Western Dubuque Biodiesel agrees to pay $6m in settlement for RFS violations

The US Department of Justice (DOJ) and the Environmental Protection Agency (EPA) have filed a complaint against NGL Crude Logistics (NGL) and Western Dubuque Biodiesel for violations of the Renewable Fuel Standard (RFS). 

Western Dubuque has agreed to pay $6 million (€5.3m) to resolve the RFS program violations for generating renewable identification numbers (RINs) for renewable fuel that was produced using unapproved feedstocks and production processes.

“Congress passed the Renewable Fuels Standards program to incentivise production of biofuels in order to achieve substantial reductions in greenhouse gas emissions, reduce the US’ dependence on foreign oil and modernise the US’ renewable energy industry,” said assistant attorney general John C. Cruden for the DOJ 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 programme,” he continued.

Biodiesel sold as feedstock

According to the authorities, NGL purchased in 2011 more than 24 million gallons of biodiesel on the open market and that approximately 36 million RINs had been assigned to the biodiesel, with NGL selling most of the RINs to other entities.

NGL then sold the biodiesel to Western Dubuque designated as a “feedstock”, and Western Dubuque reprocessed the biodiesel 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, who then sold most of these RINs to other entities.

DOJ and EPA are asking 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 resulted in excess greenhouse gas emissions equivalent to 151,319 tonnes of carbon dioxide.

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.

EPA learned that Western Dubuque used improper feedstocks during a 2011 inspection of the company’s biodiesel facility, located in Farley, Iowa.

The agency then conducted an extensive investigation into transactions between Western Dubuque and NGL.

It 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. 

At the time of the alleged violations, NGL was known as Gavilon.