Yes, let's blame the government for people abusing regulations. Except the regulations we like, of course. We'll call it "arbitrage" when we abuse regulations we don't like, and "fraud" when we abuse regulations we do like (like property).
They made a gigantic mistake and we shouldn't blame them? I disagree completely. They should be blamed for this asinine regulation yes. Because it really is their fault. Good intentions don't cut it when it comes to fiscal accountability.
I find it deeply amusing that tech people are always so forgiving of bugs in software, but seem to go out of their way to blame the government for bugs in regulation just because it's the government. Newsflash: everything is imperfect, and the operation of this whole complex world we live in requires a certain amount of good faith on the part of everyone.
I agree the regulation is asinine, but for reasons completely unrelated to the incident. From the article: "Each time the loaded train crossed the border the cargo earned its owner a certain amount of Renewable Identification Numbers (RINs), which were awarded by the US EPA to “promote and track production and importation of renewable fuels such as ethanol and biodiesel.” The RINs were supposed to be retired each time the shipment passed the border, but due to a glitch not all of them were."
The mechanism in question was reasonable, and it looks like there was a bug in the implementation. While that's definitely a mistake, I don't think it rises to the level of "asinine" and I don't think that gets the importer off the hook any more than it gets a cracker off the hook when he exploits an OS bug to steal credit card numbers.
Implementation bugs are design flaws are tax loopholes are human failings that the technocrat decries as solvable even though it's people originating all of it.
Lots of human failings are solvable through regulation. Have you been killed and eaten recently? Boom a common flaw of human society solved by government.
What is the gigantic mistake here? Per the story: The RINs were supposed to be retired each time the shipment passed the border, but due to a glitch not all of them were. Really, we have no idea whether this glitch was legislative, administrative, or database-related.
Update from the CBC story linked downthread: 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 exported from the U.S., but Bioversel says Verdeo retired ethanol RINs, worth pennies, instead of the more valuable biodiesel RINs. Bioversel claims this was all perfectly legal.
So basically Verdeo was lying to the EPA by claiming it was exporting ethanol rather than biodiesel. I would not like to be the person trying to explain to a court why that should be considered legal.
Nothing about my statement requires arbitrage to be reducible to fraud in the average case. "Arbitrage" can be a euphemism for fraudulent activity even if most arbitrage is not fraudulent.
The heart of the matter is good faith. "Fraud" is a crime created to capture activity in bad faith with respect to the property regulation. The importation here might be legal, but there is a demonstrable lack of good faith that justifies calling it fraud.
