                       Technical Support Document (TSD) 
             for the Revised CSAPR Update for the 2008 Ozone NAAQS
                      Docket ID No. EPA-HQ-OAR-2020-0272
                                       
                                       
                                       
                                       
                                       
                                       
                                       
                                       
      Allowance Allocation under the Revised CSAPR Update Final Rule TSD 
                                       
                                       
                                       
                                       
                                       
                                       
                      U.S Environmental Protection Agency
                          Office of Air and Radiation
                                  March 2021

                                       
Allowance Allocation to Existing and New Units under the Revised CSAPR Update 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 Revised CSAPR Update Rule.  Section VII.C.2 of the preamble discusses state budgets, and section VII.C.3 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 allocations.  The TSD is organized as follows:
 Overview
 New Unit Set-Asides and Allocations
 Allocation Methodology for Existing Units
 Units Eligible to Receive Allocations as Existing Units
 Data and Calculations
 States with State-approved Allocation Methodologies
 Allocations of Supplemental Allowances to Existing Units
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 VII.D of the Revised CSAPR Update preamble explains when and how states may replace the FIP allocations for vintage year 2022 or later through specific SIP procedures. 
 Overview
   As discussed in preamble section VII.B, 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 during the "control period" in an average year.  EPA finalized the Revised CSAPR Update with a limited interstate trading program.  The control period for the trading program is the "ozone season," defined as the 5-month period from May 1 through September 30 of each year.  Emission allowances are used in the implementation of this program.  Specifically, EPA creates one allowance for each ton of emissions allowed in each control period under each state's emission budget.  Each allowance has a "vintage" year, which is the year of the control period for which the allowance is issued.  Covered sources are required to submit such an allowance for each ton of the relevant pollutant emitted during the control period.  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 budget.   The state budgets are determined independently through the multi-factor analysis outlined in section VI of the Revised CSAPR Update preamble.   Regardless of the methodology used by EPA or a state to allocate allowances to sources within the state, 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.C.3 of the preamble, under the FIPs, EPA will distribute the entire budget to units 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):
 New unit set-aside (NUSA)
 Indian country new unit set-aside (Indian country NUSA)
 Existing unit budget 
   An initial amount of the state budget (91% to 98%, depending on the state) would be distributed to "existing" units (i.e., units online before January 1, 2019 in the case of this rule) in advance of the vintage year for which they are issued.  The remaining amount would be held back for "new" units in NUSA and Indian country NUSA accounts.  A "new" unit qualifying for allocations from a NUSA or Indian country NUSA would typically be a unit that commenced commercial operation on or after January 1, 2019, but some older units that do not receive allocations as existing units may also qualify for allocations. If any of the NUSA or Indian country NUSA allowances are not allocated to qualifying "new" units, then the allowances would be allocated to "existing" units on the same basis as the initial existing unit budget so they will be available to existing units for compliance.  
   The Revised CSAPR Update identifies potentially covered existing units under the rule and the allocations for each of those units under the FIP.  This TSD details how the list of existing units was determined, how the allocations were calculated, and how the quantity of allowance set-asides for new units and Indian Country new units were determined.  Following these descriptions, an appendix showing each affected EGU's allocation under the Revised CSAPR Update FIP along with the underlying data and calculations used to derive the allocations comprises most of the document.
2)	 New Unit Set Asides and Allocations
	As explained in section VII.C.3, the Revised CSAPR Update uses January 1, 2019 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 historical heat input over a five-year baseline as well as historical emissions data over an eight-year baseline.  To allocate using this methodology, EPA needs at least one full ozone season of heat input and emissions data from an "existing unit"  If a unit did not come online prior to January 1, 2019, it may not have provided a full ozone season of data at the time of the Revised CSAPR Update's finalization.   For this reason, EPA could not use a date later than January 1, 2019 for the cut-off date. Units that came online after January 1, 2019 are considered "new units" for purposes of allocation under the Revised CSAPR Update FIPs and will receive their allocations from the NUSA or Indian country NUSA for their states.  
      The new unit set-aside for 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 Revised CSAPR Update.  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 because they are specific plants that are already built or are under construction, but that commence commercial operation on or after January 1, 2019.  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.  
      In the Revised CSAPR Update, EPA has determined to use the same base percentage of the new unit set-aside of 2 percent established in the original Cross State Air Pollution Rule finalized in 2011 and the CSAPR Update Rule finalized in 2016.  EPA identified the 2 percent value as a reasonable set-aside for potential new units as it reflected the high end of state-level emissions from projected  -  or potential  -  new units.  EPA determined that this 2 percent level was reasonable for the Revised CSAPR Update as well.  By selecting the high-end percentage, EPA chose a conservative envelope that would provide a pool of new unit set-aside allowances large enough to cover emissions from "potential" new units in states.  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 "state-specific" percentage represents the share of each state budget that EPA projects to be emitted from "planned" units in 2024. 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.  
      Under the existing CSAPR Update trading program, EPA has already approved a SIP revision for one state  -  New York  -  that reflects a state preference to set aside 5 percent of the budget for the NUSA rather than the amount that EPA would have allocated under the CSAPR Update FIP. For purposes of this final rule, EPA intends to replicate individual state's allocation preferences to the extent practicable where those preferences are known from prior SIP revisions. Accordingly, for New York EPA proposes to set aside 5 percent of each budget for new units, split between a NUSA and an Indian country NUSA in the same manner as for other states.
       The base and state-specific percentages were added for each state to determine the size of that state's new-unit set asides, which are shown in Tables 1A through 1D below. 
Table 1A: 2021 New Unit Set-Asides (NUSA) and Indian Country NUSAs
State
                         State emission budgets (tons)
Portion set aside for new units (%)
Total NUSA for new units (tons) 
NUSA for new units not in Indian country (tons) 
Indian country NUSA (tons)
Illinois
                                                                          9,102
                                                                              3
                                                                            265
                                                                            265
                                                                               
