By Leah Douglas

Aug 7 (Reuters) - The U.S. Epa has launched investigations into the supply chains of at least two eco-friendly fuel producers amidst industry concerns that some might be utilizing deceptive feedstocks for biodiesel to protect rewarding government aids.

EPA spokesperson Jeffrey Landis told Reuters that the agency has introduced audits over the past year, however decreased to recognize the companies targeted since the investigations are ongoing.

The production of biodiesel from sustainable active ingredients, like used cooking oil, can make refiners a slew of state and federal ecological and climate subsidies, including tradable credits under a program administered by the EPA called the Renewable Fuel Standard. But worries have been mounting that some products identified as used cooking oil are in fact less expensive and less sustainable virgin palm oil, a product that is associated with logging and other .

The concern entered focus following a rise in used cooking oil exports from Asia in current years that experts have stated involves unrealistically high volumes relative to the amount of cooking oil utilized and recuperated in the region. The European Union is also investigating feedstocks over the fraud concerns.

The EPA audits started after the firm upgraded domestic supply-chain accounting requirements in July 2023 for sustainable fuel manufacturers seeking to earn credits under the RFS, he stated.

"EPA has carried out audits of renewable fuel producers since July 2023 that includes, amongst other things, an assessment of the areas that used cooking oil utilized in sustainable fuel production was gathered," he stated. "These investigations, nevertheless, are ongoing and we are not able to talk about ongoing enforcement investigations."

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

"The Biden administration has developed vigorous requirements to verify, not simply trust, American manufacturers, and it is important that the same scrutiny is applied to imported feedstocks," six U.S. senators, led by Roger Marshall and Sherrod Brown, wrote in a June 20 letter to federal companies.

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