1

Deliberative – Do Not Cite or Quote

Technical Support Document (TSD) for the Transport Rule

Docket ID No. EPA-HQ-OAR-2009-0491

Allowance Allocation Final Rule TSD

U.S Environmental Protection Agency

Office of Air and Radiation

June 2011
2

Deliberative – Do Not Cite or Quote

Allowance Allocation to Existing and New Units under the Transport Rule Federal Implementation 

Plan (FIP)

This Technical Support Document (TSD) provides information that supports EPA’s 

determination of unit-level allocations for existing and new units under the final Transport Rule. Section 

VI.D of the preamble discusses state budgets, and section VII.D discusses how the budgets are 

apportioned (i.e., allocated) to existing and new units under FIP program structure. This TSD provides 

additional information in support of unit level allocations and elaborates on the data and methodology 

used to arrive at the final allocations. The TSD is organized as follows:

1) Overview

2) New Unit Set-Asides and Allocations

3) Allocation Methodology for Existing Units

a. List of Existing Units

b. Data and Calculations

EPA anticipates that some states will submit State Implementation Plans (SIPs) with revised unit-level 

allocations to existing units that will replace those defined in the FIP. Section X of the final Transport 

Rule preamble explains when and how states may replace the FIP allocations, which can occur by vintage 

year 2013 or later through specific SIP procedures.

1. Overview

As discussed in preamble section VI, each state’s budget is comprised of the emissions that EPA 

estimates remain after the state has made the reductions required to eliminate its significant contribution 

to nonattainment and interference with maintenance of the relevant National Ambient Air Quality 

Standards (NAAQS) in downwind states in an average year. EPA finalized the Transport Rule with four

limited interstate trading programs. Emission allowances are used in the implementation of these 

programs. Specifically, EPA creates one allowance for each ton of emissions allowed in each year under 

each state’s budget. Each allowance has a “vintage” year, which is the year for which the allowance is 

issued. Covered sources are required to submit such an allowance for each ton of the relevant pollutant 

emitted on an annual basis. To implement the programs, allowances are initially allocated among covered 

sources within a state. 

As discussed in the preamble, under the FIP, EPA allocates allowances to sources in the state equal to 

that state’s total budget. The methodology used to determine states budgets is independent of and not 

affected by the methodology used to determine initial allowance allocations. In other words, initial 

allowance allocations in no way impact the state budgets. The state budgets are determined 

independently through the multi-factor analysis outlined in section VI of the Transport Rule preamble. 
3

Deliberative – Do Not Cite or Quote

Regardless of the methodology used by EPA or a state to allocate allowances to sources within the state, 

all emissions in each covered state that significantly contribute to nonattainment or interfere with 

maintenance in another state will be prohibited. In sum, the allocation methodology has no impact on the 

rule’s ability to satisfy the statutory mandate of CAA section 110(a)(2)(D)(i)(I) to eliminate significant 

contribution and interference with maintenance in downwind states.

As discussed in section VII.D of the preamble, under the FIPs, EPA will distribute the entire 

budget to sources located in the state subject to the FIP. However, this budget would first be divided into 

three different subgroups listed below (note, amounts vary by state):

1) New source set-aside

2) Indian Country set-aside 

3) Existing unit budget 

An initial amount of the state budget (92% to 98%, depending on the state) would be distributed to 

existing sources (i.e. sources online before January 1, 2010) in advance of the vintage year for which they 

are issued. The remaining amount would be held back for new units in a new source set-aside account. If 

any of the new source set-aside allowances remained unclaimed two weeks prior to the allowance transfer 

deadline, then they would be allocated to existing units on the same pro-rata heat input basis as the initial 

existing unit budget so they will be available to existing units for compliance. 

The final Transport Rule identifies potentially covered existing Transport Rule units and allocations 

for each of those units under the FIP. This TSD details how the list of potentially existing units was 

determined, how allocations were calculated, and how the quantity of allowance set-asides for new units 

and Indian Country units were determined. Following these descriptions, an appendix showing each 

affected EGU’s allocation under the final Transport Rule FIP along with the underlying data and 

calculations used to derive the allocation comprises most of the document.

