Energy

Biofuel Fraud Costs Oklahoma Company $35 Million

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The Department of Justice (DOJ) settled with an Oklahoma-based energy company Thursday over charges for creating and selling millions of fraudulent renewable fuel credits.

The company, NGL Crude Logistics, agreed Thursday to pay a $25 million civil penalty in addition to scrapping 36 million Renewable Identification Numbers (RINs), roughly $10 million worth, that did not correspond to any existing gallons of biofuel.

“Enforcement actions such as the one we announce today are essential to ensuring the integrity of government programs,” Principal Deputy Associate Attorney General Jesse Panuccio said in a statement. “Fraud in the [Renewable Fuel Standard] market will not be tolerated. I applaud the work of the EPA and DOJ enforcement team who achieved today’s excellent result for the taxpayers.”

Under the Renewable Fuel Standard program, oil refineries are given a set amount of biofuel, such as ethanol, that each must mix into its fuel. The federal government enforces the quotas by tracking the movement of RINs that are attached to every gallon of biofuel produced and sold.

NGL was charged for creating millions of fake RINs in 2011 by selling biofuel, but not retiring the corresponding credits. NGL would then take the RINs and trade them to other companies. RINs are often sold separately from their corresponding gallon of biofuel in order to fill companies’ biofuel quotas even if they cannot mix it into fuel.

The settlement does not appear to cover the entire extent of the fraud. NGL will pay $35 million in damages, but the company allegedly reaped an extra $43.6 million by selling the double-counted RINs, according to Politico.

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