(a) NO X allowance allocation. (1) By December 31 immediately before the first control period for which the NOX Budget opt-in permit is effective, the permitting authority will allocate NOX allowances to the NOX Budget opt-in source and submit to the Administrator the allocation for the control period in accordance with paragraph (b) of this section.

(2) By no later than December 31, after the first control period for which the NOX Budget opt-in permit is in effect, and December 31 of each year thereafter, the permitting authority will allocate NOX allowances to the NOX Budget opt-in source, and submit to the Administrator allocations for the next control period, in accordance with paragraph (b) of this section.

(b) For each control period for which the NOX Budget opt-in source has an approved NOX Budget opt-in permit, the NOX Budget opt-in source will be allocated NOX allowances in accordance with the following procedures:

(1) The heat input (in mmBtu) used for calculating NOX allowance allocations will be the lesser of:

(i) The NOX Budget opt-in source's baseline heat input determined pursuant to § 96.84(c); or

(ii) The NOX Budget opt-in source's heat input, as determined in accordance with subpart H of this part, for the control period in the year prior to the year of the control period for which the NOX allocations are being calculated.

(2) The permitting authority will allocate NOX allowances to the NOX Budget opt-in source in an amount equaling the heat input (in mmBtu) determined under paragraph (b)(1) of this section multiplied by the lesser of:

(i) The NOX Budget opt-in source's baseline NOX emissions rate (in lb/mmBtu) determined pursuant to § 96.84(c); or

(ii) The most stringent State or Federal NOX emissions limitation applicable to the NOX Budget opt-in source during the control period.