United States Takes Actions to Address Alleged Renewable Fuel Standard Violations
CEDAR RAPIDS, IOWA – The Department of Justice and the United States Environmental Protection Agency (EPA) announced today the filing of a complaint against NGL Crude Logistics LLC (NGL) and Western Dubuque Biodiesel LLC, and a settlement with Western Dubuque to address alleged violations of the Renewable Fuel Standard.
The complaint, filed in the U.S. District Court for the Northern District of Iowa alleges that 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 be traded or sold to refineries and importers to use for compliance with renewable fuel production requirements.
Under the settlement, Western Dubuque has agreed to pay $6 million to resolve alleged Renewable Fuel Standard program violations for generating RINs for renewable fuel that was 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.”
“The Department of Justice is committed to maintaining the integrity of the Renewable Fuel Standard program,” said United States Attorney Kevin W. Techau. “Congress enacted incentives for the production of biofuels to make the United States stronger and more energy independent. This $ 6 million settlement supports that goal.”
“EPA is committed to making sure companies use approved feedstocks and generate RINs legally – anything short of that compromises the integrity of the Renewable Fuel Standard program, said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “The Renewable Fuel Standard relies on companies upholding fair market principles, Western Dubuque failed to do.”
The allegations in the complaint remain assertions until they are proved.
The complaint alleges that 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 alleged violations and to pay a civil penalty.
EPA estimates that the generation of the second set of RINs alleged in this case resulted in excess greenhouse gas emissions equivalent to 151,319 metric tons of carbon dioxide.
EPA learned that 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 that the feedstocks that NGL supplied to Western Dubuque were biodiesel, which is not a permitted feedstock and that other companies had already generated RINs for the product. Western Dubuque informed EPA that it has not used biodiesel as a feedstock since 2011.
EPA is responsible for developing and implementing regulations to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. The Renewable Fuel Standard program - created under the Energy Policy Act of 2005 - was developed in collaboration with refiners, renewable fuel producers, and many other stakeholders. It was expanded and strengthened under the Energy Independence and Security Act of 2007, which was designed to encourage the blending of renewable fuels into our nation’s motor vehicle fuel supply and reduce the nation's dependence on foreign oil, help grow the nation's renewable energy industry and achieve greenhouse gas reductions.
Western Dubuque owns and operates a 30-million-gallon biodiesel plant located in Farley, Iowa. NGL is an energy service company that transports fuel and other products. At the time of the alleged violations, NGL was known as Gavilon LLC.
The settlement with Western Dubuque is subject to a 30-day public comment period and final court approval. A copy of the consent decree can be accessed at: www.justice.gov/enrd/Consent_Decrees.html.
For more information about the settlement and the complaint, visit: http://go.usa.gov/xKuFM.
Follow us on Twitter @USAO_NDIA.