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Thursday
Dec202012

The Biofuel Subsidy Scams

Corporate subsidies, in an era of fiscal-cliff attacks on Social Security and Medicare, have dodged attention despite their magnitude and absurdity. Take the renewable-fuels subsidy ecosystem—and a train of tankers filled with biodiesel that shuttled back and forth across the border between Sarnia, Ontario, and Port Huron, Michigan, twelve times, without unloading its cargo. It generated millions of dollars in profits.

The mystery train was an outgrowth of the EPA’s Renewable Fuel Standard mandate that requires oil companies to blend (subsidized) biofuels with (subsidized) fossil fuels—or alternatively, purchase Renewable Identification Numbers, or RINs, as offsets.

Each RIN is a serial number for a batch of biofuel, such as biodiesel or ethanol. RINs are generated when the biofuel is produced or imported. Under the mandate, oil companies must blend 1 billion gallons of biodiesel a year into the fuel stream. Each refiner’s contribution is determined by its market share. If a refiner doesn’t want to comply, it can instead buy RIN credits from biodiesel producers. Hence, a $2 billion market for biodiesel RIN credits, policed by the ever so vigilant EPA. But RIN credits can be traded independently from the batches of biofuel that generated them. And this has opened up some opportunities.

Last year, Clean Green Fuels in Maryland was accused of selling 32 million fake biodiesel RIN credits to oil companies and brokers. In June 2012, CEO Rodney Hailey was convicted of wire fraud, money laundering, and of violating the Clean Air Act.

Absolute Fuels in Texas, was sent an EPA Notice of Violation in February this year. On July 19, owner Jeffrey David Gunselman was arrested for having allegedly created on his computer more than $50 million in RIN credits that he then sold. He didn’t even have the facilities to produce biodiesel. Earlier this month, he pleaded guilty to a laundry list of charges and is contemplating a maximum sentence of $20 million in fines and 1,268 years in the hoosegow.

Another Texas company, Green Diesel, received a Notice of Violation on April 30. The issue: 60 million fake RINs. By then, CEO Philip Rivkin had apparently skedaddled to Europe, out of harm’s way. 

Buyers of these credits got tangled up as well: “30 refiners settled with the EPA without admitting wrongdoing.” The usual suspects. Exxon would pay a fine of $165,000; ConocoPhillips $250,000, and BP $350,000. They’d also have to buy real RINs to replace the fake ones. The chaos in the RIN market prompted the House Energy and Commerce Oversight Subcommittee to hold hearings.

But a small outfit in Toronto, Bioversel Trading Inc., was particularly resourceful in milking the RIN system—and may not have done anything illegal, according to an excellent investigative series by CBC News. Bioversel hired Canadian National Railways (CN) to shuttle the same trainload of biodiesel twelve times across the US-Canadian border without unloading the cargo. All in the second half of June, 2010. For $2.6 million.

To generate RINs from importing biodiesel into the US, ownership of each trainload was transferred to Bioversel’s US partner, Verdeo, which then, rather than selling the biodiesel in the US, exported it back to Canada. But by exporting the biodiesel, Verdeo would have been required to “retire” the associated RINs, instead of being able to sell them. So Verdeo retired ethanol RINs instead, which cost only a fraction. The difference, less the cost of transportation back and forth, was profit.

It might have remained under wraps. But the “importer of record,” Northern Biodiesel of Ontario, NY, found out that the same rail cars were being shuttled back and forth and generated new RINs each time they came into the US; something was fishy. So the owner blew the whistle.

CBC News contacted the EPA to get some clarity, but the agency refused to comment. And the railroad? Didn’t they have a clue? Nope. “As required by law, CN discharged its common carrier obligation regarding these biodiesel shipments,” spokesman Mark Hallman wrote to CBC News. “CN is not aware of any pending investigation of an alleged fraud. CN has and will continue to co-operate fully with....” etc. etc.

