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   2.50 lbs/mmBtu, divided by 2,000;

      "(B) the  difference between the  lesser of the  average annual

   emissions  in  calendar  years  1988  and  1989  or  the projected

   emissions tonnage for  calendar year 1996 of each eligible phase I

   extension  unit,  as  designated  under  paragraph  (3),  and  the

   product of the unit's baseline  multiplied by an emission  rate of

   2.50 lbs/mmBtu, divided by 2,000; and

      "(C)  the  amount  by which  (i)  the  product  of each  unit's

   baseline  multiplied  by  an  emission  rate  of  1.20  lbs/mmBtu,

   divided by 2,000, exceeds  (ii) the tonnage level specified  under

   subparagraph (E)  of paragraph (2)  of this subsection  multiplied

   by a factor of 3.

   "(5)  Each   eligible  Phase  I   extension  unit  shall   receive

allowances determined under subsection (a)(1)  or (c) of this section.

In addition, for calendar year 1995, the  Administrator shall allocate

to  each eligible Phase I  extension unit, from  the allowance reserve

created  pursuant  to  subsection  (a)(2),  allowances  equal  to  the

difference  between the  lesser  of the  average  annual emissions  in

calendar  years 1988 and 1989  or its projected  emissions tonnage for

calendar year 1995 and  the product of the unit's  baseline multiplied

by an emission  rate of 2.50 lbs/mmBtu, divided by  2,000. In calendar

year 1996, the  Administrator shall allocate  for each eligible  unit,

from  the allowance  reserve  created pursuant  to subsection  (a)(2),

allowances equal to the  difference between the lesser of  the average

annual  emissions in  calendar years  1988 and  1989 or  its projected

emissions tonnage for calendar year 1996 and the product of the unit's

baseline multi-

plied  by an  emission rate of  2.50 lbs/mmBtu,  divided by  2,000. It

shall  be unlawful  for  any source  or  unit subject  to  an approved

extension  plan under this subsection to emit sulfur dioxide in excess

of the emissions limitations  provided for in the permit  and approved

extension plan, unless the owner or operator  of each unit governed by

the permit  and approved plan  holds allowances to emit  not less than

the unit's total annual emissions.

   "(6)  In addition to  allowances specified  in paragraph  (5), the

Administrator shall allocate for each  eligible Phase I extension unit

employing  qualifying Phase  I  technology, for  calendar years  1997,

1998, and  1999, additional allowances, from  any remaining allowances

in  the reserve created  pursuant to subsection  (a)(2), following the

reduction  in the reserve provided for in paragraph (4), not to exceed

the amount by which (A) the  product of each eligible unit's  baseline

times  an emission rate of  1.20 lbs/mmBtu, divided  by 2,000, exceeds

(B) the tonnage  level specified under  subparagraph (E) of  paragraph

(2) of this subsection.

   "(7)  After January  1, 1997, in  addition to  any liability under

this  Act,  including  under section  411,  if  any  eligible phase  I

extension unit employing qualifying phase I technology or any transfer

unit  under  this subsection  emits sulfur  dioxide  in excess  of the

annual tonnage limitation specified in the extension plan, as approved

in paragraph (3) of  this subsection, the Administrator shall,  in the

calendar  year following such  excess, deduct allowances  equal to the

amount of such excess from such unit's annual allowance allocation.

   "(e)(1)  In the  case of a  unit that  receives authorization from

the  Governor  of the  State in  which such  unit  is located  to make

reductions in the emissions  of sulfur dioxide prior to  calendar year

1995 and  that is part  of a utility  system that meets  the following

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