Complaint, Settlement in Biodiesel Case

Friday, October 7, 2016 @ 03:10 PM gHale

The Department of Justice (DoJ) and the Environmental Protection Agency (EPA) filed a complaint against NGL Crude Logistics LLC (NGL) and Western Dubuque Biodiesel LLC and a settlement with Western Dubuque to address violations of the Renewable Fuel Standard.

The complaint said NGL entered into a series of transactions with Western Dubuque in 2011 that resulted in the generation of approximately 36 million invalid renewable identification numbers (RINs). RINs are credits created when a company produces qualifying renewable fuel and can end up traded or sold to refineries and importers to use for compliance with renewable fuel production requirements.

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The complaint and settlement ended up filed in the U.S. District Court for the Northern District of Iowa in Cedar Rapids, Iowa.

Under the settlement, Western Dubuque agreed to pay $6 million to resolve Renewable Fuel Standard program violations for generating RINs for renewable fuel produced using unapproved feedstocks and production processes. A feedstock is the basic material used in the production of renewable fuel. The consent decree does not resolve any claims against NGL.

“Congress passed the Renewable Fuels Standards program to incentivize production of biofuels in order to achieve substantial reductions in greenhouse gas emissions, reduce the United States’ dependence on foreign oil and modernize the United States’ renewable energy industry,” said Assistant Attorney General John C. Cruden for the Department of Justice Environment and Natural Resources Division.  “The Justice Department is committed to ensuring that Congress’ goals are not undermined by entities that attempt to compromise the integrity of the incentive program.”

“These cases uphold the energy independence and greenhouse gas reduction purposes of the law that Congress passed,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “EPA is committed to a level the playing field for responsible companies, and to ensuring that companies that illegally obtain an unfair competitive advantage are held to account.”

The allegations in the complaint remain assertions until proven.

The complaint said in 2011, NGL purchased more than 24 million gallons of biodiesel on the open market, and that approximately 36 million RINs had been assigned to the biodiesel. NGL sold most of the RINs to other entities. NGL then sold the biodiesel to Western Dubuque, but designated it as a “feedstock.” Western Dubuque reprocessed the biodiesel provided by NGL and generated a second set of RINs for the same fuel. Western Dubuque sold the reprocessed biodiesel and the second set of RINs back to NGL. NGL then sold most of these RINs to other entities.

The complaint asks the court to require NGL to retire 36 million RINs to offset the harm caused by the violations and to pay a civil penalty.

EPA estimates the generation of the second set of RINs resulted in excess greenhouse gas emissions equivalent to 151,319 metric tons of carbon dioxide.

EPA learned Western Dubuque used improper feedstocks during a 2011 inspection of the company’s biodiesel facility, located in Farley, Iowa. EPA then conducted an extensive investigation into transactions between Western Dubuque and NGL and determined the feedstocks NGL supplied to Western Dubuque were biodiesel, which is not a permitted feedstock and other companies had already generated RINs for the product. Western Dubuque informed EPA it has not used biodiesel as a feedstock since 2011.