... to get to the other side...
waw-waw-waaaaah....
Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
81–90 of 99 posts
Re: Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
#82If Bioversal/Verdaso employees who cooked this up ever apply to YC, they have a good answer for the "Tell us about the time you most successfully hacked some (non-computer) system to your advantage?" question.
It won't be successful if the company pays more in fines than it earned in profit.
It was an unartful hack, there were better ways to do this. If they had unloaded a bit, and shipping only portions of biofuel, maybe done some blending etc. they would have a much better defense and likely would have never even been caught.
I worked at Enron on their power trading floor, and saw them do pretty much the same thing with Ricochet and FatBoy which made the nightly news, congressional hearings etc. John Forney the guy who did it got a $4,000 fine and two years probation in a plea deal which he took because it was cheaper than paying his lawyers to go to court.
Anyways this is JV ball vs. what the paper industry has done with Black Liquor that has run into the BILLIONS.
Re: Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
#83Nice arbitrage!
Re: Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
#84And no-one will serve a day in prison because it's white-collar crime.
Re: Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
#85Earlier quoted context omitted.
In order to be fraud, doesn't there need to be some form of misrepresentation or deceit?
Well, bringing the same fuel load across the border over and over again but claiming a credit for it each time as if it were a different load would be misrepresentation. Update from the CBC story: Once "imported" to a company capable of generating RINs, ownership of the biodiesel was transferred to Bioversel's American partner company, Verdeo, and then exported back to Canada. RINs must be "retired" once the fuel is…
So basically Verdeo was lying to the EPA by claiming it was exporting ethanol rather than biodiesel.
Since the biodiesel in question actually is ethanol, that was properly purchased in the USA, there is no lie.
I am sure that the same situation happens by accident all of the time. When you buy ethanol you do not normally inquire as to whether it is biodiesel, even though a large fraction of it is. And if that ethanol is exported, you report it as ethanol because it is, and you cannot generally be expected to know whether it is biodiesel.
In this specific case Verdeo was presumably aware that they were exporting biodiesel (though there might be a lack of paperwork acknowledging that it was). However they believe that the regulations do not cover this case, and given that they had lawyers examining the regulations first, I see no particular reason to disbelieve them.
You may think it is ridiculous. But it is no more ridiculous than creating a legal distinction with real monetary value between two batches of identical chemicals. Yet that is exactly the distinction between corn ethanol and ethanol made from some other source.
Re: Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
#86To me this reads like pretty standard fraud, along the lines of carousel fraud[1] which was very common a few years ago. If nobody is arrested or punished for it, then that's more like weak enforcement than clever use of the system. http://en.wikipedia.org/wiki/Missing_trader_fraud#Carousel_f...
> To me this reads like pretty standard fraud I assume the companies ran this by legal before going forward with the plan. Loopholes aren't illegal, they're just exploits.
However, by all accounts, this one appears to be illegal.
From post below (soon hopefully to be 'above'):
"> (5) Importers shall not generate RINs for renewable fuel that has already been assigned RINs by a registered foreign producer.[2]"
Re: Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
#87Earlier quoted context omitted.
Well, bringing the same fuel load across the border over and over again but claiming a credit for it each time as if it were a different load would be misrepresentation. Update from the CBC story: Once "imported" to a company capable of generating RINs, ownership of the biodiesel was transferred to Bioversel's American partner company, Verdeo, and then exported back to Canada. RINs must be "retired" once the fuel is…
So basically Verdeo was lying to the EPA by claiming it was exporting ethanol rather than biodiesel. Since the biodiesel in question actually is ethanol, that was properly purchased in the USA, there is no lie. I am sure that the same situation happens by accident all of the time. When you buy ethanol you do not normally inquire as to whether it is biodiesel, even though a large fraction of it is. And if that ethanol…
Ethanol and Biodiesel are NOT the same thing. At ALL.
Ethanol is grain alcohol. Biodiesel is (quoting wikipedia) "a vegetable oil- or animal fat-based diesel fuel consisting of long-chain alkyl (methyl, propyl or ethyl) esters"
When you buy ethanol you would certainly not expect to be delivered biodiesel and if you were, it would be unusable for your needs. You can't run an ethanol engine on [bio]diesel, and you can't run a diesel engine on ethanol.
Edit: my real point is, if they were reporting ethanol as biodiesel, or vice versa, it's hard to see how it could be a "mistake."
Re: Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
#88Earlier quoted context omitted.
Well, bringing the same fuel load across the border over and over again but claiming a credit for it each time as if it were a different load would be misrepresentation. Update from the CBC story: Once "imported" to a company capable of generating RINs, ownership of the biodiesel was transferred to Bioversel's American partner company, Verdeo, and then exported back to Canada. RINs must be "retired" once the fuel is…
So basically Verdeo was lying to the EPA by claiming it was exporting ethanol rather than biodiesel. Since the biodiesel in question actually is ethanol, that was properly purchased in the USA, there is no lie. I am sure that the same situation happens by accident all of the time. When you buy ethanol you do not normally inquire as to whether it is biodiesel, even though a large fraction of it is. And if that ethanol…
Biodiesel and ethanol are not chemically identical. Ethanol is an alcohol, biodiesel is an ester (a compound of a fat molecule aka a lipid with alcohol). I'm no chemist, but I'm pretty sure you can't just pour ethanol into a diesel vehicle and expect it to function properly.
I have not researched the EPAs classification rules, so possibly there was scope for administrative confusion. But given that Verdeo managed to track the railcar in question well enough to safeguard their property interest and claim the import credits, surely they must have been aware that it was coming on the same railcar every time, a coincidence which strains belief.
As for the last point, the distinction is not between two batches of identical chemical, it's between two different methods of production. I don't care for ethanol subsidies at all because they distort the market in pernicious ways, but I think you're being rather disingenuous here. Given that the subsidy exists, it's entirely possible to develop a functional administrative framework for the correct allocation of the subsidy. Wasteful? Certainly - but that's a policy problem, not a legal one.
Re: Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
#89Hilarious. Sounds legal and I doubt they would have done it otherwise. Good example of why most regulation is ridiculous because it's generally easy to find and exploit loopholes.
Good god libertarians make me sick.
I'm a libertarian at heart but I have no time for shenanigans of this kind. I want efficient regulations, not an absence of regulation; and streamlined regulations can only work where you have a regulator with sufficient discretion to enforce the spirit of the regulation rather than allowing people to take refuge in pedantic legalism (thus generating more and more regulation to deal with all the potential corner cases).
Re: Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
#90Earlier quoted context omitted.
Just because you fail to lock your door does not authorize a burglar to come into your house and help himself to your stuff. You don't get to beg off responsibility by claiming the injured party made it too easy for you to help yourself.
Maybe a better example: Imagine your eazy-pass was mis-programmed. Going over the GG bridge, you get $$ credited to your account each trip rather than -$$ subtracted. So, depends on if the ez-pass was hacked by the user or just broken/mis-programmed by the EPA.
There's a graduated response to discovering that though, you could:
1) call up ez-pass and let them know
2) think "it's not my problem" and not let them know
3) decide to drive over the bridge more often
4) mention it to all your friends and suggest they drive over the bridge more often
5) strap your ez-pass transponder to a quadcopter and fly it in continual circles past the transponder reader.
I'm not sure where the line is, but somewhere between 3 and 5 is probably "fraudulent" behavior - at least according to my personal ethical standards (even #2 is clearly "wrong"), there's almost certainly a technical legal definition of "fraud" that applies somewhere along that line too.