Indiana
                                                                         13,051
                                                                              2
                                                                            262
                                                                            262

Kentucky
                                                                         15,300
                                                                              2
                                                                            309
                                                                            309

Louisiana
                                                                         14,818
                                                                              3
                                                                            445
                                                                            430
                                                                             15
Maryland
                                                                          1,499
                                                                              9
                                                                            135
                                                                            135

Michigan
                                                                         12,727
                                                                              4
                                                                            513
                                                                            500
                                                                             13
New Jersey
                                                                          1,253
                                                                              2
                                                                             27
                                                                             27
                                                                               
New York
                                                                          3,416
                                                                              5
                                                                            171
                                                                            168
                                                                              3
Ohio
                                                                          9,690
                                                                              3
                                                                            291
                                                                            291
                                                                               
Pennsylvania
                                                                          8,379
                                                                              4
                                                                            335
                                                                            335

Virginia
                                                                          4,516
                                                                              4
                                                                            185
                                                                            185
                                                                               
West Virginia
                                                                         13,334
                                                                              2
                                                                            266
                                                                            266
                                                                               

Table 1B: 2022 New Unit Set-Asides (NUSA) and Indian Country NUSAs
State
                         State emission budgets (tons)
Portion set aside for new units (%)
Total NUSA for new units (tons)
NUSA for new units not in Indian country (tons)
Indian country NUSA (tons)
Illinois
                                                                          9,102
                                                                              3
                                                                            265
                                                                            265
                                                                               
Indiana
                                                                         12,582
                                                                              2
                                                                            254
                                                                            254

Kentucky
                                                                         14,051
                                                                              2
                                                                            283
                                                                            283

Louisiana
                                                                         14,818
                                                                              3
                                                                            445
                                                                            430
                                                                             15
Maryland
                                                                          1,266
                                                                              9
                                                                            115
                                                                            115

Michigan
                                                                         12,290
                                                                              4
                                                                            494
                                                                            482
                                                                             12
New Jersey
                                                                          1,253
                                                                              2
                                                                             27
                                                                             27
                                                                               
New York
                                                                          3,416
                                                                              5
                                                                            171
                                                                            168
                                                                              3
Ohio
                                                                          9,773
                                                                              3
                                                                            290
                                                                            290
                                                                               
Pennsylvania
                                                                          8,373
                                                                              4
                                                                            339
                                                                            339

