Frequent Questions

If a refiner produces gasoline at the direction and to the specifications of a distributor who will ultimately purchase it, and a violation is discovered at the refinery, will both parties be jointly and severally liable for the violation? How can the dis

In a case where a refiner produces gasoline to specifications that are set by a distributor, and where that gasoline does not meet applicable refiner-level standards, the refiner who actually produces the gasoline clearly would be liable for the standards violation. It would be no defense for the refiner to argue that it only was following the directions of the distributor-transferee of the gasoline produced by the refiner.

In addition, in this scenario the distributor also could meet the definition of "refiner" for the refining operation and could be liable if the gasoline is found in violation of the applicable standards. Contracting for the production of gasoline would amount to "control" over the refining operation, which would result in the distributor-"refiner" being jointly and severally liable for the standards violation.

The distributor could protect itself against liability by including in the processing agreement only specifications for gasoline that meets all applicable standards, and by monitoring the quality of gasoline received from the refinery to ensure it in fact meets all applicable standards. In addition, if the distributor's relationship with the refinery operations is sufficiently close that the distributor, in effect, "operates, controls or supervises" the refinery operation, then the distributor would be a co-refiner. In such a case the distributor-"refiner" should take steps to ensure all the refiner requirements are met, including refiner and independent sampling and testing, record keeping, reporting, and attest engagements. (7/1/94)

This question and answer is posted at The original was posted in the Q&A posted on 7/1/94 which can found at" See Question ID 3857 for RFG (Taken from the first question on
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