Fraud and Biodiesel Credits

Rodney Hailey started Clean Green Fuel in March 2009 to sell biodiesel credits to companies trying to meet their quotas for renewable-fuel production. Situated within a market that is required by law to expand ever year, Hailey’s company seemed poised to prosper. And it did, at least on paper, selling 32.2 million credits worth $9 million. Translated, that means that Clean Green Fuel was under agreement to produce about 21.4 million gallons of biodiesel.

On June 25, federal courts convicted Hailey of fraud, the first such case associated with the sale of RINs, or renewable identification numbers. It appears that, after founding Clean Green Fuel, he rented a garage and bought pipes and blending equipment. But the one-man, one-shed operation never blended any biomass-based biofuel. His pipes were connected to nothing. Hailey now faces up to 484 years in prison.

RINs were created by the 2007 Energy Independence and Security Act, which mandated that companies that refine, import, or blend fossil fuels (the “obligated parties,” in the bill’s legalese) blend a certain, annually increasing amount of biomass-based diesel from 2008 to 2022. RINs are a way of tracking how much biodiesel these companies create. One gallon of corn-starch ethanol is worth one RIN; of agri-biodiesel, 1.5 RINs; and of cellulose ethanol, 2.5 RINs.

Read more: http://www.nationalreview.com/articles/312581/fraud-and-biodiesel-credits-nash-keune