BCB Handles Public Relations Work for Private Business

July 14, 2011

Investigative Reports

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The NerveMidlands BioFuels is an alternative energy success story, by all accounts.

The Winnsboro company produces 25,000 gallons of biodiesel fuel a month from waste vegetable oil, and while it has received some government support since its inception, Midlands BioFuels is profitable and would be even without government largesse, co-founder Joe Renwick says.

“We specifically designed and built this operation so we wouldn’t need any money from anyone,” according to Renwick. “We’re the only biofuel processing business in the state that we know of that can say that.”

The lion’s share of Midlands BioFuels’ government subsidies – about $85,100 – came in the form of a grant it received last year, awarded through the S.C. Energy Office, which is under the state Budget and Control Board.

The funding came from stimulus money doled out as part of an effort to convert vehicles to run on new fuels and to build the state’s network of alternative vehicle-refueling stations. Midlands BioFuels’ provided $48,890 in match funding for the project, according to Rebecca Griggs, the public outreach coordinator for the S.C. Energy Office.

Midlands BioFuels used the money to add a biodiesel blending unit to its operation, which not only enables the company to create different blends of biodiesel more easily but to load it on tankers, allowing it to be shipped around the state to be sold wholesale. Previously, nearly all of Midlands BioFuels’ product was sold retail.

But the BCB’s largesse didn’t end with the grant. Earlier this month, once the new blending station was ready to be unveiled to the media, the Budget and Control Board distributed a press release worked up by the state Energy Office on behalf of Midlands BioFuels.

The release, sent out by Budget and Control Board spokeswoman Lindsey Kremlick under the title “MEDIA ALERT,” certainly generated extensive coverage.

The unveiling of Midlands BioFuels’ new biodiesel blending unit on July 6 was mentioned by numerous media outlets, including The Associated Press, Forbes.com, The State, the Charlotte Observer, the Myrtle Beach Sun News, the Anderson Independent Mail, the Columbia Business Report, television stationsWSPA, WIS, WLTX, WACH, WCIV, WECT, the South Carolina Radio Network and myriad of smaller newspapers.

Biodiesel fuel

Biodiesel fuel was selling for more than $3.60 a gallon at Midlands BioFuels’ Winnsboro plant earlier this week.

At the bottom of the release was “Palmetto State Clean Fuels Coalition – An initiative of the SC Energy Office,” with the address and phone number of the state Energy Office.

The Palmetto State Clean Fuels Coalition is part of the Clean Cities program, one of nearly 100 designated coalitions in the U.S.

Clean Cities coalitions seek to expand the use of gasoline and diesel fuel alternatives, which include ethanol, methanol, electricity and propane, according to the Palmetto State Clean Fuels Coalition website.

The publicity effort on behalf of Midlands BioFuels raises a number of questions, including:

  • Why were state dollars spent to promote a private business through the drafting and distribution of promotional materials;
  • Does having the state’s imprimatur on a release give a private business an advantage over competitors; and
  • Is the state taking business away from advertising and marketing agencies who handle this sort of work?

That the Budget and Control Board would send out a release for Midlands BioFuels is slightly puzzling to John Crangle, director of the government watchdog organization Common Cause of South Carolina.

“An argument could be made that the Budget and Control Board is promoting a private business and the question is, is it a function of the Budget and Control Board to promote a private business?” Crangle asked. “On the other hand, you could also argue that this provides some accountability in that it lets taxpayers in South Carolina know what happened with their tax dollars.”

It’s not uncommon for the state Energy Office to handle promotional efforts for private businesses that receive grants, Griggs said.

“As with any other public or private business receiving a grant though the S.C. Energy Office, we work in conjunction with the recipient to formulate press releases when warranted,” she wrote in an email to The Nerve.

Griggs added that there was no charge to Midlands BioFuels for the S.C. Energy Office’s assistance in developing and pushing out the press release, adding, “Often these releases are encouraged by the U.S. Department of Energy who awards these funds to the S.C. Energy Office to administer projects such as Midlands BioFuels.”

The promotional effort the Budget and Control Board and S.C. Energy Office handled on behalf of Midlands BioFuels would normally cost anywhere from $750 to upwards of $3,000, said Wayne Adams, president of the Adams Group, a Columbia strategic marketing firm whose abilities includes public relations.

Founded in 2008, Midlands BioFuels converts used vegetable oil into biodiesel fuel through a refining process. The company gathers the waste oil it uses from area schools, correctional facilities, restaurants and other commercial food producers.

Midlands BioFuels can turn out 25,000 gallons of 100 percent biodiesel, called B100, a month.

Biodiesel is described as a clean-burning alternative fuel, produced from domestic, renewable resources. It contains no petroleum, but can be blended at any level with petroleum diesel to create a biodiesel blend.

Biodiesel can often be used in diesel engines with little or no modification.

Midlands BioFuels gets a 90 percent yield on the waste product that it uses, meaning for every 100 gallons of vegetable oil it brings in, it turns out 90 gallons of B100 biodiesel, according to Renwick.

Biodiesel generally costs more than petroleum diesel. Earlier this week, Midlands BioFuels was selling B20 for $3.65 a gallon. B20 is a blend of 20 percent (by volume) biodiesel with 80 percent petrodiesel.

Renwick notes that since his company’s inception it has always sold fuel for less than the petrodiesel price.

As long as diesel is selling for more than $2 a gallon, Midlands BioFuels will be profitable, Renwick added, meaning the company’s revenues will exceed its expenses.

With the addition of the blending unit, Midlands BioFuels is the only biodiesel plant in the state and possibly the Southeast that collects its own waste oil, processes it, than manufactures and sells biodiesel, Renwick said.

While the majority of Midlands BioFuels’ taxpayer-subsidized funding was awarded through the S.C. Energy Office, the company also received about $8,000 from the S.C. Department of Health and Environmental Control, along with some money from SC Launch, an affiliate of the S.C. Research Authority, also a state agency.

The original announcement regarding Midlands BioFuels’ grant was made in May 2010. The company was one of 11 organizations in South Carolina that shared more than $4.5 million awarded through the S.C. Energy Office to convert vehicles to run on new fuels and to build the state’s network of alternative vehicle refueling stations.

In addition to Midlands BioFuels, recipients included:

  • Spinx Company, which received $850,000 to install 18 ethanol refueling stations and eight biodiesel stations in Greenville, Anderson, Spartanburg and Oconee counties;
  • The city of Rock Hill, which received $350,250 to convert five city vehicles to operate with compressed natural gas and to install compressed natural gas, biodiesel and ethanol refueling stations; and
  • OM Biofuels LLC of Charleston, which received $52,000 to install a biodiesel refueling station.

While the $85,100 grant was a welcome boon to Midlands BioFuels, the company has been a viable business for three years and in the black for the past year, Renwick said.

He added that the occasional government grant is nice, but neither he nor co-founder Brandon Spence went into the biodiesel business with the idea of getting by on taxpayer subsidies.

“You can’t start a business dependent on the government,” Renwick said.

Reach Dietrich at (803) 779-5022 ext. 110, or kevin@thenerve.org.