Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Administration of the Auctions.
(1) The Executive Officer may serve as
auction administrator or designate an entity to serve as auction
administrator.
(2) The Executive
Officer may serve as financial services administrator or may designate a
qualified financial services administrator to conduct all financial
transactions required by this article.
(b) The Executive Officer may direct that the
California GHG allowances designated for auction be offered through an auction
conducted jointly with other jurisdictions to which California links pursuant
to subarticle 12, provided the joint auction conforms to this
article.
(c) Auction Notification.
At least 60 days prior to each auction, the auction administrator shall publish
the following information:
(1) The date and
time of the auction;
(2) Auction
application requirements and instructions;
(3) The form and manner for submitting
bids;
(4) The procedures for
conducting the auction;
(5) The
administrative requirements for participation;
(6) The number of allowances that will be
available at the auction; and
(7)
For the announcement of the first quarter auction, the number of allowances to
be available for sale during the calendar year and the Auction Reserve Price in
effect for the calendar year pursuant to section
95911(c).
(8) If California has linked to a
jurisdiction operating an External GHG ETS pursuant to subarticle 12, the
number of allowances in section
95912(c)(6) may
also include the allowances made available by the linked jurisdiction. The
auction administrator may modify the auction notice to reflect changes in
allowances made available by any linked jurisdictions up until 30 days prior to
an auction.
(d) Auction
Eligibility .
(1) The Executive Officer must
approve an entity's auction eligibility before that entity may participate in
an auction.
(2) Only an entity
registered into the Cap-and-Trade Program pursuant to section
95830 is eligible for auction
participation.
(3) An entity whose
holding account has been revoked or is currently suspended pursuant to section
96011 is not eligible to
participate in an auction. An individual associated pursuant to sections
95830,
95832, and
95833 with an entity whose holding
account has been revoked or is currently suspended pursuant to section
96011 is not eligible to
participate in an auction.
(4) An
entity must provide auction eligibility information, including any changes
required by subarticle 5, at least 30 days prior to an auction in which it
intends to participate, including:
(A) Except
as otherwise provided in section
95833(e)(4), the
existence of any direct or indirect corporate associations pursuant to sections
95833 and
95911(d);
(B) An allocation of the purchase limit among
associated entities as defined in section
95833, or a change in the existing
allocation of the purchase limit among associated entities, if
applicable;
(C) An allocation of
the holding limit among associated entities as defined in section
95833, or a change in the existing
allocation of the holding limit among associated entities, if applicable;
and
(D) An attestation disclosing
the existence and status of any ongoing investigation or an investigation that
has occurred within the last ten years with respect to any alleged violation of
any rule, regulation, or law associated with any commodity, securities,
environmental, or financial market for the entity participating in the auction,
and all otherentities with whom the entity has a direct corporate association
pursuant to section
95833 that participate in a
carbon, fuel, or electricity market. The attestation must be updated to reflect
any change in the status of an investigation that has occurred since the most
recent auction application attestation was submitted.
(5) An entity with any changes to the auction
eligibility information listed in section
95912(d)(4)
within 30 days prior to an auction may be denied eligibility for the auction if
the updated information represents a material change. For the purposes of
changes to indirect and direct corporate associations, this section only
applies to those corporate associates with entities registered in the tracking
system.
(6) Prior to participating
in an auction, any primary or alternate account representative that will be
submitting bids on behalf of entities eligible to participate in an auction
must have already:
(A) Complied with the
Know-Your-Customer requirements of section
95834; and
(B) Submitted the additional information
required by the financial services administrator contained in Appendix A of
this Article.
(e) Auction Participation Approval. An entity
that intends to participate in an auction must inform the Auction Administrator
at least 30 days prior to an auction of its intent to bid in an auction,
otherwise the entity may not participate in that auction. An entity must be
declared eligible for auction participation pursuant to section
95912(d) before
it can be approved for auction participation.
(f) Protection of Confidential Information.
To the extent permitted by state law, the Executive Officer, the Auction
Administrator, and the financial services administrator will treat the auction
eligibility information submitted pursuant to section
95912(d)(4) and
not listed for release pursuant to section
95912(i)(5) as
confidential business information.
(g) All bids will be considered binding
offers for the purchase of allowances under the rules of the auction.
(h) Auction participants must provide a bid
guarantee to the financial services administrator at least 12 days prior to the
auction.
(1) The bid guarantee must be in one,
or a combination of, the following forms:
(A)
Cash in the form of a wire transfer; or
(B) An irrevocable letter of credit;
or
(C) A bond.
(D) All forms of bid guarantee must be in a
form that may be accepted by the financial services administrator consistent
with U.S. banking laws and bank practices.
(2) The bid guarantee submitted by any entity
registered with California will be in U.S. dollars.
(3) A bid guarantee submitted in any form
other than cash must be payable within three business days of payment request
submitted by physical presentment or electronically by facsimile, or other
electronic form accepted by the financial services administrator.
(4) The bid guarantee will be in the currency
used by the jurisdiction with which the entity has registered.
(5) The amount of the bid guarantee must be
greater than or equal to the maximum value of the bids to be submitted.
(A) The value of a set of bids equals the
cumulative quantity of bids submitted at or above a price times that price. The
value of the set of bids is calculated at each price at which the bidder will
submit a bid.
(B) The maximum value
of a set of bids is the highest value of a set of bids calculated at each price
at which the bidder will submit a bid.
