Court Opinion

ID: 894571
Source: CourtListenerOpinion
Date Created: 2013-06-06 19:52:34.508032+00
Date Added: 2024-06-11T15:42:06.358899
License: Public Domain

PUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                             No. 12-1078

AMERICAN   PETROLEUM    INSTITUTE;   AMERICAN           FUELS   AND
PETROCHEMICAL MANUFACTURERS ASSOCIATION,

                Plaintiffs − Appellants,

           v.

ROY A. COOPER, III, Attorney General of the State of North
Carolina,

                Defendant – Appellee,

NORTH   CAROLINA    PETROLEUM    AND      CONVENIENCE      MARKETERS
ASSOCIATION,

                Intervenor/Defendant – Appellee.

--------------------------

PETROLEUM MARKETERS ASSOCIATION OF AMERICA,

                Amicus Supporting Appellees.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. Louise W. Flanagan,
District Judge. (5:08-cv-00396-FL)

Argued:   January 31, 2013                     Decided:     June 6, 2013

Before MOTZ, KING, and AGEE, Circuit Judges.
Affirmed in part, vacated in part, and remanded by published
opinion. Judge Agee wrote the opinion, in which Judge Motz and
Judge King joined.

ARGUED: Robert Allen Long, Jr., COVINGTON & BURLING, LLP,
Washington, D.C., for Appellants.     Melissa Lou Trippe, NORTH
CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina; Charles
Foster Marshall, III, BROOKS, PIERCE, MCLENDON, HUMPHREY &
LEONARD, Raleigh, North Carolina, for Appellees.       ON BRIEF:
Thomas L. Cubbage III, Henry B. Liu, Kristen E. Eichensehr,
COVINGTON & BURLING, LLP, Washington, D.C., for Appellants.
Alexander McClure Peters, NORTH CAROLINA DEPARTMENT OF JUSTICE,
Raleigh, North Carolina, for Appellee Roy A. Cooper, III; Eric
M. David, Mary F. Peña, BROOKS, PIERCE, MCLENDON, HUMPHREY &
LEONARD, Raleigh, North Carolina, for Appellee North Carolina
Petroleum and Convenience Marketers Association.     Alphonse M.
Alfano, BASSMAN, MITCHELL & ALFANO, CHARTERED, Washington, D.C.,
for Amicus Supporting Appellees.

                               2
AGEE, Circuit Judge:

     Plaintiffs      American        Petroleum            Institute      (“API”)        and

American    Fuels    and      Petrochemical              Manufacturers        Association

(“AFPMA”)        (collectively        “Plaintiffs”)                 brought       federal

preemption-based     challenges      in       the    district       court     seeking    to

enjoin enforcement of North Carolina’s Ethanol Blending Statute

(“the    Blending    Statute”),      N.C.       Gen.        Stat.    § 75-90      (2008).

Concluding that the Blending Statute was not preempted under any

of the grounds advanced by Plaintiffs, the court granted summary

judgment    in   favor   of    the   State          of    North     Carolina     and    the

Intervenor-Defendant,          the    North              Carolina     Petroleum         and

Convenience      Marketers      Association              (“NCPCMA”)      (collectively

“Defendants”).      For the reasons set forth below, we affirm the

district court’s judgment in part, vacate it in part, and remand

for further proceedings consistent with this opinion. 1

     1
       The Plaintiffs in this action are two trade organizations
representing the natural gas and oil industry in the United
States, including manufacturers and refiners of oil and gasoline
who import gasoline into North Carolina. NCPCMA, the Defendant-
Intervenor is a statewide trade association, representing
businesses engaged in the marketing of petroleum and convenience
products.    Over Plaintiffs’ objection, the district court
allowed the NCPCMA to intervene as a defendant.

                                          3
                                           I.

      This appeal involves the complex interplay of federal and

state        regulatory      schemes     concerning    the        distribution      of

renewable fuels.            We begin with an overview of the applicable

federal renewable fuel program and the state’s Blending Statute.

        In an attempt to increase the quantity of renewable fuels

in the marketplace, Congress enacted a statutory regime that we

refer to generally as the “federal renewable fuel program.”                        See

Energy       Policy   Act    of   2005   (“the   Act”),    Pub.     L.    No.   109-58

(codified at 42 U.S.C. § 7545(o)).                In furtherance of the Act,

Congress authorized the Environmental Protection Agency (“EPA”)

to   adopt      regulations       to   mandate   suppliers    such       as   gasoline

importers and refiners (but not distributors or marketers) to

offer for sale renewable fuel, e.g., ethanol. 2                     See 40 C.F.R.

§ 80.1406.        The EPA is charged with determining, annually, how

much renewable fuel should enter the marketplace, and assigning

volume-based quotas to obligated entities in order to meet the

annual requirement.

        To    monitor     compliance,     each    gallon     of    renewable      fuel

produced or imported into the United States is assigned a unique

        2
       The Act defines “renewable fuel” as “fuel that is produced
from renewable biomass,” 42 U.S.C. § 7545(o)(1)(J), which
includes ethanol, biomass-based diesel, and cellulosic biofuel,
to name a few. Id. This appeal only concerns the practice of
blending ethanol with conventional gasoline.

                                           4
renewable         identification        number         (“RIN”).       See    40     C.F.R.

§ 80.1128.        These RINs are attached to the fuel, and transferred

along with the fuel to purchasers.                     The RINs are tracked by the

EPA,       and   if    an   obligated    party        fails   to   obtain   an    adequate

number of RINs, it may be subject to a significant monetary

penalty.         See     40   C.F.R.    §§ 80.1160,       80.1161,       80.1163.     Once

renewable fuel is blended with traditional gasoline (most often

at a 1:9 ratio, creating the blended fuel “E-10” meaning 10

percent ethanol), the RIN separates from the renewable fuel,

becomes the property of the entity who blended the renewable

fuel with the gasoline, and may be traded on the open market.

Under this mechanism, obligated parties who do not themselves

blend renewable fuel with conventional gasoline may acquire RINs

and also meet the EPA mandate on the quantity of RINs. 3

       At the heart of the issues in this case are the two common

methods employed to blend ethanol with conventional gasoline.