2) New Unit Set Asides and Allocations

As explained in section VII.D, the final Transport Rule uses January 1, 2010 as the cut-off date 

used to distinguish “new units” from “existing units” for purposes of allowance allocation. Allocations to

existing units are based on historic heat input over a five-year baseline as well as historic emissions data. 

To allocate on this basis, EPA needs at least one full year of heat input and emissions data from an 

“existing unit” to determine its allocation using this methodology. If a unit did not come online prior to 

January 1, 2010, it cannot have provided a full year of data at the time of the Transport Rule’s

finalization. For this reason, EPA could not use a date later than Jan. 1, 2010 for the cut-off date. Units 

that came online after January 1, 2010 are considered “new units” for purposes of allocation under the 

final Transport Rule FIPs and will receive their allocations from the new source set aside. In the 

proposal, only units that came online after January 1, 2012 were considered “new units”. Therefore, units 

coming online on or after January 1, 2010 and before January 1, 2012 represent a unique subset of units 

that were considered “existing units” at proposal, but “new units” in the final Transport Rule. EPA 

recognizes that the final rule’s designation of these units as “new units” would, all else held equal, 

increase the demand for allowances in the new unit set-asides. As a result, EPA’s methodology for 

establishing each state’s new unit set aside in the final Transport Rule accounts specifically for the 

inclusion of units that commenced commercial operation on or after January 1, 2010 as described below. 
4

Deliberative – Do Not Cite or Quote

The new unit set-aside for SO2, annual NOX, and ozone season NOX for each state is a percentage 

of the state’s total budget. This percentage is the sum of a “base” percentage that all states receive for 

“potential” new units and a state-specific percentage reflecting emissions from “planned” units. For 

purposes of this document, the “potential” units on which the new source set-aside base percentage relies 

are those units that are projected new builds in the IPM modeling of the Transport Rule. In other words, 

they are units that do not show up in the modeling input, but do show up in the modeling output. 

“Planned” units, on which the state-specific percentage of the new source set-aside is based, are those 

units that are already identified in the modeling input (NEEDS) because they are specific plants that 

already built or are under construction, but that commence commercial operation on or after January 1, 

2010. Because the location of these “planned” units is already known and identified in the modeling 

input, the portion of the new unit set-aside corresponding to these units is state-specific. 

EPA determined the base percentage of the new unit set-aside by assessing the share of each 

state’s budget that is emitted in 2020 by new capacity build projected by the model (i.e., “potential 

units”). EPA identified each state’s projected net new emissions in 2020 as a percent of the state’s total 

budget. It then selected the maximum percentage among all states for all pollutants at the state level as 

the “base” percentage for each state’s new unit set aside.

1

 By selecting the maximum percentage, EPA 

chose a conservative envelope that would provide a pool of new source set-aside allowances large enough 

to cover emissions from “potential” new units in any state. EPA chose this basis in order to preserve a 

reasonable amount of allowances for new unit allocations in every state, as new units may not be sited in 

the same locations that EPA’s modeling assumes for analytical purposes. The maximum percentages of 

the total emissions represented by the projected net new emissions projected in 2020 at the state level are: 

SO2: 0.00 %

Annual NOX: 1.80%

Ozone season NOX: 1.76%

In the final Transport Rule, EPA relied on this analysis to establish a “base” percentage for each 

pollutant as 2 percent of each state’s total emissions budget for each pollutant. This base percentage is 

smaller than the 3 percent share EPA proposed to use in the proposed Transport Rule and is the result of 

EPA’s updated power sector modeling, which projects a lower share of future emissions from “potential” 

new capacity build that the model projects.

The “state-specific” percentage represents the share of each state budget that EPA projects to be 

emitted from “planned” units in 2020. As discussed previously, determining the state-specific percentage 

is necessary given the new unit definition used in the final rule. EPA is determining a state-specific 

percentage for projected emissions from “planned” units because unlike the location of new capacity that 

the model projects to be built, the location of planned units is already known.

