\-- In addition, the compliance entity will need to have the ability to
screen referred questions of implementation, in accordance with agreed
criteria that should be adopted at COP 6.

-   The attached elements text elaborates the US position on the
    institutional/procedural aspects of the compliance regime.

    [Initiation of the process (references)]{.underline}

```{=html}
<!-- -->
```
-   References are to be distinguished from initiation of the compliance
    process:

    \-- There will be several sources for references of questions of
    implementation (see below).

    \-- However, the decision whether to pursue a particular question of
    implementation should be made by the compliance entity itself.

-   Two issues then arise:

    \-- who can refer an issue to the compliance entity for further
    consideration; and

    \-- whether the compliance\` entity should screen issues on a
    case-by-case basis or whether there is a need for generally
    applicable rules.

-   In terms of the first issue, it seems that:

    \-- Any Party or group of Parties should be able to refer an issue
    with respect i o its own implementation

    \-- Article 8 expert review teams should refer all reports related
    to in implementation don by Annex I Parties.

    \-- A Party or group of Parties should be :able to refer an issue
    with respect to implementation of another Party under certain
    circumstances.

-   In terms of the second issue, there should be screening rules, both
    to provide agreed criteria to the entity as to which issues should
    be pursued and to promote consistency among cases. The screening
    aspect of the compliance entity should have minimal discretion.

    ![](media/image1.png){width="1.8090277777777777in"
    height="0.19722222222222222in"}

    have such a role, it should not have to approve the outcomes from
    Component 2; such outcomes should stand unless affirmatively
    overridden by the COP/moP.

# Outcomes, Generally

-   The compliance regime may result in four categories of potential
    outcomes:

    \--One category includes outcomes that are purely facilitative in
    nature, such as incentives, advice, assistance, or the arrangement
    thereof.

    \--A second category includes outcomes that are beyond facilitative,
    yet stop short of legally requiring a Party to take or refrain from
    a particular action, for example, warnings, publication of
    non-compliance or potential non-compliance.

    \--A third category includes loss of access to a Kyoto mechanism as
    the result of failure to meet that mechanism's eligibility
    requirements, for example, loss of access to emissions trading if a
    Party does not maintain the required registry.

    \--A fourth category includes outcomes that are mandatory, i.e.,
    that require a particular result as a result of non-compliance with
    a specific Protocol obligation.

-   Application of the first two categories of responses by the
    compliance entity is discretionary.

-   Application of the third category will flow from the rules in the
    decisions governing mechanisms under Articles 6,12,and 17.

-   Application of the fourth category will flow from the agreed
    mandatory outcomes resulting from particular Protocol violations, as
    contained below.

[Mandatory Outcomes]{.underline}

-   Mandatory outcomes will relate to non-compliance with Article 3.1 of
    the Protocol.

-   There will be a \[X-month\] period at the end of a commitment period
    known as a "true-up period."

-   During a true-up period, a Party may cure any overage it may have
    with respect to the previous commitment period by utilizing Articles
    6, 12, and/or 17.

-   \[further consideration of voluntary fund used to remain in
    compliance\]

-   To the extent that a Party continues to have an overage after the
    expiry of the true-up period:

> \-- Its assigned amount for the subsequent commitment period will be
> reduced by a number of tonnes equal to, \[1.3\] the number of tonnes
> by which it exceeded its assigned amount.
>
> \-- It may not transfer assigned amount under Article 17 in the
> subsequent commitment period (i.e., the period following the true-up
> period) until it demonstrates that it will have an AAU surplus in that
> period.
>
> \-- In addition, there should be a mandatory procedural outcome when a
> Party operating under Article 4 is found to be in non-compliance with
> Articles 5 and 7. Specifically, the result set forth in Article 4.5 of
> the Protocol (i.e., responsibility to meet levels of emissions in the
> Article 4 agreement) should apply. The reason is that, when one Party
> operating under Article 4 is not measuring/reporting properly, such
> inaccurate or missing information cannot be allowed to taint the
> entire Article 4 arrangement. Where one Patty has inaccurate or
> missing information each Article 4 Party needs to be responsible for
> its own level of emissions set out in the burden-sharing agreement.

[Other Issues]{.underline}

-   The compliance regime is without prejudice to Article 19 of the
    Protocol.

-   Any modifications to the compliance regime must be made by consensus
    of the Parties to the Protocol.