The U.S. EPA has announced the amount of administrative settlements levied against 30 obligated parties and renewable fuel exporters due to the purchase of invalid biodiesel renewable identification numbers (RINs) used by EPA to track obligated party compliance with the renewable fuel standard (RFS2). The RINs were fraudulently generated by Clean Green Fuels LLC and Absolute Fuels LLC.

According to information published by the EPA, it is pursuing enforcement actions against renewable fuel producers and importers that generated invalid RINs—specifically Clean Green Fuel and Absolute Fuels—in an effort to protect the RFS2’s integrity and maintain a level playing field for regulated companies. The EPA also announced that it has implemented an interim enforcement response policy for obligated parties or exporters who used invalid RINs generated by these two companies. The administrative settlement agreements entered by the EPA against the 30 obligated parties and exporters aim to remedy the use of these fraudulent RINs.

The settlements include:

-Astra Oil Co. LLC—$292,645

-Atlantic Trading & Marketing Inc.—$50,000

-BP Products North America—$350,000

-Buckeye Pipe Line Company LP —$8,397

-Buckeye Terminals LLC—$6,766

-Citgo Petroleum Corp.—$350,000

-Colonial Oil Industries—$15,130

-ConocoPhillips—$250,000

-Enterprise TE Products Pipeline Co. LLC—$440

-Exxon Mobil Corp.—$165,407

-Flint Hills Resources LP—$29,301

-George E. Warren Corp.—$250,000

-Houston Refining LP—$150,000

-Kinder Morgan Southeast Terminals LLC—$3,000

-Lansing Trade Group LLC—$5,586

-Lima Refining Co.—$130,084

-Marathon Petroleum Co. LP—$219,792

-Morgan Stanley Capital Group Inc.—$4,275

-Motiva Enterprises LLC—$239,848

-National Cooperative Refinery Association—$63,642

-Nidera Energy US—$66,624

-RIL USA Inc.—$50,000

-Shell Chemicals LP—$10,000

-Shell Oil Co.—$10,800

-Shell Oil Products US—$110,331

-Shell Trading (US) Co.—$96,799

-Sunoco Inc. (R&M)—$311,100

-TOTAL Petrochemicals USA Inc.—$109,802

-Trafigura AG—$73,465

-WRB Refining LP—$227,538

According to Wayne Lee, CEO of Lee Enterprises Consulting Inc., it is a positive sign that the EPA elected to enact administrative settlements to deal with this issue, as harsher penalties could have been enforced. That said, Lee noted that in the settlements the EPA has made it clear that obligated parties have a duty to verify that they buy valid RINs. “They are basically telling the obligated parties that they need to inspect the RINs, and inspect the people who are selling the RINs, before they buy them,” he said.

In its interim enforcement response policy the EPA stressed that it is “incumbent upon all parties to undertake due diligence to ascertain the validity of RINs to be used to meet an RVO under the [RFS program].” The agency also said it expects all parties to prevent future violations, and will be taking a more aggressive approach to future violations.

The streamlined approach put forth by the EPA applies to parties under two circumstances: if at the time they used the RINs they had not yet learned they were invalid, and if they have implemented remedial actions prescribed by the agency, including the resubmittal of reports to remove the invalid RINs. According to the EPA, as a condition to resolving RIN use and shortfall violations under the streamlined approach, parties will be required to submit a RIN integrity report within one year of the date that it learned that it used an invalid RIN. The report must describe the methodology or system that has been implemented or adopted to ensure that RINs it uses to satisfy its RFS2 obligations are valid.

As a result of this policy, Lee said he expects that more obligated parties will elect to work with third parties to validate RINs. Lee Enterprises Consulting offers a RIN verification program, RIN 9000, and Lee said he has already been contacted by obligated parties looking for assistance with putting together RIN integrity reports. Lee also said EPA intends to be more aggressive about this issue from here on out.

Although a great deal of attention has been paid to this issue of fraudulent RINs, Lee said he very seriously doubts that many companies or individuals in the industry are purposely generating invalid RINs. “If there is an inaccuracy in the industry, I don’t think it’s intentional,” he said. Rather, he says it’s likely that many invalid RINs are the result of unintentional mistakes that can be addressed by better education and training.