Quad County Corn Processors Cooperative Clean Air Act Settlement

(Washington, DC – November 3, 2022) - The U.S. Environmental Protection Agency and the U.S. Department of Justice today announced a settlement with Iowa-based Quad County Corn Processors Cooperative, that requires the company to retire over 438,000 renewable fuel credits to resolve alleged violations of the Renewable Fuel Standard (RFS) program. Quad County Corn Processors Cooperative will also pay a civil penalty of $320,000 under the settlement.

On this page:

• Overview of Company
• Overview of the Renewable Fuel Standard Program
• Case Overview/Alleged Violations
• Injunctive Relief
• Pollution Impacts
• Health and Environmental Benefits
• Civil Penalty
• Comment Period
• Contact

Overview of Company

Quad County Corn Processors Cooperative (Quad) is an agricultural cooperative located in Galva, Iowa. Quad produces about 100,000 gallons of ethanol each day, or about 35 million gallons per year. Quad’s facility is registered to produce cellulosic ethanol, generating D3 Renewable RINs, and non-cellulosic ethanol, generating D6 RINs.

Overview of the Renewable Fuel Standard Program

The original Renewable Fuel Standard program (RFS1) was created under the Energy Policy Act of 2005 and established the first renewable fuel volume mandate in the United States. RFS1 required 7.5 billion gallons of renewable fuel be blended into gasoline by 2012.

The Energy Independence and Security Act of 2007 expanded the program, which became known as the RFS2 program. The RFS2 program reduces greenhouse gas (GHG) emissions by setting a national mandate for renewable fuels that meet specific GHG emissions reduction standards. The RFS2 regulations created a market-based program to assure that the national mandate will be met. Renewable fuel producers and importers generate renewable fuel credits, known as Renewable Identification Numbers or RINs, for each gallon of renewable fuel that meets the GHG emissions reduction standards. The program requires refiners and importers, known as obligated parties, to retire a specific number of RINs each year based on the amount of petroleum fuel that they produce and import.

The RFS program is expected to reduce GHG emissions by 138 million metric tons when fully implemented in 2022. The reductions would be equivalent to taking about 27 million vehicles off the road.

Case Overview/Alleged Violations

The settlement resolves an enforcement action by EPA against Quad for alleged violations of the RFS2 regulations. EPA and the U.S. Department of Justice allege that from May 26, 2015, through October 12, 2015, Quad changed its EPA-approved process and diverted starch from the non-cellulosic production process into its cellulosic fermenter process. The consequence of this change was that the finished ethanol was no longer purely cellulosic ethanol, but instead a combination of non-cellulosic ethanol and cellulosic ethanol. The combination required that Quad appropriately allocate the different RIN types using specific regulatory formulas to ensure that the RIN types represented the correct volumes of renewable fuel. Accordingly, the Complaint alleges that during this time period, Quad utilized a process that was not described in its registration information; failed to submit chemical analysis and data regarding its process; and did not apply the correct regulatory formulas to assign RINs the appropriate D code.

Injunctive Relief

Quad is required to mitigate the harm caused by the alleged violations by retiring approximately 438,000 cellulosic RINs.

Pollution Impacts

The failure to retire RINs threatens the GHG emissions reductions Congress sought to achieve by requiring that the renewable fuel be used in the United States. The EPA estimates that Quad’s violations resulted in a failure to achieve a reduction of emissions equivalent to 4,689,959 pounds of carbon dioxide in the United States.

Health and Environmental Benefits

In order to ensure the GHG emissions reductions from the RFS program are achieved, and to protect the program's integrity and maintain a level playing field for regulated companies, EPA pursues enforcement actions against renewable fuel producers, such as Quad, and importers that generate invalid RINs.

Civil Penalty

Quad will pay a civil penalty of $320,000.

Comment Period

The proposed settlement, lodged in the U.S. District Court for the Northern District of Iowa, Western Division, is subject to a 30-day public comment period and final court approval. The public comment period will begin when the Department of Justice (“DOJ”) publishes a notice of the Settlement Agreement in the Federal Register.  The settlement is available at the Department of Justice website.

For more information, contact:

Matthew Kryman
Attorney-Advisor
U.S. Environmental Protection Agency  
OECA/AED/Fuels Enforcement Branch (8MSU)
1595 Wynkoop Street
Denver, CO  80202
(303) 312-6272
[email protected]