Alas, CBC News had obtained a copy of an internal CN email, dated June 14, 2010, sent by Teresa Edwards, CN’s Sarnia transportation manager. In addition to some technical details, it included these priceless words: “It will be the same cars flipping back and forth and the product will stay on the car. Target is to get at least 25 flips across the border and back by June 30.” And a word of corporate encouragement: “This move has the potential to make a lot of money for CN so need everyone’s assistance to maximize the number of trips we make and ensure that it all moves smooth.”

In a follow-up email, dated June 28, 2010, of which CBC News also obtained a copy, Edwards wrote: “The Bioversal move back and forth across the border at Sarnia has now completed. Records show that we moved 1984 cars total.... This equates to approximately 2.6 million dollars of revenue....”

Though the Canada Border Services Agency and the EPA are investigating, CBC News emphasized that it “has found no evidence Bioversel or its partners broke any laws.” Apparently, regulations at the time permitted importing biofuels to generate RIN credits, re-export the fuel, retire cheaper ethanol credits instead of biodiesel credits, and laugh all the way to the bank. A perfect example of how huge corporate welfare programs, such as fuel subsidies, throw off unexpected crumbs in surprising directions.

Another investigation, this one into the potentially deadly industry practice of mechanical tenderization of beef, has turned into a nightmare for steak lovers. The risks have been known since at least 2003. Yet the industry resists even the most basic labeling requirement that would save lives. Read.... The Beef Industry’s Deadly Secret: “Blading” and “Needling” 

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Reader Comments (7)

....hmmm, isn't one of the Board of Directors of CN Railroad somebody by the name of Raisbeck ?? who was about the number 3 man in charge at Cargill, Inc, that runs umpteen ethanol plants ??? just wonderin'
December 20, 2012 | Unregistered Commenterjames thurber
james - interesting!
December 20, 2012 | Registered CommenterWolf Richter
i checked , raisbeck was a director at Canadian Pacific not CN, but nonetheless........................he resigned in June from the board........................smelly, at a minimum.
December 21, 2012 | Unregistered Commenterjames thurber
Here's more on our EPA:





The EPA is now working ‘internationally’ (INTERNATIONALLY'?) with the UN; our EPA has awarded a five-year, $2.5 million grant (US citizen's taxes) to the UNU Institute for Sustainability and Peace (UNU-ISP)…you've been taxed to fund UNU since 1972, how's that 'sustainablility and peace' going UNU? Your also paying for the UN ‘World Tourist Organization’ (UNWTO), another tax black hole along with UNESCO & ICLEI, recently exposed in their war on private property rights & liberty -Agenda 21. We're funding 22% of the UN budget which funds also the IMF and WB (yep they're both UN agencies), think CNN or NBC will tell you how your taxes are being spent? But that 22% you see in Wikipedia dosen't include all the 'back door' funding (your taxes).



Did the EPA first mention that to our congress or taxpayers or the people freezing in New Jersey? This is (actually 'you will' pay) for the USA to clean up 'e-trash' around the world (around the world?), at least that is what they are telling us what the money is for.....and where the fek did the EPA get the money? The EPA can 'deem' law now, so it can, shut up (see below).



So, we are providing the world's libraries with $6,000 (each, google it) Kindals that is creating the "e-trash" and now we are the world's trash collectors?

“for Sustainability and Peace” right.



...and this:



'Should Law Enforcement Agencies Have The Power To Write And Enforce Whatever Laws They Desire?'

Posted on August 4, 2011



"This is how unelected bureaucrats, such as those in the EPA, can write law that wasn’t necessarily intended by the Congress. We see it all the time. A good example are the recent new regulations being promulgated by the EPA to control carbon emissions from power generating plants that effectively will enforce a carbon cap-and-trade law that the Congress has in fact already rejected." If you write the law you can fund yourself at will. But where does that money come from? Obama's stash?

