CARB Fines Tesoro $1.36M Over Low Carbon Fuel Standard Violations

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The California Air Resources Board (CARB) recently announced a $1.36 million settlement with Tesoro Refining & Marketing LLC for violating the Low Carbon Fuel Standard (LCFS).

The LCFS requires that regulated fuel producers report the carbon generated in the production of transportation fuels sold in California. In this case, the company misreported 1.9 billion gallons of gasoline, diesel, biodiesel and ethanol, including under-reporting 403 million gallons of LCFS deficit-generating fuels, CARB claims.

“California’s programs to address climate change require accurate reporting. This settlement is a reminder to fuel producers that accuracy matters,” says Richard W. Corey, CARB executive officer. “The LCFS is an important part of our work as Californians expect more clean fuel choices that offer alternatives to petroleum and reduce emissions of pollutants that adversely impact public health and reduce greenhouse gases.”

In March 2017, Tesoro – which is now Marathon Petroleum Corp. – notified CARB that the company had misreported fuel data from 2011 to 2016. The inaccurate information spanned 24 quarterly reports. Tesoro formally acknowledged the mistake in a letter outlining the problems and worked with CARB to account for all the fuel provided and correct their reports. Because of the company’s cooperation, the settlement is for far less than the maximum possible penalties, says CARB.

In June 2017, Tesoro acquired Western Refining and announced a new name, Andeavor. Then, last October, Andeavor and Marathon Petroleum Corp. closed a merger, creating a combined company known as Marathon Petroleum Corp.

The money from the fine will be deposited in the state Air Pollution Control Fund, where it can be appropriated by the legislature for air quality and GHG-reduction efforts.

The LCFS encourages the use of cleaner, low-carbon fuels in California. The standards are expressed in terms of the “carbon intensity” (CI) of gasoline and diesel fuel and their various substitutes. CI is calculated based on the life cycle GHG emissions of a fuel. Those emissions include carbon dioxide, methane, nitrogen oxide and other GHG contributors. This life cycle assessment examines the GHG emissions associated with each step of the production, transportation and use of a given fuel, sometimes referred to as “well-to-wheel” analysis.

Under the LCFS, fuel producers generate deficits or credits based on an annual baseline CI. Fuels with a CI above the baseline create deficits; fuels with a CI below the baseline generate credits. Companies with credits can sell them to companies with deficits.

The LCFS is one of several programs developed under The Global Warming Solutions Act (A.B.32). It works with other A.B.32 programs, such as cap-and-trade, the zero-emission vehicle program and the renewable portfolio standard, to achieve California’s GHG-reduction goals.

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