WASHINGTON – On February 3, the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance published its Mobile Source Civil Penalty Policy, which went into effect immediately upon issuance. The policy is the framework by which EPA will calculate the appropriate penalties for violations of certain fuel regulations under the Clean Air Act (CAA) that are addressed in administrative settlements rather than litigation.

The CAA fuel requirements and regulations touched by this policy work to reduce air pollution arising from fuel emissions by establishing standards for gasoline and diesel fuel. In fact, the policy applies to two types of CAA violations:

• Standards violations (violations of standards relating to gasoline and diesel fuel composition); and
• Programmatic violations (“violations of sampling, testing, reporting, recordkeeping, and other requirements that are designed to facilitate the EPA’s ability to monitor compliance with the fuels standards and other requirements”).

Both standards and programmatic violations can occur in relation to any of the following fuel standards that are relevant to NACS members:

• Annual Average and Per-gallon Gasoline Sulfur Standards;
• Annual Average Benzene Standards;
• Summer Volatility Standards, including conventional and reformulated gasoline standards;
• Motor Vehicle non-road, Locomotive and Marine Diesel Sulfur Standards; and
• Improper Generation, Transfer, and Use of Credits under the Gasoline Benzene and Gasoline Sulfur Programs listed above.

When any entity in the fuel distribution system has violated one of the above-mentioned standards, EPA may assess penalties that will be the basis for any proposed settlement. For violations of the above CAA fuel requirements, the maximum penalty is $37,500 for every day the violation continues, plus the amount of economic benefit or savings resulting from the violation.

To ensure equitably penalties and expedite claim resolution, the policy advises calculating a penalty by adding together two factors: an economic benefit component and a gravity component. The economic benefit component, commonly referred to as BEN, quantifies the benefits of non-compliance—such as the benefits that accumulate from avoiding or delaying costs or any competitive advantage gained by the violation. This is different from the gravity component, which gages the gravity or seriousness of the violation and examines the levels of actual or potential harm, the size of the violator’s business and the harm to the regulatory scheme.

This policy emphasizes that EPA “considers all violations of the fuels standards to be serious,” and delineates what factors drive EPA’s penalty calculations for fuel standards violations. The policy does not expand EPA enforcement jurisdiction.

However, NACS members should carry on monitoring their operations to make certain they are not running afoul of the regulations—because EPA will not stop bringing enforcement actions. And any investigation into a potential violation of fuel regulations, such as the regulations for Reid Vapor Pressure and sulfur, will no doubt look to potential retail violators before other entities in the fuel chain.