BRUSSELS, BELGIUM - Documents indicate that the European Union is about to investigate whether U.S. biodiesel producers have routed their product to Europe through third countries in an effort to avoid tariffs imposed on U.S. shipments last year, the Wall Street Journal reported.

European biodiesel producers first sought the tariffs in 2008. They argued that U.S. government subsidies were causing a flood of U.S. biodiesel shipments to the EU that depressed prices and forced a number of European biodiesel plants to go out of business.

News of the probe comes at a time when the U.S. biodiesel industry is pushing hard for a retroactive, multiple-year extension of the biodiesel tax credit. The U.S. $1/gal biodiesel tax credit expired at the end of 2009.

The probe will also look into whether U.S. biodiesel producers have deliberately blended their product with large amounts of mineral oil or other substances to avoid the duties, since they only apply to fuel blends that contain at least 20 percent pure biodiesel.

The investigation could lead to the expansion of EU tariffs to include biodiesel shipments from Canada and Singapore and fuel blends that contain less than 20 percent biodiesel, the documents indicated.

In July, the European Commission said in a note to national governments that biodiesel shipments from the U.S. to the EU have plummeted since the tariff went into effect in March 2009. But the direct shipments have apparently been replaced partly by large shipments of U.S. biodiesel exported to Canada and Singapore that are then re-exported to the EU, the note said.