U.S. biodiesel manufacturer to pay $6 mln to settle fraud charges

Source: By Chris Prentice, Reuters • Posted: Thursday, October 6, 2016

U.S. biofuel manufacturer Western Dubuque Biodiesel LLC has agreed to pay $6 million to settle charges that it had violated the country’s renewable fuels program, U.S. regulators said on Tuesday, marking the second such settlement within a week.

The Department of Justice and Environmental Protection Agency said in a joint statement that Western Dubuque and another company, NGL Crude Logistics, created more biofuel credits in 2011 than allowed under the country’s Renewable Fuel Standard (RFS) mandates.

The credits, known as Renewable Identification Numbers (RINs), are used by oil refiners and gasoline importers to prove they are meeting government mandates for use of ethanol and biodiesel in gasoline and diesel. They are created with each gallon of biofuel produced and can be bought and sold by different companies.

Western Dubuque, which operates a 30-million-gallon plant in Farley, Iowa, has agreed to pay the penalty to settle the charges, the regulators said. The company said in a statement that it has not admitted to any violations.

The complaint against NGL, formerly known as Gavilon LLC, has not been settled, the regulators added. NGL has been asked to retired 36 million credits, they added.

A spokesman for NGL did not respond immediately to requests for comment.

The regulators said NGL purchased biodiesel with RINs attached in 2011, which were then sold to other companies. The pipeline company sold the biodiesel back to Western Dubuque, which then reprocessed the fuel to generate a second set of RINs that were again sold to NGL, they added.

The settlement with Western Dubuque is the second involving the biofuels program in a matter of days. A Glencore Plc unit agreed to pay a record penalty of $27 million last week for fraud from 2011-2013.

Renewable fuel (D6) RIN credits for 2016 compliance traded at 89.5 cents apiece. Prices of biodiesel (D4) credits were $1.025 each, traders said.