The California Air Resources Board (ARB) 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 underreporting 403 million gallons of LCFS deficit-generating fuels.

In March 2017, Tesoro 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.

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 greenhouse gas (GHG) reduction efforts.

The LCFS encourages the use of cleaner, low-carbon fuels in California. It also encourages the production of those fuels, and therefore, reductions in greenhouse gas emissions.

The LCFS 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 greenhouse gas emissions of a fuel. Those emissions include carbon dioxide, methane, nitrogen oxide and other greenhouse gas contributors. This life cycle assessment examines the greenhouse gas 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.