Biofuels requirement breed multi-million dollar fraud scams

Bloomberg/BNA:
Recent developments in multi-million dollar fraud cases involving biofuels tax credits and renewable fuels credits have raised new questions about the ability of enforcement officials at the Environmental Protection Agency, the Internal Revenue Service and the Department of Justice to keep control of the markets in renewable fuels incentives ( United States v Jalal,, S.D. Ohio,, No 2:16-cr-00180,, guilty plea 9/27/16 ; United States v. Chemoil Corp.,, N.D. Calif.,, No. 3:16-cv-05538,, settlement 9/29/16 ).

Malek Jalal, owner and manager of a New Jersey feedstock collector and processor, pleaded guilty Sept. 27 to conspiracy and obstruction of justice for his role in a $6 million scheme to fraudulently claim tax credits and renewable energy credits multiple times on the same load of fuel, according to a Justice Department statement.

Two days later, the department and the EPA announced that they had reached a settlement with Chemoil Corp. requiring the company to pay a $27 million fine and to retire more than 65 million renewable fuel credits—worth over $71 million at current market prices—over claims that the company exported nearly 50 million gallons in biodiesel between 2011 and 2013 without retiring the Renewable Identification Numbers that were generated for the exported fuel.

A spokeswoman for the biodiesel industry told Bloomberg BNA in the wake of the announcements that fraud in biofuels credits remains an isolated phenomenon in an industry that has succeeded in reining in its bad actors as it has matured. But a former EPA official says that it will remain very difficult for officials in resource-strapped agencies to stay on top of fraud in renewable energy credits without changes in the current structure of the program.
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The best way to stop it is to do away with the requirement that refiners use biofuels.  The fuel is not needed and was the product of a perceived scarcity of oil that has been replaced by a glut of oil yet this ridiculous requirement persists.  Let biofuels compete in the open market without forcing others to take it.  If it can't make under those circumstances that is just further evidence that it is not needed or wanted.

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