The base and state-specific percentages were added for each state and each pollutant to 

determine that state’s size of the new-unit set asides, which are shown below in Tables 1 through 3

below.2

 

1 Net new emissions for each pollutant are equal to the projected 2020 emissions from newly built units by IPM 

(which does not include planned units) less the sum of allocations to units projected to be retire more than 4 years in 

advance of 2020. As explained in section VII.D of the preamble for the final Transport Rule, after 4 years of non 

operation, existing units have their allocation redirected to the new unit set asides, thereby offsetting the need for 

additional allowances to be withheld from existing unit allocations for purposes of the new unit set asides.

2 The ozone-season NOX values in these tables reflect EGUs in the 20 states covered by this rule for purposes of the 

ozone NAAQS and the six states that would be covered for the ozone NAAQS if EPA finalizes its supplemental 

proposal.
5

Deliberative – Do Not Cite or Quote

Table 1 - State New Unit Set-Aside

Accounts (As % of Total State Budget)

Annual 

SO2

Annual 

NOX

Ozone 

Season 

NOX

Alabama 2% 2% 2%

Arkansas --- --- 2%

Florida --- --- 2%

Georgia 2% 2% 2%

Illinois 5% 8% 8%

Indiana 3% 3% 3%

Iowa 2% 2% 2%

Kansas 2% 2% 2%

Kentucky 6% 4% 4%

Louisiana --- --- 3%

Maryland 2% 2% 2%

Michigan 2% 2% 2%

Minnesota 2% 2% ---

Mississippi --- --- 2%

Missouri 2% 3% 3%

Nebraska 4% 7% ---

New Jersey 2% 2% 2%

New York 2% 3% 3%

North Carolina 8% 6% 6%

Ohio 2% 2% 2%
6

Deliberative – Do Not Cite or Quote

Oklahoma --- --- 2%

Pennsylvania 2% 2% 2%

South Carolina 2% 2% 2%

Tennessee 2% 2% 2%

Texas 5% 3% 3%

Virginia 4% 5% 5%

West Virginia 7% 5% 5%

Wisconsin 5% 6% 6%

Table 2: State New Unit Set-Aside Accounts (tons).*

SO2 in 

2012-

2013

SO2 in 

2014 and 

Later

NOX

Annual 

in 2012-

2013

NOX

Annual 

in 2014 

and 

Later

Ozone 

Season 

NOX in 

2012-

2013

Ozone 

Season 

NOX in 

2014

Alabama 4,321 4,265 1,454 1,439 635 630

Arkansas

--- --- --- --- 301 301

Florida --- --- --- --- 557 557

Georgia 3,171 1,905 1,240 811 559 366

Illinois 11,744 6,206 3,830 3,830 1,697 1,697

Indiana 8,563 4,833 3,292 3,253 1,406 1,385

Iowa 2,142 1,503 766 749 331 324

Kansas 831 831 615 512 271 220

Kentucky 11,360 6,377 3,403 3,090 1,447 1,307

Louisiana --- --- --- --- 403 403

Maryland 602 564 333 331 144 144

Michigan 3,891 2,880 1,204 1,156 515 495

Minnesota 840 840 592 592 --- ---

Mississippi

--- --- --- --- 203 203

Missouri 4,149 3,319 1,571 1,462 683 632

Nebraska 2,602 2,602 1,850 1,850 --- ---

New Jersey 111 111 145 145 68 68

New York 409 237 527 527 250 250

North Carolina 10,951 4,610 3,036 2,494 1,330 1,107

Ohio 6,205 2,742 1,854 1,750 801 756
7

Deliberative – Do Not Cite or Quote

Oklahoma --- --- --- --- 437 437

Pennsylvania 5,573 2,240 2,400 2,384 1,044 1,038

South Carolina 1,773 1,773 649 649 278 278

Tennessee 2,963 1,177 714 387 298 160

Texas 12,198 12,198 4,008 4,008 1,891 1,891

Virginia 2,833 1,402 1,662 1,662 723 723

West Virginia 10,232 5,297 2,974 2,729 1,264 1,165

Wisconsin 3,974 2,006 1,898 1,823 822 793

*Amounts shown reflect total set aside portion of budget (including set aside for Indian Country new units). 

Values are approximate, may vary slightly due to rounding. See regulatory text for final set-aside values.

For each control period, any allowances remaining in a state’s new unit set-aside (after 

allocations are made to new units that requested allowances) are distributed to the existing units in that 

state in proportion to the existing units’ original allocations. This ensures that total allocations to units in 

the state are equal to the state budget in that year. 

