Valero Sues Texas-Based Commodity Group for Failure to Deliver 106 Million RINs

Source: By Todd Neeley, DTN Staff Reporter • Posted: Thursday, January 7, 2021

Valero has filed a lawsuit in Texas state court alleging a Cypress, Texas,-based commodity group failed to deliver renewable identification numbers, or RINs, as part of an agreement with Valero.In the lawsuit filed on Dec. 31 in Harris County, Texas, Valero alleges because Sundive Commodity Group, LLC, failed to provide RINs to Valero, the company was forced to spend $10 million more on the open market to meet its obligations in the Renewable Fuel Standard.

Valero owns and operates 14 ethanol plants across the Corn Belt, with a production capacity of 1.73 billion gallons per year.

Obligated parties to the RFS can buy RINs to meet their obligations.

According to the lawsuit, Valero executed about 100 contracts with Sundive to buy RINs for a total of 106 million RINs.”When September came, though, Sundive failed to deliver the 21.5 million RINs it promised” for September 2020, the lawsuit said.

“After failing to deliver the September RINs, Sundive told Valero that they were having technical problems with EMTS (RINs trading system). Sundive failed to deliver the 8 million RINs for October, and the 4 million RINs for November. So, Valero had to purchase the RINs in the marketplace to ensure it could comply with its regulatory obligations. But the market price for the RINs was higher than the price Valero agreed to pay Sundive.”

In all, Valero paid $10.1 million more for RINs than “it should have paid had Sundive timely delivered the RINs,” the lawsuit said.

Sundive could not be reached for comment.

Brian Milne, DTN editor and product manager, said RINs prices have been rallying this week. Part of it comes from a sentiment that upcoming Renewable Fuel Standard renewable volume obligations for 2021 will be supportive of the RINs market.

Milne said the lawsuit could have “stoked bullish sentiment.”

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

 

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