Title IV of the Clean Air Act, as amended by Clean Air Act Amendments of 1990, (the Act) authorizes the Environmental Protection Agency (EPA or Agency) to establish the Acid Rain Program in order to reduce the adverse health and ecological impacts of acidic deposition. On March 23, 1993, the Agency promulgated final rules allocating allowances to utility units, including the criteria and method of allocating early reduction credits under section 404(e) of the Act. This action implements a settlement of litigation between EPA and a utility regarding Phase II early reduction credits. The settlement provides a method by which additional allowances may be loaned to units receiving early reduction credits as an incentive to further reduce emissions prior to the units becoming subject to the applicable Acid Rain Program emission limitations. In the proposed rules section of this Federal Register, EPA is proposing a rule that is identical to this direct final rule. If significant, adverse comments are timely received on the proposed rule (see DATES section), this direct final rule will be withdrawn and all such comments will be addressed in a subsequent final rule based on the proposed rule. If no significant, adverse comments are timely received on the proposed rule, then the direct final rule becomes effective as published and no further action is contemplated on the parallel proposal published today.