UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

____________________________________ IN THE MATTER OF: ) ) ) TENNESSEE VALLEY AUTHORITY ) Federal Facilities Compliance Agreement ) Between the United States Environmental 400 West Summit Hill Drive ) Protection Agency and the Tennessee Knoxville, Tennessee 37902 ) Valley Authority ) Allen, Bull Run, Colbert, ) Cumberland, Gallatin, Johnsonville, ) Docket No

. CAA

- 04

- 2010

- 1760 John Sevier, Kingston, P aradise, ) Shawnee, and Widows Creek ) Fossil Plants ) )

____________________________________ )

FEDERAL FACILITIES COMPLIANCE AGREEMENTi TABLE OF CONTENTS I. PURPOSE

................................ ................................ ................................ ................................ ... 5 II. JURISDICTION

................................ ................................ ................................ ........................ 5 III. PARTIES BO UND

................................ ................................ ................................ .................. 6 IV. EPA’S FINDINGS OF FACT AND CONCLUSIONS OF LAW

................................ ........... 6 V. COMPLIANCE PROGRAM

................................ ................................ ................................ .... 6 A. DEFINITIONS

................................ ................................ ................................ ...................... 7 B. NO x EMISSION R EDUCTIONS AND CONTROLS

................................ ........................ 21 C. SO 2 EMISSION REDUCTIONS AND CONTROLS

................................ ......................... 28 D. PM EMISSION REDUCTIONS AND CONTROLS

................................ ......................... 37
E. PROHIBITION ON NETTING OR OFFSETS FROM REQUIRED CONTROLS

........... 43 F. ENVIRONMENTAL MITIGATION PROJECTS

................................ .............................. 50 G. CIVIL PENALTY

................................ ................................ ................................ ............... 52 H. RESOLUTION OF CLAIMS AGAINST TVA

................................ ................................ .. 53 I. PERIODIC REPORTING

................................ ................................ ................................ ..... 57
J. REVIEW AND APPROVAL OF SUBMITTALS

................................ ............................... 59 K. STIPULATED PENALTIES

................................ ................................ .............................. 60 L. PERMITS

................................ ................................ ................................ ............................ 65 VI. COORDINATION OF OVERSIGHT AND ENFORCEMENT

................................ ........... 69 VII. FORCE MAJEURE

................................ ................................ ................................ .............. 69
VIII. DISPUTE RESOLUTION

................................ ................................ ................................ ... 73ii IX. INFORMATION COLLECTION AND RETENTION

................................ ......................... 75
X. NOTICES

................................ ................................ ................................ ................................ 76
XI. SALES OR TRANSFERS OF OPERATIONAL OR OWNERSHIP INTERESTS

............. 79
XII. MODIFICATION

................................ ................................ ................................ ................. 81
XIII. GENERAL PROVISIONS

................................ ................................ ................................ .. 81
XIV. SIGNATORIES AND SERVICE

................................ ................................ ....................... 85
XV . PUBLIC COMMENT

................................ ................................ ................................ .......... 85 XVI. CONDITIONAL TERMINATION OF ENFORCEMENT UNDER COMPLIANCE AGREEMENT

................................ ................................ ................................ .............................. 86
APPENDIX A

– REPORTING REQUIREMENTS
APPENDIX B

– EMISSION LIMITATIONS FOR NEW CC/CT UNITS APPENDIX C

– ENVIRONMENTAL MITIGATION PROJECTS
EXHBIT 1

– CONSENT DECREE1 WHEREAS, the United States Environmental Protection Agency (“EPA”) issued an administrative compliance order to the Tennessee Valley Authority (“TVA”) pursuant to Sections 113 and 167 of the Clean Air Act (“Act”) , 42 U.S.C. §§ 7413, 747 7 , alleging that T VA violated, inter alia , the Prevention of Significant Deterioration (“PSD”) and Nonattainment New Source Review (“Nonattainment NSR”) programs of the Act, its implementing regulations, and the federally approved and enforceable State Implementation Plans (“SIPs”) for Alabama, Kentucky, and Tennessee at several of the coal

