By RYAN TRACY
WASHINGTON -- House Republicans said Thursday they had "credible" evidence the Environmental Protection Agency may double the number of federal biodiesel credits it has deemed fraudulent, raising the specter of more financial penalties for refiners as a result of a widening scandal in the government-supervised market.
In a letter criticizing the EPA for "ineffective" efforts at maintaining a reliable market for the credits, four Republicans on the House Energy and Commerce Committee said "credible sources" had told "committee investigators that the number [of invalid credits] could double in the coming months."
The Obama administration has identified about $49 million of fraudulent credits from two biodiesel producers that allegedly sold credits for biofuel without producing any.
Those credits were bought by refiners who are now required to replace them to show they are meeting a federal mandate to use biodiesel fuel.
The credits are traded on a platform EPA oversees, but the agency has held buyers accountable for purchasing fake credits, exposing companies to penalties for buying them.
EPA identified a third fraudulent producer April 30. Thursday's letter was an indication more fake producers might be caught.
The Republican lawmakers also asked the EPA a number of questions about its enforcement efforts, saying the agency was creating uncertainty in the market, making it difficult for small biodiesel producers to find buyers.
"It does not appear that the EPA has taken any steps to actually solve the problem," they wrote.
"EPA has taken and continues to take steps to help restore certainty in the market," the EPA said Thursday, "including taking enforcement action to root out fraud and building requirements into the [biofuel] standards designed to protect producers and purchasers and ensure that the goals of Congress are met."
Dow Jones Newswires