Civil Enforcement of the Renewable Fuel Standard Program
The Renewable Fuel 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.
Congress adopted the RFS program to reduce the nation's dependence on foreign oil, help grow the nation's renewable energy industry and achieve significant greenhouse gas emissions reductions.
EPA is charged with implementing the RFS program and enforcing its requirements. In order to protect the program's integrity and maintain a level playing field for regulated companies, EPA is pursuing enforcement actions against renewable fuel producers and importers that generated invalid RINs.
The EPA has implemented the following enforcement response policies relating to obligated parties or renewable fuel exporters who used invalid RINs from 2010, 2011, 2012, 2013 and 2014 RINs:
- Interim Enforcement Response Policy
- Second Interim Enforcement Response Policy
- Amended Second Interim Enforcement Response Policy
Administrative Actions
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For information regarding the EPA’s Notice of Intent to Revoke the Ability of Genscape to Verify RINs as a Third Party Auditor.
Enforcement Actions:
- 2020
- 2018
- 2017
- 2016
- 2015
- 2014
- 2013
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PES Holdings, LLC, et. al
On July 21, 2019, following a June 21, 2019 explosion and fire at the Philadelphia Energy Solutions Refining and Marketing LLC (“PESRM”) owned and operated refinery located in Philadelphia, Pennsylvania (“Philadelphia Refinery”), PES Holdings, LLC, North Yard GP, LLC, North Yard Logistics, L.P., PES Administrative Services, LLC, PES Energy Inc., PES Intermediate, LLC, PES Ultimate Holdings, LLC, and PESRM (collectively the “Debtors”) filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware.
On September 30, 2019, PESRM failed to meet its renewable identification number (“RIN”) retirement obligations, accrued for the period from January 1, 2019 through June 30, 2019, and required by the 2018 Consent Decree and Environmental Settlement Agreement, In Re: PES Holdings, LLC, et. al., Case No. 18-10122 (KG) (“2018 Consent Decree”), that PESRM and many of the other Debtors in this matter entered into with the United States in a prior 2018 bankruptcy case. On March 31, 2020, these RIN retirement obligation violations became a violation under the Clean Air Act’s (“CAA”) Renewable Fuel Standard (“RFS”) program.
Additionally, after the June 21 explosion, including in part while the bankruptcy case was pending, PESRM continued to produce gasoline and diesel fuel from crude oils that remained at the Philadelphia Refinery, triggering additional RIN retirement obligations under the 2018 Consent Decree and the CAA’s RFS program. For any RINs generated after July 1, 2019, the compliance deadline under both the 2018 Consent Decree and the CAA’s RFS program was March 31, 2020.
On May 1, 2020, the United States and Debtors filed a Consent Decree and Environmental Settlement Agreement (“Settlement Agreement”) with the bankruptcy court to resolve Debtors’ obligations under the 2018 Consent Decree, the CAA, and the RFS regulations. Under the Settlement Agreement, Debtors have agreed to purchase and retire up to 161,830,963 Quality Assurance Plan Q-RINs subject to a price cap of $22 million, as described below.
See: the PES Holdings, LLC, et. al. case
NGL Crude Logistics, LLC
On September 27, 2018, the EPA announced a settlement with NGL Crude Logistics, LLC that resolves allegations in the United States’ October 4, 2016 Complaint alleging that the company entered into a series of transactions in 2011, that resulted in the generation of more than 36 million invalid RINs. NGL will pay a civil penalty of $25 million and retire 36 million valid renewable fuel credits. The EPA settled its related allegations against Western Dubuque Biodiesel, LLC on October 4, 2016.
See: the NGL Crude Logistics, LLC
PES Holdings, LLC, et. al.
On January 21, 2018, PES Holdings, LLC, North Yard Financing, LLC, North Yard GP, LLC, North Yard Logistics, L.P., PES Administrative Services, LLC, PES Logistics GP, LLC, PES Logistics Partners, L.P., Philadelphia Energy Solutions Refining and Marketing LLC (PESRM), PESRM Holdings, LLC (collectively the Debtors) filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware.
The Debtors Bankruptcy Plan of Reorganization failed to provide for any compliance with a portion of Debtors’ 2016 RVOs, all of its 2017 RVOs, and the portion of its 2018 RVOs that it incurs between January 1, 2018, and the Effective Date of the settlement (anticipated to be April 1, 2018).
On March 12, 2018, the Debtors and the United States filed a settlement with the bankruptcy court to resolve the Debtors’ obligations under the Clean Air Act Renewable Fuel Standard (RFS) program. Under the Settlement Agreement, Debtors have agreed (1) to retire a total of 138 million currently held RINs to resolve PESRM’s liability for RVOs prior to the Effective Date of Debtors’ proposed Plan of Reorganization (“Plan”); (2) to retire 64.6 million RINs it currently owns towards the Reorganized Debtors post-bankruptcy 2018 RVO; and (3) to consent to retirement of RINs on a semiannual basis for their post-Effective Date RVOs through 2022. This obligation will be extended and the company will be subject to stipulated penalties if it fails to meet this obligation.