Virginia
                                                                          3,897
                                                                              4
                                                                            161
                                                                            161
                                                                               
West Virginia
                                                                         12,884
                                                                              2
                                                                            261
                                                                            261
                                                                               
      
Table 1C: 2023 New Unit Set-Asides (NUSA) and Indian Country NUSAs
State
                         State emission budgets (tons)
Portion set aside for new units (%)
Total NUSA for new units (tons)
NUSA for new units not in Indian country (tons)
Indian country NUSA (tons)
Illinois
                                                                          8,179
                                                                              3
                                                                            248
                                                                            248
                                                                               
Indiana
                                                                         12,553
                                                                              2
                                                                            249
                                                                            249

Kentucky
                                                                         14,051
                                                                              2
                                                                            283
                                                                            283

Louisiana
                                                                         14,818
                                                                              3
                                                                            445
                                                                            430
                                                                             15
Maryland
                                                                          1,266
                                                                              9
                                                                            115
                                                                            115

Michigan
                                                                          9,975
                                                                              4
                                                                            398
                                                                            388
                                                                             10
New Jersey
                                                                          1,253
                                                                              2
                                                                             27
                                                                             27
                                                                               
New York
                                                                          3,421
                                                                              5
                                                                            171
                                                                            168
                                                                              3
Ohio
                                                                          9,773
                                                                              3
                                                                            290
                                                                            290
                                                                               
Pennsylvania
                                                                          8,373
                                                                              4
                                                                            339
                                                                            339

Virginia
                                                                          3,980
                                                                              4
                                                                            166
                                                                            166
                                                                               
West Virginia
                                                                         12,884
                                                                              2
                                                                            261
                                                                            261
                                                                               

Table 1D: 2024 and Onwards; New Unit Set-Asides (NUSA) and Indian Country NUSAs
State
                         State emission budgets (tons)
Portion set aside for new units (%)
Total NUSA for new units (tons)
NUSA for new units not in Indian country (tons)
Indian country NUSA (tons)
Illinois
                                                                          8,059
                                                                              3
                                                                            244
                                                                            244
                                                                               
Indiana
                                                                          9,564
                                                                              2
                                                                            190
                                                                            190

Kentucky
                                                                         14,051
                                                                              2
                                                                            283
                                                                            283

Louisiana
                                                                         14,818
                                                                              3
                                                                            445
                                                                            430
                                                                             15
Maryland
                                                                          1,348
                                                                              9
                                                                            122
                                                                            122

Michigan
                                                                          9,786
                                                                              4
                                                                            392
                                                                            382
                                                                             10
New Jersey
                                                                          1,253
                                                                              2
                                                                             27
                                                                             27
                                                                               
New York
                                                                          3,403
                                                                              5
                                                                            170
                                                                            167
                                                                              3
Ohio
                                                                          9,773
                                                                              3
                                                                            290
                                                                            290
                                                                               
Pennsylvania
                                                                          8,373
                                                                              4
                                                                            339
                                                                            339

Virginia
                                                                          3,663
                                                                              4
                                                                            150
                                                                            150
                                                                               
West Virginia
                                                                         12,884
                                                                              2
                                                                            261
                                                                            261
                                                                               
      For each control period, any allowances remaining in a state's new unit set-aside (after allocations are made to new units in accordance with the Revised CSAPR Update regulations) 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. 
      As shown in Tables 1A through 1D, in the case of states that have Indian country within their borders, a share of the overall portion of the state budget reserved for new units is further reserved for possible allocation to any new units in Indian country.  Each Indian country new unit set-aside equals a proportion of the "base" new unit set-aside included in this Revised CSAPR Update (the base percentage, as described above, is 2 percent of the state budget).  As under CSAPR and the CSAPR Update, EPA reserved allowances for the Indian country new unit set-aside only 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 has calculated that the maximum percentage of Indian country in any state within the Revised CSAPR Update region is no higher than 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 Revised CSAPR Update states with Indian country are shown in Tables 1A through 1D.
      New units are allocated allowances from the set-aside accounts described above.  Under the final rule, EPA will allocate allowances from the new unit set-asides after the end of each control period but before the allowance transfer deadline for the control period (i.e., the date when each unit must hold allowances at least equal to its emissions during the control period).  Allowances will be allocated among the eligible units in proportion to the units' emissions during the control period, up to the amounts of those emissions.  Any unallocated allowances in the new unit set-aside for a control period will be allocated to existing units in proportion to their share of the existing-unit allocations for that control period.  Unused allowances in the Indian country new unit set-aside first will be transferred to the respective state's new unit set-aside. If allowances remain unused in the state's new unit set-aside, they then will be 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 on the unit's historical heat input but limits any unit's allocation to its historical 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 covered units.  Next, EPA compiled reported data on each unit and calculated its share of heat input.  Both stages are described below.  
 Units Eligible to Receive Allocations as Existing Units