The    first,         “inline”   blending,       is    conducted    by    suppliers    and

takes place at the terminal where distributors and retailers

       3
        Related to the federal renewable fuel program is the
Volumetric Ethanol Excise Tax Credit (“VEETC”), 26 U.S.C.
§ 6426.    The VEETC grants a tax credit of fifty-one cents per
gallon to an entity that blends ethanol with conventional
gasoline.    Congress allowed the VEETC to expire at the end of
2011.    However, earlier this year, Congress renewed the VEETC
through the end of 2013.     See American Taxpayer Relief Act of
2012, Pub. L. No. 112-240 § 412(a).

                                             5
purchase the gasoline product from the suppliers. 4                The inline

blending process consists of unblended (“pure”) gasoline at the

terminal being transferred to a holding container denominated as

a “terminal rack.”     A computer measures and pumps ethanol from a

separate    tank   (along     with      the     supplier’s    brand-specific

additives) into the pure gasoline.            The blended gasoline is then

transferred from the terminal rack to a transport vehicle for

delivery to the retailer.

     The second blending method, “splash blending,” 5 describes a

process by which a retailer purchases unblended gasoline from a

supplier at the supplier’s terminal.            The retailer adds ethanol,

purchased   separately      from   an       ethanol   distributor,    to    the

unblended   gasoline   in    the   transport      vehicle    by   pumping   the

ethanol into that vehicle’s tank.             The ethanol is blended with

     4
        For purposes of this opinion we will use the terms
“supplier” and “retailer” to describe the relevant parties on
either end of the ethanol transactions at issue as those terms
are used in the Blending Statute.       A supplier may include
parties also denominated as “refiners” or “manufacturers,” but
are the entities bringing pure gasoline for sale to “retailers”
in North Carolina.      “Retailers” may include parties also
denominated as “marketers” or “distributors” but are the parties
delivering ethanol for sale either to the ultimate consumer or
final market vendor.
     5
       “Splash blending” is sometimes referred to in the record
as “below the line” or “below the rack” blending. The terms are
used interchangeably, however, and we simply refer to the
practice as “splash blending.”

                                        6
the “pure” gasoline by the vehicle’s movement, i.e., “splash”

blending.

     The Plaintiffs contended before the district court, and on

appeal,   that      splash    blending     is       more   subject     to   error    than

inline blending and thereby inhibits their ability to preserve

and verify the quality of their trademarked goods.                            In other

words, they assert splash blending is more likely than inline

blending to produce a blended gasoline product with an incorrect

ethanol   to      gasoline   ratio,   which,          among   other    things,      could

adversely      affect    motor     vehicle          performance.        According      to

suppliers,        they   have     tried    to        prevent     these      errors     by

transitioning away from splash blending and installing inline

blending equipment at their terminals in North Carolina.

     Against this backdrop the North Carolina General Assembly

enacted     the    Blending      Statute       in     2008,    which    provides,     in

pertinent part:

     (b)   A supplier that imports gasoline into the State
     shall offer gasoline for sale to a distributor or
     retailer that is not preblended with fuel alcohol and
     that is suitable for subsequent blending with fuel
     alcohol.

     (c)   The General Assembly finds that use of blended
     fuels reduces dependence on imported oil and is
     therefore in the public interest.           The General
     Assembly further finds that gasoline may be blended
     with   fuel   alcohol   below  the   terminal  rack   by
     distributors and retailers as well as above the
     terminal rack by suppliers and that there is no reason
     to   restrict   or   prevent  blending   by   suppliers,
     distributors, or retailers.    Therefore, any provision

                                           7
     of any contract that would restrict or prevent a
     distributor or retailer from blending gasoline with
     fuel alcohol or from qualifying for any federal or
     State tax credit due to blenders is contrary to public
     policy and is void.   This subsection does not impair
     the obligation of existing contracts, but does apply
     if such contract is modified, amended, or renewed.

N.C. Gen. Stat. § 75-90.         The Blending Statute thus requires

those entities importing gasoline into North Carolina (i.e., the

suppliers) to offer unblended gasoline for sale to retailers and

prevents suppliers from contractually restricting retailers from

splash   blending,       i.e.,   blending   ethanol   with   gasoline

themselves.

     In 2008, Plaintiffs filed a complaint against the State of

North Carolina (“the State”) in the U.S. District Court for the

Eastern District of North Carolina, seeking to enjoin the State

from enforcing the Blending Statute.         The Plaintiffs alleged

that the Blending Statute was preempted by (1) the Petroleum

Marketing Practices Act (“PMPA”), 15 U.S.C. §§ 2801-2841; (2)

the federal renewable fuel program; and (3) the Lanham Act, 15

U.S.C. §§ 1051-1113. 6     In 2010, the parties made certain factual

     6
       Plaintiffs also raised a challenge to the Blending Statute
based on the Constitution’s Commerce Clause. The district court
twice granted summary judgment in favor of Defendants on that
claim, and Plaintiffs have not challenged the disposition of
that claim on appeal.    Thus, this claim has been abandoned by
Plaintiffs. See United States v. Brooks, 524 F.3d 549, 556 n.11
(4th Cir. 2008) (issue not raised in opening brief is
abandoned).

                                    8
stipulations        and     filed    cross-motions        for    summary         judgment

relating     to     Plaintiffs’      facial      challenges      to    the       Blending

Statute.

      The district court granted summary judgment in favor of

Defendants on Plaintiffs’ facial challenges, and correspondingly

denied Plaintiffs’ motion for summary judgment (hereinafter the

“Facial Summary Judgment Order”).                 See Am. Petroleum Inst. v.

Cooper, 681 F. Supp. 2d 635 (E.D.N.C. 2010).                     In doing so, the

court    held      that     the    Blending    Statute     was    consistent         with

articulated Congressional goals in the context of the federal

renewable fuel program.             Relying heavily on this Court’s opinion

in Mobil Oil Corp. v. Virginia Gasoline Marketers & Automobile

Repair Association, 34 F.3d 220 (4th Cir. 1994), the district

court also rejected Plaintiffs’ claims that either the Lanham

Act or the PMPA preempted the Blending Statute.

      Following       the    district     court’s     Facial     Summary         Judgment

Order, the parties engaged in further discovery on Plaintiffs’

claims   that      the    Blending    Statue    was   preempted       as    applied    to

them.        The    parties       again   filed    cross-motions           for   summary

judgment, and the district court again granted summary judgment

in   favor    of    the     Defendants,    and    correspondingly           denied    the

Plaintiffs’        motion    for    summary    judgment    (“As-Applied          Summary

Judgment Order”).            See Am. Petroleum Inst. v. Cooper, 835 F.

Supp. 2d 63 (E.D.N.C. 2011).

