Chemoil settles federal charges involving renewable fuel credits
Chemoil Corp., a San Francisco-based motor fuels supplier, agreed to retire more than $71 million of renewable identification numbers (RIN) and pay a $27-million fine as a proposed settlement of federal charges that it violated renewable fuel credit procedures under the federal Renewable Fuel Standards, the US Department of Justice and Environmental Protection Agency jointly announced.
The fine was the highest in the history of EPA’s fuel programs, they noted in their Sept. 29 announcement. They alleged that Chemoil exported at least 48.5 million gal of biodiesel from 2011 to 2013, but failed to retire the more than 72 million RINs that were generated for the exported fuel.
RINs are credits that are created when a company produces or imports renewable fuel. They can be traded or sold to refiners and blenders to help them comply with the RFS program’s fuel volume requirements, the two federal entities explained.
They said these RIN suppliers are required to retire the credits for biodiesel and other renewable fuels because the fuel is no longer available to be blended into US fossil fuel supplies and cannot be used to meet renewable fuel quotas that the 2005 Energy Policy Act established and the 2007 Energy Independence and Security Act expanded.
If those suppliers fail to retire the appropriate number and type of RINs associated with the exported fuel, as DOJ and EPA alleged happened in the Chemoil case, it can artificially inflate the volume of renewable fuel available for blending in this country and the number of RINs available to meet the RFS volume mandate. Ensuring that renewable fuel exporters comply with RIN retirement regulations is critical to the RFS program’s proper functioning and integrity, DOJ and EPA said.
The American Petroleum Institute and American Fuel & Petrochemical Manufacturers have each strongly criticized the RIN program that EPA developed and implemented to ensure that refiners and blenders meet RFS volume quotas. The program actually “provided the unintended framework for a new and persistent area of fraud,” an E&W Strategies report commissioned by Valero Energy Corp. charged (OGJ Online, Sept. 20, 2016).
The proposed settlement’s consent decree, which was filed on Sept. 29 in US District Court for Northern California, is subject to a 30-day public comment period and final court approval, DOJ and EPA said.
Contact Nick Snow at [email protected].
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.