Each Indian country set-aside equals a proportion of the “base” new unit set-aside included in this 

final Transport Rule (the base percentage, as described above, is calculated as 2 percent of the state 

budget). EPA is reserving allowances for the Indian country set-aside from each state’s “base” 

percentage of the new unit set-aside. EPA is not reserving these allowances from the state-specific 

percentage of each state’s new unit set-aside because that percentage is specifically calculated on the 

basis of projected emissions from “planned” units, none of which are located in Indian country. EPA is 

creating Indian country set-asides in each state as a share of that state’s base percentage portion of the

new unit set-aside, i.e., as a share of the 2 percent portion of the total budget in that state. EPA is 

determining the size of the Indian country set-aside (within that 2 percent portion of the state budget) on 

the basis of the percentage of Indian country relative to the entire state. EPA calculates the maximum 

percentage of Indian country in any state within the Transport Rule region to equal to 5 percent, and is 

using that level as a basis for establishing Indian country set-asides for all states whose geographic 

boundaries encompass Indian country. Therefore, the Indian country set-aside is 5 percent of the base 

percentage new unit set-aside, which is equivalent to 0.1 percent of the total state budget (i.e., 5 percent of 

2 percent is 0.1 percent). EPA assessed the share of Indian country within each state using the American 

Indian Reservations/Federally Recognized Tribal Entities dataset, which contains data for the 562 

federally recognized Tribal entities in the contiguous U.S. and Alaska. EPA analyzed the share of square 

miles of Indian country within the total square miles of a state whose geographic boundaries encompass

that Indian country. As explained above, EPA then took the highest percentage as the number to be 

applied across all states with Indian country to determine the Indian country new unit set-aside. The 

Indian country new unit set-asides in the following Transport Rule states with Indian Country are shown 

in Table 4.

Table 3: New Unit Set-Aside Allowances for Indian Country (tons)

For SO2 in 

2012-2013, 

Indian 

Country

For SO2 in 

2014, 

Indian 

Country

For NOX 

Annual in 

2012-2013, 

Indian 

Country

For NOX 

Annual in 

2014, 

Indian 

Country

For Ozone 

Season 

NOX in 

2012-2013, 

Indian 

Country

For Ozone 

Season 

NOX in 

2014, 

Indian 

Country
8

Deliberative – Do Not Cite or Quote

Florida --- --- --- --- 28 28

Iowa 107 75 38 37 17 16

Kansas 42 42 31 26 14 11

Louisiana --- --- --- --- 13 13

Michigan 195 144 60 58 26 25

Minnesota 42 42 30 30 --- ---

Mississippi --- --- --- --- 10 10

Nebraska 65 65 26 26 --- ---

New York 20 12 18 18 8 8

North 

Carolina

137 58 51 42 22 18

South 

Carolina

89 89 32 32 14 14

Texas 244 244 134 134 63 63

Wisconsin 79 40 32 30 14 13

*Values are approximate, may vary slightly due to rounding. See regulatory text for final set-aside values

New units are allocated allowances from the set aside accounts described above. The final rule 

provides that a unit’s new unit set-aside allocation initially equals that unit’s emissions for the control 

period (annual or ozone season) in the preceding year. EPA determines whether the total amount of 

initial allowance allocations for all units in a state for a control period exceeds the amount in the state’s 

new unit set-aside for the control period. If the amount in the new unit set-aside is exceeded, EPA 

allocates each unit a proportionate share of the new unit set-aside based on the unit’s initial allocation 

amount. Any unallocated allowances in the new unit set-aside are allocated to existing units in proportion 

to their share of the current existing-unit allocations. Unused allowances in the Indian country set aside 

are first transferred to the respective state’s new unit set-aside. If allowances remain unused in the state’s 

new unit set aside, they are then proportionally distributed, as previously described, to existing units in 

that state. 