- fired electric generating units that TVA owns and operates when it made certain physical changes without obtaining the necessary permits and installing the controls necessary to reduce em issions of oxides of nitrogen (NO x ) , sulfur dioxide (SO 2 ) , and particulate matter ( “ PM ” ) ; WHEREAS, in the administrative compliance order, issued on November 3, 1999, and subsequently amended several times, including on April 10, 20 00, EPA directed TVA to come in to compliance with the Clean Air Act; WHEREAS, the United States Environmental Appeals Board (“EAB”) issued a Final Order on Reconsideration in In re Tennessee Valley Auth

. , 9 E.A.D 357 ( EAB 2000), in which it found that TVA had violated the PSD and Nonattainment NSR programs of the Act, its implementing regulations, and the relevant SIPs , and directed TVA to come in t o compliance with the Act; WHEREAS, T VA petitioned for review of the administrative compliance order and the
EAB ’ s Final Order on Reconsideration in the United States Court of Appeals for the Eleventh Circuit, which concluded that EPA ’ s administrative proceedings, and the Act provisions under2 which the order was issued, violated due process, Tennessee Valley Auth

. v. Whitman , 336 F.3 d 1236, 1244, 1260 (11th Cir. 2003), cert. denied , 541 U.S. 1030 (2004); Brief for Respondent in Opposition to a Writ of Certiorari (“Brief for Respondent”) at 4 , National Parks Conservation
Ass ’n et al. v. Tennessee Valley Auth

. , 554 U. S. 917 (2008) (No. 07

- 867) , and which then held that the uncon stitutionality of the Act provision meant that EPA ’ s order was not a “final agency action” and that the court of appeals therefore lacked jurisdiction to review it, see Brief for Respondent at 4 ( citi ng Whitman , 336 F. 3d at 1248, 1260) ; WHEREAS, through this Federal Facilities Compliance Agreement (“Compliance Agreement”) and the Consent Agreement and Final Order executed by EPA and TVA pursuant to 40 C.F.R §§ 2 2.13(b) and 22.18(b)(2), forwarded to th e Region 4 Regional Judicial Off ic er for ratification, In re Tennessee Valley Auth

. , Docket No. CAA

- 04

- 2010

- 1528(b) , EPA and TVA are resolving the violations alleged in the amended administrative compliance order and the Final Order on Reconsideration;
WH EREAS, the States of Alabama, North Carolina, and Tennessee a nd the Commonwealth of Kentucky (collectively “the Stat es”) , are concurrently filing a c omplaint and lodging a proposed Consent Decree in the Eastern District of Tennessee (Exhibit 1 to this Comp liance Agreement) , that , when entered, will secure by way of injunction the same relief as this Compliance Agreement and that, therefore, TVA ’ s operations will be governed by both this Compliance Agreement and the Consent Decree ; WHEREAS, National Parks Conservation Association, Sierra Club, and Our Children ’ s Earth Foundation (collectively the “Citizen Plaintiffs”) are concurrently filing a complaint and3 lodging a Consent Decree in the Eastern District of Tennessee with the States , that secures the

same injunctive relief as this Compliance Agreement; WHEREAS, in their complaints, the States and Citizen Plaintiffs allege, inter alia , that TVA made major modifications to major emitting facilities, and failed to obtain the necessary permits and install the controls necessary under the Act to reduce NO x , SO 2 , and/or PM emissions, and further allege that such emissions damage human health and the environment; WHEREAS, EPA and TVA agree that this Compliance Agreement has been negotiated and executed by the Par ties in good faith to ensure compliance with the law; WHEREAS, EPA, the States , and the Citizen Plaintiffs anticipate that this Compliance Agreement (and the States ’ and Citizen Plaintiffs ’ Consent Decree), including the installation and operation of poll ution control technology and other measures adopted pursuant to this Compliance Agreement and the Consent Decree, will achieve significant reductions of emissions from the TVA System and thereby significantly improve air quality; WHEREAS, TVA is now under taking a process to transform itself into a cleaner power system by reducing emissions from its coal

