners of the Middletown-based E-Biofuels LLC in September. The U.S. Justice Department accused them of falsely claiming its products qualified under government incentives for renewable fuels. At Wednesday’s value of about 40 cents each for biodiesel, the invalidated RINs would have been worth about $13.4 million.

The EPA move, which was posted on its website, may further roil the market for credits used by refiners such as Valero Corp. and Exxon Mobil Corp. to meet government renewable-fuel requirements. Before Wednesday’s action, the agency had said three companies produced a total of 140 million fraudulent Renewable Identification Numbers, or RINs.

“EPA unfortunately continues to hold obligated parties responsible for illegal activities perpetrated by biodiesel producers such as E-Biofuels,” Charles Drevna, the president of the American Fuel & Petrochemical Manufacturers, a Washington-based lobbying group, said in a prepared statement. “The industry remains unfairly exposed to a system that actually penalizes the victim of fraud.”

Under U.S. law, refiners such as Exxon and Valero must blend ethanol or other biofuels into their fuels. EPA rules allow refiners to buy credits from other producers to fulfill their obligations in lieu of making the fuel themselves.

The market in credits for the cleaner fuel seized up last year after federal prosecutors accused Clean Green Fuels LLC of selling 32 million fraudulent certificates, and EPA forced refiners to pay fines for the fake renewable credits they held. A second company, Absolute Fuels LLC, was issued a notice of violation in February for allegedly selling 48 million bogus certificates.

In the fraud case involving a third company, Green Diesel LLC, the EPA reached administrative settlements with 39 companies including Exxon and Valero. In that case, for example, Exxon agreed to pay a penalty of $165,407, according to the settlement document posted on the EPA’s website.

After the first reports of fraud were discovered, the EPA developed a proposal to tighten oversight of the renewable fuels program, or RFS, and that regulation is set to be issued next year, the EPA said Wednesday in an e-mail.

“This fraud is disappointing for everyone, but it is important to remember that these are isolated cases from several years ago,” Ben Evans, a spokesman for the National Biodiesel Board, said in an e-mail. “Despite what RFS critics would like us to believe, they do not show that the RFS is broken any more than an isolated case of trading fraud shows the stock market is broken.”

A telephone listing for E-Biofuels LLC is disconnected. Thomas Farlow, a lawyer representing the former owners didn’t return a telephone message left seeking comment.

ADVERTISEMENT

  • huh
    I read this article 5 times and still don't understand it. Did the US EPA revoke E-Biofuels RINs specifically or did the author lump them into the article? Is a RIN a tax credit? Exxon's $160000 settlement is in response to what exactly? They were accused of falsifying how much? This is a very confusing article on a very interesting topic.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
ADVERTISEMENT