The bunker fuel unit of Anglo-Swiss commodity trading and mining giant Glencore Plc has agreed to pay a US$27M penalty and retire over 65M renewable fuel credits to resolve alleged violations of the US biofuels programme.

The settlement was announced by the US Department of Justice (DoJ) and Environmental Protection Agency (EPA) on 29 September, which alleged that Chemoil Corp had exported at least 48.5M gallons of biodiesel from the USA from 2011 to 2013 but failed to retire more than 72M Renewable Identification Number (RIN)s that were generated for the exported fuel.

The DoJ said the fine was the largest in the history of the EPA’s fuel programmes and the current market value of the credits – along with an additional 7.7M RINs already retired by Chemoil in the lead-up to the settlement – was more than US$71M.

RINs are credits created when a company produces or imports renewable fuel. They can be traded or sold to refiners and fuel importers or exporters to help them comply with the US Renewable Fuel Standard (RFS) programme.

“The RFS programme requires exporters to retire RINs for renewable fuel like biodiesel, because the fuel exported is no longer available for blending into the USA’s fossil fuel supply and, for that reason, cannot be used to meet the renewable fuel volume mandate established by Congress,” the DoJ said.

“If exporters fail to retire the appropriate number and type of RINs associated with the exported fuel, it artificially inflates the volume of renewable fuel available for blending in this country and the number of RINs available to meet the renewable fuel volume mandate. Ensuring exporters comply with the regulations for RIN retirement is critical to the proper functioning and integrity of the RFS programme.”

Reuters said the removal of RINS from the market was likely to stoke mounting worries over tightening inventories of the credits.

It said the RIN market had been rife with fraud in previous years and the US government had settled a number of cases of past fraud in recent months.

In August, the US Renewable Fuels Association also urged the Commodity Futures Trading Commission to investigate possible manipulation of the US market for RINs (see Biofuels News, OFI September/October 2016).

Glencore bought a majority stake in Chemoil in December 2009. Chemoil’s main business is providing fuelling services for ships in port.