3) Allocation Methodology for Existing Units

The allocation methodology bases a unit’s allocation off heat input but limits any unit’s allocation to 

its historic maximum emissions. Implementation of this methodology involves identifying potentially 

covered units and determining appropriate data baselines for each unit. EPA first identified the list of 

potential TR covered units. Next, it compiled reported data on each unit and calculated its share of heat 

input. Both stages are described below. 

a) List of Potential Existing Transport Rule Units

The list of units to which final allocations are adopted in the final rule is based on final 

applicability criteria discussed in section VII.B of the preamble and Sections 97.404, 97.504, 97.604, and 

97.704 of the final Transport Rule regulations. Existing units are units that are covered under these 

criteria and that commenced commercial operation prior to January 1, 2010. This cutoff date is used in 

the definition of existing unit because it assures that at least one full year of historic data is available to 

determine each existing unit’s allocation. The baseline years used in the NODA also ended in 2009 for 

similar reasons. Since publishing the NODA, the 2010 data has been reported and verified. Because an 

additional year of data is available, EPA updated it cut-off date for existing units to January 1, 2010, its 

heat input baseline from 2005-2009 to 2006-2010, and its historic emission baseline to 2003-2010. 
9

Deliberative – Do Not Cite or Quote

These final allocation tables (Document ID EPA-HQ-OAR-XXXXX) contain a list of units that EPA 

believes, based on best available data, meet the covered and existing unit criteria. As described above, 

the percent of the state budgets allocated to existing units varies between 92% and 98% for each state 

depending on the number of planned units in each state.

To identify the potential existing Transport Rule units, EPA relied largely on data reported to 

EPA. To develop the list of potential existing Transport Rule units, EPA first included any fossil-fuelfired unit serving a generator greater than 25 MWe producing electricity for sale that is in a Transport 

Rule state and on line prior to January 1, 2010 and that reported emissions data in 2010 under at least one 

of the following ongoing EPA trading programs: the CAIR NOX or CAIR SO2 annual trading program or

the Acid Rain Program. EPA did not include units that were flagged as opt-in units. Data reported to 

EPA under CAIR and the Acid Rain Program meet the requirements of Part 75 and have been certified as 

to their accuracy and completeness by the source’s designated representative. About 98% of the 

potential existing covered units listed in the final rule allocation tables were identified in this manner.

Next, EPA supplemented the list of units by using data from the Integrated Planning Model 

v.4.10 (IPM) to identify potential existing units under the Transport Rule that were not reporting data to 

EPA under the CAIR NOX or SO2 annual or Acid Rain trading program. Specifically, IPM’s National 

Electric Energy Data System (NEEDS) was used to identify units that were potentially fossil-fuel-fired

units serving generators greater than 25 MWe producing electricity for sale that are in a Transport Rule 

state and were not reporting under one of these ongoing EPA trading programs. The capacity field in 

NEEDs was used as a proxy for nameplate capacity. However, the capacity reported is actually net 

summertime dependable capacity. Net summer dependable capacity is the maximum capacity that the 

unit can sustain over the summer peak demand period reduced by the capacity required for station 

services or auxiliary equipment. EPA notes that while this data point does not directly reflect capacity as 

defined in the Transport Rule, it serves as a reasonable proxy and is the best data that EPA has available

for these units. 

A source who felt the summertime dependable capacity identified in NEEDS did not accurately 

reflect their TR applicability status as determined by their actual nameplate capacity had the chance to 

express such comments in response to the January 7, 2011 NODA (76 FR 1109). EPA reviewed these 

comments and updated the list of potentially covered units to reflect these comments. To identify 

whether the NEEDs unit potentially met the fossil fuel criteria of a covered unit, EPA identified those 

units with a plant type listing of coal steam, combined cycle, combustion turbine, fossil waste, IGCC, 

landfill gas, Municipal Solid Waste, O/G Steam, tires or biomass. Approximately 2% of the potential 

existing covered units listed in the final rule allocation tables were identified in this manner.

