Justice Department attorneys say that the Environmental Protection Agency’s requirement that gasoline and diesel refiners either use a certain amount of green fuel that is not commercially available or purchase an exemption provided the financing for a scam artist to buy $15 million worth of art.
“Federal law requires gasoline and diesel refiners and importers to introduce renewable, non-fossil fuel into the national fuel mix,” the Justice Department explains. “To ensure this, the Environmental Protection Agency (EPA) created a system of credits known as “Renewable Identification Numbers” – or “RINs” – to track and boost renewable fuel production. The RINs can be obtained by: producing renewable fuel; importing renewable fuel produced by approved foreign producers; purchasing renewable fuel, with associated RINs, from approved domestic producers; and purchasing RINs without the underlying renewable fuel.”
The D.C. Circuit Court of Appeals, in vacating the EPA rule for 2013, faulted the regulators for effectively saying, “Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers.” Thus, there’s quite a market for the RIN credits.
“Mandating unicorn-like standards based on a wish essentially takes away market-based principles and provides the opportunity for fraud,” Sen. David Vitter, R-La., the top Republican on the Senate Environment and Public Works Committee, said in a statement on the case.
It’s an opportunity that caught the eye of Philip J. Rivkin, owner of Green Diesel, according to DOJ. “Green Diesel sold RINs to companies such as Shell Oil, BP, CITGO and Exxon that were invalid because they did not, in fact, represent the production of any biodiesel at all,” DOJ alleges. “Purchasers of invalid RINs from Green Diesel have reported losses exceeding $78 million.”
Per DOJ, Rivkin used money gained from the sale of fake RINs to buy 2,200 pieces of art, which the federal covernment is now trying to confiscate. “When property is forfeited to the United States, the law allows the U.S. Department of Justice to utilize the property to reimburse victims of the underlying unlawful activity for their losses,” DOJ explains.
Vitter believes the case demonstrates a problem with the biofuel mandate. “RIN fraud, in the area of biomass based diesel, is another symptom of an inherently flawed mandate that needs further examination,” he said.