      The set of units covered by the trading program established in the final rule is based on applicability criteria discussed in section VII.C of the preamble and 40 CFR 97.1004 of the Revised CSAPR Update regulations.  Note that because the applicability criteria are the same criteria used in CSAPR Update, the inventory of units under the rule would be the same inventory of units currently reporting under the CSAPR Update trading program for the states covered under the rule; however, many units that were considered new units under the CSAPR Update would be considered existing units under the Revised CSAPR Update. For purposes of the rule, existing units are units that are covered under these criteria and that commenced commercial operation prior to January 1, 2019.  This cutoff date is used in the definition of existing unit because it assures that at least one full ozone season of historical data will be available to determine each existing unit's allocation in the final rule. These allocation tables 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 91% and 98% for each state depending on the number of planned units in each state.
      As EPA used the same applicability criteria in this final rule as those used in the CSAPR Update to identify the potential existing Revised CSAPR Update units, EPA relied on data reported to EPA indicating which units were covered under CSAPR Update.  All units were already identified and reporting as subject to CSAPR trading programs.
      EPA has computed default allowances allocations for all units identified as subject to the new trading program established in this action as described above except where a unit was determined to be ineligible to receive default allocations for reasons related to retirement.  To determine which of the units identified as subject to the new trading program are ineligible to receive default allocations for a given control period, EPA further identified each unit that has already failed to operate in at least two consecutive control periods, has officially retired, or has scheduled a retirement prior to January 1, 2024 with sufficient certainty to be reflected in the process for setting the emission budgets.  For these units, EPA does not provide a default allowance allocation for any control period, in the case of a unit that has already failed to operate for at least two consecutive control periods or has officially retired, or for any control period after the year of the unit's scheduled retirement, in the case of the remaining units.  This approach to determining eligibility to receive allocations as an existing unit does not apply to other units that may cease operations after 2020 but whose upcoming retirements were not scheduled as of finalization of this action with sufficient certainty to be reflected in the process for setting the emission budgets.  Rather, for units with unscheduled future retirements, the units are eligible to receive default allowance allocations as existing units under the trading program established in this action for the 2021 control period, for each additional consecutive control period in which they continue to operate, and for up to five control periods of non-operation. After a unit does not operate for two consecutive control periods, then after three additional control periods (i.e., five total control periods starting from the first control period of non-operation), the default allocations computed for the unit are not recorded in the corresponding source's compliance account but are instead added to the respective state's new unit set-asides for reallocation in accordance with the provisions governing the new unit set-asides.  See preamble section VII.C.3 for further discussion on this topic.  Any units that do not receive default allocations as existing units for a given control period are eligible to receive allocations from the respective states' new unit set-asides for that control period if the units in fact operate during the control period.
 Data and Calculations
      For the units identified through the process in section 3a) above. EPA used reported heat-input data from 2015-2019 and reported emissions data from the EPA database for the years 2012-2019. 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 methodology establishes a baseline historical heat input value for each potential existing unit and identifies a unit's tentative share of available allowances under the Revised CSAPR Update trading program equal to the unit's percentage share of the total baseline historical heat input for all eligible existing CSAPR Update units in the state.   In instances where the tentative heat input-based allocation to a given unit exceeds the unit's historical maximum emissions over the baseline period, this historical maximum emissions is used as an upper bound on the allocation and the unit's allocation is set equal to this emission level.  Any amount of the unit's tentative heat input-based allocation exceeding the unit's historical maximum emissions is then reapportioned to other eligible existing units in the state whose tentative heat input-based emissions do not exceed their historical maximum emissions.  This approach is applied to each state separately, using the portion of that state's budget available for eligible existing Revised CSAPR Update units in that state.  
      Allocations under this approach for each existing unit are determined by applying the following steps.
 For each unit in the list of existing Revised CSAPR Update units, ozone season heat input values for the baseline period of 2015 through 2019 are identified using data reported to EPA.  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 unit 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 period in order to improve representativeness of a unit's normal operating conditions over time. 
 For each unit, the three highest, non-zero ozone season heat input values within the five-year baseline period are selected and averaged.  Selecting the three highest, non-zero ozone season heat input values within the five-year baseline period reduces the likelihood that any particular single year's operations (which might 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 five-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 2018 and 2019 among the baseline years and the reported heat input values are 2 and 4 mmBtus respectively, then the unit's average heat input used in the allocation process is (2+4)/2 = 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 as the "three-year average heat input." 
 The three-year average heat inputs of all eligible existing units in a state are summed to obtain that state's total "three-year average heat input."
 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.
 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 country new unit set-aside for the state) to determine that unit's tentative heat input-based allocation.  
 An eight-year (2012-2019) historical emissions baseline period is established for ozone season NOX based on data reported to EPA.  This eight-year historical emissions baseline is used in order to capture the unit-level emissions before and after the implementation of the original CSAPR.
 For each unit, the maximum ozone season NOX emissions from the eight-year baseline period for the unit is identified.  These values are referred to as the "maximum historical baseline emissions" for each unit.
 If a unit has a tentative heat-input based allocation (as determined in step 6) that exceeds its maximum historical baseline emissions (as determined in step 8), then its allocation equals the maximum historical baseline emission for that unit.
 The difference (if positive) under step 9 between a unit's historical heat-input-based allocation and its "maximum historical baseline emissions" would be reapportioned on the same basis as described in steps 1 through 6 to units whose tentative heat-input-based allocations do not exceed their maximum historical baseline emissions.  Steps 7, 8, and 9 are repeated with each revised allocation distribution until the entire existing-unit portion of the state budget is 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.
Source data can be found at ampd.epa.gov/ampd
Table 2: Demonstration of Allocations Using Finalized Allocation Methodology in a Three-Unit State With a 80 Ton State Budget
 
