By RYAN TRACY
WASHINGTON -- The US Environmental Protection Agency late
Tuesday made its first specific promises to address fraud in
the alternative fuels market, a signal that months of
negotiations with industry representatives are making
In a letter to Rep. Gene Green, a Texas Democrat who was
among lawmakers pressing the agency to act, EPA Assistant
Administrator Gina McCarthy said the agency would formally
propose a new regulation for the alternative fuel market by the
end of this year.
A copy of the letter was viewed by Dow Jones Newswires.
Refiners and oil importers are required to buy certain
amounts of fuel made from plants every year under a 2005 law
designed to reduce US oil imports.
The EPA enforces the mandate by assigning each gallon of
fuel a number, which refiners can buy and sell on a market the
The market for alternative diesel-motor fuels - typically
made from cooking oil, soybeans, and other feedstocks - has been in turmoil
since last year, when it became clear that some companies were
selling fraudulent numbers.
Ms. McCarthy said the proposal would allow a legal defense
for refiners who buy alternative diesel-motor fuel from
producers that don't follow the agencys rules. Oil
refiners had sought that so-called affirmative defense to
reduce their financial burden as a result of future fraud
She also said the agency was working to set up guidelines
for rooting out phony producers using a third-party auditor.
Following those guidelines would be voluntary, she said, but
would "ensure that refiners and other participants who meet the
conditions" wouldn't face civil penalties.
A representative of Mr. Green didn't immediately respond to
requests for comment.
Stephen Brown, a spokesman for Tesoro, which has been
involved in the negotiations, said the letter appears to
suggest that bipartisan oversight from the House Energy &
Commerce Committee, coupled with a united front from the
obligated party community, has helped move the Agency toward a
Obligated parties is the term EPA uses to refer
to refiners and others required to comply with the
The proposal would be made final as soon as possible
in 2013, Ms. McCarthy wrote, a nod to industry concerns
about the new rule taking effect in time to comply with the
alternative-fuel mandate for next year.
Even if the new rules aren't made final by Jan. 1, EPA is
seeking to make sure the entire year is covered under the
new policy, Ms. McCarthy said.
Dow Jones Newswires