The EPA is only one:
Agenda 21 (UN)


www.theblaze.com/stories/does-the-new-white-house-rural-council-uns-agenda-21

Excerpt:


The new White House Rural Council will probably be populated by experts in the various fields that might prove helpful to the folks who live and work outside of large urban areas, right? Well, Tom Vilsack, the current Secretary of Agriculture, will chair the group, but let us review the list of members appointed to serve on this new council – according to the order, the heads of the following groups have been appointed:
•(1) the Department of the Treasury; Timothy Geithner
•(2) the Department of Defense; Robert Gates
•(3) the Department of Justice; Eric Holder
•(4) the Department of the Interior; Ken Salazar
•(5) the Department of Commerce; Gary Locke
•(6) the Department of Labor; Hilda Solis
•(7) the Department of Health and Human Services; Kathleen Sebelius
•(8) the Department of Housing and Urban Development; Shaun Donovan
•(9) the Department of Transportation; Ray LaHood
•(10) the Department of Energy; Dr. Steven Chu
•(11) the Department of Education; Arne Duncan
•(12) the Department of Veterans Affairs; Eric Shinseki
•(13) the Department of Homeland Security; Janet Napolitano
•(14) the Environmental Protection Agency; Lisa Jackson
•(15) the Federal Communications Commission; Michael Copps
•(16) the Office of Management and Budget; Peter Orszag
•(17) the Office of Science and Technology Policy; John Holdren
•(18) the Office of National Drug Control Policy; R. Gil Kerlikowske
•(19) the Council of Economic Advisers; Austan Goolsbee
•(20) the Domestic Policy Council; Melody Barnes (former VP at Center for American Progress)
•(21) the National Economic Council; Gene B. Sperling
•(22) the Small Business Administration; Karen Mills
•(23) the Council on Environmental Quality; Nancy Sutley
•(24) the White House Office of Public Engagement and Intergovernmental Affairs; Valerie Jarrett
•(25) the White House Office of Cabinet Affairs; and such other executive branch departments, agencies, and offices as the President or Secretary of Agriculture may, from time to time, designate. Chris Lu (or virtually anyone to be designated by the 24 people named above)

It appears that not a single department in the federal government was excluded from the new White House Rural Council, and the wild card option in number 25 gives the president and the agriculture secretary the option to designate anyone to serve on this powerful council.

America better wake up fast, the coming gun debates is all part of dis-arming the USA
December 21, 2012 | Unregistered CommenterDADDY WARBUCKS
The EPA (and other regulatory agencies) has gotten way too authoritative and powerful


Watch Agenda 21 in real time action, is the same happening in countries outside the USA, yep? (AND WHAT YOU HEAR IS ONLY THE BEGINING OF THEIR PLAN, reminder at bottom)

Sheriff Dean Wilson – Defend Rural America:

http://www.youtube.com/watch?v=ZicSIjJwSmU&feature=share&list=PLybzMXLEOSWIx9oOmYL7ZVDOvZghNmMED

A must watch (and share):
“more education increases the threat to sustainability” – you can’t make this up.

Youtube: Agenda 21 For Dummies
http://youtu.be/TzEEgtOFFlM
December 21, 2012 | Unregistered CommenterDADDY WARBUCKS
That biodiesel ferried back and forth...tansesterified biodiesel has a limited shelf life. Whoever got stuck with it last probably found it almost unusable!

I was involved in the biodiesel industry several years ago. We tried to do things the honest way. The price of vegetable oil rose so fast, we found outselves without enough funds to react to the changing market and unable to build the plant - and that was WITH the $1.00 credit.
December 21, 2012 | Unregistered Commenterjohnnygeneric
Another good example how incompetent policymakers are when they have to make big calls like here.
-Influence on worldfood supply missed.
-Influence on food prices (especially in poorer parts of the world), missed.
-Mass production and natural disasters (in Malysia/Indonesia etc, increasing often several times more CO2 levels than the stuff grown on it helps), missed.
-No idea how levies/subsidies work through the system (simple one dimensional thinking), missed.
-Proper mechanisms for proper audits etc. installed etc., missed.
-Feed back to see if things work, missed.
December 22, 2012 | Unregistered CommenterRik

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