                                   Step 1-6
                                  Step 7,8,9
                                    Step 10
 
               Historical Heat-input-based Tentative Allocation
                     Maximum Historical Baseline Emissions
                                  Finalized 
                                  Allocation
Unit A
                                      20
                                      16
                                      16
Unit B
                                      30
                                      50
                                      32
Unit C
                                      30
                                      50
                                      32

Where can I find these data?
The unit level allocations can be found in the separate file titled "Unit-level allocations and underlying data for the Revised CSAPR Update final rule" published as an Excel file and available in the docket and available as Appendix to this document.  The file contains six worksheets.  The first, titled "Final RCU Allocations", identifies each unit and its 2021, 2022, 2023 and 2024 and beyond allocations under the trading program.  The second worksheet, titled "Underlying Data for FIP", shows all the data and calculations that are enumerated above.  Each of the ten steps is 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 third and fourth worksheets show data and calculations described in section 3c) (States with state-approved allocation methodologies) for states where state-approved allocation methodologies from SIP submittals were used in place of EPA's default allocation methodology described above. The fifth worksheet, titled "Retired Units", lists those units for which EPA has not received official notification of retirement but which EPA nevertheless believes were retired units as of January 1, 2021 as well as units with scheduled future retirements known with sufficient certainty to be taken into account in the budget-setting process; EPA is not determining allocations for these units as existing units for control periods following the year of retirement or scheduled retirement. If the units resume operation, they would have to comply with the program (and would qualify for NUSA allocations). The sixth worksheet lists units which came on-line after January 1, 2019 and are considered new units.
Rounding
EPA uses conventional rounding for 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 unit set-aside, then the share of its budget initially allocated to existing units would be 475 tons.  If there are only two covered existing units in the state with equal heat inputs and historical maximum emissions above their tentative historical heat-input-based allocations, then 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 unit set-aside amount for the state.  EPA notes that, because of rounding, the actual number of allowances in the new unit set-aside will sometimes be a percentage of the state budget marginally greater or less than the percentage identified in the tables above.  In other words, the percentage approximated for the new unit set aside in the tables above may be 5%, but the actual total allowances in the new unit set-aside may equal 5.1% or 4.9% of the state budget.  Because EPA does not issue allowances or allow surrender of allowances for compliance using fractional tons, this type of rounding is necessary.
Consent Decrees
EPA's consent decrees with fossil fuel-fired power plants were examined to evaluate if these impact unit level allocations. (https://www.epa.gov/enforcement/coal-fired-power-plant-enforcement) 
Tonnage limits were first evaluated. There are no ozone season tonnage limits, only annual tonnage limits. The annual tonnage limits were each checked and in all cases are above the unit-level allocations of ozone season allowances under this rule.   In other words, no ozone season unit-level allocation exceeds the annual limitation established in the consent decrees.  Therefore, tonnage limits in the consent decrees are not relevant to the ozone season unit level allocation process in the Revised CSAPR Update. 
