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Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?

A cargo train filled with biofuels crossed the border between the US and Canada 24 times between the 15th of June and the 28th of June 2010; not once did it unload its cargo, yet it still earned millions of dollars. CBC News of Canada was the first to pick up on this story on the 3rd of December 2012, and began their own investigation into the possible explanations behind this odd behaviour.

CN Rail, the operator of the train, stated their innocence in the matter as they had only “received shipping directions from the customer, which, under law, it has an obligation to meet. CN discharged its obligations with respect to those movements in strict compliance with its obligations as a common carrier, and was compensated accordingly.” Even so, they still managed to earn C$2.6 million in shipping fees.

During their investigation CBC managed to obtain an internal email which stated that the cars of the train were all reconfigured between each trip but that the cargo was never actually unloaded, because “each move per car across the border is revenue generated”, the sale of the cargo itself was inconsequential.

Related Article: U.S. Military Biofuels Survives Republican Congressional Euthanasia Attempt

The cargo of the train was owned by Bioversal Trading Inc., or its US partner Verdero, depending on what stage of the trip it was at. The companies “made several million dollars importing and exporting the fuel to exploit a loophole in a U.S. green energy program.” Each time the loaded train crossed the border the cargo earned its owner a certain amount of Renewable Identification Numbers (RINs), which were awarded by the US EPA to “promote and track production and importation of renewable fuels such as ethanol and biodiesel.” The RINs were supposed to be retired each time the shipment passed the border, but due to a glitch not all of them were. This enabled Bioversal to accumulate over 12 million RINs from the 24 trips, worth between 50 cents and $1 each, which they can then sell on to oil companies that haven’t met the EPA’s renewable fuel requirements.

Both the Canada Border Services Agency and the US EPA have launched investigations into the possibility of fraud, although the companies claim that the practice was totally legal.

By. James Burgess of Oilprice.com



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  • chuck on January 15 2013 said:
    We all know that the figures dont lie but liars sure can figure. it doesnt sound like it was really a loophole in the law, but rather an accounting failure that Bioversal was able to take advantage of and accumulate the credits.

    as a former executive at a class 1 freight railroad i can say with confidence that it is not possible that CN (a private company that i own stock in) was not aware this was going on. it is true that the carrier is required to follow legitimate transportation orders from shippers. it is also true that someone should have asked questions about this. i am confident that plenty of people in their transportation, car accounting, food and ag and chemical groups were watching the block of cars ping-pong across the border, amused and sending out freight bills.

    this is a form of fraud, or at least sharp practice on the part of Bioversal. CN appears to have been performing legal acts that supported fraud. if i were in their shoes i would not count on the invulnerable shield of the surface transportation board or the transport board of canada to protect me.
  • PJ on January 11 2013 said:
    Nice to see our tax dollars used for such productive ends.
  • Jerry on January 08 2013 said:
    Is it true that Obama's Navy is switching to biodiesel for our fleet at $26.00 pe gallon?
  • Deborah Leigh on January 07 2013 said:
    For all you pro-communism folks, please name one where the standard of living is on par with a capitalistist system? And if you are living in a country with a capitalist system like the US or Canada, please tell me why you live there? Why not relocate to a country that has the system you prefer, rather than making your current nation into something different?
  • VinDC on January 06 2013 said:
    That's Obamanomics For You! Huh?
  • SabreKai on January 05 2013 said:
    Seems to me that no matter how they did it, and whether they think it is legal, a solid case of fraud exists. If you find a loophole,a law abiding person would report it. To take advantage of it is fraud. Plain and Simple.