See: the PES Holdings, LLC, et. al. case.
Triton Energy, LLC
The EPA issued Triton Energy, LLC (Triton) a Notice of Violation (NOV) on February 15, 2017. The NOV alleges that Triton generated about 39 million invalid D4 renewable identification numbers (RINs) between March 1, 2012, and March 31, 2015.
The EPA entered into the following administrative settlement agreements to resolve alleged civil violations arising from the use of invalid Triton Energy, LLC biomass-based diesel RINs.
See: the Triton Energy, LLC case for information relating to Obligated Parties who used RINs identified in the NOV.
Western Dubuque Biodiesel, LLC
On October 4, 2016, the EPA entered into a settlement agreement with Iowa-based Western Dubuque Biodiesel, LLC. The settlement resolves allegations that the company entered into a series of transactions in 2011, that resulted in the generation of more than 36 million invalid RINs. Western Dubuque will pay a civil penalty of $6 million.
The EPA alleged that in 2011, Western Dubuque entered into a series of transactions with NGL Crude Logistics, LLC (NGL), then known as Gavilon LLC, that resulted in the generation of more than 36 million invalid biomass-based diesel RINs. NGL is not a part of this settlement. The EPA and the U.S. Department of Justice filed a lawsuit against NGL, and entered into a separate settlement agreement with NGL on September 27, 2018, after more than a year and a half of litigation.
See: the Western Dubuque Biodiesel, LLC case.
Chemoil Corporation
On September 29, 2016, EPA entered into 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 settlement resolves an enforcement action by EPA against Chemoil for violations of the Clean Air Act (CAA) involving its failure to comply with the RFS2 requirements. EPA alleged 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 also alleged related reporting violations
The market value of the credits at the time of the settlement agreement -- along with an additional 7.7 million renewable identification numbers (RINs) already retired by Chemoil in the lead up to this settlement -- was 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.
See the Chemoil Corporation case.
Montgomery Recycling Corporation
The EPA issued Montgomery Recycling Corporation (Montgomery Recycling) a Notice of Violation (NOV) on October 8, 2016. The NOV alleges that Montgomery Recycling generated more than 12.5 million invalid biomass-based diesel renewable identification numbers (RINs). Montgomery Recycling failed to produce any qualifying renewable fuel and transferred the majority of these invalid RINs to others.
The EPA entered into the following administrative settlement agreements to resolve alleged civil violations arising from the use of invalid Montgomery Recycling Corporation biomass-based diesel RINs.
Notification to Parties that Own, Transferred, or Used Gen-X Energy Group, Inc. or Southern Resources and Commodities, LLC RINs
The EPA informed Gen-X Energy Group, Inc. (Gen-X), and Southern Resources and Commodities, LLC (SRC) on December 24, 2015, that based on the plea agreement, United States of America vs. Scott Carl Johnson, and associated court filings, Renewable Identification Numbers (RINs) those companies produced were potentially invalid. The majority of these RINs were verified as A-RINs during the Renewable Fuel Standard Quality Assurance Plan (QAP) program’s interim period. (See QAP rule.) This period started on February 21, 2013 and ended on December 31, 2014, but allowed retrospective verification of RINs generated from January 1, 2013.
On January 29, 2016, via email, the EPA notified companies that own, used, or transferred Gen-X or SRC potentially invalid RINs that they may assert an affirmative defense pursuant to 40 C.F.R. § 80.1473.
Under the regulations, parties are generally prohibited from transferring invalid RINs or using invalid RINs to meet the person’s renewable volume obligation (RVO). 40 C.F.R. § 80.1460 (b)(2) and (c)(1). However, companies who used potentially invalid A-RINs for compliance with an RVO under § 80.1427, or companies who transferred potentially invalid A-RINs, may assert an affirmative defense for these actions.
The EPA separately entered into administrative settlement agreements with three obligated parties who collectively used more than 7.7 million unverified Gen-X Energy Group Inc. RINs, that were generated prior to when the interim QAP rule went into effect.
New Energy Fuels Inc. (NEF) and Chieftain Biofuels LLC (Chieftain)
The EPA issued New Energy Fuels Inc. (NEF) and Chieftain Biofuels LLC (Chieftain) a notice of violation (NOV) on July 28, 2015. The NOV alleges that NEF generated more than 10.2 million invalid biomass-based diesel renewable identification numbers (RINs) and Chieftain generated more than 4.8 million invalid biomass-based diesel RINs. NEF and Chieftain failed to produce any qualifying renewable fuel and transferred the majority of these invalid RINs to others.
The EPA entered into the following administrative settlement agreements to resolve alleged civil violations arising from the use of invalid New Energy Fuels Inc. and Chieftain Biofuels, LLC biomass-based diesel RINs.