EPA also looked at NOx emission rate limits in these consent decrees; this information can be found in a separate file entitled "Impact of coal consent decrees for the Revised CSAPR Update final rule". When the emission rate limits are applied with an assumption of average heat input, EPA found that collectively, across all units with emission rate limits under the consent decrees, the amount of allowances allocated to the units could exceed the estimated emissions allowed under the units' rate limits by a total of 483 tons in 2021, 348 tons in 2022, 188 tons in 2023, and 210 tons in 2024 and beyond. This analysis included 49 units with consent decree NOx emission rate limits that are finalized as existing units in the Revised CSAPR Update Rule. Moreover, EPA determined that if maximum allowable heat inputs were assumed instead of average heat inputs, no unit would have an allowance allocation exceeding its emission rate limit in any program year. Therefore, EPA concluded that the emission rate limits in the consent decrees would affect very few allowances in the Revised CSAPR Update trading program, if any. Any effort to reallocate the allowances potentially made unusable by emission rate limits would require EPA to make assumptions about individual units' future utilization and heat input. Because this would require the use of unit-level projections whose application in setting unit-level allocations would be difficult to support, and because few allowances are potentially at risk, EPA has chosen not to adjust allocations to reflect emission rate limits defined in the consent decrees. EPA again notes that states may substitute their own state-determined allowance allocations for EPA's default allowance allocations for control periods starting in 2022 through SIP revisions.
      
     c)  States with State-approved Allocation Methodologies
In the CSAPR Update, if, at the time the rule was finalized, EPA had already approved a SIP revision addressing the allocation of CSAPR ozone season NOX allowances among the units in the state, and if the SIP's allocation provisions could be applied to an updated budget, EPA used the allocation methodology in the approved SIP revision to govern the allocation of allowances among that state's units under the final CSAPR Update. EPA is following the same in the Revised CSAPR Update. 
Two of the states that are covered by the Revised CSAPR Update  -  Indiana and New York  -  have approved SIPs with state methodologies for allocating allowances. See 83 FR 64472 (Dec. 17, 2018) (Indiana); 84 FR 38878 (Aug. 8, 2019) (New York). The allocation methodologies used for existing units in these states are described below. 
Indiana
 In step 1, instead of the standard baseline period of 2015 through 2019, ozone season heat input values for the baseline period of 2012 through 2019 are identified using data reported to EPA.
 In step 2, the standard methodology is used to average the three highest, non-zero ozone season heat input values within this longer eight-year baseline period.
 The standard unit level allocation methodology and standard NUSA methodology are utilized from this point forward.
New York
 A preliminary allocation for each unit is computed as the average of the unit's ozone season NOx emissions for the years 2017 to 2019, with zero data years included as zeroes.
 All preliminary unit allocations at the end of step 1) are summed. If the sum is no more than 85% of the state budget, proceed to step 4). If the sum exceeds 85% of the state budget, first do step 3).
 Apply an equivalent ratio to all preliminary unit allocations from step 1) to reduce the sum of all unit allocations to 85% of the state budget.
 The preliminary unit allocation value is rounded to the nearest whole number using conventional rounding.  
 The total portion of the state budget set aside for new units is 5.0%; this includes 0.1% as an Indian country NUSA and 4.9% as a NUSA for units in the state other than Indian country within the state's borders.
 The difference between the sum of all unit allocations and the total NUSA portion is allocated to NYSERDA. By definition this must be at least 10% of the state budget, though it could be higher.