                                           9
      On the federal renewable fuel program preemption issue, the

court      concluded    that       suppliers        were    essentially         seeking    the

ability     to   exclude        retailers      from      the    selling    or    trading    of

RINs, and held that the federal renewable fuel program did not

contemplate      such       a    monopoly.          In   rejecting        Plaintiffs’      as-

applied Lanham Act challenge, the court largely reiterated many

of   the    conclusions         set    forth   in     the      Facial    Summary    Judgment

Order, including its holding that the Blending Statute does not

affect the ability of suppliers to engage in quality control of

their      trademarked          products.           Lastly,       the     court     rejected

Plaintiffs’ claim that, as applied to them, the Blending Statue

prohibited them from terminating a franchise relationship for

“willful adulteration” of suppliers’ products, in violation of

the PMPA.

      The district court then entered a final judgment in favor

of Defendants on all of Plaintiffs’ claims.                           Plaintiffs’ noted a

timely      appeal     of       that   judgment,         and     we     have    jurisdiction

pursuant to 28 U.S.C. § 1291. 7

      7
       Defendants assert that we lack jurisdiction to consider
issues on appeal pertaining to Plaintiffs’ facial challenge to
the Blending Statute under the PMPA because Plaintiffs failed to
timely appeal the district court’s Facial Summary Judgment
Order.
     This argument lacks merit.     The Facial Summary Judgment
Order was not an appealable final judgment because it did not
dispose of all of Plaintiffs’ claims.      See Fox v. Baltimore
Police Dep’t, 201 F.3d 526, 530 (4th Cir. 2000) (“[A] district
(Continued)
                                               10
                                        II.

      We review the district court’s summary judgment ruling de

novo, applying the same standard applied by the district court.

See Henry v. Purnell, 652 F.3d 524, 531 (4th Cir.) (en banc),

cert. denied, 132 S. Ct. 781 (2011).                    We “view all facts and

reasonable inferences therefrom in the light most favorable to

the   nonmoving    party,”    T–Mobile        Ne.,    LLC    v.    City    Council   of

Newport    News,   Va.,   674 F.3d 380,        385    (4th   Cir.)    (internal

quotation marks omitted), cert. denied, 133 S. Ct. 264 (2012),

here, the Plaintiffs.           Summary judgment should be granted “if

the movant shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter

of law.”    Fed. R. Civ. P. 56(a).

                                     III.

      Plaintiffs    contend      that    the         district      court    erred    in

concluding that the Blending Statute was not preempted on the

basis of the Lanham Act, the PMPA, or the federal renewable fuel

program.    Defendants’ argue, as a threshold matter, that there

court order is not ‘final’ until it has resolved all claims as
to all parties.”).     The judgment ultimately entered by the
district court explicitly referenced both of its summary
judgment orders, and Plaintiffs have taken a proper appeal from
that judgment.   We thus have subject matter jurisdiction as to
all the issues now raised by Plaintiffs on appeal.

                                        11
is   no    preemption     because      suppliers      can    opt   out      of   the

requirements of the Blending Statute.                 Before addressing these

specific contentions, we review certain fundamental principles

in the consideration of a preemption claim.

                          A.     Preemption Doctrine

     Under the Constitution’s Supremacy Clause, U.S. Const. art.

VI, cl. 2, state laws that conflict with applicable federal law

are preempted.        Cox v. Shalala, 112 F.3d 151, 154 (4th Cir.

1997)     (citation     omitted).          When   conducting       a    preemption

analysis, we are guided first and foremost by the maxim that

“the purpose of Congress is the ultimate touchstone in every

pre-emption case.”        Wyeth v. Levine, 555 U.S. 555, 565 (2009).

That said, when determining the interplay of the federal and

state statutes at issue, we are obliged to attempt to harmonize

those statutes if reasonably possible.                 See Anderson v. Babb,

632 F.2d 300, 308 (4th Cir. 1980) (“a court should avoid, if

possible, that construction of a statute that would result in

its constitutional invalidation.”).               We recognize and apply a

rebuttable    presumption       that   Congress,      by    enacting    a   federal

statute, did not intend to preempt state law.                 Columbia Venture,

LLC v. Dewberry & Davis, LLC, 604 F.3d 824, 830 (4th Cir. 2010).

     Nonetheless, Congress may evince an intent to preempt state

law in three ways.        First, federal law may preempt state law by

expressly     declaring        Congress’     intent    to    do    so    (“express

                                        12
preemption”).          Cox, 112 F.3d          at    154.     Second,     Congress       can

“occupy the field by regulating so pervasively that there is no

room    left   for   the      states       to    supplement          federal    law”       (“field

preemption”).        Id.      And third, a state law is preempted “to the

extent    it     actually      conflicts              with       federal     law”     (“conflict

preemption”).        Id.       Conflict preemption “includes cases where

compliance with both federal and state regulations is a physical

impossibility, and those instances where the challenged state

law stands as an obstacle to the accomplishment and execution of

the    full    purposes     and      objectives             of    Congress.”        Arizona     v.

United States, 567 U.S. ---, ---, 132 S. Ct. 2492, 2501 (2012)

(internal quotation marks and citations omitted).                               Plaintiffs do

not contend that Congress has “occupied the field” with respect

to     ethanol    blending,          but        do        argue    conflict     and        express

preemption apply to the Blending Statute.

       We now turn to the specific issues of preemption on appeal.

                                      B.         Opt Out

       Defendants first argue that the Blending Statute is not

preempted      under     any      theory         advanced          by   Plaintiffs         because

suppliers      are     able     to     opt       out        of    the      Blending    Statute.

Specifically, the Defendants observe that although the Blending

Statute       requires     suppliers            who        import       gasoline      to     offer

unblended      gasoline       for    sale,           the    Blending       Statute     does    not

specify the amount of unblended gasoline that must be sold, the

                                                 13
minimum number of terminals at which unblended gasoline must be

sold, or the grades of unblended gasoline that must be sold.

The   Defendants       assert      that,      as     a     matter     of    record,   some

suppliers are already attempting to mitigate the effects of the

Blending     Statute      by,   for       example,       selling    unblended    gasoline

only at a single terminal in North Carolina, or offering only a

single      grade    of   unblended         gasoline        that,    when    mixed    with

ethanol,      only    produces        a    more     expensive,        premium    gasoline

product.      Defendants also posit that the Blending Statute could

potentially     be    avoided      by      suppliers       choosing    to    import   only

conventional blendstock for oxygenate blending (“blendstock”), a

sub-octane gasoline product that only reaches a standard 87-

octane when mixed with ethanol.

