|Investing in Californian emission allowances – formal requirements - Page 2|
|Wednesday, 01 June 2011 06:00|
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In order to complete registration VAE must designate an authorized account representative. As the Proposed Regulation Order states an application for an account must designate a single authorized account representative and a single alternate authorized account representative who may act on behalf of the authorized account representative. The agreement by which the alternate authorized account representative is selected shall include a procedure for authorizing the alternate authorized account representative to act in lieu of the authorized account representative.
An application for an account submitted to the accounts administrator must include the following elements:
1) name, address, e-mail address, telephone number, and facsimile transmission number of the authorized account representative and any alternate authorized account representative;
2) organization name;
3) a list of all entities subject to a binding agreement for the authorized account representative or any alternate authorized account representative to represent their ownership interest with respect to the compliance instruments held in the account, including a statement of each beneficial owner’s percentage ownership interest and a statement of affiliations between beneficial owners;
4) the certification statement by the authorized account representative and any alternate authorized account representative (relating to the capacity to act on behalf of the principal), the exact wording thereof is laid down in the Proposed Regulation Order)
5) the signature of the authorized account representative and any alternate authorized account representative and the dates signed.
The scope of the representatives’ capacity, required by the said regulations, is drafted as a maximally extensive alongside with a general prohibition on contractual limitations as regards the representatives powers towards the ARB. The very similar approach is visible from RGGI market rules and it seems that Californian scheme treated RGGI as a prototype in that regard.
The market rules contain rigorous and rigid provisions that the authorized account representative and any alternate authorized account representative for the account represent and, all his or her representations, actions, inactions, or submissions, legally bind VAE in all matters pertaining to the California cap-and-trade, notwithstanding any agreement between the authorized account representative or any alternate authorized account representative and VAE. The scheme rules consequently stipulate that VAE are bound by any decision or order issued to the authorized account representative or any alternate authorized account representative by the Executive Officer of the ARB or a court regarding the account. Furthermore, any representation, action, inaction, or submission by any alternate authorized account representative shall be deemed to be a representation, action, inaction, or submission by the authorized account representative.
Unless otherwise required by the Executive Officer of the ARB, documents of agreement referred to in the application for an account shall not be submitted to the accounts administrator. Additionally, the accounts administrator shall not be under any obligation to review or evaluate the sufficiency of such documents, if submitted.
Creation of an account
Under the Californian scheme there are projected three main types of accounts in the emissions registry, namely holding account, limited-use holding account and compliance account.
The limited-use holding accounts and compliance accounts are principally for a covered entities and opt-in covered entities which qualify for a allocation of allowances. So for VAE generally are designed holding accounts.
It follows from the provision “The Executive Officer shall not approve registration for more than one set of accounts for an entity” that for VAE only one holding account is allowed.
The account for the registrant is created after the Executive Officer of the ARB approves a registration.
The fundamental legal point linked with procedures outlined above is that registration with ARB or the purchase or holding of a compliance instrument issued by ARB shall conclusively establish a person’s consent to be subject to the jurisdiction of the State of California, including the administrative authority of ARB and the jurisdiction of the Superior Courts of the State of California. Such an unequivocal provision contained in the Proposed Regulation Order means that one should carefully consider the investment decisions at issue, analysing all relevant aspects of the Californian law in order not to be adversely surprised.
It should be recalled that rules on Californian cap-and-trade are still work-in-progress and in the course of further analyses the envisioned measures may change. The above considerations are based on the version of the scheme rules adopted by the ARB on 16 December 2010 ((see: California Environmental Protection Agency Proposed Regulation to Implement the California Cap-and-Trade Program, version adopted by the ARB on 16 December 2010, Appendix A Proposed Regulation Order, Release Date: October 28, 2010, http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm).