As always Cantor Fitzgerald does not trade for its own account. All allowances purchased in the auction or traded in the open market are for our clients. It is Cantor Fitzgerald’s policy to keep the identity of our clients and their positions in the market in strict confidence.

View NOx OTC MPI History

Latest Litigation Woes Knock NOx EA And SO2 EA MPIs Down
The May NOx MPI stands at $549/ton for vintage 1999s, $690/ton for vintage 2000s, $606/ton for vintage 2001s, and $579/ton for vintage 2002s. Relative to April, all of the vintage NOx MPIs are down, and the SO2 EA prices saw some dramatic swings for the first time in many months. In general, the NOx EA market continued its lackluster approach, with many sources holding their allowances until the summer months’ effects on demand and lawsuit outcomes could be better assessed. SO2 EA volumes are discussed on the prior page, but continued to see substantial volumes change hands. What sent prices for NOx EAs down and SO2 EAs all over the map was the latest round of lawsuit news on May 22, 2000 (see following story -- “Supreme Court Grants Cert.”). Greater volumes are still anticipated as we cross the threshold into the ozone season and buyers focus their attention more keenly on their compliance needs.

Supreme Court Grants Cert.
In May 1999, the U.S. Court of Appeals for the District of Columbia ruled in favor of the petitioners, American Trucking Association, et al., (i.e., not U.S. EPA) that EPA’s revisions to the National Ambient Air Quality Standards (NAAQS) should be vacated. Disagreeing with the Court of Appeals’ decision, EPA petitioned the U.S. Supreme Court for review of the decision (a petition of certiorari (cert.) is a necessary step before a case is heard by the Supreme Court; permission of the Court is necessary and is only granted where the Court believes that a case is ripe for review). EPA’s petition for cert. was granted on May 22, 2000. Thus, a bit more uncertainty hangs in the air. If EPA is successful, expect tighter emission standards. If EPA is not successful, it’s status quo for existing programs.

NY Governor Pataki And NY Legislators Restrict SO2 EA Trading
In a move labeled as dangerous for the environment by some environmental groups, the U.S. EPA, and even much of the New York Department of Environmental Conservation (NYDEC), on May 24, 2000 Governor Pataki signed into law a bill that restricts certain types of SO2 EA sales. Specifically, New York sources with SO2 EAs may not allow their allowances to be used in 14 upwind states. Governor Pataki and the state legislators approved the bill, stating that it will help minimize acid deposition in New York from upwind states. Troubling industry, the U.S. EPA, and NYDEC are reports such as EPA’s own presentation of numerous private analysis at www.epa.gov/acidrain/papers and a recent Environment Reporter article entitled, "Allowance Trading and Potential Hot Spots - Good News from the Acid Rain Program" Environment Reporter, page 954, May 12, 2000. Each report hails the SO2 EA program as a success, and in particular, notes that the SO2 EA program has not created “hot spots”, nor has there been a trend in the direction that allowances are traded. The Environment Reporter article even notes that the opportunity for trading has actually caused large emitters to reduce their emissions, thus reducing hot spots. Despite the testimony of many experts on the subject, the bill was passed, leading many to proffer that this act was nothing more than political grandstanding. The perceived zaniness of this bill sent the SO2 EA market on a wild ride down and then back up on May 24, 2000, with approximately a $7.00 spread on that day alone. By the end of the day May 24, 2000 and throughout the day May 25, 2000, the market appeared to have recovered and was on its usual course without such dramatic price swings.

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