Colonial Oil Industries, Inc. Clean Air Act Settlement

WASHINGTON, DC  – On April 10, 2024, the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice announced a settlement with Colonial Oil Industries, Inc. addressing violations of the Clean Air Act’s Renewable Fuel Standard (RFS) program requirements.  

The settlement requires Colonial to purchase and retire over 9 million RINs within two years, at an estimated cost of approximately $12.2 million and that will result in over 18,300 metric tons of carbon dioxide equivalent reductions. In addition, Colonial will pay a civil penalty of $2,805,420. 

• Overview of Company
• Violations
• Injunctive Relief
• Environmental Impact from Alleged Violations
• Civil Penalty
• Contact

Overview of Company

Colonial produces and imports fuel and lubricant products. With terminals in Savannah, Georgia, Charleston, South Carolina, and Jacksonville, Florida, as well as numerous terminals along commercial pipelines, Colonial has an extensive network to supply gasoline and diesel fuel to the eastern United States. 

Violations

Renewable Fuel Standard (RFS) Violations

Under the RFS program, refiners or importers of gasoline or diesel fuel, such as Colonial, achieve compliance by either blending renewable fuels into transportation fuel or by purchasing credits (called “Renewable Identification Numbers” or RINs) to meet their renewable volume obligations (RVOs). 

EPA calculates and establishes annual RVOs through rulemaking, based on the Clean Air Act’s volume requirements and projections of gasoline and diesel production each year. The standards are converted into a percentage and obligated parties must demonstrate compliance annually. 

Fuel intended for use only in ocean-going vessels is not required to be included in obligated parties’ RVO calculations. Not all marine vessels are ocean-going vessels, however, and volumes supplied to non-oceangoing vessels must be included in RVO calculations. Between 2013 and 2019, Colonial excluded fuel it supplied to non-oceangoing marine vessels from its RVO calculations in violation of the RFS regulations. 

Reid Vapor Pressure (RVP) Standard Violations

This settlement also resolves claims related to Colonial’s sale of three batches of gasoline totaling more than 1.3 million gallons produced at its facilities located in Savannah, Georgia and Jacksonville, Florida that exceeded the applicable 9.0 psi Reid vapor pressure (RVP) standard during the 2018 summer season (May 1 to September 15).  

Injunctive Relief

The settlement requires Colonial to purchase and retire a total of 9,004,874 RINs within two years of settlement, which is estimated to cost approximately $12,200,000 (based on the annual average price of RINs in calendar year 2023). Under the RFS program, there are four different types of RVO obligations: cellulosic biofuel, biomass-based diesel, advanced biofuel, and renewable fuel. The settlement requires Colonial to purchase a minimum number of RINs for each RVO that is consistent with the type of RINs that Colonial would have been required to purchase during the years of non-compliance. 

Environmental Impact from Alleged Violations 

Colonial’s actions resulted in less renewable fuel being used in lieu of petroleum fuel, resulting in increased greenhouse gas (GHG) emissions. Elevated concentrations of GHGs have been warming the planet, leading to changes in the Earth’s climate including changes in the frequency and intensity of heat waves, precipitation, and extreme weather events, rising seas, and retreating snow and ice.  

Violations of the RVP standards resulted in additional emissions of volatile organic compounds (VOCs). VOCs are a precursor to the formation of ground-level ozone. Ground-level ozone causes a wide variety of health and environmental impacts, including temporary breathing difficulty for people with asthma, respiratory illness, and aggravation of existing heart disease.  

Civil Penalty

Colonial will pay a $2,805,420 civil penalty to the United States.

Contact Information

For Legal Questions: 
Ryan Bickmore, Attorney-Advisor 
Air Enforcement Division 
U.S. Environmental Protection Agency 
1595 Wynkoop Street (8MSU) 
Denver, CO  80202-1129 
Ryan Bickmore ([email protected])  

For Technical Questions: 
Taylor Waanders, Chemical Engineer  
Air Enforcement Division 
U.S. Environmental Protection Agency 
1595 Wynkoop Street (8MSU) 
Denver, CO  80202-1129 
Taylor Waanders ([email protected])