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Civil Enforcement of the Renewable Fuels Standard (RFS) Program
The Renewable Fuels Standard (RFS) program requires producers or importers of renewable fuel to generate fuel credits, known as Renewable Identification Numbers (RINs), in proportion to the amount and type of renewable fuel they produced or imported. The RFS Program also requires that non-renewable fuel refiners and importers, known as obligated parties, and renewable fuel exporters obtain valid RINs and retire those RINs each year by submitting them to the EPA.
Enforcement of the renewable fuel requirements helps protect the program’s integrity and maintain a level playing field for regulated companies.
The EPA has issued Notices of Violations (NOVs) relating to RINs produced by the following companies:
- Clean Green Fuels, LLC
- Absolute Fuels, LLC
Clean Green Fuels, LLC
On November 7, 2011, the EPA issued 24 NOVs to companies who retired invalid biomass-based diesel RINs to comply with their renewable volume obligations (RVOs). The RINs were generated by Clean Green Fuels, LLC, whose owner, Rodney R. Hailey, was charged on October 3, 2011, with wire fraud, money laundering, and violating the Clean Air Act. These charges arise from a scheme in which he and his company allegedly generated and sold over 32 million RINs, but neither produced nor imported any renewable fuel. The filing of criminal charges is not a finding of guilt; Mr. Hailey is presumed innocent until proven guilty in court.
Please see the following company names to view that company’s NOV.
- Astra Oil Company (PDF) (7pp, 491K)
- Atlantic Trading & Marketing Inc (PDF) (5pp, 321K)
- Buckeye Pipe Line Company, L.P. (PDF) (4pp, 190K)
- Buckeye Terminals, LLC (PDF) (4pp, 989K)
- Colonial Oil (PDF) (4pp, 187K)
- Exxon Mobil Corporation (PDF) (4pp, 179K)
- Flint Hills Resources LP (PDF) (4pp, 242K)
- George E. Warren Corporation (PDF) (14pp, 1MB)
- Kinder Morgan SE Terminals LLC (PDF) (4pp, 186K)
- Lima Refining Company (PDF) (7pp, 384K)
- Marathon Petroleum Company LP (PDF) (7pp, 137K)
- Morgan Stanley Capital Group Inc. (PDF) (5pp, 184K)
- Motiva Enterprises LL (PDF) (5pp, 86K)
- NECO Distribution and Transport Ltd (PDF) (4pp, 203K)
- Nidera Energy US (PDF) (5pp, 340K)
- RIL USA Inc. (PDF) (4pp, 245K)
- Shell Chemicals LP (PDF) (4pp, 72K)
- Shell Oil Company (PDF) (4pp, 183K)
- Shell Oil Products US (PDF) (5pp, 314K)
- Shell Trading US Company (PDF) (5pp, 282K)
- Sunoco, Inc. (R&M) (PDF) (4pp, 258K)
- TE Products Pipeline Company (PDF) (4pp, 173K)
- Tesoro Companies, Inc. (PDF) (4pp, 78K)
- Trafigura AG (PDF) (4pp, 265K)
In January 2012, the EPA sent settlement offers to all companies that used the invalid RINs generated by Clean Green Fuels, LLC. The agency took this step to protect the integrity of the renewable fuels market and to reinforce the need for companies to ensure they are using only valid renewable fuel credits.
Absolute Fuels, LLC
The EPA issued Absolute Fuels, LLC (PDF) (2pp, 539K) a NOV on February 2, 2012. The NOV alleges the company generated over 48 million invalid biomass-based diesel RINs without producing any qualifying renewable fuel and transferred the majority of these invalid RINs to others.
Frequently Asked Questions and Answers
Question: What should a company do if they believe they currently own invalid RINs or retired invalid RINs to meet its RVO?
Answer: Follow the regulations at 40 C.F.R. § 80.1431(b) (excerpted below) and, as needed, contact the EPA’s Fuels Compliance Center of the OTAQ via the Fuels Programs Support Line (EPAFuelsPrograms@epa.gov or 202-343-9755).
“In the case of RINs that are invalid, the following provisions apply:
- Upon determination by any party that RINs owned are invalid, the party must keep copies and adjust its records, reports, and compliance calculations in which the invalid RINs were used. The party must retire the invalid RINs in the applicable RIN transaction reports under § 80.1451(c)(2) for the quarter in which the RINs were determined to be invalid.
- Invalid RINs cannot be used to achieve compliance with the Renewable Volume Obligations of an obligated party or exporter, regardless of the party's good faith belief that the RINs were valid at the time they were acquired.
- Any valid RINs remaining after invalid RINs are retired must first be applied to correct the transfer of invalid RINs to another party before applying the valid RINs to meet the party's Renewable Volume Obligations at the end of the compliance year.”
Question: What is a NOV?
Answer: A NOV is a Notice of Violation (NOV). It is one step in EPA’s investigation and enforcement of violations of EPA statutes and regulations. A NOV notifies the recipient that EPA believes the recipient has committed one or more violations and provides instructions for coming into compliance. NOVs typically offer an opportunity for the recipient to discuss the recipient’s actions, including efforts to achieve compliance. NOVs are not a final EPA determination that a violation has occurred. EPA considers all appropriate information to determine the final enforcement response.
Question: Does EPA have a role in ensuring the validity of RINs?
Answer: The Renewable Fuel Standard (RFS) regulations are clear that invalid RINs may not be used for compliance. The EPA does not certify or otherwise validate RINs. In providing regulated parties with the flexibility of purchasing RINs to meet RFS requirements, the EPA stated that the buyer must beware.
Question: What help does EPA provide regulated parties in identifying and addressing potential RIN problems?
Answer: The EPA’s Moderated Transaction System (EMTS) provides several tools that can help RIN buyers avoid buying, selling and using RINs from questionable sources. If a RIN buyer has concerns about the validity of RINs it has purchased, the EPA's system allows it to “lock” those RINs and not have them counted towards meeting RFS requirements. If a RIN buyer has concerns about specific producers of RINs, the EPA’s system also allows it to block RINs from those producers from being transferred to its account.
Question: Do obligated parties and renewable fuel exporters that used invalid 2010 Clean Green or Absolute Fuels Renewable Identification Numbers (RINs) need to replace all of the invalid RINs with valid 2010 RINs?
Answer: The Renewable Fuels Standard (RFS) regulations provide a limited flexibility to carry a RIN deficit, so obligated parties and renewable fuel exporters that used invalid RINs may be able to show that they meet their Renewable Volume Obligations (RVOs) by carrying a deficit forward in accordance with the limitations at 40 C.F.R. § 80.1427(b) and making up the deficit with valid RINs in the following compliance year.
Obligated parties and renewable fuel exporters that used invalid Clean Green or Absolute Fuels thus have the options of replacing invalid RINs in their 2010 compliance reports with valid RINs that meet the RFS requirements for the 2010 compliance period, including roll over and RIN life limitations, or incurring or adding to a 2010 RIN deficit that is carried forward to and made up in the 2011compliance year. Those electing to incur or add to a 2010 deficit would be required to demonstrate that the deficit had been made up in 2011 as part of their 2011 compliance report due in early 2012.