EPA may revoke ability of Genscape to verify RINS

On Jan. 4, the U.S. EPA issued a notice of intent to revoke the ability of Genscape to verify renewable identification numbers (RINs) under the renewable fuel standard (RFS) quality assurance program (QAP). According to the agency, it is taking action to hold Genscape accountable for failing to meet all elements of its approved quality assurance plan and for verifying millions of RINs that were fraudulently generated by two companies, Gen-X Energy Group Inc. and Southern Resources and Commodities. The agency is also requiring Genscape to retire valid RINs to replace the approximately 68 million invalid A-RINs they verified, which were then used for compliance. That action must be completed within 60 days.

EPA’s list of registered companies and facilities in fuel programs indicates Gen-X is registered with the agency as a biodiesel producer based in Pasco, Washington, that is eligible to generate D5 advanced biofuel RINs. Southern Resources and Commodities is listed as a biodiesel producer located in East Dublin, Georgia, that is also eligible to generate D5 RINs. 

In its notice, the EPA explains that under the RFS, obligated parties and exporters must obtain and retire RINs to meet their compliance obligations and demonstrate the RFS program’s renewable fuel mandates are met. The agency also stressed it “is aggressively pursuing bad actors in the RFS program to maintain a level playing field for firms that play by the rules.”

Genscape has 60 days to submit written comments to the EPA in response to the notice. The company did not immediately return a message from Biomass Magazine seeking comment on the EPA’s action. The EPA said it will review and consider comments submitted by Genscape before taking final action.

The EPA finalized rules establishing the QAP program in 2014. The voluntary program allows third parties to audit RINs according to EPA-approved quality assurance plans, which help verifying that they are valid. According to the agency, the program provides a supplement to the “buyer beware” liability for obligated parties under the RFA. It also provides clarity over which party is obligated to replace invalid RINs. The EPA estimates approximately 12 percent of RINs generated under the RFS program are audited by a third party under the QAP.

According to the EPA, Genscape is currently authorized to verify D4, D5, and D6 biodiesel and renewable diesel RINs, D5 RINs for renewable heating oil from separated food waste, D3 and D5 RINs for biogas, D6 and D5 ethanol RINs, D3 RINs for cellulosic ethanol and D7 RINs for cellulosic diesel, jet fuel and heating oil.

In its notice, the EPA said Genscape will be able to function normally as a QAP provider unless the agency issues a final decision to revoke its registration. The agency also noted that if it does revoke Genscape’s registration, renewable fuel producers that have Genscape as their QAP provider will no longer be able to generate Q-RINs unless they switch to a different QAP provider. The EPA did not provide an exact date or deadline for its final action regarding Genscape, but did specify the decision would be made no sooner than 30 days after thoroughly reviewing any response submitted by Genscape.

The invalid RINs approved by Genscape are A-RINS, which were verified under EPA’s interim QAP. The current QAP program provides Q-RINs and has a different set of rules that would apply. According to the EPA, obligated parties do not have to replace invalid A-RINs if they meet the affirmative defense requirements established in RFS regulation. As a result, an obligated party holding invalid A-RINs can still transfer the RIN or retire it for compliance purposes if they meet the affirmative defense criteria. The EPA has notified companies that own, used or transferred potentially invalid RINs that they may assert an affirmative defense.

Additional information on the issue is available on the EPA website.