EPA v. NGL and Western Dubuque Biodiesel

Case summary

This settlement resolves allegations Iowa-based Western Dubuque Biodiesel, LLC entered into a series of transactions in 2011 that resulted in the generation of more than 36 million invalid renewable fuel credits. Western Dubuque owns and operates a 30 million gallon biodiesel plant located in Farley, Iowa. The company was formed in 2005 by a group of eastern Iowa farmers and business people. The original Renewable Fuel Standard program (RFS1) was created under the Energy Policy Act of 2005, and established the first renewable fuel volume mandate in the United States. The Energy Independence and Security Act of 2007 expanded the program, which became known as the RFS2 program. The RFS2 program reduces greenhouse gas (GHG) emissions by setting a national mandate for renewable fuels that meet specific GHG emissions reduction standards. The RFS2 regulations created a market based program to assure that the national mandate will be met. Renewable fuel producers and importers generate renewable fuel credits, known as Renewable Identification Numbers or RINs, for each gallon of renewable fuel that meets the GHG emissions reduction standards. The program requires refiners and importers, known as obligated parties, to retire a specific number of RINs each year based on the amount of petroleum fuel that they produce and import. The RFS program was designed to reduce GHG emissions by 138 million metric tons when fully implemented in 2022. The reductions would be equivalent to taking about 27 million vehicles off the road. 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 alleged violations, and to pay a substantial civil penalty. Biomass-based diesel RINs represent renewable fuel that displaces petroleum diesel fuel and achieves GHG emissions reductions. When two RINs are generated for the same volume of fuel, the invalid RINs distort the actual GHG emissions achieved. This has a negative impact on the goals of the RFS program and the integrity of the RIN market. The EPA estimates that the illegal generation of RINs in this case resulted in excess greenhouse gas emissions of about 151,319 metric tons of carbon dioxide equivalent emissions. Western Dubuque will pay a civil penalty of $6 million. The penalty is based, in part, on the company?s limited ability to pay a larger penalty and replace RINs to offset the harm caused by the alleged violation. For more information, see https://www.epa.gov/enforcement/western-dubuque-biodiesel-llc-clean-air-act-settlement

Defendants (2)

• NGL Crude Logistics, LLCNamed in complaintNamed in settlement
• Western Dubuque Biodiesel, LLC (SB)Named in complaintNamed in settlement

Facilities (2)

• WESTERN DUBUQUE BIODIESEL LLC

  904 JAMESMEIER RD, FARLEY, IA, 52046

  Registry ID: 110032650058

• WESTERN DUBUQUE BIODIESEL LLC

  904 JAMESMEIER RD, FARLEY, IA, 52046

  Registry ID: 110032650058

Statutes cited

• CAA 211 — Regulation of Fuels - Motor Vehicle and Engine Fuels

Enforcement conclusions (2)

• Western Dubuque Biodieselentered 2017-04-13

  Primary law: CAA

  Federal penalty: $6,000,000

• NGL Crude Logisticsentered 2018-11-08

  Primary law: CAA

  Federal penalty: $25,000,000

Timeline (7 milestones)

• 2015-01-07Referred To Dept Of Justice
• 2015-01-16Enforcement Action Data Entered
• 2016-10-04Complaint Filed With Court
• 2017-04-11Consent Decree Amendment
• 2018-09-27Final Order Lodged
• 2018-11-08Final Order Entered
• 2020-01-06Enforcement Action Closed