      The    district      court      did     not    accept        Defendants’    opt-out

argument and neither do we.                  Defendants (including the State)

have not conceded before the district court or this Court that

the suppliers’ actions in attempting to remove themselves (i.e.,

opt-out) from the ambit of the Blending Statute are permitted

under North Carolina or federal law.                       This fact alone gives us

considerable pause as to the validity of Defendants’ opt-out

contentions.         More to the point, however, the mere fact that

suppliers may be able to take certain steps to limit the reach

of the Blending Statute does not equate to an ability to “opt

out” of the Blending Statute for preemption purposes.                             Indeed,

                                             14
Defendants cite no case, and we identify none, in support of

their argument that an otherwise-preempted state law survives

preemption merely because those subject to it can alter their

conduct in order to avoid some part of its ambit.                 Defendants’

argument thus lacks merit.

                            C.    PMPA Preemption

     In Mobil Oil, we explained that

     The [PMPA] governs the relationships between petroleum
     refiners and their retail franchisees. The PMPA's
     primary purpose is to protect petroleum franchisees
     from arbitrary or discriminatory terminations and
     nonrenewals. S.Rep. No. 731, 95th Cong., 2d Sess. 15,
     reprinted in 1978 U.S.C.C.A.N. 873, 874.    [The PMPA]
     also   serves  two  secondary  purposes:   to  provide
     uniformity in the law governing petroleum franchise
     termination and nonrenewal, and to allow franchisors
     flexibility in dealing with franchisee misconduct or
     changes in market conditions.    1978 U.S.C.C.A.N. at
     877.     It expressly preempts state law governing
     termination or nonrenewal which differs from its
     provisions. 15 U.S.C.A. § 2806(a).
34 F.3d at 223.      We also observed that “Congress used very broad

language   to    define    the   PMPA’s    preemptive   scope.    The   [PMPA]

preempts   any     state    law    ‘with    respect     to’   termination   or

nonrenewal which differs from the PMPA.”           Id. at 225.

     The Mobil Oil court noted that the state law at issue there

     narrows the grounds for termination available to
     franchisors operating in Virginia. Under the PMPA, if
     contractual terms are reasonable and material, a
     franchisee's failure to comply with them is legitimate
     grounds for termination.   Unless the terms prohibited
     by [the state law] would in all circumstances be
     unreasonable and immaterial—a finding we are unwilling

                                      15
        to   make—[the  state   law]  eliminates   grounds  for
        termination that would be available under the PMPA.

Id. at     224   (internal    citations       omitted).     Thus,   the   express

preemption previsions of the PMPA preempted the Virginia statute

at issue in Mobil Oil.

     In 1994, however, just months after the Mobil Oil decision,

Congress passed certain amendments to the PMPA that are relevant

here.     First, Congress amended the PMPA such that a franchisor

could no longer terminate or nonrenew a franchise agreement for

failure     to   comply      with   a    reasonable       franchise   agreement

provision, if that provision is “illegal or unenforceable” under

otherwise applicable state law.               See 15 U.S.C. §§ 2802(b)(2)(A);

2801(13)(C) (“the following are grounds for termination of a

franchise . . . : A failure by the franchisee to comply with any

provision of the franchise,” but “the term ‘failure’ does not

include . . . any failure based on a provision of the franchise

which is illegal or unenforceable under the law of any State.”).

     Second,     Congress     narrowed    the     grounds   for   preemption   by

prohibiting a franchisor from conditioning a new franchise or

renewal upon an agreement “to release or waive . . . any right

that the franchisee may have under any valid or applicable State

law.”     15 U.S.C. § 2805(f)(1)(B).

        In the absence of the 1994 amendments, Plaintiffs would

have a strong argument supporting their PMPA preemption claim.

                                         16
We   agree        with    the       district      court,     however,       that        the    1994

amendments         to     the        PMPA    significantly          narrowed       the         prior

statute’s preemptive scope so that the current version of the

PMPA does not preempt the Blending Statute.                              The district court

properly      held        that       the     1994      amendments        give    states        “the

authority         to    pass     substantive        laws    making       certain        franchise

provisions illegal or unenforceable.”                        (J.A. 95).           To read the

1994 amendments otherwise would render those portions of the

PMPA    a    nullity.           It    is    axiomatic       that    when    interpreting            a

statute, this Court should strive to “avoid any interpretation

that    may   render          statutory       terms      meaningless      or     superfluous.”

Discover      Bank       v.    Vaden,       396 F.3d 366,     369    (4th    Cir.        2005).

Thus, for PMPA purposes only, the 1994 amendments render the

Blending Statute immune from Plaintiffs’ preemption claim.

        As   an    alternative          argument,        Plaintiffs       contend       that       the

Blending Statute conflicts with certain provisions of the PMPA

that allow a franchisor to terminate a franchise agreement for

“willful adulteration” of a petroleum product by the franchisee.

The PMPA provides that a franchisor may terminate a franchise

relationship on the basis of “[t]he occurrence of an event which

is relevant to the franchise relationship and as a result of

which    termination           of     the    franchise      or     nonrenewal       .    .     .   is

reasonable.”           15 U.S.C. § 2802(b)(2)(C).                  As relevant here, “an

event which is relevant to the franchise relationship, [etc.]”

                                                  17
includes “willful             adulteration,       mislabeling      or    misbranding     of

motor fuels or other trademark violations.”                    § 2802(c)(10)

      We     do   not     agree    with     Plaintiffs       that       splash    blending

constitutes the sort of “willful adulteration” contemplated by

Congress in § 2802.              First, the language of the PMPA strongly

suggests     that    “adulteration”         is     similar    to    “misbranding,”       or

“other trademark violations.”                15 U.S.C. § 2802(c)(10) (emphasis

added).       This is consistent with the holdings of those cases

(cited       by     the       district      court)      that        have     interpreted

“adulteration” to mean some form of mislabeling or misbranding.

See Wisser Co. v. Mobil Oil Corp., 730 F.2d 54, 60 (2d Cir.

1984)      (equating      “misbranding”       of     gasoline      with    adulteration

provision of PMPA); Little Tor Auto Ctr. v. Exxon Co. USA, 830

F.   Supp.    792,      795    (S.D.N.Y.     1993)    (same);      Shell    Oil    Co.   v.

Wentworth, 822 F. Supp. 878, 882 (D. Conn. 1993) (same); Shell

Oil Co. v. Avar Corp., No. 97 C 4479, 1998 WL 312119, at *3

(N.D. Ill. June 5, 1998) (“commingling” of fuel a violation of

adulteration provision of PMPA); Aoude v. Mobil Oil Corp., Civ.

