(Reuters) – California regulators say that U.S. refiner Phillips 66 (NYSE:PSX) started processing renewable diesel in an improper way in a unit at its Rodeo, California, refinery, the company confirmed to Reuters.
Phillips 66 said last year that it would start processing small amounts of soybean oil at the Rodeo refinery in the first quarter of 2021. This was part of a plan to become the largest producer of renewable fuels made from animal fats and soybean oil in the United States.
The Bay Area Air Quality Management District (BAAQMD) sent a notice of violation to the refiner at the beginning of June. The notice said that the refiner started making renewable diesel without changing the existing air permit, which allows the same kind of processing with petroleum feedstocks.
“Phillips 66 disagrees with the allegation, but is working with the district to resolve the notice of violation,” the company said in a statement, adding that it had sent the district a request to change its air permit.
Last year, environmental groups asked the BAAQMD, which regulates stationary sources of air pollution, to look into whether the company changed its oil refinery without getting the necessary permits.
Environmental groups, like the Natural Resources Defense Council, said the company didn’t have the right permits. Phillips 66 said this was not true. But, according to an email from the regulators that Reuters saw, Phillips 66 was told in June that they had not applied for a permit to use alternative fuels in one of the refinery units.
Regulators said the refiner needs to give more information so they can figure out if the company needs a permit to make changes to the unit. Once the investigation is done, they will take enforcement action.
Early in May, Contra Costa County approved plans by Phillips 66 and Marathon Petroleum (NYSE:MPC) to change their refineries in the Bay Area to make renewable fuels.
