EPA and DOJ settle RIN fraud case with Western Dubuque Biodiesel

In Washington, the U.S. Environmental Protection Agency and the U.S. Department of Justice announced a settlement with Iowa-based Western Dubuque Biodiesel, LLC that resolves allegations that the company entered into a series of transactions in 2011, that resulted in the generation of more than 36 million invalid renewable fuel credits. Western Dubuque will pay a civil penalty of $6 million.

The settlement resolves an enforcement action by the EPA and the U.S. Department of Justice (DOJ) against Western Dubuque for violations of the RFS2 regulations. The EPA and the DOJ allege that in 2011, Western Dubuque entered into a series of transactions with NGL Crude Logistics, LLC (NGL), formally known as Gavilon LLC, that resulted in the generation of more than 36 million invalid biomass-based diesel RINs.

NGL purchased biodiesel with RINs from other companies, separated and sold the RINs to third parties, and then sold the biodiesel to Western Dubuque as a methyl ester “feedstock.” Methyl esters are a class of chemical compounds that include, but are not limited to, biodiesel.

Western Dubuque then reprocessed this “feedstock” and generated a second set of RINs for the reprocessed fuel. Western Dubuque sold all of the biodiesel it produced from NGL’s “feedstock” and RINs it generated in 2011 to NGL. The EPA and the U.S. Department of Justice also allege that Western Dubuque violated a number of RFS2 prohibited acts because the RINs it generated were not produced using a qualifying feedstock or qualifying process.

NGL is not a part of this settlement. The EPA and the U.S. Department of Justice have filed a lawsuit against NGL, and will ask the court to require NGL to retire 36 million biomass-based diesel RINs to offset the harm caused by its alledged violations, and to pay a substantial civil penalty.

The EPA and the U.S. Department of Justice have filed a lawsuit against NGL, and will ask the court to require NGL to retire 36 million biomass-based diesel RINs to offset the harm caused by its alledged violations, and to pay a substantial civil penalty.