    So who is going to be charged or fined or anything even vaguely punishing for this? NO ONE.
  • Michael K. Pipe on January 05 2013 said:
    Just another case of "Catch 22". NEVER let morality get in the way of PROFIT!
  • indyjonesouthere on January 04 2013 said:
    This is a government created program and a government managed program. But it's a taxpayer funded program and thousands of other programs are just like this and all of them function equally well. And we wonder why we have a 16 trillion debt.
  • Mike Austin on January 04 2013 said:
    Anonymous on January 04 2013 said:
    Capitalism breeds immorality......
    Really? I don't see how this could happen if the Gov't did not make these fraudulent laws that take tax money and subsidize the companies they choose.
    With no regulation for "green energy credits" it would never happen.
  • Anonymous on January 04 2013 said:
    Capitalism breeds immorality......
  • eljimb0 on January 03 2013 said:
    A green solution to this 'crime' would be to put only one gallon of bio-fuel in each rail-car tank. Fuel savings, spill liability, general wear and tear on equipment, win win. Save the polar bears!!
  • Russell on January 03 2013 said:
    This is corruption, no doubt about it, but let's look at the underlying corruption that causes it -- the corrupt science of anthropogenic global warming, without which there would be no "biofuel" and related subsidies and "RINs" to begin with. When will we reject this scam and eliminate everything related to it?
  • Carl Weetabix on January 03 2013 said:
    @bill and @scawarren

    Murders still happen and police departments are inefficient, so we should abolish laws and police departments?

    Despite having the largest military and intelligence apparatus, 3,000 Americans died in 9/11. Our military and intelligence agencies are severely inefficient, should we abolish the military en toto?
  • Anonymous on January 03 2013 said:
    We have a perfect storm of corruption in far too many governments in far too many countries, with the U.S. blatantly turning from a free Capitalistic society to Communism under the dictatorship of barry hussein soetero.

    So, explain to me how can anyone expect honesty among thieves/or criminals?
  • Hill on January 02 2013 said:
    @Bill: how about the other way around. Capitalism encourages finding and exploiting loopholes instead of genuinely make the world better. Nationalize the whole energy sector to prevent those abuses. Let's go full on communism.

    Because the world is black and white.
  • Bill on January 02 2013 said:
    This is why its silly to think a government can effectively prop up a capitalistic economy.

    The government is mostly incompetent because it is run by people who have never done anything but politics.

    Most of the subsidies and government $$$ incentives need to end today. They are ineffective and easily taken advantage of.
  • Chris on January 02 2013 said:
    @Leon
    Well put.
  • scawarren on January 02 2013 said:
    The United States EPA needs to be abolished. The EPA is well known for its inefficiency, it is very costly and it is not a power designated to the federal government by our constitution.
  • RMB on January 02 2013 said:
    This is an example of uneducated and poorly executed management. Under the rules of RFS 1, there were many legal ways to conduct this transaction. The prohibition here is multiple RINs generations on the same product. I estimate this to be around 660k gallons per trip. 23 of the 24 trips are potentially double counted rins....660k gallons is about 24 rail cars.
    24x23= 552. Each rail car is a 32,500 fine. The fine 17,940,000.00 forbthat period. Now the big number as of the 28th of December. 24 violations @ 780,000.per day x 912 days 711,360,000-in fines to the two companies....Any body that bought the real fuel and the rins also faces fines under this law. One tank car represents 195k in fines or one group of Rins... Each party could face a fine of 29,640,000 if they used the Rins for Obligated Party or other party compliance. All numbers are USD. This is a huge mess, again.
  • AdamPeart on January 02 2013 said:
    @Myke

    And why aren't we using Tesla's source of energy? Because of evil people in government that create policy that benefits the few at the expense of the many, then sells the rotten bill of goods to the useful idiots known as the American public.
  • Leon on January 02 2013 said:
    A tax hike should solve this problem....
  • Roanman on January 02 2013 said:
    More evidence that like everything else the idiots within government conjure up, the unintended consequences of tax incentives always corrupt.
  • Myke on January 02 2013 said:
    " [...] although the companies claim that the practice was totally legal."

    Everything that makes the elite richer is legal. Anything that helps out the middle/lower class is illegal i.e. hemp production for biodiesel.

    The problem is not policy, government, or "evil people." The problem is you and I keep letting these idiots run our 2 countries.

    If we used Tesla's source of energy, none of this would be happening.
  • Anonymous on January 02 2013 said:
    This is why America is self destructing and becoming a corrupt, third world country.
  • Norman on January 02 2013 said:
    Oh my goodness. "Corruption, into your life it will creep". Is there collusion between the "U.S. EPA & the Canada Border Services Agency"? Where will this all end? Gaming the system, isn't the way to progress, nor is it really legal, even if the entities have put loopholes in the regulations/laws. Someone pays, while those who profit get away clean. When will the industry clean up its ranks, or will it just let these things fester?

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