LINCOLN, Neb. (DTN) -- Chevron U.S.A. agreed to pay a $1.1 million civil penalty after admitting it had invalidly generated over 2.2 million renewable identification numbers, or RINs, under the Renewable Fuel Standard and sold the advanced biofuels credits to a third party.

The U.S. Department of Justice announced on Wednesday a settlement with Chevron for violations of the Clean Air Act, to include the retirement of 2 million valid RINs valued at $3.6 million.

According to the complaint and settlement filed in the U.S. District Court for the Southern District of Texas, from January 2022 through April 2023, Chevron purchased renewable diesel for which RINs had been previously generated to blend with the renewable diesel it had produced.

"Chevron received the purchased renewable diesel at the El Segundo (California) terminal from a marine vessel and then transferred the purchased renewable diesel through a pipeline to a storage tank containing finished renewable diesel," the complaint said.

"The purchased renewable diesel remaining in the pipeline was flushed to a separate gasoil storage tank, which subsequently feeds the hydrotreater for processing."

Chevron then co-processed about 5.4 million gallons of purchased renewable diesel that had been stored in the gasoil tank with renewable feedstocks to produce renewable diesel.

Chevron generated 9.2 million RINs for the 5.4 million gallons of renewable diesel it purchased and co-processed with renewable feedstocks, the complaint said.

According to the settlement, Chevron has implemented "accounting and operational changes" to prevent the improper generation of RINs on purchased renewable diesel.

In addition, Chevron "neither admits nor denies" the alleged violations of the Clean Air Act, as part of the settlement.

"Today's action demonstrates the administration's commitment to the Renewable Fuel Standard program by ensuring that renewable identification numbers generated and traded represent actual renewable fuel gallons produced," said Adam Gustafson, principal deputy assistant attorney of the Environment and Natural Resources Division.

"The benefits that flow from the Renewable Fuel Standard program to rural American communities depend on the integrity of program credits, and this action ensures the reliability of renewable identification numbers in the marketplace."

The RFS program allows renewable fuel producers to generate RINs on renewable fuel they produce that is used in the United States. RINs may be generated just once on any volume of renewable fuel to prevent potential double-counting.

Todd Neeley can be reached at todd.neeley@dtn.com

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