Genscape must replace 68mn markers used to comply with US biofuel mandates and may lose its ability to verify the credits after passing through fraudulent renewable identification numbers (RINs), the Environmental Protection Agency (EPA) said today.
The commodity data service has 60 days to respond to the agency's intent to revoke its participation in the Renewable Fuel Standard (RFS) Quality Assurance Program. Genscape verified millions of credits fraudulently generated between February 2013 and the end of 2014 in a scheme between two Washington and Georgia renewables companies, according to the EPA.
A Genscape representative could not be immediately reached for comment.
"EPA is aggressively pursuing bad actors in the RFS program to maintain a level playing field for firms that play by the rules," the agency said.
The RFS uses RINs, generated when conventional fuel blends with renewable components, to represent each gallon toward compliance with the mandates. EPA began creating the Quality Assurance Program in 2012 after a waive of fraudulent credit discoveries undermined confidence in the system used to verify that refiners, fuel importers and other companies adding to the US transportation fuel supply ensured minimum volumes of biofuels blended into that pool each year. Obligated companies that purchased the fraudulent credits in good faith faced more than $200mn in EPA fines as well as a requirement to replace the bad credits with valid RINs.
Because refiners and importers may lack the infrastructure to blend those materials themselves, companies can purchase RINs from blenders or other third parties. This distance between the end user and the physical fuel created the opportunity for fraud.
Genscape was an early participant in verifying RINs. EPA approved that company's QAP program in 2013. Credits verified under a quality assurance program represent roughly 12pc of the total volume of the markers, according to the agency.
Genscape verified fraudulent RINs generated by Gen-X and Southern Resources and Commodities, which were created by either reprocessing existing biofuels or attributed to fuels that were never produced, according to a plea agreement between individuals charged in the fraud and federal prosecutors.