(C) The auction participant submits a single
bid guarantee to cover bids in both the Current and Advance Auctions and the
amount of the single bid guarantee must be greater than or equal to the
combined maximum value of the Current and Advance Auction bids to be
submitted.
(6) The bid
guarantee will be made payable to the financial services
administrator.
(7) The bid
guarantee will expire no sooner than 26 days after the auction date.
(8) The financial services administrator will
evaluate the bid guarantee and inform the auction administrator of the value of
the bid guarantee once it is found to conform to this section and is accepted
by the Executive Officer.
(9) If an
entity has submitted more than one form of bid guarantee then the financial
services administrator will apply the instruments to the unpaid balance in the
order the instruments are listed in section
95912(h)(1).
(10) The auction administrator will apply the
value of the bid guarantee to the Current Auction first when accepting bids
pursuant to section
95911(e)(3). The
remaining value of the bid guarantee will be used to determine acceptance of
bids into the Advance Auction.
(i) After the auction administrator has
notified the Executive Officer of the results of the auction the Executive
Officer will:
(1) Review the conduct of the
auction by the auction administrator, then certify whether the auction met the
requirements of this article;
(2)
After certification, direct the auction administrator to notify each winning
bidder of the auction settlement price, the number of allowances that the
bidder purchased, the bidder's total purchase cost, and the deadline and method
for submitting payment.
(3) After
certification, direct the financial services administrator to:
(A) Collect cash payments from winning
bidders within seven days of notifying them of the auction results;
(B) Use the bid guarantee to cover payment
for allowance purchases by any entity that fails to make cash payment within
seven days after bidders are notified of results and place the proceeds into
the Greenhouse Gas Reduction Fund created pursuant to Government Code section
16428.8;
(C) Deposit auction proceeds from sales of
ARB allowances sold at auction into the Greenhouse Gas Reduction Fund created
pursuant to Government Code section
16428.8;
(D) Distribute auction proceeds to entities
that consigned allowances for auction pursuant to section
95910(d);
(E) Return any unused cash bid guarantee;
and
(F) Return any bid guarantee
form other than cash after receipt of payment for allowances awarded.
(G) A bid guarantee in a form other than cash
may be held by the financial services administrator for multiple auctions or
reserve sales upon agreement by the financial services administrator and
bidder.
(4) Upon
determining that the payment for allowances has been deposited into the
Greenhouse Gas Reduction Fund created pursuant to Government Code section
16428.8,
or transferred to entities that consigned allowances, transfer the allowances
purchased into each winning bidder's Holding Account, or to its Compliance
Account if needed to comply with the holding limit;
(5) Inform each approved external GHG
emissions trading system and the associated tracking system of the serial
numbers of allowances purchased at auction; and
(6) Following the auction, the Executive
Officer will publish at
www.arb.ca.gov the
following information:
(A) The names of the
bidders;
(B) Auction settlement
price; and
(C) Aggregated or
distributional information on purchases with the names of the entities
withheld.
(j)
The auction bidding window may be delayed, rescheduled, or cancelled due to
technical systems failures and to protect the environmental stringency of the
California Cap-and-Trade Program.
(1) The
opening of the auction bidding window may be delayed or paused for no more than
one hour by the Executive Officer due to technical systems failures.
(2) The bidding window may be rescheduled by
the Executive Officer due to technical systems failures or to protect the
environmental stringency of the California Cap-and-Trade Program.
(3) Rescheduled Auctions.
(A) The auction bidding window must be
rescheduled to ensure the financial services administrator can use any bid
guarantees submitted pursuant to section
95912 prior to the expiration date
required by section
95912.
(B) No additional auction applications may be
accepted.
(C) The financial
services administrator will keep all bid guarantees to complete financial
settlement of the auction after the rescheduled bidding window.
(D) No bid guarantees provided pursuant to
section 95912 may be amended.
(E) If technical systems failures cannot be
resolved and a bidding window cannot be rescheduled to meet the requirements of
this section, then the Executive Officer will cancel the auction bidding
window.
1. New
section filed 12-13-2011; operative 1-1-2012 pursuant to Government Code
section
11343.4
(Register 2011, No. 50).
2. Amendment of section heading and section
filed 8-29-2012; operative 9-1-2012 pursuant to Government Code section
11343.4
(Register 2012, No. 35).
3. New subsections (c)(8) and (i)(1)(E)
filed 6-24-2013; operative 10-1-2013 (Register 2013, No. 26).
4.
Amendment of section and NOTE filed 6-26-2014; operative 7-1-2014 pursuant to
Government Code section
11343.4(b)(3)
(Register 2014, No. 26).
5. Amendment of subsections (d)(4)(D)-(E),
repealer of subsection (d)(4)(F), amendment of subsections (j)(1)(B)-(C), new
subsection (j)(1)(D), amendment of subsections (j)(10) and (k)(2), repealer of
subsections (k)(2)(A)-(F), new subsections (k)(3)-(k)(3)(G) and subsection
renumbering filed 9-18-2017; operative 10-1-2017 pursuant to Government Code
section
11343.4(b)(3)
(Register 2017, No. 38).
6. Amendment filed 3-29-2019; operative
3-29-2019 pursuant to Government Code section
11343.4(b)(3)
(Register 2019, No. 13).
Note: Authority cited: Sections
38510,
38560,
38562,
38570,
38571,
38580,
39600
and
39601,
Health and Safety Code. Reference: Sections
38530,
38560.5,
38564,
38565,
38570
and
39600,
Health and Safety Code and Section
16428.8,
Government Code.