- fired power plants, by retiring some coal

- fired units, and by relying more on lower

- emitting or non

- emitting generation like natural gas and nuclear units and energy

- efficiency and demand response programs; WHEREAS, TVA disagree d with, and continues to disagree with, the allegations of the administrative compliance order and the findings of fact and conclusions of law of the Final Order on Reconsideration by the EAB, a nd denies that it violated the Act as so alleged and found ( see Whitman , 336 F.3d at 1244

- 45 ) ;4 WHEREAS, TVA wishes to resolve, without the uncertainty and expense associated with further litigation, the claims of EPA and other parties that it has violated any provisions of the
Act ’ s PSD , Nonattainment NSR , New Source Performance Standards ( “ NSPS ” ) , minor new source review (“minor NSR”) , or (to the extent related to such PSD, N onattainment NSR, NSPS , and minor NSR claims) Title V Operating Permit programs by way of the activities identified in the administrative compli ance order or other similar activities TVA has conducted at its coal

fired electricity generating plants; WHEREAS, as specified in 168 of this Compliance Agreement, TVA has agreed to an expedited schedule to obtain the appropriate Clean Water Act N ational P ollutant D ischarge
E limination S ystem permits for the wa stewater discharges from its flue gas desulfurization ( “ FGD ” ) systems should EPA promulgate a final rule containing revisions to the Effluent Limitations Guidelines; EPA announced on September 15, 2 009, its decision to proceed with a rul emaking to revise the existing E f fluent Limitations G uidelines for the Steam Electric Power Generating industry; EPA had conducted a multi

- year study of the wastewater discharges from the Steam Electric Power Generati ng industry and technologies available to treat those discharges; EPA determined that steam electric power plants are responsible for a significant amount of the toxic pollutant loadings discharged to surface waters by point sources, and coal ash ponds and FGD systems generate many of these loadings; and EPA concluded that the study demonstrated the need to consider updating the existing Effluent Limitations G uidelines; WHEREAS, TVA plans to seek public review and comment during the environmental reviews conducted pursuant to the National Environmental Policy Act for the construction and5 operation of any combustion turbine and combined cycle electric generating plants it proposes to add to its system; NOW, THEREFORE, without any admission of fact or law, the Parties hereby agree as follows:
I. PURPOSE
1. The United States Environmental Protection Agency (“EPA”) and the Tennessee Valley Authority (“TVA”) enter into this Federal Facilities Compliance Agreement (“Compliance Agreement”) to address violations of the Clean Air Act (“Act”) alleged by EPA in
In re Tennessee Valley Auth

. , 9 E.A.D. 357 (EAB 2000 ). The purpose of this Compliance Agreement is to establish a compliance program for TVA ’ s fifty

- nine ( 59 ) coal

- fired boilers located at eleven (11) plants in Alabama, Kentucky, and Tennessee.
II. JURISDICTI ON
2. EPA and TVA enter into this Compliance Agreement pursuant to the Clean Air Act, 42 U.S.C. §§ 7401 et seq ., and Executive Order 12088, 43 Fed. Reg. 47 , 707 (Oct

. 13, 1978). 3. References in this Compliance A greement to possible civil remedies against TVA sh all be without prejudice to the position of the United States in its petition for a writ of certiorari
in United States Envtl. Protection Agency v. Tennessee Valley Auth

. , No. 02

- 1162, that TVA, as an agency of the United States, lacks independent litigati ng authority, and shall not be interpreted as supporting or admitting any contrary position.
4. Subject to Paragraph 87 of the Consent Agreement and Final Order in In re Tennessee Valley Auth

