A large food and agricultural producer has sued a commodities trader in federal court seeking damages for its alleged refusal to replace renewable fuel credits that were later found to be fake. Cargill, Inc. v. Int’l Exch. Servs., LLC, No. 12-7042, (S.D.N.Y. filed 9/18/12).

Under the Energy Independence and Security Act of 2007, oil companies that market petroleum in the United States must either produce a designated quantity of renewable fuel, such as ethanol or biodiesel, or purchase credits called renewable identification numbers (RINs). Plaintiff, which also markets and distributes fuels and energy products, purchased nearly 1.2 million RINs from defendant, and they later turned out to be false. The complaint seeks valid replacements for the allegedly fraudulent biodiesel credits it purchased from defendants as well as actual damages and court fees. It also asks the court to enjoin defendant from trading any more renewable credits until plaintiff’s claims are resolved.

Under a 2007 U.S. Environmental Protection Agency (EPA) rule, companies that use invalid credits could be penalized for both falsification of RINs and an inability to meet renewable credit standards. In April 2012, 28 companies agreed to a settlement with EPA after purchasing invalid renewable fuel credits. One of those sellers of invalid credits, Clean Green Fuels, was reportedly later convicted on charges of selling $9-million worth of renewable fuel credits. See BNA Daily Environment Report, September 27, 2012.