No. 92-10495 RGS, 1994 WL 548061, at *1–3 (D. Mass. Sept. 2,

1994)      (mixing      two     suppliers’        gasoline    products       constitutes

adulteration).

      The    statute      itself    lists     “willful       adulteration”        seriatim

with “mislabeling, misbranding of other motor fuels or other

trademark     violations,”         suggesting       that     “willful      adulteration”

                                             18
must    be    understood   in     the     same       frame   of    references   as

mislabeling or applying a nongenuine or altered mark.                     Moreover,

within the context of this case, the district court correctly

reasoned that “blending fuel with renewable fuel is an accepted

industry     practice   that    Congress       has    recognized    and   mandated

through federal law.”          (J.A. 526.)       It is difficult to imagine

that when Congress stated that a franchise agreement could be

terminated for willful adulteration, it meant to include ethanol

blending, a practice which Congress not only mandates but also

incentivizes through tax credits.              In sum, there is no merit to

Plaintiffs’ claim that splash blending would constitute “willful

adulteration” as that term is understood in statute and case law

for PMPA purposes so as to bring about a conflict between it and

the Blending Statute.

       Accordingly, we agree with the district court that the PMPA

does not preempt the Blending Statute, either expressly or by

way of conflict preemption.             The district court did not err in

granting summary judgment to Defendants as to this issue.

             D.   Federal Renewable Fuel Program Preemption

       Plaintiffs   also       argue    that     the     Blending    Statute     is

preempted by the federal renewable fuel program.                     We conclude

that the district court correctly held that it is not.

                                         19
     At the outset, we note our agreement with what the district

court   described   as   the   “uncontested   purpose”   of   the   federal

renewable fuel program:

     “to ensure jobs . . . [through] secure, affordable,
     and reliable energy” and “to move the United States
     toward greater energy independence and security” by
     “increas[ing] the production of clean, renewable fuels
     . . . .” Energy Policy Act of 2005, Pub. L. No. 109-
     58,   119  Stat.   594   (establishing  renewable   fuel
     program); Energy Independence and Security Act of
     2007, Pub. L. No. 110-140, 121 Stat. 1492 (amending
     renewable fuel program).        To that end, Congress
     created annual goals for renewable fuel usage, and
     directed the Environmental Protection Agency (“EPA”)
     to create regulations that would “ensure that gasoline
     sold or introduced into commerce in the United States
     . . . contains the applicable volume of renewable fuel
     determined    [by      that    table].”    42     U.S.C.
     § 7545(o)(2)(A)(I), (B).

(J.A. 502-03.)      In promulgating final rules for the creation of

the RIN trading system under the federal renewable fuel program,

the EPA described its objectives as follows:

     [The RIN system] was developed in light of the
     somewhat unique aspects of the [renewable fuel]
     program. . . . [U]nder this program the refiners and
     importers of gasoline are the parties obligated to
     comply with the renewable fuel requirements.    At the
     same time, refiners and importers do not generally
     produce or blend renewable fuels at their facilities
     and so are dependent on the actions of others for the
     means of compliance.        Unlike EPA’s other fuel
     programs, the actions needed for compliance largely
     center on the production, distribution, and use of a
     product by parties other than refiners and importers.
     In this context, we believe that the RIN transfer
     mechanism should focus primarily on facilitating
     compliance by refiners and importers and doing so in a
     way that imposes minimum burden on other parties and
     minimum   disruption   of    current  mechanisms   for
     distribution of renewable fuels.

                                    20
      Our final program does this by relying on the current
      market structure for ethanol distribution and use and
      avoiding the need for creation of new mechanisms for
      RIN distribution that are separate and apart from this
      current structure.     Our program basically requires
      RINs to be transferred with renewable fuel until the
      point at which the renewable fuel is purchased by an
      obligated party or is blended into gasoline or diesel
      fuel by a blender. This approach allows the RIN to be
      incorporated into the current market structure for
      sale and distribution of renewable fuel, and avoids
      requiring refiners to develop and use wholly new
      market mechanisms.      While the development of new
      market mechanisms to distribute RINs is not precluded
      under our program, it is also not required.

Regulation of Fuels and Fuel Additives: Renewable Fuel Standard

Program, 72 Fed. Reg. 23,900, 23,937 (May 1, 2007) (emphases

added).     The EPA’s statements are instructive insofar as they

recognize     that,     generally       speaking,      retailers    would    be    the

parties     who    carried       out     the    blending     of     ethanol       with

conventional gasoline.

      This determination by the agency charged with carrying out

the renewable fuel program counsels a finding that the federal

renewable fuel program does not preempt the Blending Statute.

The   EPA     anticipated        that     suppliers      (i.e.,     refiners       and

importers)     would     often     not     be    carrying    out    the     blending

themselves,       but   rather,     would       sell    unblended    gasoline       to

distributors who would then blend the gasoline with ethanol.

That the suppliers may find themselves having to purchase RINs

was fully anticipated by the agency charged with implementing

                                          21
the renewable fuel program and militates in favor of a finding

for the Defendants on this issue.

     Moreover, we reiterate the presumption that Congress did

not intent to preempt state law.           Cf. Columbia Venture, 604 F.3d

at 830.     And Plaintiffs have identified no component of the

federal renewable fuel program that is impeded by the Blending

Statute.     Plaintiffs’      chief   complaint    is    that    the   Blending

Statute    impedes    the    flexibility    that   Congress      and   the   EPA

intended to grant suppliers in determining how to meet their

obligations under the federal renewable fuel program.                    But as

the district court correctly observed, suppliers are essentially

seeking to exclude retailers from participating in the process

of ethanol blending, therefore creating a monopoly of RINs.                   As

recounted above, the EPA clearly did not contemplate the RIN

market developing in such a manner.           Indeed, to the extent that

the federal renewable fuel program is concerned with creating

flexible    systems    for    production     of    blended      gasoline,    the

Blending    Statute    contributes     to     those     ends    by     requiring

suppliers to allow retailers to blend ethanol with conventional

gasoline.

     We therefore conclude that the Plaintiffs’ contention that

the federal renewable fuel program preempts the Blending Statute

lacks merit.    The district court did not err in granting summary

judgment to the Defendants as to this issue.

