Indiana Ethanol Facility Fined $9,600 for Clean Air Act Violations

- by Seth Slabaugh, Novem­ber 11, 2014, The Star Press

Car­di­nal Ethanol has paid a $9,600 fine to set­tle a com­plaint that it vio­lat­ed its Clean Air Act oper­at­ing permit.

The penal­ty is insignif­i­cant in light of the grass­roots, investor-owned com­pa­ny’s prof­itabil­i­ty — $26.4 mil­lion net income for the fis­cal year end­ed Sept. 30, 2013.

Pres­i­dent Jeff Painter said rev­enue and income data for fis­cal year 2014 are not avail­able because an inde­pen­dent audit has not been completed.

But accord­ing to Secu­ri­ties and Exchange Com­mis­sion infor­ma­tion, the com­pa­ny’s net income for the third quar­ter of fis­cal year 2014 totaled $29.4 million.

Until now, Car­di­nal Ethanol had been the only bio­fu­els plant in East Cen­tral Indi­ana that had not paid a civ­il penal­ty for alleged air or water vio­la­tions. Those vio­la­tions usu­al­ly occur dur­ing planned shut­downs for main­te­nance or start-ups.

“We paid the assess­ment in order to expe­dite this set­tle­ment,” Painter said.

Accord­ing to the Indi­ana Depart­ment of Envi­ron­men­tal Man­age­ment, the com­pa­ny did not take rea­son­able steps to restore an air pol­lu­tion scrub­ber’s oper­a­tion to nor­mal oper­a­tion as soon as prac­ti­cal dur­ing planned shut­downs in 2011–13.

The com­plaint also accus­es the com­pa­ny of fail­ing to record vis­i­ble emis­sions of bag house exhaust around Christ­mas time in 2012.

The plant pro­duced 110 mil­lion gal­lons of ethanol; 314,321 tons of dis­tillers grain used in cat­tle feed; and 26.5 mil­lion pounds of corn oil in fis­cal year 2013.

Car­di­nal Ethanol needs about 39 mil­lion bushels of corn a year, or 107,000 bushels a day, to pro­duce 110 mil­lion gal­lons of ethanol.

An ethanol plant is essen­tial­ly a fer­men­ta­tion plant, Car­di­nal Ethanol says in its SEC reports. Ground corn and water are mixed with enzymes and yeast to pro­duce a sub­stance called “beer,” which con­tains about 10 per­cent alco­hol and 90 per­cent water. The beer is boiled to sep­a­rate the water, result­ing in eth­yl alcohol.

While the fine was insignif­i­cant, the com­pa­ny says in its SEC reports that envi­ron­men­tal reg­u­la­tions, which often require expen­sive pol­lu­tion con­trol equip­ment, can be expen­sive and reduce profitability.

“Car­bon diox­ide may be reg­u­lat­ed in the future by the EPA as an air pol­lu­tant, caus­ing us to obtain addi­tion­al per­mits and install addi­tion­al … equip­ment,” the com­pa­ny report­ed to investors.

Besides green­house gas­es, oth­er air pol­lu­tants of con­cern emit­ted by ethanol plants include volatile organ­ic com­pounds, acetalde­hyde and par­tic­u­late matter.

In 2010, IDEM issued Car­di­nal Ethanol an oper­at­ing per­mit for air emis­sions that increased the plan­t’s oper­at­ing capac­i­ty and emis­sion lim­its, includ­ing those for par­tic­u­late mat­ter. The Nat­ur­al Resources Defense Coun­cil (NRDC) appealed the issuance of that and oth­er ethanol air per­mits, win­ning at the Indi­ana Court of Appeals level.

“IDEM has peti­tioned to trans­fer the mat­ter to the Indi­ana Supreme Court and the par­ties are await­ing a deci­sion on the peti­tion,” the com­pa­ny report­ed in August. ” … should NRD­C’s chal­lenge of our per­mit ulti­mate­ly be suc­cess­ful … this would result in a decrease in our pro­duc­tion of ethanol and dis­tillers grains and could have a neg­a­tive effect on our profitability.”

How­ev­er, Painter this week told The Star Press: “After the Indi­ana Supreme Court reversed a rul­ing in favor of NRDC on the same issue but involv­ing dif­fer­ent ethanol plants, NRDC vol­un­tar­i­ly filed a motion to dis­miss its admin­is­tra­tive chal­lenge to Car­di­nal’s … permit.”

The POET Biore­fin­ing ethanol plant in the Madi­son Coun­ty com­mu­ni­ty of Alexan­dria has been fined more than $55,000 for alleged vio­la­tions of its per­mit; the POET Biore­fin­ing plant in Port­land has been fined $18,000; and the Cen­tral Indi­ana Ethanol Plant in Mar­i­on has been fined $22,500.

In addi­tion, Cen­tral Indi­ana Ethanol now faces anoth­er fine for alleged vio­la­tions includ­ing fail­ure to oper­ate a scrub­ber to con­trol emis­sions of volatile organ­ic com­pounds and haz­ardous air pol­lu­tants dur­ing a three-day shut­down this past May.

In 2008, soy bio-diesel pro­duc­er E‑Biofuels, Mid­dle­town, paid IDEM a penal­ty of $18,000 for dis­charges into san­i­tary sew­ers that inter­fered with oper­a­tions of the town’s waste­water treat­ment plant.

Last year, E‑Biofuels was accused of buy­ing low-grade fuel from else­where, ship­ping it to its Mid­dle­town plant, switch­ing labels, mark­ing up prices and sell­ing the prod­uct as pre­mi­um fuel to its cus­tomers. Fed­er­al offi­cials says the com­pa­ny cheat­ed investors and tax­pay­ers out of more than $100 million.

The Louis Drey­fus soy bio-diesel plant in the Kosciusko Coun­ty com­mu­ni­ty of Clay­pool was fined $103,750 in 2009 over alleged start-up vio­la­tions. The plant was fined anoth­er $7,750 last year.