Members of Congress ask for RIN market investigation

By Erin Voegele | October 23, 2013

On Oct. 22, a group of 13 members of Congress sent a letter to Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, advocating for an investigation into the role fraud and manipulation have played in the recent volatility of the renewable identification number (RIN) markets.

Within the letter, the lawmakers noted increasing concern over the potential for manipulation in the RIN markets and the adverse effects market manipulation could be having on the volatility of RIN prices. “We believe the RFS is legislatively sound serving as an effective policy for reducing foreign oil use, creating jobs and economic activity, and spurring innovation, and want to ensure the market is not being exploited just as we do with all energy markets,” they wrote.

The members of Congress also noted that RINS are credits meant to be traded among the fuel supply chain, not credits intended for trading as commodities through financial markets. “We are writing to ask for the CFTC’s assistance in ensuring the integrity of the RIN market and that RIN prices adequately reflect supply and demand within the fuel supply chain and remain free of external influence,” they said in the letter, specifically requesting the CFTC what extent fraud and manipulation have played in the volatility of RIN prices to date, and the potential for price influence through trading outside the originally intended RIN market framework.

The group also for assistance in identifying the most effective ways to monitor the RIN market, and asks that the commission work with the U.S. EPA to accomplish that goal.

The letter was signed by Reps. Dave Loebsack, D-Iowa; Collin Peterson D-Minn.; Bruce Braley, D-Iowa; Cheri Bustos, D-Ill.; Tim Walz, D-Minn.; Rick Nolan, D-Minn.; Kristi Noem, R-S.D.; Aaron Schock, R-Ill.; Jan Schakowsky, D-Ill.; Tom Latham, R-Iowa; Steve King, R-Iowa; Mark Pocan, D-Wis.; and William Enyart, D-Ill.

Monty Shaw, executive director of the Iowa Renewable Fuels Association, helped round up signatures for the letter. “IRFA is certainly frustrated that RIN volatility, created by the oil industry, is then used by the oil industry to attack the RFS.  The RIN market should be about compliance, not speculation.  Some transparency, sunshine and oversight would certainly help.  We appreciate Iowa’s entire Congressional delegation weighing in on this,” he said. “When you look at the chart of RIN prices set against the backdrop of anti-RFS activities in Congress it is hard not to conclude that some in the oil industry are gaming the RIN system for political advantage.”

Last month, Sen. Debbie Stabenow, D-Mich., made a similar request to the CFTC, asking for an investigation into allegations about possible manipulation in the RIN markets. Stabenow chairs the U.S. Senate Committee on Agriculture, Nutrition and Forestry.

Sen. Chuck Grassley, R-Iowa., has also taken action with regard to RIN markets. In September, he send a letter to U.S. EPA Administrator Gina McCarthy, requesting that the agency take action to increase transparency in the RIN markets and provide assurance that the market is functioning for its intended purpose rather than acting as a profit mechanism for financial institutions.