Thank You For Submiting Feedback!
United States District Court for the Eastern District of Missouri, Eastern Division
October 2, 2012, Decided; October 2, 2012, Filed
Case No. 4:12CV00404 ERW
MEMORANDUM AND ORDER
This matter comes before the Court on Defendant International Exchange Services LLC's Motion to Dismiss or to Stay the Proceedings [ECF No. 8].
This litigation arises from a contract for the sale of Renewable Identification Numbers ("RINs"). Plaintiff, GP&W, Inc., d/b/a Center Oil Company, filed this action claiming breach of contract and breach of express and implied warranties. Plaintiff requests specific performance of the contract by replacement of invalid RINs. Defendant petitions the Court to dismiss this case for failure to state a claim, failure to join a required party, and in the alternative, to stay the proceedings.
A. Regulatory Background
"In 2005, Congress amended section 211 of the Clean Air Act that authorizes [the U.S. Environmental Protection Agency ("EPA") ] to regulate fuel and fuel additives to establish a [*2] renewable fuel program." Nat'l Petrochemical & Refiners Ass'n v. EPA, 630 F.3d 145, 147, 394 U.S. App. D.C. 1 (D.C. Cir. 2010) (citing Pub. L. No. 109-58, § 1501, 119 Stat. 594 (codified at 42 U.S.C. § 7545(o))). Under this act, "obligated parties—refiners, importers, and certain blenders of gasoline—had to show that they had introduced a required volume of renewable fuel into the domestic gasoline pool each year." Id. at 148. In 2007, the EPA published regulations detailing how to meet this renewable volume obligation ("RVO"). Regulation of Fuels and Fuel Additives: Renewable Fuel Standard Program, 72 Fed.Reg. 23,900 (May 1, 2007). To facilitate compliance, the EPA adopted a system of RINs for reporting purposes. Id. at 23,908-10. 1 "Thus, obligated parties would demonstrate their compliance with the annual volume standard by acquiring RINs for each gallon of renewable fuel, which would be assigned to batches of renewable fuel produced [in] or imported into the United States, with different fuels carrying different values based on the energy content relative to ethanol." Nat'l Petrochemical, 630 F.3d at 148. See 72 Fed. Reg. at 23,909.
An active secondary market exists for the purchase and sale of RINs that obligated parties use to meet their RVOs. Vinmar Overseas, Ltd. v. OceanConnect, LLC, 2012 U.S. Dist. LEXIS 117068, 2012 WL 3599486, at *1 (S.D. Tex. Aug. 20, 2012). A RIN can be separated from a volume of renewable fuel. 40 C.F.R. §80.1429(a). When an obligated party has satisfied its annual quota, it can sell the excess RINs to other obligated parties. 40 C.F.R. § 80.1428(b). This credit system was required by Congress. 42 U.S.C. § 7545(o)(5). Separated RINs can be transferred any number of times. 40 C.F.R. § 80.1428(b)(3). It is a violation to generate a RIN for which the applicable renewable fuel volume was not produced. 40 C.F.R. § 80.1460(b)(1). Furthermore, no person may create or transfer an invalid RIN. Id. subs. (b)(2). Invalid RINs cannot satisfy an obligated party's RVO even if acquired in good faith. 40 C.F.R. § 80.1431(b)(2). If a person transfers an invalid RIN under 40 C.F.R. § 80.1460(b)(1), the person will incur liabilities under 40 C.F.R. § 80.1461 and be subject to civil penalties under 40 C.F.R. § 80.1463.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2012 U.S. Dist. LEXIS 142213 *; 78 U.C.C. Rep. Serv. 2d (Callaghan) 800; 2012 WL 4513851
GP&W, INC., d/b/a, CENTER OIL COMPANY, Plaintiff, vs. INTERNATIONAL EXCHANGE SERVICES, LLC, Defendant.
fuel, parties, damages, invalid, obligated, proceedings, renewable, join, motion to dismiss, warranty, argues, regulations, commodity, alleges, warranty claim, buyer, motion to stay, contractual, compliance, intangible, purchasing, currency, deliver, primary jurisdiction, complete relief, cognizable, Notice, courts, volume