There is no a fix allowable deformation and dont know your project scenario.  Usually, you estimate the deformation in order to design a structure to tolerate estimated deformation.

I'm trying to apply the embankments/dams seismic slope stability theory (Newmark) to the stability analysis of a 1.5 to 1 natural bedrock slope adjacent to a proposed development. The plan checker is not satisfied with the static and pseudostatic analysis already provided. I'm trying to compare the calculated deformations by the Newmark method to some "allowable" deformation values that could be found on technical literature. Am I on the right track? Thanks!

The subject of what is considered "allowable deformation" is a highly contentious one, at least here in Southern California.  The SCEC document I've linked to discusses this issue, and provides some recommeded criteria.

http://www.scec.org/resources/catalog/LandslideProceduresJune02.pdf

This is a very good document.  To my knowledge, most of the public agencies have not mandated the method be used.  One of the main reasons is that the amount of "allowable deformation" is contentious.

If you don't already have it, ask for a copy of the geotechnical guidelines from the reviewer's agency.  If they have such a document, see if the Newmark criteria is in it or even mentioned.

Thanks guys! As epongra mentioned, there's still some debating to be done about the issue. By the way, I'm in southern california also. Is there any other document I should be aware of regarding this allowable deformation topic? Thanks!