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Why did a Train Carrying Biofuel Cross the Border 24 Times and Never Unload?
- z_ 14y agoCBC article: http://www.cbc.ca/news/canada/story/2012/12/19/mystery-biodiesel-train-credits.html http://www.cbc.ca/news/canada/story/2012/12/19/mystery-biodi...
- gojomo 14y agoIf 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.
- dsr_ 14y agoIt won't be successful if the company pays more in fines than it earned in profit.
- vinhboy 14y agothat never happens.
- tantalor 14y agoBut it's not a real profit, i.e., they weren't selling anything. The money (in the form of RINs) was stolen from the EPA. You better believe the government will be recouping it.
- deleted 14y ago[deleted]
- ryguytilidie 14y agoIf the US government is involved in the prosecution, we can pretty much guarantee that we will make it worth their while. It's usually something like "oh you made 500m profit from fraud? How about 50m fine, any bigger might make you go out of business, like you would have without committing fraud."
- pebb 14y agoPlus, they admit no guilt like the banks!
- ianstallings 14y agoWell, maybe. Uncle Sam tends to look the other way when it's not him being fleeced. But when it is him, holy crap watch out. He'll break you up and sell you for pieces.
- johnrgrace 14y agoIt 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.
- SideburnsOfDoom 14y agoTL;DR: export fraud.
- EwanToo 14y agoTo 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_fraud http://en.wikipedia.org/wiki/Missing_trader_fraud#Carousel_f...
- InclinedPlane 14y agoThe important bit here is that expiration failure "glitch", and the details thereof. If it's just a straight up glitch and the law called for the expiration of the RINs after one crossing then this is a pretty clear-cut case of fraud. If a bank error puts a million dollars in your account, or if a car falls off a shipping truck into your front yard, that doesn't make it yours. By the same token, a glitch in the expiration system doesn't make exploiting that glitch legal.
- bdunbar 14y ago> 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.
- calinet6 14y agoHowever, 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]"
- johnpmayer 14y ago> The RINs were supposed to be retired each time the shipment passed the border, but due to a glitch not all of them were. Inside job? Sounds like the type of "glitch" that was in Office Space. But probably not (Hanlon)
- exabrial 14y agoGood lord... The companies here are dirty, but lets not forget the EPA for creating the problem in the first place!
- rgbrenner 14y agoWhat problem did the EPA create exactly? They created a rule that the company disagreed with? That does not give them a right to break it. That's not how the law works.
- polyfractal 14y agoErr...the EPA didn't create a law that the company disagreed with. They created a regulation that was designed to incentivise the importation of renewable fuels. Someone at Bioversal Trading was clever enough to realize that they could make more money gaming this regulation then actually selling their cargo. Therefore, they ran the train back and forth a dozen times and wracked up money from the Government. Dirty? Yeah. Fraudulent? Potentially, depending on how the regulation was written. If anything, it speaks to the danger of hidden incentives in otherwise innocent-looking regulations.
- rgbrenner 14y ago>If anything, it speaks to the danger of hidden incentives in otherwise innocent-looking regulations. That's like saying, there should be no lower tax brackets than 39% because I can lie and say I made less money than I actually did... speaks to the danger of hidden incentives in the tax code.
- ams6110 14y agoWell it does. The more complex the code the more ways there are to legally avoid its intent. Extreme example: if we had one tax bracket and no exemptions or deductions, there would be little anyone could do to avoid taxes other than literally earn less money.
- gsibble 14y agoHilarious. 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.
- SideburnsOfDoom 14y ago> Sounds legal On the contrary, sounds a lot like a standard "carousel fraud" > and I doubt they would have done it otherwise. ... Which happens despite being illegal. > Good example of why most regulation is ridiculous Laws aren't perfect, lets try no laws!
- lhnn 14y agoThe government is quick to enforce "spirit of the law" or "letter of the law" when it's most convenient for them.
- deleted 14y ago[deleted]
- eagsalazar2 14y agoGood god libertarians make me sick.
- jrs235 14y agoI identify as a libertarian... But all these folks blaming the government in this case without truly knowing what took place but just jumping to the regulations are to blame conclusion, make me ill. Yes the law of unintended consequences often occurs with regulations however blatantly taking advantage of someone or something is wrong, legal or illegal. This is where we need a jury of peers to determine whether we want to encourage or discourage the behavior that this company took part in. I'd find this company guilty in a heart beat. It's like jury nullification in reverse. All it takes for evil to triumph is good men to do nothing.
- aresant 14y agoA fun sci-fi read would be about a futuristic government that "subsidizes" an Industry for much-debated, but ultimately politically driven reasons. Rather than simply making cash-handouts, however, the Government & the Industry conspire to hide these handouts by creating new by-products for sale to consumers. The Industry grows and rejoices, extending its products into as far ranging lines as sweeteners, fuels, and plastics. To drive adoption they interrupt the free market through price manipulation and straight forward mandate from their "Environmental" agency. Despite overwhelming evidence that consumers are being harmed by these by-products - record obesity, less efficient engines, and environmental damage - the subsidies only grow. I'd like to see how the protagonist would drive change as presently my best solution is to rage via comment board into the echo chamber.
- lostlogin 14y agoAm i missing the joke? Whats sci-fi about this? And how many industries are like this? Meat, diary, cars, arms, power, oil, medical, prisons. And these are just the ones that come to read from stories I have read recently.
- mmanfrin 14y agoAm i missing the joke? Yep.
- Androsynth 14y agoThe joke is that there is nothing sci-fi about this :)
- uvdiv 14y agoHe's bitter about corn subsidies in the US. "sweeteners, fuels, and plastics" -- high fructose corn syrup, corn ethanol, corn ethanol-derived polyethylene "price manipulation and straight forward mandate from their "Environmental" agency." -- corn ethanol subsidies, corn ethanol mandates etc.
