Last week, reports emerged of another alleged case of RIN fraud. If the three people accused are found guilty of their $66.5 million crime, then they will be the latest in a long line of fraudsters taking advantage of the broken Renewable Fuel Standard (RFS).
Since the RFS was introduced, fraud within the Renewable Identification Number (RIN) program has run into hundreds of millions of dollars – and at the heart of the problem was a lack of EPA oversight which left refiners as the victims.
The scams have come in various guises. One re-sold biodiesel that had already been used to generate RINs, which was carried out by three brothers in Indiana that raked in more than $145 million in just two years. Another, run by Joseph Rivkin, made $29 million in a little over a year.
A previous AFPM blog covered the case of Rodney Hailey, who generated fake RINs while selling absolutely nothing at all – and still made $9 million. Worse still, EPA approved Hailey’s application to be on its RIN registry without even bothering to check his facility.
If they had even taken a cursory glance at the ramshackle shed he was supposedly operating out of, they would have realized there was no way he could have made any biofuel, let alone the millions of gallons he was claiming to make.
For years since these fraud cases started coming to light, refiners have struggled to trust EPA’s list of RIN producers. Even now, under the voluntary Quality Assurance Program (QAP) announced by EPA in July 2014, the onus is still on purchasers to ensure the RINs are valid. Apparently it was the refiners’ fault for restricting their RIN purchasing to a handful of providers they found to be trustworthy. To add insult to injury, the price of biodiesel RINs has skyrocketed since EPA released its rule on November 30.
But those who ultimately lose out, as ever, are the consumers who have to foot the bill for a fundamentally flawed program. Yet again, this latest RIN fraud case spotlights the failures in the program, and is yet another nail in the RFS coffin. All that’s left is for Congress to do the decent thing and repeal it as soon as possible.