1 Deliberative – Do Not Cite or Quote Technical Support Document (TSD) for the Transport Rule Docket ID No. EPA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U.S Environmental Protection Agency Office of Air and Radiation Ju ne 20112 Deliberative – Do Not Cite or Quote Allowance Allocation to Existing and New Units under the Transport Rule Federal Implementation Plan (FIP ) This Technical Support Document (TSD)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. Se ction 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 all ocations 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 all owance has a “vintage” year, which is the year for which the allowance is issue d
. 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 signific ant 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 9 8 % , 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
- aside s 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) NewUnit 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 o f 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 repres ent 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 designati on 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 SO 2 , annual NO X , and ozone season NO X 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 emission s 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 pol lutants 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 f

rom “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 pur poses. The maximum percentages of the total emissions represented by the projected net new emissions projected in 2020 at the state level are:

SO 2 : 0.00 % Annual NO X : 1. 80 % Ozone season NO X : 1.76 % In the final Transport Rule , EPA relied on this analysis to establish a “base” percentage for each pollutant a s 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 th e 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 o f the new
-unit set aside s , 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 explai ned 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 NO X 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 SO 2 Annual

NO X Ozone Season NO X 

### Alabama 2% 2% 2% Arkansas
--- --- 2% Florida
--- --- 2% Georgia 2% 2% 2% Illinois 5% 8% 8% Indiana 3% 3% 3% Io wa 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).* SO 2 in 2012 - 2013 SO 2 in

2014 and Later NO X

Annual in 2012 - 2013 NO X

Annual in 2014 and Later Ozone

Season NO X in 2012 - 2013 Ozone

Season NO X 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 Il linois 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 Io wa 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 7567 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 allocati ons. This ensures that total allocations to units in the state are equal to the state budget in that year
. Each Indian c ountry set - aside equals a proportion of the “base” new unit set
- aside included in this final Transport Rule (the base percentage, as de scribed 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 perc entage 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 c ountry set - aside s 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 c ountry relative to the entire state. EPA calculates the maximum percentage of Indian c ountry 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 us ing the American Indian Reservations/Federally Recognized Tribal Entities dataset, whi ch 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 th at 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 state s 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 Country8 Deliberative – Do Not Cite or Quote Florida
--- --- --- --- 28 28 Io wa 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 *V alues 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 allowance s 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 po tential 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 di scussed 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 assure s 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 th e 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
- fuel
fired 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 201 0 under at least one of the following ongoing EPA trading programs: the CAIR NO X or CAIR SO 2 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 9 8 % 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 NO X or SO 2 annual or Acid Rain trading program. Specifically, IPM’s National Electric Energy Data System (NEEDS) was u sed 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 s ource 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 the se 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, com bined 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 NO X or SO 2 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 9 8 % 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 200 3 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 a

nd 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 C ountry 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 perio d, 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 mmB tus 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 existing
unit portion of the state budget (i.e., the state budget less the state’s new unit set
- aside and, if applicable, the Indian C ountry 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 SO 2 , NO X , and ozone s eason NO X based on data reported to EPA or, where EPA data is unavai lable, 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 NO X Budget Program (NBP). 8. For each unit, the maximum annual historic SO 2 and NO X emissions would be identified within the eight
-year baseline. Similarly, the maximum ozone season NO X emissions from the eight
year 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 i n a Three - Unit State With a 80 T on State Budget

Step 1 - 6 Step 7,8,9 Step 10 Historic Heat - input based Initial Allocation Maximum Historic Baseline Emissions Final Allocation Unit A 20 16 1612 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 5 00 ton budget with a 5% new source set
- aside, than its existing unit allocation would be 4 75 tons. If there are only two covered existing units in the state with equal h eat 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 a nd the state budget (i.e., 500
-4 76), 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.