Chemoil Corporation Renewable Fuel Standard Settlement

(Washington, DC - September 29, 2016) EPA 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. 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.

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Overview of Company

Chemoil Corporation (Chemoil) is a privately-held company, and one of the world's leading retail energy companies in sea and land sector. Chemoil sells marine, aviation, diesel, renewable fuels, and residual oil products. Chemoil is incorporated in California, and resides and does business in San Francisco, California.

Overview of the Renewable Fuel Standard Program

The original Renewable Fuel Standard program was created under the Energy Policy Act of 2005, and established the first renewable fuel volume mandate in the United States. The program required 7.5 billion gallons of renewable fuel be blended into gasoline by 2012.

The Energy Independence and Security Act of 2007 expanded the program, which became known as the RFS2 program. The RFS2 program reduces greenhouse gas (GHG) emissions by setting a national mandate for renewable fuels that meet specific GHG emissions reduction standards. The RFS2 regulations created a market based program to assure that the national mandate will be met. Renewable fuel producers and importers generate renewable fuel credits, known as renewable identification numbers or RINs, for each gallon of renewable fuel that meets the GHG emissions reduction standards. The program requires refiners and importers, known as obligated parties, to retire a specific number of RINs each year based on the amount of petroleum fuel that they produce and import. Since exported renewable fuel is no longer available for use in the United States to fulfill the renewable fuel volume mandates, the program also requires exporters of renewable fuel to calculate and meet exporter renewable volume obligations that are based upon the type and volume of renewable fuel exported from the United States.

The RFS program was designed to reduce GHG emissions by 138 million metric tons when fully implemented in 2022. The reductions would be equivalent to taking about 27 million vehicles off the road.

Violations

The settlement resolves an enforcement action by EPA against Chemoil for violations of the Clean Air Act involving its failure to comply with the RFS2 requirements. EPA and the U.S. Department of Justice (DOJ) allege that Chemoil exported at least 48.5 million gallons of biodiesel from the United States in 2011, 2012, and 2013, without retiring the approximately 72.7 million biomass-based diesel RINs for that fuel. The EPA discovered the alleged violations as a result of tips from RFS program participants. EPA and DOJ also allege related reporting violations

Injunctive Relief

Chemoil is required to mitigate the harm caused by its violations by retiring from the market 65 million biomass-based diesel RINs. Chemoil retired an additional 7.7 million biomass-based diesel RINs in the lead up to this settlement.

Pollutant Impacts

The failure to retire RINs threatens the GHG emissions reductions Congress sought to achieve by requiring that the renewable fuel be used in the United States. The EPA estimates that Chemoil’s violations resulted in a failure to achieve a reduction of emissions equivalent to 305,579 metric tons of carbon dioxide in the United States.

Health and Environmental Benefits

In order to ensure the GHG emissions reductions from the RFS program are achieved, and to protect the program's integrity and maintain a level playing field for regulated companies, EPA pursues enforcement actions against renewable fuel exporters, such as Chemoil that export renewable fuel but fail to retire the requisite RINs for that fuel.

Failure to submit required reports to EPA are significant violations because they result in a reduced ability by EPA to know whether the renewable fuels meet specific GHG emissions reduction standards, and a negative impact on the integrity of the renewable fuels program.

Civil Penalty

Chemoil will pay a civil penalty of $27 million.

Comment Period

The proposed settlement, lodged 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.  Information on submitting comments is available at the Department of Justice website.

For More Information, Contact:

Tony Miller
Air Enforcement Division
U.S. Environmental Protection Agency
1595 Wynkoop Street (8MSU)
Denver, Colorado 80202
[email protected]
303-312-7161