Common use of Compliance Markets Clause in Contracts

Compliance Markets. The drafters present ideas and mechanisms to promote fungibility of RECs across compliance markets, including the mechanics for representations concerning compliance of a product with the requirements of multiple programs, as well as optional mechanics that will enable parties to unlock potential further value in RECs through optional verification. When a REC is indicated as sold in a compliance market, the seller represents that as of the date of the trade, the REC complies with the requirements of the compliance programs so indicated, but the buyer takes the risk of the potential for change in the legal requirements after the trade date. However, the parties can choose to have the seller bear the change-in-law risk between the trade date and delivery by electing to sell the product as “Regulatorily Continuing.” Presence or absence of the “Regulatorily Continuing” designation does not give rise to a right by either Buyer or Seller to cancel delivery or purchase if there is a failure of the Product to comply for a later delivery date if the program is changed; rather it is an allocation of risks of what parties may be required to do so the delivery can, when made, be used for compliance. Additionally, if the compliance program is later cancelled, delivery is still to be made and paid for at the original price, unless the parties have specifically provided otherwise in the original Product Order.