This subset of units identified through NEEDS was then screened to remove units that were not 

potential existing Transport Rule units and thus not eligible to obtain allocations. In particular, if the unit 

was retired or in cold storage in 2010 or is a steam turbine at a combined cycle (CC) plant that was listed 

as a separate unit in NEEDS but reported to EPA as one CC unit, then it was not included as a unit in the 

list of potential existing Transport Rule units. The remaining units in this subset of units were added to 

the list. For instance, there were units in Nebraska and Kansas that were identified through NEEDS as 

being potential existing Transport Rule units that were not currently reporting under the CAIR NOX or 

SO2 annual or Acid Rain trading program because the units were not Acid Rain Program units and were 

not in a CAIR state. Finally, a small number of units were added to or removed from the list based on 

comment and supporting data previously submitted to EPA during the comment period on the proposed 

Transport Rule and/or the January 7, 2011 NODA by the unit owner or operator.

Units identified using the EPA and NEEDS databases were included in the list of potential 

existing Transport Rule units if they were in one of the following states covered by the Transport Rule: 

Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, 
10

Deliberative – Do Not Cite or Quote

Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, 

Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.3

b) Data and Calculations

For the 98% of units identified through the process in section 3.a. above because they were 

reporting under the ARP and/or CAIR programs, EPA used reported heat-input and emissions data from 

the EPA database for the years 2003 through 2010. For units included in the list of potential existing 

Transport Rule units that were not reporting under one of these ongoing EPA trading programs, EPA used 

historic heat input and emissions data from Energy Information Administration (EIA) forms 767, 860, 

906, 920, and 923. These data are publicly available at

http://www.eia.doe.gov/cneaf/electricity/page/data.html. The heat input based allocation method 

finalized and described below is used to allocate the existing unit portion of the state’s budget (i.e., the 

state budget less the state’s new unit set-aside and, if applicable, the Indian Country new unit set-aside for 

the state).

Specifically, the heat input approach with the historic maximum emissions upper bound used for 

allocations in Transport Rule FIPs establishes a baseline historic heat input value for each potential 

existing Transport Rule unit and sets a unit’s share of available allowances under each Transport Rule 

trading program equal to the unit’s percentage share of the total baseline historic heat input for all 

potential existing Transport Rule units in the state. This approach is applied to each state separately, 

using the portion of that state’s budget available for potential existing Transport Rule units in that state. 

In instances where the heat input based allocation exceeds the unit’s historic maximum emissions over 

the baseline period, this historic maximum emissions is used as an upper bound on the allocation and the 

source’s allocation is set equal to this emission level. 

Allocations under this approach for each existing unit are determined by applying the following 

steps.

1. For each unit in the list of potential existing Transport Rule units, annual heat input values for the 

baseline period of 2006 through 2010 are identified using data reported to EPA or, where EPA 

data is unavailable, EIA. For a baseline year for which a unit has no data on heat input (e.g., for a 

baseline year before the year when a unit started operating), the units is assigned a zero value. 

(Step 2 explains how such zero values are treated in the calculations.) The allocation method 

uses a five-year baseline in order to improve representation of a unit’s normal operating 

conditions over time. 

2. For each unit, the three highest, non-zero annual heat input values within the 5 year baseline are 

selected and averaged. Selecting the three highest, non-zero annual heat input values within the 

five-year baseline reduces the likelihood that any particular single year’s operations (which might 

 

3 As noted in the preamble, the inclusion of a unit in, or exclusion of a unit from, the list of 

potential existing Transport Rule units presented in the final rule allocation tables reflects only EPA’s 

preliminary assessment of the applicability of the final Transport Rule and in no way suggests that EPA 

has made a determination about the applicability of the final Transport Rule to any unit. While 

allocations calculated for this final Transport Rule are based on the best available data provided to EPA 

by the time of the calculation, the applicability of the final Transport Rule to an individual unit is 

determined based on all relevant data, whether or not EPA had such data at the time that allocations were 

calculated. 
11

Deliberative – Do Not Cite or Quote

be negatively affected by outages or other unusual events) determine a unit’s allocation. If a unit 

does not have three non-zero heat input values during the 5 year baseline period, EPA averages 

only those years for which a unit does have non-zero heat input values. For example, if a unit has 

only reported data for 2008 and 2009 among the baseline years and the reported heat input values 

are 2 and 4 mmBtus respectively, then the unit’s average heat input used to determine its pro-rata 

share of the state budget is (2+4)/2 = 3.

3. Each unit is assigned a baseline heat input value calculated as described in step 2 above. This 

baseline heat input value is referred to in the data tables in the rulemaking docket, and on the 

website referenced previously, as the "three-year average heat input". 

