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By Leah Douglas

Aug 7 (Reuters) - The U.S. Environmental Protection Agency has launched investigations into the supply chains of a minimum of 2 eco-friendly fuel producers in the middle of industry concerns that some might be using deceptive feedstocks for biodiesel to protect financially rewarding federal government subsidies.

EPA spokesperson Jeffrey Landis told Reuters that the agency has launched audits over the past year, however declined to determine the business targeted due to the fact that the investigations are ongoing.

The production of biodiesel from components, like used cooking oil, can make refiners a variety of state and federal environmental and environment aids, including tradable credits under a program administered by the EPA called the Renewable Fuel Standard. But worries have been mounting that some supplies labeled as utilized cooking oil are actually cheaper and less sustainable virgin palm oil, a product that is related to deforestation and other ecological damage.

The problem came into focus following a surge in used cooking oil exports from Asia in recent years that analysts have stated includes unrealistically high volumes relative to the amount of cooking oil used and recovered in the region. The European Union is also examining feedstocks over the fraud issues.

The EPA audits began after the firm updated domestic supply-chain accounting requirements in July 2023 for renewable fuel producers looking for to earn credits under the RFS, he stated.

"EPA has actually carried out audits of renewable fuel producers considering that July 2023 which includes, amongst other things, an examination of the places that used cooking oil utilized in sustainable fuel production was gathered," he stated. "These examinations, however, are continuous and we are unable to discuss ongoing enforcement investigations."

U.S. senators from farm states have actually called for more oversight of biofuel feedstocks, saying federal firms must be as strenuous in validating imports as they are auditing domestic supply chains.

"The Biden administration has actually created energetic standards to validate, not just trust, American manufacturers, and it is crucial that the same scrutiny is used to imported feedstocks," six U.S. senators, led by Roger Marshall and Sherrod Brown, wrote in a June 20 letter to federal agencies.

Another letter from 15 senators to the Treasury Department on July 30 advised the administration to leave out imported feedstocks like UCO from an additional tidy fuel tax credit program passed in the Inflation Reduction Act. (Reporting by Leah Douglas in Washington Editing by Richard Valdmanis and Matthew Lewis)