Keller and Heckman – Fuels Advisory: EPA Proposes Replacing RIN Confusion with Audit Nightmare

By Jean-Cyril (JC) Walker and Adrienne M. Timmel

In response to concerns and Congressional pressure over widespread fraud in the renewable fuels market, the U.S. Environmental Protection Agency ("EPA") is proposing to establish an innocent purchaser defense, for those companies that purchase Renewable Identification Numbers ("RINs") audited by an EPA-registered, third-party auditor. At the heart of the program is a complicated and invasive auditing scheme, whereby an independent third-party would verify the validity of RINs generated by a renewable fuel producer through quarterly in-plant audits and records review and monitoring

In short, EPA's proposal hinges on the disclosure of information previously held confidential by renewable fuel producers, raising serious concerns for producers that seek to protect such information from other market players. In addition, EPA's proposal fails to address the flaw in its Renewable Fuels Standard ("RFS") Program, which initially led to the RIN fraud, namely the Agency's failure to adequately oversee its own program.

Read and download the complete Fuels Advisory here.

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