RFS non-compliance cost this company $15 million
Presented by TrueComply AI
Welcome to the latest edition of our LinkedIn Regular-atory Compliance Newsletter! In this issue, we'll look at a noteworthy Clean Air Act settlement involving Colonial Oil Industries, Inc., and explore the implications of their recent violations and the financial consequences they face. We'll also discuss some important considerations regarding Reid Vapor Pressure (RVP) calculations.
Settlement Overview
Colonial Oil Industries, Inc., a major petroleum products distributor based in Savannah, Georgia, has reached a settlement with the U.S. Environmental Protection Agency (EPA) and the Department of Justice (DOJ) regarding Clean Air Act violations.
Violations and Compliance Issues
The company was found to have violated several provisions of the Clean Air Act, specifically:
1. Failure to comply with Renewable Fuel Standard (RFS) program requirements
2. Improper exclusion of certain marine vessel fuel from renewable volume obligation calculations
3. Production of gasoline exceeding federal limits on volatile organic compounds
Between 2013 and 2019, Colonial Oil excluded approximately 100 million gallons of diesel supplied to non-oceangoing marine vessels from its renewable volume obligation calculations.
Financial Ramifications
The settlement includes significant financial penalties and compliance measures:
- Colonial Oil Industries will pay a $2.8 million civil penalty.
- The company is expected to spend approximately $12.2 million to purchase and retire over 9 million Renewable Identification Numbers (RINs) within two years.
Potential Environmental Impact
The EPA estimates that the settlement will result in over 18,300 metric tons of carbon dioxide equivalent reductions, which is comparable to approximately:
- Offsetting emissions from powering 2,386 homes for a year
- Removing 4,355 gasoline-powered cars from the road for a year
Reid Vapor Pressure (RVP) Considerations
Given the importance of RVP in regulatory compliance, it's crucial to understand its calculation and potential issues:
Calculation Methods
RVP can be measured using specialized equipment or estimated using the product's composition[4]. One common method for estimating RVP is to use the boiling points of individual components in the fuel, along with their vapor pressures[4].
Potential Issues
1. While estimation methods exist, actual RVP can vary depending on factors such as impurities or the accuracy of vapor pressure data used[4]. For regulatory compliance, specialized equipment is often necessary for accurate measurements.
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2. The presence of air and water vapor can affect RVP measurements. Some calculation models assume an air- and water-free environment, which may not reflect real-world conditions[6].
3. RVP is highly sensitive to temperature changes. The standard test conditions (100°F or 37.8°C) may not always represent actual storage or transportation conditions[3].
4. Calculating RVP for blended products can be challenging, as the relationship between component RVPs and the final blend's RVP is not always linear[6].
5. It's important to note that True Vapor Pressure (TVP) and RVP are not identical. TVP is more relevant from an engineering perspective, while RVP is the standard regulatory measure[5].
Implications for the Industry
This settlement and the complexities surrounding RVP calculations serve as reminders of the importance of regulatory compliance in the petroleum industry. Companies operating in this sector should:
- Regularly review and update their compliance programs
- Invest in accurate measurement and calculation methods for RVP
- Stay informed about evolving environmental regulations and measurement standards
Simply put; by prioritizing compliance and understanding the nuances of RVP calculations, businesses can avoid costly penalties and contribute to improved air quality as the EPA would say.
Sources:
1. U.S. Environmental Protection Agency. "Colonial Oil Industries, Inc. Clean Air Act Settlement." https://www.epa.gov/enforcement/colonial-oil-industries-inc-clean-air-act-settlement
Citations:
Disclaimer: This is not legal advice and shall not be construed as such.
?? Nathan Hammer, 2024-present. All rights reserved.