                                      22
                         E.      Lanham Act Preemption

      Plaintiffs’       final     argument       for    preemption    is    that   the

Blending Statute interferes with suppliers’ ability to control

the   quality    of   the     products     bearing      their   trademarks.        Such

quality control by the mark holder, the Plaintiffs represent, is

a fundamental premise of the Lanham Act and provides the basis

for their   preemption          argument    on    the    Blending    Statute.      The

Plaintiffs do not contend that Congress, via the Lanham Act, has

expressly   preempted           the   Blending         Statute.       Rather,      the

Plaintiffs rely on “conflict preemption;” that is, whether the

Blending Statute “actually conflicts with federal law,” Cox, 112
F.3d at 154, or “stands as an obstacle to the accomplishment and

execution   of    the    full    purposes        and    objectives   of    Congress,”

Arizona, --- U.S. at ---, 132 S. Ct. at 2501.

      As one court has explained, “the Lanham Act expresses a

Congressional design to legislate so that the public can buy

with confidence, and the trademark holder will not be pirated.”

Mariniello v. Shell Oil Co., 511 F.2d 853, 858 (3d Cir. 1975).

In Shell Oil Co. v. Commercial Petroleum, Inc., 928 F.2d 104

(4th Cir. 1991), we observed that “the Lanham . . . Act affords

the trademark holder the right to control the quality of the

goods manufactured and sold under its trademark.                           The actual

quality of the goods is irrelevant; it is the control of the

quality that a trademark holder is entitled to maintain.”                          Id.

                                           23
at     107    (internal      quotation        marks,    alteration,           and    citation

omitted).

       In     addition,      one    of   the      Lanham      Act’s    purposes       is     “to

establish uniform regulation of trademarks thereby eliminating

the possibility that remedies would vary from state to state.”

Rickard v. Auto Publisher, Inc., 735 F.2d 450, 457 (11th Cir.

1984).        The Lanham Act is intended to, inter alia, “protect

registered marks used in [interstate] commerce from interference

by State . . . legislation.”                15 U.S.C. § 1127.

       Two cases from this Court are particularly instructive in

determining the application of the Lanham Act in the case at

bar.         Shell   Oil,    a    trademark       infringement        case,    informs       our

preemption       analysis         because    it    articulates        the     rights       of   a

trademark owner to regulate the quality control of the petroleum

products bearing its mark.                  In Shell Oil, a wholesaler of bulk

oil (who was not authorized to sell Shell oil) bought Shell-

brand oil        from   an       authorized    distributor       and     then       resold      it

under the Shell trademark. 928 F.2d at 106.                The wholesaler

argued it was entitled to do so because the Lanham Act does not

apply to the sale of genuine goods bearing genuine marks.                                    Id.

at 107.        We disagreed, emphasizing that a trademarked good is

only    “genuine”       if   it     is   manufactured         and     distributed       under

quality       controls       established          by   that     good’s        manufacturer.

“Without Shell’s enforcement of its quality controls, the bulk

                                              24
oil   sold     by    [the       wholesaler]       was    not   ‘genuine.’”            Id.

Importantly,        we    underscored      that    the    existence       of     quality

controls on the part of the resaler were immaterial.                               “[I]n

order to maintain the genuineness of the bulk oil, the quality

standards must be controlled by Shell.”                  Id. (emphasis added).

      Furthermore,        the    Shell    Oil    court   observed       that,    in   the

absence of quality controls as established by Shell, consumer

confusion was likely, and the Lanham Act violated.                        “The use of

the   Shell   mark       implies   that    the    product      has    been     delivered

according     to    all    quality   control       guidelines        enforced    by   the

manufacturer.”           Id. at 108.       “[P]roof of actual confusion is

unnecessary; the likelihood of confusion is the determinative

factor.”      Id. (quoting Soweco, Inc. v. Shell Oil Co., 617 F.2d
1178, 1185-86 (5th Cir. 1980). 8

      8
       Shell Oil’s holding is consistent with that in United
States v. Farmer, 370 F.3d 435 (4th Cir. 2004), a criminal
trademark counterfeiting case.      In Farmer, we upheld the
criminal trademark conviction of a defendant accused of
purchasing shirts manufactured for (but rejected by) mark
holders, affixing the registered mark, and selling the shirts as
genuine.   We reasoned that, even if the quality of the shirts
sold by the defendant was identical to the quality of “genuine”
Nike shirts, “[o]ne of the rights that a trademark confers upon
its owner is the right to control the quality of the goods
manufactured and sold under that trademark.”        Id. at 441
(internal quotation marks omitted).    Accordingly, “the actual
quality of the goods is irrelevant; it is the control of quality
that a trademark holder is entitled to maintain.” Id. (internal
quotation marks omitted).

                                           25
       Mobil       Oil        directly          involved         a    claim       of   Lanham       Act

preemption         as    Mobil      challenged             Virginia        laws   regulating        the

maximum      number       of       stations       a    retailer           could   operate,        sales

quotas for those stations, and minimum hours of operation.                                           We

acknowledged the settled principle that “[t]he Lanham Act gives

a     mark    owner      the       right        to     control        the    quality       of     goods

associated with his mark,” 34 F.3d at 226, but held that the

regulations at issue did not run afoul of the Lanham Act, id. at

226-27,      under       the       facts    of       that    case.          Significantly,          the

challenged restrictions in Mobil Oil were entirely unrelated to

the     manufacture           or     preparation            of       the    actual     trademarked

product, Mobil-branded gasoline.

       With     respect        to    the        Virginia         regulation       that     suppliers

could not require retailers to be open twenty-four consecutive

hours per day, we held that the provision “does not adversely

affect       the     quality        of     services          provided        by    Mobil        service

stations” because “the inability to require 24-hour operation

does not detract from [Mobil’s] trademark image.”                                      Id. at 226.

We also held that the Virginia law prohibiting suppliers from

limiting the number of stations a retailer could operate was not

preempted       because        it    “[did]          not    have      a    significant      negative

impact on Mobil’s quality control efforts.                                  This provision does

not     alter      the        franchisee’s            obligations           to    uphold        Mobil’s

standards       as      set    forth       in    the       franchise        agreement[.]”           Id.

                                                      26
Lastly,       we   reasoned      that    the     Virginia       provision        prohibiting

gasoline purchase or sales quotas in franchise agreements was

not preempted because the provision “[did] not prevent Mobil

from maintaining the quality of its products and services. . . .