- rprasad 14y agoIt is sci-fi in the sense that it involves speculation as to future interefence in various scientific endeavors on a industry-wide scale (i.e., soft sci-fi) by extending numerous historical examples of such practices. Also...it takes place in the future.
- kunle 14y agoSeems like a classic case of the law of unintended consequences at work.
- coopdog 14y agoAs much as I dislike the idea of new government departments, it sounds like they do need some kind of 'evil' department who's only job is to think up ways to abuse proposed new laws and regulations before they go into effect. Similar to how generals have the intelligence section of their staff put on only the enemy hat and poke holes in their plans.
- rndmize 14y agoI don't think you need a new department for that. Take the tax code. Who knows how to exploit the tax code the best? The accountants at the IRS. Have the IRS give an employee a bonus each time they find an exploit and write a report on how it works and recommendations on fixing it. It shouldn't be that different from the way major software vendors pay rewards for reported bugs/exploits. You could provide similar incentives for reports on efficiency improvements (and to prevent exploitation of a system like this, you could have the bonus provided only if the improvement/fix is actually implemented, or based on how significant it is, or something.) Prize and crowd-sourcing systems have worked pretty well when it comes to a lot of things, so why not apply them to improving government bureaucracy? As it stands, our system does the opposite - it rewards people for finding and abusing exploits in the system instead of fixing them (see - every corporate scandal and stock market crash ever.)
- ams6110 14y agoSo "exploit" == legal way to keep MY money. Interesting.
- Steko 14y agohttp://www.mnn.com/green-tech/transportation/stories/solved-the-mystery-of-the-biofuel-filled-train-that-kept-crossing\ http://www.mnn.com/green-tech/transportation/stories/solved-... The companies maintain that this practice was legal. Another company, Northern Biodiesel, appears to have been put out of business by the practice. The EPA has investigated several other cases of RIN fraud, including one against Jeffrey David Gunselman, the CEO of Absolute Fuels who was arrested in July, accused of selling more than $50 million in fake RIN credits. So yeah, keep telling yourself that this is another case of the dum dum gubmint who needs to stay out of our way and how no one ever goes bankrupt after defrauding the gubmint because I mean, it all sounded great when Rush said it right?
- SoftwareMaven 14y agoI don't understand what you are saying (aside from trolling, which is heavily frowned upon). It reads to me like the government is either creating perverse incentives, failing to implement correctly or failing to monitor. If it is the first, we'd be better off without the interference. If it is the second, what is wrong with the government that it can't implement it's policies correctly (perhaps too complex)? If it is the last, then why is the government not policing the policies better? And finally, do RIN credits provide better incentives than no credits? That is the real question that should be asked with regard to the government being involved. The government's track-record isn't great.
- Steko 14y ago"I don't understand what you are saying " The assumption that this is a legal loophole is mistaken. "It reads to me like the government is either creating perverse incentives, failing to implement correctly or failing to monitor" Because someone committed fraud and they're now being investigated for fraud by the government? "If it is the first, we'd be better off without the interference" If only we were omniscient and knew which incentives were perverse. "If it is the second, what is wrong with the government that it can't implement it's policies correctly (perhaps too complex)?" If only the government could always put it's policies into effect perfectly like the free market. Wait, what? "If it is the last, then why is the government not policing the policies better?" Because justice isn't instant? Because 30+ years of one party pushing deregulation takes it's toll? It sounds like your solution to the latter is more deregulation. "And finally, do RIN credits provide better incentives than no credits? That is the real question that should be asked with regard to the government being involved." If only there were some way for the public to comment on future government rules. "The government's track-record isn't great." The track record for successful modern societies without pesky governments is stunningly less great.
- bmuon 14y agoThis is a typical case of how incentives have a tendency to go wrong. I recommend you to listen to this Freakonomics Radio podcast which tells a series of stories about incentive failure, for example an indian town which started farming cobras when a ruler started giving out money for each cobra head after an infestation. http://www.freakonomics.com/2012/10/11/the-cobra-effect-a-new-freakonomics-radio-podcast/ http://www.freakonomics.com/2012/10/11/the-cobra-effect-a-ne...
- eagsalazar2 14y agoSometimes I am dazzled, again, by what total dicks some people are.
- icambron 14y agoLot of assumptions on this thread. The company involved here is claiming that hasn't committed a crime, which isn't a very interesting claim. The agency that's launched and investigation hasn't gotten a chance to, you know, conduct that investigation yet. There's also a possibility that this was all a mistake that just needs sorted out. So before we all jump on the incentives-gone-wrong and government-is-inefficient trains, maybe give the government a chance? But if we are going to speculate--and let's face it, we are--let's at least have a gander at the relevant regulations. IANAL, etc, but from my reading Title 40 Part 80 Subpart M [1] it seems really unlikely that assigning the same volume of fuel different RINs is legal. There's a bunch there about assigning specific numbers to specific volumes of fuel, but there's also the super specific: > (5) Importers shall not generate RINs for renewable fuel that has already been assigned RINs by a registered foreign producer.[2] Sounds pretty clear. [1] http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=27e92597791f3c5cb9d729f136e9782d&rgn=div6&view=text&node=40:17.0.1.1.9.13 http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=27e92597... [2] http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=27e92597791f3c5cb9d729f136e9782d&rgn=div6&view=text&node=40:17.0.1.1.9.13&idno=40#40:17.0.1.1.9.13.93.16 http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=27e92597...
- wayne_h 14y ago... to get to the other side... waw-waw-waaaaah....
- frere 14y agoNice arbitrage!
- ck2 14y agoAnd no-one will serve a day in prison because it's white-collar crime.