II 110th CONGRESS 1st Session S. 2423 IN THE SENATE OF THE UNITED STATES December 6, 2007 Mrs. Feinstein introduced the following bill; which was read twice and referred to the Committee on Environment and Public Works A BILL To facilitate price transparency in markets for the sale of emission allowances, and for other purposes.

1.

Short title

This Act may be cited as the Emission Allowance Market Transparency Act of 2007.

2.

Emission allowance market transparency

(a)

Purpose

The purpose of this section is to facilitate price transparency in markets for the sale of emission allowances (including markets for real-time, forward, futures, and options) to the maximum extent practicable, taking into consideration— (1)the public interest; (2)the integrity of those markets; (3)fair competition; and (4)protection of consumers. (b)

Definitions

In this section: (1)

Administrator

The term Administrator means the Administrator of the Environmental Protection Agency. (2)

Emission allowance

The term emission allowance means any allowance, credit, or other permit issued pursuant to any Federal law (including regulations) to any individual or entity for use in offsetting the emissions of any pollutant (including any greenhouse gas) by the individual or entity. (c)

Duties of Administrator

(1)

Regulations

The Administrator shall promulgate such regulations as the Administrator determines to be necessary to achieve the purpose of this section, including regulations that provide for the dissemination, on a timely basis, of information regarding the availability and prices of emission allowances with respect to— (A)the Administrator; (B)State regulatory authorities; (C)buyers and sellers of the emission allowances; and (D)the public. (2)

Obtaining information

(A)

In general

Subject to subparagraph (B), the Administrator may— (i)obtain the information described in paragraph (1) directly from any emission allowance market participant; or (ii)enter into an agreement under which another entity obtains and makes public that information. (B)

Limitation

Any activity carried out by the Administrator or another entity to obtain information pursuant to subparagraph (A) shall be subject to applicable rules designed to prevent the disclosure of information the disclosure of which would be detrimental to the operation of an effective emission allowance market, as determined by the Administrator. (3)

Use of existing price publishers and service providers

In carrying out this subsection, the Administrator shall— (A)take into consideration the degree of relevant price transparency provided by price publishers and providers of trade processing services in operation on the date of enactment of this Act; and (B)use information and services provided by those publishers and providers to the maximum extent practicable. (d)

Actions by individuals and entities

(1)

Prohibitions

It shall be unlawful for any individual or entity— (A)to knowingly provide to the Administrator (or another entity acting pursuant to an agreement described in subsection (c)(2)(A)(ii)) any false information relating to the price or quantity of emission allowances sold, purchased, transferred, banked, or borrowed by the individual or entity, with the intent to fraudulently affect the data being compiled by the Administrator or other entity; (B)directly or indirectly, to use in connection with the purchase or sale of an emission allowance any manipulative or deceptive device or contrivance (within the meaning of section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78j(b))), in contravention of such rules and regulations as the Administrator may prescribe to protect the public interest or consumers; or (C)to cheat or defraud, or attempt to cheat or defraud, another market participant, client, or customer. (2)

Monitoring

The Administrator shall monitor trading to prevent false reporting, manipulation, and fraud under this section. (3)

Effect of subsection

Nothing in this subsection creates any private right of action. (e)

Excessive speculation

(1)

Finding

Congress finds that excessive speculation relating to emission allowances— (A)can cause sudden or unreasonable fluctuations or unwarranted changes in the price of emission allowances; and (B)imposes an unnecessary burden on— (i)the development of a well-functioning emission allowance market; (ii)the planning decisions of businesses and industry; and (iii)consumers. (2)

Prevention of burdens

(A)

In general

To prevent, decrease, or eliminate the burdens associated with excessive speculation relating to emission allowances, the Administrator, in accordance with subparagraph (B) and after providing notice and an opportunity for public comment, shall adopt position limitations or position accountability for speculators as the Administrator determines to be necessary on— (i)the quantity of trading transactions allowed to be conducted, and the positions eligible to be held, by any individual or entity in any emission allowance market; and (ii)any emission allowance auction conducted pursuant to Federal law (including regulations). (B)

Consultation

In carrying out subparagraph (A), the Administrator shall consult with— (i)the Commodity Futures Trading Commission; (ii)the Federal Trade Commission; and (iii)the Federal Energy Regulatory Commission. (C)

Nonapplicability to bona fide hedging transactions or positions

(i)

In general

No regulation promulgated pursuant to this paragraph shall apply to a transaction or position described in subparagraph (A)(i) that is a bona fide hedging transaction or position, as determined by the Administrator. (ii)

Regulations for definitions

The Administrator shall promulgate such regulations as the Administrator determines to be necessary to define the term bona fide hedging transaction or position for purposes of clause (i), including regulations that permit individuals or entities to hedge any legitimate anticipated business need for any subsequent period during which an appropriate futures contract is open and available on an exchange or other emission allowance market or auction. (f)

Penalties

An individual or entity that, as determined by the Administrator, violates an applicable provision of this section or a regulation promulgated pursuant to this section shall be subject to a fine of $1,000,000, or imprisonment for not more than 10 years, or both, for each violation. (g)

Jurisdiction of Commodity Futures Trading Commission

Nothing in this section abrogates the jurisdiction of the Commodity Futures Trading Commission with respect to any contract, agreement, or transaction for future delivery of an emission allowance (including a carbon dioxide credit).