4. The three-year average heat inputs of all potential existing Transport Rule units in a state is 

summed to obtain that state’s total “three-year average heat input”.

5. Each unit’s three-year average heat input is divided by the state’s total three-year average heat 

input to determine that unit’s share of the state’s total three-year average heat input.

6. Each unit’s share of the state’s total three-year average heat input is multiplied by the existingunit portion of the state budget (i.e., the state budget less the state’s new unit set-aside and, if 

applicable, the Indian Country new unit set-aside for the state) to determine that unit’s initial 

allocation. 

7. An eight-year (2003-2010) historic emissions baseline is established for SO2, NOX, and ozone 

season NOX based on data reported to EPA or, where EPA data is unavailable, EIA data. This 

eight-year historic emissions baseline is used in order to capture the unit-level emission before 

and after the promulgation of the Clean Air Interstate Rule (CAIR) and the NOX Budget Program 

(NBP).

8. For each unit, the maximum annual historic SO2 and NOX emissions would be identified within 

the eight-year baseline. Similarly, the maximum ozone season NOX emissions from the eightyear baseline for each unit would be identified. These values are referred to as the “maximum 

historic baseline emissions” for each unit.

9. If a unit has a historic heat-input based allocation (as determined in step 6) that exceeds its 

maximum historic baseline emissions (as determined in step 8), then its allocation would equal 

the maximum historic baseline emission for that unit.

10. The difference (if positive) under step 9 between a unit’s historic heat-input-based allocation and 

its “maximum historic baseline emissions” would be reapportioned on the same basis as 

described in steps 1 through 6 to units whose historic-heat-input-based allocation does not exceed 

its maximum historic baseline emissions. Steps 7, 8, and 9 are repeated with each revised 

allocation distribution until the entire existing-unit portion of the state budget would be allocated. 

The resulting allocation value is rounded to the nearest whole number using conventional 

rounding. The table below provides an example application of the steps 1-10 in a hypothetical 

state.

Table 4 - Demonstration of Allocations Using Final Allocation 

Methodology in a Three-Unit State With a 80 Ton State Budget

Step 1-6 Step 7,8,9 Step 10

Historic Heat-inputbased Initial AllocationMaximum Historic 

Baseline Emissions Final Allocation

Unit 

A 20 16 16
12

Deliberative – Do Not Cite or Quote

Unit 

B 30 50 32

Unit 

C 30 50 32

Where can I find this data?

The unit level allocations can be found in the separate file titled “Unit Level Allocations under the FIP” 

published as an Excel file and available at placeholder. The file contains three worksheets. The first, 

titled “Final Allocations” identifies each unit and its final allocation under each of the trading programs. 

The second worksheet, titled “underlying data”, shows all the data and calculations that are numerated 

above. Each of the ten steps are color coded and displayed in sequential order moving from left to right 

across the spreadsheet. The formulas to derive any calculated values are explained directly beneath the 

column header. The final worksheet, “corrected data” identifies corrections to unit level data identified 

by commenter and incorporated into final tables by EPA. 

Rounding

EPA uses conventional rounding for its allocation purposes and applies rounding at the unit level for 

existing unit allocations. For example, if State A has a 500 ton budget with a 5% new source set-aside, 

than its existing unit allocation would be 475 tons. If there are only two covered existing units in the state 

with equal heat inputs and a historic maximum emissions above 500 tons, than the steps described above 

would result in an allocation of 237.5 tons for each unit. This unit level allocation for each of these units 

would round to 238 allowances, which would sum to 476 allowances. The difference between the sum of 

the rounded existing unit level allocations and the state budget (i.e., 500-476), would be the actual new 

source set-aside budget for the state. EPA notes that because of rounding, the actual number of 

allowances in the new source set aside will sometimes sum to a total value whose percentage of the state 

value is marginally greater or less than the percentage identified in the tables above. In other words, the 

percentage approximated for the new source set aside in the tables above may be 5%, but the actual total 

new source set-aside allowances may equal 5.01% or 4.99% of the state budget. Because EPA does not 

issue allowances nor require compliance using fractional tons, this type of rounding is necessary.