Cargill v. International Exchange Services

U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Environmental Law

New York Law Journal

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Judge Harold Baer

Under the Clean Air Act (CAA), and Environmental Protection Agency regulations governing the Renewable Fuel Standard Program, "obligated parties" may sell gasoline containing ethanol or a similar renewable fuel. Cargill sued International Exchange Services (IES) for transfer of invalid renewable fuel credits called Renewable Identification Numbers (RINs). Cargill bought the RINs to meet its own CAA obligations. Partly granting IES's motion the court dismissed Cargill's citizen suit for the CAA's violation. and its claim asserting breach of implied warranties under the Uniform Commercial Code. Cargill's claim asserting breach of contract for the alleged sale of invalid RINs survived dismissal. As to Cargill's citizen suit the court, discussing 20 CFR §80.1131(b)(3)—and noting that as a commodities trader IES was not an obligated party under the regulations—found §80.1131(b)(3) inapplicable when one does not apply RINs to meet its "volume obligation." A market participant lacking volume obligation has no duty under §80.1131(b)(3) to correct the transfer. Because Cargill failed to properly allege IES's violation of the regulations, its claim under the CAA's citizen suit provision must be dismissed.

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