## Facts

- DuPont held banked nitrogen oxide (NOx) emission-reduction credits created by emissions reductions at its New Jersey facility.
- New Jersey law allowed later regulations to reduce or eliminate previously banked credits, and state agency correspondence warned DuPont that future, more restrictive regulations would discount the banked quantity.
- For a planned New England power project, Tractebel Power, Inc. (TPI) used its affiliate Tractebel Energy Marketing, Inc. (TEMI) to locate and purchase NOx credits.
- On March 10, 1998, TEMI (as TPI’s agent) contracted with DuPont to purchase 1,000 tons of NOx credits for $1 million.
- Shortly after contracting, New Jersey regulators revoked DuPont’s credits under new regulations, preventing DuPont from delivering the contracted credits.
- DuPont refused to perform; it sued regulators but later abandoned that suit.
- In the Texas contract action, the jury found DuPont breached and awarded TPI $1.2 million in damages, but also found DuPont’s breach excused by commercial impracticability; the trial court entered judgment for DuPont.

## Issues

1. Whether commercial impracticability excused DuPont’s nonperformance when the regulatory risk of credit reduction or elimination was expressly disclosed and foreseeable.
2. Whether the evidence was legally sufficient to support the jury’s finding of impracticability and the resulting judgment excusing breach.

## Decision

- The appellate court reversed the take-nothing judgment for DuPont.
- The court held there was no evidence supporting DuPont’s commercial impracticability defense on the undisputed record of known regulatory risk.
- The case was remanded for entry of judgment for TEMI and TPI consistent with the jury’s findings of breach and damages, without excuse based on impracticability.

## Legal Principles

- Commercial impracticability is a narrow excuse and generally requires a supervening event whose nonoccurrence was a basic assumption of the contract and for which the invoking party did not bear the risk.
- A party cannot establish impracticability based on a regulatory change that was expressly contemplated by governing law and agency warnings; such a change is foreseeable and treated as a risk borne by the party subject to that regulatory regime.
- When a jury’s finding on an affirmative defense lacks legally sufficient evidentiary support, an appellate court may set it aside and render or remand for judgment consistent with supported liability and damages findings.

## Conclusion

Because the regulatory possibility of discounting or eliminating banked emission credits was explicit and known, DuPont could not treat the later revocation as an unforeseeable contingency excusing performance; the impracticability finding failed for lack of evidence, so judgment was required for the buyer on breach and damages.


Tractebel Energy Mktg., Inc. v. E.I. Du Pont de Nemours & Co., 118 S.W.3d 60 (Tex. App.—Houston [14th Dist.] 2003)