    d)  Allocations of Supplemental Allowances to Existing Units
Although EPA expects the Revised CSAPR Update to be published in the Federal Register in early April 2021, before the start of the 2021 ozone season on May 1, 2021, the effective date of the rule will fall after May 1, 2021 because of the requirements of the Congressional Review Act. The first control period under the new trading program established in the Revised CSAPR Update will start on May 1, 2021, and the state emission budgets for the 2021 control period are computed on the basis of data for the full 2021 ozone season. To ensure that the enhanced control stringency represented by the new budgets will not take effect until after the Revised CSAPR Update's effective date, EPA is issuing supplemental allowances for the portion of the 2021 ozone season occurring between May 1, 2021 and the rule's effective date. The total amount of supplemental allowances for each state will be calculated by multiplying the difference between that state's previous emission budget under the CSAPR Update and that state's new emission budget under the Revised CSAPR Update by the fraction of the 2021 ozone season, measured in days, occurring before the Revised CSAPR Update's effective date.
The total supplemental allowances issued for each state will be allocated among the state's existing units as if the supplemental allowances had been included in the state's 2021 emission budget under the Revised CSAPR Update, using the same methodology described in the earlier sections of this document, with two exceptions. The first exception is that no portion of the supplemental allowances will be added to the new unit set-aside or Indian country new unit set-aside for a state. The amounts of the new unit set-aside and Indian country new unit set-aside for each state for the 2021 control period will continue to be the amounts published at 40 CFR 97.1010(a) for each state, which have been determined using the methodology described above.
The second exception concerns the rounding procedure. In the methodology described above, once the unit-level allocations to existing units from the state's emission budget have been rounded to the nearest allowances using conventional rounding, those rounded amounts are the final allocations to the existing units. If the sum of the individual unit-level allocations differs from the portion of the state's emission budget that was used to calculate the allocations to existing units, the amount of the difference is added to or subtracted from the preliminary amount of the new unit set-aside to determine the final amount of the new unit set-aside. Because the final amounts of the new unit set-asides and Indian country new unit set-asides under the Revised CSAPR Update have already been determined based on the state emission budgets before calculation of the unit-level allocations of supplemental allowances issued for each state, EPA will use a different rounding procedure for the unit-level allocations of supplemental allowances, as follows. For each state, EPA will calculate a preliminary total unit-level allocation to each existing unit based on the combined amount of the state's 2021 emission budget plus the state's supplemental allowances and minus the final amounts of the state's new unit set-aside and Indian country new unit set-aside. These preliminary total unit-level allocations will be calculated using the methodology described above except for the final adjustments to account for rounding differences (in other words, EPA will not make any further adjustment to the states' new unit set-asides or Indian country new unit set-asides). For each unit, EPA will then calculate the difference between the unit's preliminary total unit-level allocation and the unit's final unit-level allocation as calculated before consideration of the supplemental allowances. This difference will equal the unit's preliminary allocation of supplemental allowances. 
After computing the preliminary unit-level allocations of supplemental allowances as described above, EPA will determine for each state if there is any difference between the sum of the preliminary unit-level allocations and the total amount of supplemental allowances for the state. If so, EPA will list the units in the state in descending order of their preliminary allocations of supplemental allowances, and in alphabetical order by source and numerical order by unit in instances where the amounts for units are the same. EPA will then adjust the preliminary allocation for each unit up or down by one allowance, starting with the first listed unit and continuing until the sum of the adjusted unit-level allocations of the supplemental allowances for the state equals the total amount of supplemental allowances for the state.
EPA will post an updated version of the "Unit-level allocations and underlying data for the Revised CSAPR Update final rule" spreadsheet referenced above showing the calculations of unit-level allocations of the supplemental allowances and will provide public notice of the updated spreadsheet's availability. 

Appendix
"Unit-level allocations and underlying data for the Revised CSAPR Update final rule" available in accompanying excel file

