Western Dubuque to Pay $6M Settlement

OAKHURST, N.J. (DTN) -- The U.S. Environmental Protection Agency and Department of Justice have filed a complaint against NGL Crude Logistics, LLC and Western Dubuque Biodiesel, LLC and a $6 million settlement with Western Dubuque to address alleged violations of the Renewable Fuel Standard.

The complaint, filed in the U.S. District Court of the Northern District of Iowa in Cedar Rapids, 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 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 were produced using unapproved feedstocks and production processes. The consent decree does not resolve any claims against NGL.

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 emission 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.

Western Dubuque owns and operates a 30 million gallon biodiesel plant located in Farley. 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.

The allegations in the complaint remain assertions until they are proved.

EPA is responsible for developing and implementing regulations to ensure that transportation fuel sold in the U.S. contains a minimum volume of renewable fuel. The RFS 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.