Covid-era payments intended to help industry survive pandemic downturn
ONIDA, S.D. – An Onida-based ethanol company is asking a federal judge to award it more than $2 million from the government, alleging it was shortchanged by the Department of Agriculture.
Ringneck Energy argues USDA owed the money as part of a federal program that Congress passed to help ethanol companies endure shortfalls during the Covid-19 pandemic. The pandemic in 2020 reduced demand for ethanol and gasoline, as people around much of the country were ordered to stay home.
Congress directed the department to make $700 million available to eligible biofuels companies like Ringneck. The program allowed biofuels companies to qualify for payments based on the difference in 2020 production versus 2019, or through lost profits on contractual commitments.
Ringneck commenced operations in June of 2019. The facility was designed and constructed to produce 80 million gallons a year. Initially, the facility produced ethanol at a lower rate as staff became familiar with the plant’s operation, the company’s complaint says. By the fourth quarter of 2019, the company says it was operating at full capacity.
“Plaintiff fully and reasonably expected to contribute 80 million gallons of fuel-grade ethanol to the marketplace in calendar year 2020 before the onset of the Covid-19 pandemic and the resulting demand and market losses for fuel-grade ethanol and other liquid transportation fuel,” the lawsuit says.
Ringneck says it submitted an application to the department in February of 2022, basing its losses on failed contracts and its partial year of production in 2019.
In May of that year, the department awarded the company with $240,240 – well below what Ringneck contended it should have received under the program’s guidelines.
The company appealed, and in November of that year an administrative law judge ordered the department to recalculate the reimbursement.
The department came back with another determination – this time finding Ringneck qualified for $5.2 million in program funding. But Ringneck argues it should have qualified for $7.2 million. The company appealed again, but a department director rejected the appeal.
The company hasn’t had an easy transition from its start just prior to the pandemic. In July 2023, a massive explosion caused parts of the facility to collapse. The explosion was caused when employees attempted to restart machinery. The plant did not regain full production capacity until later that year.
The company is represented by William Van Camp of Olinger, Lovald, McCahren & Van Camp in Pierre and by William Hanigan of Hanigan Law Group in Des Moines.
USDA has not responded.
