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Proposed Rule on Verification System For Renewable Credits Goes to White House

Tuesday, December 18, 2012

The Environmental Protection Agency sent a proposed rule to the White House for review Dec. 15 that would establish a third-party verification system for renewable fuel credits.

The proposed rule comes after 30 companies reached a settlement with EPA in April in which they agreed to pay approximately $3.65 million in penalties after they purchased fraudulent renewable identification numbers (RINs), serial numbers that are assigned to batches of renewable fuel generated to satisfy the renewable fuel standard. The renewable identification numbers can also be traded as credits.

After reaching that settlement, EPA said it intended to propose a verification system to prevent fraudulent RINs from entering the marketplace. The agency said the rule would include a system allowing third parties to audit and verify the validity of the RINs being sold.

“One of the things we want is clarity,” Ben Evans, a spokesman for the National Biodiesel Board, told BNA Dec. 17. “We want a good outline of what due diligence is, so the parties can comply.”

In October, EPA issued a draft quality assurance plan that set ongoing and quarterly monitoring requirements for renewable fuel producers (212 DER A-16, 11/2/12).

Draft Plan Bridges Gap

The petroleum industry had pressed EPA to finalize its verification rule before the start of the 2013 compliance year, but the agency said the draft quality assurance plan will allow renewable fuel producers to verify the validity of their renewable identification numbers until the rule can be finalized.

The draft plan would require ongoing monitoring of feedstocks, production processes, and the number of gallons of renewable fuel being produced. Additionally, the draft plan would require quarterly monitoring of work force size, certificates of analysis verifying fuel types, and process quality controls.

EPA's inspector general has begun its own investigation into whether EPA has an effective system for managing renewable identification numbers (227 DER A-12, 11/27/12).

In a related case, the Justice Department reported Dec. 14 that a Texas man pleaded guilty to charges of wire fraud, money laundering, and making false statements in violation of the Clean Air Act after falsely representing that he was in the business of producing biodiesel fuel (seerelated story in this issue).

By Andrew Childers  


EPA's draft quality assurance plan issued in October is available at http://www.epa.gov/otaq/fuels/renewablefuels/documents/420b12063.pdf.