[a]ll    gasoline        sold    under   the        Mobile    mark    must       comply   with

Mobil’s quality standards.”              Id.

      Although we did not find Lanham Act preemption applied in

Mobil Oil, the basis of our decision was that the challenged

restrictions did not have a “significant negative impact on”

Mobil’s ability to control the quality of its trademarked good,

Mobil gasoline.          See id.      Read together, Mobil Oil and Shell Oil

stand for the proposition that, under the Lanham Act, the mark

holder has a right to maintain the quality of the goods bearing

its   mark,        and   when    a   state      statute       does    not       significantly

interfere with that right, there is no preemption.

      Applying that framework to the case at bar, we conclude

that the district court erred by granting summary judgment in

favor    of    Defendants        because     genuine       issues     of    material       fact

remain in dispute.              Specific to this case, the Plaintiffs’ as-

applied preemption challenge under the Lanham Act goes to the

effect    of       splash   blending       by       retailers    on     the      Plaintiffs’

trademark rights; i.e., the quality of the gasoline product sold

under    those       trademarks      when       it    is     produced      by    the    splash

blending       process.         Plaintiffs       contended       before         the    district

                                               27
court that splash blending is unreliable as compared to inline

blending   because         of   the   potential       for    human      error    in    the

measuring, delivery, and mixing of the ethanol as part of that

process.        By    contrast,       they    note    that       inline   blending       is

computer-operated, and when errors do occur, they are quickly

detected   and       the   blended    gasoline       is    not    released     for    sale.

Because of the difference in the production methods, Plaintiffs

assert that splash blended gasoline that is improperly blended

is more difficult to detect, and more costly to correct, and has

a greater potential to harm the customer’s vehicle; all to the

potential detriment of the suppliers’ marks.

     In addition to tendering affidavits in support of these

claims,       Plaintiffs        submitted         anecdotal        documentation        of

trademarked blended gasoline, sold as E-10, but being comprised

of more or less than 10 percent ethanol.                          In sum, Plaintiffs

presented competent evidence that splash blending could result

in an inferior quality product that could harm vehicle engines

or performance thereby denigrating the value of the trademarked

goods   and     fostering       consumer      confusion.           In   response,       the

Defendants      presented        evidence         contradicting         some    of     the

Plaintiffs’ evidence.

     The   district        court,     however,       did    not    view   the    factual

dispute regarding the relative quality of blending practices to

be a material one for summary judgment purposes.                          In awarding

                                             28
summary judgment to the Defendants, the district court rejected

Plaintiffs’ arguments “that splash blending prevents them from

effective quality control” because “the undisputed facts do not

support   that     contention.”        (J.A.   519.)      The   district    court

concluded that the Blending Statute “as applied does not prevent

suppliers from engaging in quality control of their trademarked

branded products,” (J.A. 518), and therefore “a dispute over the

best blending practice does not create an issue of material fact

to withstand summary judgment,” (J.A. 520.)

       Citing to several of the parties stipulations (¶¶ 86-121),

the district court held that because problems can arise from

both   inline    and   splash    blending,     “blending    is   an   imperfect

process,”    and    therefore,    no    genuine   issue    of    material   fact

exists.     (J.A. 519-20).      The court relied heavily on ¶ 74 of the

stipulations, which stated that:

       Suppliers have asked Marketers in North Carolina to
       sign splash blending agreements if those marketers
       wish to splash blend a Supplier’s branded gasoline
       product with ethanol.     In some cases, the splash
       blending agreements impose quality control measures
       for splash blending and statements that seek to limit
       the Supplier’s liability for blending errors.

(J.A. 117.)        This stipulation, however, does not establish as

undisputed fact that splash blended gasoline sufficiently meets

the quality control that suppliers require for the trademarked

goods: the blended gasoline.             There is no explanation in the

record whether the “quality control measures” imposed by the

                                        29
splash blending agreements are sufficient in fact to maintain

the   quality      reasonably       required       by     the    trademark    owner,   or

whether they are merely an effort to mitigate the effects of the

Blending Statute by requiring that splash blending be conducted

in the best way possible absent preemption.                       Further findings of

fact are necessary to determine whether the quality controls,

imposed    at     the    insistence        of    suppliers,       are    sufficient    to

actually protect the quality of the trademarked gasoline.

      The court was correct that problems may arise from both

inline and splash blending.                 But the fact that the trademark

owner’s preferred method of quality control is imperfect does

not   mean      that    other,   perhaps         more     flawed,    quality     control

measures     are       sufficient     to        protect     the    trademark    owners’

interests in maintaining the quality of their marks and avoiding

consumer confusion.         If, as a factual matter, inline blending is

generally more accurate, or less likely to result in sub-quality

blended gasoline, suppliers may have a legitimate Lanham Act

claim     that    the    Blending     Statute           forces    them   to    authorize

retailers to downgrade their trademarked products in the splash

blending process that results in fuel that is below the quality

desired by the holder of the mark.                       Whether they in fact have

such a claim depends on the answer to factual questions that

were not resolved prior to the award of summary judgment.

                                            30
     The district court, however, concluded that the Blending

Statute could be construed to avoid a conflict with Lanham Act

principles.        In the district court’s view, suppliers could “set

forth    specific     guidelines        for      blending    and    require       random

testing of the resulting blended gasoline.” (J.A. 518.)                          And to

deal with retailers who are unwilling to “follow [suppliers’]

quality control procedures, suppliers may forbid the use of the

trademarked    name     as    to     the    subsequent      sale   of     the   blended

gasoline     and    bring     suit     under     the   Lanham      Act    where      such

unauthorized use occurs.”            (J.A. 519.)

     In reaching these conclusions, however, the district court

failed to view the record evidence under the correct summary

judgment     standard,       “taking       the   evidence    and    all    reasonable

inferences drawn therefrom in the light most favorable to the

nonmoving party.”        Durham v. Horner, 690 F.3d 183, 188 (4th Cir.

2012).       Construing       the     record      evidence    in    favor       of     the

nonmovant, the Plaintiffs, the evidence does present a genuine

disputed issue of material fact that does not permit the award

of summary judgment in the current posture of the case.

