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Freight Train Crosses Border 12 Times ‘to Exploit Biofuel Loophole’

Canadian rail company CN shipped the same load of biodiesel back and forth over the US-Canada border 12 times, at a cost of $2.6 million, to exploit a loophole in the EPA’s renewable fuel standard, according to CBC.

The shipments took place over the Sarnia-Port Huron border in 2010. The train criss-crossed the national boundary 12 times without even unloading its cargo, CBC says.

Bioversal Trading of Toronto organized the deliveries-that-never-were to rack up renewable identification numbers – credits set up by the EPA to encourage and track the production and importation of renewable fuels, CBC says. Once imported, Bioversal transferred the biodiesel RINs to its US-based partner company Verdeo.

Under the program, once biofuel is exported, an equivalent number of RINs must be retired by the company. However Bioversal says that Verdeo collected the imports as biodiesel RINs and retired the corresponding number of far less valuable ethanol RINs. The operation is all completely legal according to Bioversal, CBC says.

The EPA refused to comment, CBC says.

In November 2011, the EPA caught more than a dozen major companies, including Morgan Stanley, Royal Dutch Shell and Exxon Mobil, in a scheme involving fraudulent RINs. The agency issued notices of violation alleging that the companies used invalid RINs purchased from Clean Green Fuel LLC, a company whose owner has been charged with carrying out a $9 million scam involving the distribution of 32 million invalid credits.

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