Electric vehicle charging company appeals record fine from DEQ for fraud

The owner of TTS Charging said he was mistaken about how DEQ’s carbon credits program works but the agency said he acted recklessly

By: - October 5, 2022 6:32 pm

Brand new vehicles bought in Oregon in 2035 and beyond will need to be zero emissions, according to new rules passed by the state’s Environmental Quality Commission. (Oregon Department of Transportation/Flickr)

A Lincoln City company that builds electric vehicle charging stations and allegedly defrauded the Oregon Department of Environmental Quality out of $2 million in carbon credits is appealing the ruling. 

On Friday, the agency fined Thompson Technical Services, or TTS Charging, of Lincoln City $2.7 million for falsely claiming credits through a state greenhouse emissions reductions program. It is the largest fine DEQ has ever issued. 

TTS owner Merlin Thompson denies the charges, saying he made a mistake when he submitted a quarterly report to DEQ saying three of his charging stations in Sheridan had provided 15 million kilowatt hours of electricity to electric vehicles during January, February and March of this year. 

The charging stations had not been built, DEQ found. 

Even if they had been, they could not dispense that amount of kilowatt hours charging electric vehicles 24 hours a day for a year. Based on the claims, TTS reaped 16,089 carbon credits from DEQ under the Clean Fuels Program and sold them for nearly $2 million that was supposed to be invested in expanding the business, stations and staff. Since its founding nearly two years ago, Thompson has not finished any of his 10 charging stations in Sheridan and Lincoln City, he said, citing supply chain issues. Additionally, many of Thompson’s employees say they are owed thousands of dollars in unpaid wages, according to complaints submitted to the Oregon Bureau of Labor and Industries. 

Claiming confusion

On Wednesday, Thompson said in a note on the company’s website announcing the appeal that he was confused about the agency’s carbon crediting program, and thought he was applying for advance carbon credits that could be awarded before infrastructure had been built. 

Under the Clean Fuels Program, DEQ awards electric vehicle charging station builders credits for each ton of carbon dioxide they keep out of the atmosphere by powering electric vehicles. Those companies can sell the credits to fossil fuel distributors, who are required by law to lower their emissions and the carbon intensity of diesel and gas imported into the state. Fossil fuel companies can buy carbon credits from companies like TTS to count towards their overall emissions reductions. TTS sold its carbon credits for about $1.8 million to Elbow River Marketing, a fossil fuel distributor and marketer based in Calgary, Canada.

It's not something that I purposely did. I’m not trying to purposely defraud anybody. All I want to do is get these charging stations out there.

– Merlin Thompson, owner of TTS Charging

DEQ will advance government entities, schools or companies under contract with those public organizations up to six years worth of carbon credits to sell and put back into their business. Thompson’s company does not qualify for such credits. He said when he filed for credits on the three charging stations, he thought he was reporting kilowatt hours he expected the company to provide in order to get advance credits, not earned credits from already charging vehicles.

“It’s not something that I purposely did,” Thompson told the Capital Chronicle. “I’m not trying to purposely defraud anybody. All I want to do is get these charging stations out there.” 

Thompson also said he found out about the mistake when DEQ went public with the fine Friday. 

Harry Esteve, a DEQ spokesperson, said in an email that Thompson signed a statement months ago that said the nonexistent charging stations had dispensed nearly 15 million kilowatt hours of charges to cars. 

“DEQ alleges this was reckless conduct,” Esteve said. 

Esteve said the company received a pre-enforcement notice warning them of the violations and pending action 50 days before Friday’s announcement.

Misleading DEQ

Thompson is also charged with misleading the agency about where the electricity for the charging stations would come from, inflating the environmental value of his charging stations and misleading the agency into giving him too many carbon credits. 

In paperwork filed with DEQ, Thompson claimed the electricity for the stations would come from Consumers Power, Inc, a cooperative utility that has a lower carbon intensity score from DEQ compared to other electricity providers in the state. The score is based on the amount of energy electric utilities source from renewables such as solar and hydropower. But DEQ found that Thompson planned to buy electricity from PGE, the largest electricity provider in the state, which has a higher carbon intensity score because it doesn’t use as much energy from renewable sources. Had Thompson correctly identified the source of the electricity in his application for carbon credits, TTS would have received just over 9,156 credits from DEQ, not the 16,089 it received and sold. 

Wage theft

Thompson claims he used the nearly $2 million he received in carbon credits to buy an electric vehicle fleet for maintenance and testing at electric vehicle stations and to pay for employees and training. 

But according to eight wage-theft complaints against TTS filed with the Oregon Bureau of Labor and Industry since March, Thompson has not paid many of his employees. 

The employees, almost all technicians tasked with building and servicing the charging stations, said Thompson took taxes out of their pay but never paid them for months or at all. They also said he did not give them the necessary tools and protective equipment needed to work with high-voltage electricity. One employee claimed being owed more than $15,000. Some said they had not been paid since December 2021. 

Walt Mower, a former technician, said he and five other employees went to Thompson’s Lincoln City home to confront him about unpaid wages. 

I’m still trying to get caught up. He put me so far in the hole.

– Walt Mower, former TTS Charging technician

Mower quit after five months and earning only $10,000. He claims he is owed $38,000. He told Thompson he needed the money for medical treatment. After he quit, Mower found a job in construction and went to a doctor who diagnosed him with bladder cancer. 

“I’m still trying to get caught up. He put me so far in the hole,” Mower said.

Thompson said he was only aware of two wage disputes and that both were settled. He said one involved  misunderstandings around reimbursement for travel and motel expenses and in another, he said an employee had not reported all their hours. 

Thompson said that most technicians were not salaried but were paid based on services provided. 

“Technicians get paid based on their work. If they’re not doing work, there’s no wages to be paid,” he said. 

In addition to the fine, DEQ revoked TTS’ permission to participate in the Clean Fuels Program and its remaining 89 credits. The company must purchase credits to replace those it received from DEQ and transferred to the marketing company.

If the company complies with DEQs orders, the agency will reduce the size of the penalty, according to a news release.

Thompson said he’ll do whatever it takes to pay DEQ back. 

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CORRECTION: The Department of Environmental Quality advances carbon credits to government entities, schools and companies that contract with them. A previous version of this story said the credits are given to new companies. Thompson thought he was applying for advance carbon credits, but does not qualify for them. 

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Alex Baumhardt
Alex Baumhardt

Alex Baumhardt has been a national radio producer focusing on education for American Public Media since 2017. She has reported from the Arctic to the Antarctic for national and international media, and from Minnesota and Oregon for The Washington Post. She previously worked in Iceland and Qatar and was a Fulbright scholar in Spain where she earned a master's degree in digital media. She's been a kayaking guide in Alaska, farmed on four continents and worked the night shift at several bakeries to support her reporting along the way.

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