. , Docket No. CAA

- 04

- 2010

- 1528(b) , TVA retains the right to controvert6 in any proceedings, other than a proceeding solely to enforce this Compliance Agreement , the validity of any of EPA ’ s findings of fact or conclusions of l aw of this Compliance Agreement. TVA agrees to comply with and be bound by the terms of this Compliance Agreement, and further agrees in any proceeding solely to implement or enforce this Compliance Agreement, that it will not contest the validity of this Compliance Agreement or its terms.
III. PARTIES BOUND 5. The Pa rties to this Compliance Agreement are EPA and TVA.
6. Upon the Effective Date , the provisions of this Compliance Agreement shall apply to and be binding upon EPA and TVA and their successors and assigns, and TVA ’ s officers, employees and agents, solely in th eir capacities as such.
IV. EPA ’ S FINDINGS OF FACT AN D CONCLUSIONS OF LAW
7. EPA incorporates by reference, as if fully set forth herein, the findings of fact and conclusions of l aw ( i.e. , Section I. Nature of the Action/Jurisdictional Statements, Section I I. Legal Background, Section III. Factual Allegations, and Section IV. Alleged Violations) contained in the Consent Agreement and Final Order between EPA and TVA, In re Tennessee Valley Auth. , Docket No. CAA

- 04

- 2010

- 1528(b)

. V. COMPLIANCE PROGRAM 8. TVA shall be responsible for providing a copy of this Compliance Agreement to all vendors, suppliers, consultants, contractors, agents, and any other company or other organization retained to perform any of the work required by this Compliance Agreement. Notwithstanding any retention of contractors, subcontractors, or agents to perform any work7 required under this Compliance Agreement, TVA shall be responsible for ensuring that all work is performed in accordance with the requirements of this Compliance Ag reement. For this reason, in any action to enforce this Compliance Agreement, TVA shall not assert as a defense the failure of its officers, directors, employees, servants, agents, or contractors to take actions necessary to comply with this Compliance Ag reement, unless TVA establishes that such failure resulted from a Force Majeure Event, as defined in Paragraph 17 1 of this Compliance Agreement.
A. DEFINITIONS
9. Every term expressly defined by this Compliance Agreement shall have the meaning given to that term by this Compliance Agreement and, except as otherwise provided in this Compliance Agreement, every other term used in this Compliance Agreement that is also a term under the Act or the regulations implementing the Act shall mean in this Compliance Agreement what such term means under the Act or those implementing regulations.
10. “Alabama” means the State of Alabama, Alabama Department of Environmental Management. 11. “Baghouse” means a full stream (fabric filter) particulate emission s control device.
12. “Boiler Island” means a Unit = s (a) fuel combustion system (including bunker, coal pulverizers, crusher, stoker, and fuel burners); (b) combustion ai r system; (c) steam generating system (firebox, boiler tubes, and walls); and (d) draft system (excluding the stack), all as further8 described in “Interpretation of Reconstruction,” by J ohn B. Rasnic U.S. EPA (Nov. 25, 1986) and attachments thereto.
13. “Capital Expenditure” means all capital expenditures, as defined by Generally Accepted Accounting Principles as those principles exist as of the Date of Execution of this Compliance Agreement, excluding the cost of installing or upgrading polluti on control devices.
14. “Citizen Plaintiffs” means, collectively, National Parks Conservation Association, Sierra Club, and Our Children ’ s Earth Foundation. 15. “CEMS” means, for obligations involving NO x and SO 2 under this Compliance Agreement, the devices define d in 40 C.F.R. § 72.2 and installed and maintained as required by 40 C.F.R. Part 75, and for obligations involving PM, the continuous emission monitors installed and maintained as described in 40 C.F.R. § 60.49Da(v). 16. “Clean Air Act” or “Act” means the fede ral Clean Air Act, 42 U.S.C. §§ 7401

- 7671q, and its implementing regulations.
17. “Compliance Agreement ” or “Federal Facilities Compliance Agreement ” means this Federal Facilities Compliance Agreement and the Appendices hereto, which are incorporated into this Compliance Agreement.
18. “Consent Decree” means the Consent Decree signed by the States , the Citizen Plaintiffs, and TVA and filed for lodging in Alabama et a l. v. Tennessee Valley Auth. , No. 11