     If the Plaintiffs’ evidence is proven at trial, there is a

reasonable     possibility         that     splash     blending     could       have    a

“significant negative impact” on the gasoline product sold to

the consumer.        That effect, if significantly deleterious, could

negatively affect the quality of the marked goods in a way that

                                            31
after the fact quality control measures would be insufficient to

safeguard and maintain the quality of the “trademarked, branded

products.”         Further, if the Plaintiffs prevailed on this factual

issue    of    scientific        proof,    then    their     Lanham       Act    rights      may

extend beyond the partial quality control measures articulated

by the district court and may not be sufficiently protected by

post hoc remedies after the inferior trademarked goods have been

placed in the consumer market by virtue of a conflicting state

statute.

      If the Blending Statute effectively operates to authorize

Lanham Act violations with a “significant negative impact” on

the quality of the trademarked good, the fact that suppliers

have a right of action against retailers in those circumstances

may     be    insufficient         to     save     the      Blending          Statute      from

preemption.         See Cox, 112 F.3d at 154 (state law is preempted

“to the extent that it actually conflicts with federal law”).

Unlike       the    mark    holder’s       requirements        in        Mobil      Oil,    the

Plaintiffs’         trademark      complaints        here     go     directly        to     the

manufacture of the marked product, the blended gasoline, which

goes directly to a consumer market.                      Without finding as a fact

the effect of splash blending, the district court could only

speculate      as    to    whether       splash    blending        had    a     “significant

negative      impact”      and    whether     that   impact     would         be,   in     fact,

sufficiently        eliminated      by    a   realistic      set     of    after-the-fact

                                              32
quality      control       measures.          Consequently,           the     district     court

could not have determined, without a factual resolution of the

effect of splash blending, whether the mark holders’ rights to

quality      control       of    the     marked        product       were     protected       from

“significant       negative           impact”    and     the    likelihood         of   consumer

confusion prevented.

      Under the Shell Oil/Mobil Oil formulation, it is not enough

to say, as the district court did, that some measure of quality

control is available to suppliers.                       Rather, the court must make

factual     findings        establishing         whether        or   not    the    quality      of

gasoline that is splash blended by retailers meets the trademark

holders’ (the Plaintiffs) quality standards to be blended in the

manner specified by the owner of the mark.                                    If the splash-

blended fuel is not to a quality as specified by the trademark

owner then the district court should make further findings of

fact whether, and to what extent, the suppliers could reasonably

impose      quality    controls         on    splash      blended       gasoline,       and    the

efficacy      of   those        quality      control      measures       to      protect     their

trademarked        goods        and    prevent        consumer       confusion.         If     the

suppliers      are,    as        a     factual        matter,     able      to    demand      that

marketers      take        certain       ameliorative           steps      that    effectively

mitigate material risks to quality that the district court finds

are associated with splash blending, then the Blending Statute

may   not    “have     a    significant          negative       impact      on    [suppliers’]

                                                 33
quality control efforts.”             Mobil Oil, 34 F.3d at 226.            In that

circumstance, particularly in view of the presumption against

preemption, a finding of preemption may not lie.

     Defendants rejoin on appeal that the Blending Statute does

not conflict with the objects of the Lanham Act because there is

no evidence in the record of consumer confusion.                      Defendants may

be correct as a matter of record, but the lack of evidence of

actual existing consumer confusion is beside the point.                       As we

observed   above,      “proof    of    actual      confusion     is    unnecessary.”

Shell    Oil, 928 F.2d     at    108     (internal     quotation     marks   and

alteration      omitted).       The     key      question   is   whether    consumer

confusion is likely.          See id.       If the Plaintiffs’ factual claims

on inline blending versus splash blending are correct and other

quality control measures are not sufficiently effective, then

the district court must further weigh whether the sale of the

potentially inferior product will be likely to cause consumer

confusion.       The suppliers’ trademarks suggest to the consumer

that the blended gasoline has been manufactured to a level of

quality specified by the trademark holder.                   And if that is not

so, the Lanham Act may be transgressed. 9

     9
       Plaintiffs also contend that the Blending Statute is
contrary to the goals of the Lanham Act because it allows for a
sort of “soft piracy” by permitting retailers to sell blended
gasoline bearing suppliers’ marks, when, in actuality, retailers
have only purchased a percentage of the final product from
(Continued)
                                            34
       Accordingly,          we     vacate      the       district     court’s        grant    of

summary judgment to the Defendants on the Lanham Act preemption

claim.     We remand the case to the district court to consider

upon    further       fact     finding       whether        the   Blending       Statute,     by

preventing suppliers from restricting the ability of retailers

to    splash    blend,       has    a   “significant          negative    impact”       on    the

suppliers’ ability to ensure that blended gasoline bearing the

suppliers’ mark is at the level of quality suppliers reasonably

demand to safeguard their trademark rights and prevent consumer

confusion.          In doing so, the court should be mindful both of the

weighty presumption against preemption of state law, and also of

the    maxim        that     “the     purpose        of     Congress     is     the    ultimate

touchstone in every pre-emption case.”                         Wyeth, 555 U.S. at 565.

Finally,       we     note     that     should        the     district        court    conclude

suppliers cannot adequately ensure the quality of splash-blended

gasoline, the Lanham Act would not preempt the Blending Statute

in its entirety.              Rather, any preemption under the Lanham Act

would go to limiting North Carolina from requiring suppliers to

suppliers (ninety percent in the case of E-10 gasoline, for
example).   This argument lacks merit.     As the district court
recognized, suppliers set the price of ethanol, and can require
retailers to disclose in advance of sale whether they intend to
blend unblended gasoline with ethanol. Nothing in the Blending
Statute prevents suppliers from adjusting their prices in order
to ensure that they are compensated for the goodwill associated
with the products bearing their trademarks.

                                                35
permit   the    sale    of    splash-blended    gasoline       under   their

trademarks.     See Dalton v. Little Rock Family Planning Servs.,

516 U.S. 474, 476 (1996) (“[S]tate law is displaced only to the

extent that it actually conflicts with federal law.”) (internal

quotation marks omitted).

                                     IV.

     Although    we    are   in   agreement   with   the    district   court

insofar as it rejected Plaintiffs’ PMPA and federal renewable

fuel program preemption challenges, we hold that genuine issues

of material fact remain unresolved as to Plaintiffs’ Lanham Act

preemption challenge to the Blending Statute.          As a consequence,

the district court erred in awarding summary judgment to the

Defendants on the Lanham Act claim.            We therefore affirm the

judgment of the district court in part, vacate it in part, and

remand for further proceedings consistent with this opinion.

                                                           AFFIRMED IN PART,
                                                            VACATED IN PART,
                                                                AND REMANDED

                                     36