Washakie Renewable Energy, LLC
On March 19, 2015, EPA filed a civil Complaint against Washakie Renewable Energy, LLC and filed a Stipulation of Settlement and Order (settlement). The settlement resolves allegations that Washakie generated more than 7.2 million invalid biomass-based diesel renewable identification numbers (RINs) from January 29, 2010, to October 15, 2010. The settlement also resolves a number of related recordkeeping and reporting violations.
Washakie will pay a civil penalty of $3 million. EPA obtained mitigation of the harm caused by Washakie's generation of more than 7.2 million RINs by requiring Washakie to purchase and retire an equivalent number of biomass-based diesel RINs. Since Washakie replaced the 7.2 million RINs, the EPA entered into the following penalty only administrative settlement agreements to resolve the alleged civil violations arising from obligated parties' use of the 7.2 million invalid Washakie RINs.
See the Washakie Renewable Energy, LLC case.
Global E Marketing, LLC
The EPA issued Global E Marketing, LLC a notice of violation (NOV) on September 18, 2014. The NOV alleges the company generated more than 6 million invalid biomass-based diesel RINs without importing any qualifying renewable fuel and transferred the majority of these invalid RINs to others.
The EPA entered into the following administrative settlement agreements to resolve alleged civil violations arising from the use of invalid Global E Marketing, LLC biomass-based diesel RINs.
Green Diesel, LLC
On June 19, 2014, Philip Joseph Rivkin, a/k/a Felipe Poitan Arriaga, CEO of Green Diesel, LLC, was indicted by a federal grand jury in Houston, Texas for allegedly selling more than $29 million in fraudulent Renewable Fuel Credits. The indictment states that Rivkin claimed to produce millions of gallons of biodiesel and then generated and sold RINs based upon this claim. In reality, the indictment states, no biodiesel was ever produced. The 68-count indictment against Rivkin includes allegations of wire fraud, mail fraud, Clean Air Act false statements, and money laundering. An indictment is only a charge and is not evidence of guilt. All defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
Rivkin, 49, was arrested in Houston on June 18, 2014, after he arrived from Guatemala, which had deported him for having fraudulently secured Guatemalan citizenship.
The EPA issued Green Diesel, LLC a NOV on April 30, 2012. The NOV alleges the company generated more than 60 million invalid biomass-based diesel RINs without producing any qualifying renewable fuel and transferred the majority of these invalid RINs to others.
The EPA entered into the following administrative settlement agreements to resolve alleged civil violations arising from the use of invalid Green Diesel, LLC biomass-based diesel RINs.
Imperial Petroleum, Inc. and e-Biofuels, LLC NOV
The EPA issued e-Biofuels, LLC and Imperial Petroleum, Inc. a NOV on December 18, 2013. The NOV alleges the companies generated more than 33.5 million invalid biomass-based diesel RINs without producing any qualifying renewable fuel and transferred the majority of these invalid RINs to others.
The EPA entered into the following administrative settlement agreements to resolve alleged civil violations arising from the use of invalid e-Biofuels, LLC biomass-based diesel RINs.
Absolute Fuels, LLC
On March 29, 2013, Jeffrey David Gunselman, the owner of Absolute Fuels, LLC, was sentenced to more than 15 years in prison for selling more than $40 million in fraudulent RINs. He was also ordered to pay more than $54.9 million in restitution, and fined $175,000. In December of 2012, Gunselman pled guilty to an indictment charging 51 counts of wire fraud, 24 counts of money laundering and four counts of making false statements in violation of the Clean Air Act.
The EPA issued Absolute Fuels, LLC 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.
The EPA entered into the following administrative settlement agreements to resolve alleged civil violations arising from the use of invalid Absolute Fuels, LLC biomass-based diesel RINs.
Clean Green Fuels, LLC
On February 22, 2013, Rodney R. Hailey, the owner of Clean Green Fuels, LLC, was sentenced to more than 12 years in prison for selling about $9 million in fraudulent RINs. He was also ordered to pay restitution of about $42 million to over 20 companies and to forfeit $9.1 million in proceeds from the sale of fraudulent RINs that he used to purchase a house, cars, and jewelry.
On June 25, 2012, Rodney R. Hailey was found guilty of wire fraud, money laundering, and violating the Clean Air Act in the United States District Court for the District of Maryland. The jury found that Mr. Hailey ran a scheme in which he and his company generated and sold over 32 million RINs, but neither produced nor imported any renewable fuel.
On November 7, 2011, the EPA issued NOVs to 24 companies who retired invalid biomass-based diesel RINs, generated by Clean Green Fuels, LLC, to comply with their renewable volume obligations (RVOs).
The EPA entered into the following administrative settlement agreements to resolve alleged civil violations arising from the use of invalid Clean Green Fuels, LLC biomass-based diesel RINs.