There’s a New Variable in UCO Trading

Updated: Jun 15, 2023

As U.S. EPA finalizes its UCO-reporting requirements, collectors and buyers now have to agree on how much confidential business data to share.

A used cooking oil (UCO) collector considers a variety of factors when deciding where and to whom to sell their oil. Price, length of contract, logistics and the reputation of the counterparty have historically been primary decision drivers. But now, as the U.S. EPA is finalizing its UCO-reporting requirements, they have an additional variable to consider. Collectors and buyers now have to agree on just how much confidential business data (client lists and oil-volume sources) to share, when and with whom. Both sellers and buyers now have new concerns and liabilities.

Throughout 2022 and 2023, EPA has been drafting and reworking the Renewable Fuel Standard for the 2023-’25 term. A key part of that effort has revolved around clarifying the rules about reporting where biofuel producers get the UCO they use in their production. While debate has gone back and forth on who should be responsible for the data—for example, whether a producer or third-party company should hold the records—EPA has made clear that it wants detailed records of where each gallon of oil originated, down to the address or GPS coordinate of the source, the date of collection, and the number of gallons or pounds collected.

In recent years, some leading biofuel producers have sought to become more vertically integrated by entering into collection of restaurant waste themselves or by expanding their accounts. Think of this as analogous to a petroleum refiner also wanting to own and operate the wellheads. Understandably, most grease collectors who have traditionally serviced these UCO “wellheads” will not want their lists of clients and the volumes of oil they produce to be publicly available to their potential competitors.

Conversely, if a seller (UCO recycler) is known to have hand-written records decomposing on the floor of their truck, or worse yet, the records don’t exist at all, the buyer probably would not want to assume the risk of failing an audit, replacing invalidated renewable identification number (RIN) and Low Carbon Fuel Standard credits, and facing steep penalties.

EPA has the right to regulate entities generating RIN credits and hold these producers liable for replacing invalidated RINs. To limit their own liability, the producer can create a scenario in which they are indemnified, such as with Q-RINs—RINs verified by a third-party auditor under the Quality Assurance Plan protocol. In turn, RIN producers are given the choice to incur the costs associated with third-party QAP services or handle the risk and liability internally. Each option has its pros and cons for the producer.

As a trading firm representing independent, U.S.-based recyclers in the UCO space for over a decade, Reiter Trading and sister company Reiter Software have sought to take an active role in shaping the current discussion regarding recordkeeping. We have worked to develop software that makes handling the ever-changing compliance landscape effortless for our clients. And we have fought to ensure the privacy concerns of our suppliers and liability concerns of our customers are fully understood by each party and the regulatory authorities.

To those of you who have engaged with us over the past several months in this effort—both suppliers and oil users—thank you. We appreciate your engagement and support. Whether you are a competitor, client or something in between, it is the existence of all of us that creates a competitive and efficient marketplace of products and services that, in the end, benefits the entire supply chain—all the way back to the restaurant.

At present, Reiter Trading will continue to transparently communicate all the recordkeeping obligations to our vendors, letting them decide the price/privacy balance that is right for them on a contract-by-contract basis. Conversely, we will continue to supply all our customers with one of the most traceable UCO supply chains on earth.

If you are a collector hoping to sell into the renewable fuel industry, consider first getting organized using software tools such as those offered by Reiter Software. Not only will our software offerings, such as Route Simplified, improve operations, but it will allow our trading firm and others like us to purchase from your organization with confidence that you are on top of the recordkeeping situation.

For a limited time, Reiter Software is offering free trials of its Route Simplified UCO collection and recordkeeping platform. Route Simplified removes the pain points in the UCO collection business and makes compliance a value-added byproduct of your further-optimized operation.

To learn more about all of the trading, software and consulting services available to UCO collectors from Reiter, visit ReiterUSA.com.