A refinery sold diesel derived from co-processed renewable feedstocks that customers later claimed damaged vehicle engines and contaminated storage tanks; poor cold-flow properties were suspected. Baker & O’Brien’s consultants stepped in and evaluated the refinery's production and blending methods and subsequent corrective actions. Our expert report facilitated the dispute resolution.

Many United States refineries process renewable-based feedstocks to aid in complying with national Renewable Fuels Standards (RFS), state-level low-carbon fuel standards, or both. Some refineries process a controlled amount of renewables with crude oil-based streams (called “co-processing”) in existing units. The resulting finished ULSD is mostly indistinguishable from diesel derived from crude oil.

Refineries may also purchase renewable-derived fuels such as biodiesel to blend (up to certain limits) directly into the finished product. Combining co-processing and direct renewables blending allows the refiner to satisfy some of its renewables obligations.

Several ULSD specifications govern its propensity to plug or foul diesel engine components. Diesel fuels become susceptible to wax formation and solidification at lower temperatures—properties collectively called “cold flow” characteristics. Renewable feedstocks and biodiesel typically contain more components that adversely affect cold-flow properties. Moreover, renewable-derived ULSD and biodiesel contain compounds that can interact with each other and negatively impact finished product quality. Refineries must properly pretreat and filter renewable diesel feedstocks and biodiesel blendstocks to ensure safe co-processing or blending into ULSD sold to consumers.

A refinery (Refinery) co-processed renewable feedstocks with diesel from crude oil in its diesel treating units. Additionally, the Refinery blended purchased biodiesel (B99) into the finished ULSD product. The resulting product, derived from up to 5% renewable feedstocks plus B99, was sold as ULSD.

The Refinery received complaints from its wholesale distributors and retailers. Customers claimed that batches of diesel the Refinery supplied had fouled and damaged their diesel engines. The Refinery confirmed that the claimants had used/purchased its ULSD during a certain period that had caused the the fouling issues. The Refinery paid affected parties for claims to repair vehicles, clean storage and vehicle tanks, and buy back the diesel. Subsequently, the Refinery filed an insurance claim to recoup the damages incurred due to this event.

Baker & O’Brien was retained to evaluate the insurance claim. We reviewed the claim with a focus on (1) the Refinery’s operation, blending and quality testing methods, and procedures, (2) the applicable ULSD specifications, and (3) the Refinery’s internal investigation methodology and subsequent mitigating actions.

Baker & O’Brien examined the Refinery’s blending and testing procedures to ensure compliance with industry standards and practices for ULSD product. We assessed whether the Refinery's ULSD product specifications were in line with the local pipeline and industry standards. We also reviewed the Refinery’s investigation and causation analysis of the incident, as well as the corrective actions taken to minimize the likelihood of recurrence. These corrective actions included feedstock sourcing, pre- and post-treatment, and more rigorous testing. Baker & O'Brien submitted a report outlining our findings on the causation and the Refinery’s mitigating actions. Our report facilitated the resolution of the claim.