Chemoil must pay largest settlement in history of EPA's fuel programs

Chemoil must pay largest settlement in history of EPA's fuel programs

EPA and DOJ allege Chemoil exported biodiesel, but failed to retire RINs.

Chemoil Corporation is required to retire 65 million renewable fuel credits to resolve alleged violations of the Renewable Fuel Standard program, according to the terms of a settlement announced today by the Environmental Protection Agency and Department of Justice.

The current market value of the credits -- along with an additional 7.7 million renewable identification numbers (RINs) already retired by Chemoil in the lead up to this settlement -- is more than $71 million. Chemoil will also pay a $27 million civil penalty under the settlement, the largest in the history of the EPA’s fuel programs.

The U.S. Environmental Protection Agency and the U.S. Department of Justice today announced a settlement with Chemoil Corporation that requires the company to retire 65 million renewable fuel credits to resolve alleged violations of the Renewable Fuel Standard (RFS) program. (Photo: monkey business images/Thinkstock)

EPA and the DOJ allege that Chemoil exported at least 48.5 million gallons 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 created when a company produces or imports renewable fuel and can be traded or sold to refiners and fuel importers or exporters to help them comply with the RFS program requirements.

The RFS program requires exporters to retire RINs for renewable fuel like biodiesel, because the fuel exported is no longer available for blending into United States’ fossil fuel supply and, for that reason, cannot be used to meet the renewable fuel volume mandate established by Congress. If exporters fail to retire the appropriate number and type of RINs associated with the exported fuel, as the United States alleges happened here, it artificially inflates the volume of renewable fuel available for blending in this country and the number of RINs available to meet the renewable fuel volume mandate. Ensuring exporters comply with the regulations for RIN retirement is critical to the proper functioning and integrity of the RFS program.

“This settlement delivers on the greenhouse gas emissions reduction goals that Congress envisioned for the Renewable Fuel Standard,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “It’s vital that companies retire renewable fuel credits when exporting fuel abroad. Upholding this requirement is a key way EPA is working to maintain program integrity and a level playing field for companies that follow the law.”

“Congress adopted the Renewable Fuel Standards program to achieve significant greenhouse gas emissions reductions, reduce the nation’s dependence on foreign oil, and grow our domestic renewable energy industry,” said Assistant Attorney for the Environment and Natural Resources Division, John C. Cruden. “By ensuring a level playing field within the industry through vigorous compliance monitoring and enforcement, we help ensure that these important Congressional goals are met.”

EPA discovered the alleged violations as a result of tips from RFS program participants.

Chemoil is based in San Francisco, California, and sells marine, aviation, diesel, renewable fuels and residual oil products.

The proposed settlement, lodged today in the U.S. District Court for the Northern District of California, is subject to a 30-day public comment period and final court approval.

For more information on the settlement and for information on how to submit a comment, visit

https://www.epa.gov/enforcement/chemoil-corporation-renewable-fuel-standard-settlement

Source: EPA

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