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 developing 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:
- 2016
- 2015
- 2014
- 2013
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NGL Crude Logistics, LLC and Western Dubuque Biodiesel, LLC
On October 4, 2016, the EPA entered into a settlement agreement with Iowa-based Western Dubuque Biodiesel, LLC. It 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), formally 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 have filed a lawsuit against NGL, and will ask the court to require NGL to retire 36 million biomass-based diesel RINs to offset the harm caused by its alleged violations, and to pay a substantial civil penalty.
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 intends to present obligated parties who used these RINs for compliance purposes with administrative settlement agreements that will be generally consistent with the Interim Enforcement Response Policies.
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 contacted any parties who may own, have transferred, or used potentially invalid Gen-X or SRC Q-RINs, generated under the QAP final rule, or unverified RINs to explain the process of resolving those potential violations.
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.