-

_____ (E.D. Tenn. filed April 2011 ), in the United States District Court for the Eastern District of Tennessee. The Consent Decree is Exhibit 1 to this Compliance Agreement.9 19. “Continuously Operate” or “Continuous Operation” means that when a pollution control technology or combustion control is used at a Unit (including, but not limited to, SCR, FGD, PM Control Device, SNCR, Low NO x Burner ( “ LNB ” ), Overfire Air (“OFA”) or Separated Overf ire Air ( “ SOFA ” )), it shall be operated at all times such Unit is in operation (except during a Malfunction that is determined to be a Force Majeure Event ), so as to minimize emissions to the greatest extent technically practicable consistent with the technological limitations, manufacturers = specifications, fire prevention codes, and good engineering and maint enance practices for such pollution control technology or combustion control and the Unit.
20. “Date of Execution” means the date that this Compliance Agreement has been signed by both TVA and EPA

. 21. “Day” means calendar day unless otherwise specified in this C ompliance Agreement.
22. “Effective Date” means sixty (60 ) days after the Date of Execution of this Compliance Agreement or , if public comments warrant a change to this Compliance Agreement after the Date of Execution, then the Effective Date shall mean sixty (60) days after the date that this Compliance Agreement has been re

- signed by both TVA and EPA

. 23. “Emission Rate” means the number of pounds of pollutant emitted per million
B ritish thermal units of heat input ( “ lb/mmBTU ” ), measured in accordance with this Compliance Agreement.
24. “ESP” means electrostatic precipitator, a pollution control device for the reduction of PM.10 25. “EPA” means the United States Environmental Protection Agency.
26. “Flue Gas Desulfurization System” or “FGD” means a pollution control device with one or more absorber vessels that employs flue gas desulfurization technology for the control of SO 2 emissions. Unless Paragraph 89 expressly requires the installation and Continuous Operation of a W et FGD, TVA may i nstall either a Wet FGD or a Dry FGD.
27. “Greenhouse Gases” means the air pollutant defined at 40 C.F.R § 86.1818

- 12(a)

as of the Date of Execution of this Compliance Agreement as the aggregate group of six greenhouse gases: c arbon dioxide, nitrou s oxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride

. This definition continues to apply even if 40 C.F.R §
86.1818

- 12(a) is subsequently revised, stayed, vacated or otherwise modified.
28. “Improved Unit” for NO x means a TVA System Unit equipped with an SCR or scheduled under this Compliance Agreement to be equipped with an SCR (or equivalent control technology approved pursuant to 19 8 ) or Repowered to Renewable Biomass (as defined herein). A Unit may be an Improved Unit for one po llutant without being an I mproved Unit for another. Any O ther Unit in the TVA System can become an Improved Unit for NO x if it is equipped with an SCR (or equivalent control technology a pproved pursuant to Paragraph 198 ) and the requirement to Continuousl y Operate the SCR or equivalent control technology is incorporated into a federally

- enforceable non

- Title V permit, or if it is Repowered to Renewable Biomass (as defined herein). 29. “Improved Unit” for SO 2 means a TVA System Unit equipped with an FG D or scheduled under this Compliance Agreement to be equipped with an FGD (or equivalent control11 technology a pproved pursuant to Paragraph 198 ) or Repowered to Renewable Biomass (as defined herein). A Unit may be an Improved Unit for one pollutant withou t being an I mproved Unit for another. Any O ther Unit in the TVA System can become an Improved Unit for SO 2 if it is equipped with an FGD (or equivalent control technology a pproved pursuant to Paragraph 198 ) and the requirement to Continuously Operate the FGD or equivalent control technology is incorporated into a federally

- enforceable non

- Title V permit, or it is Repowered to Renewable Biomass (as defined herein).
30. “Kentucky” means the Commonwealth of Kentucky, Energy and Environment Cabinet.
31. “lb/mmBTU” me ans one pound per million British thermal units.
32. “Malfunction” means any sudden, infrequent, and not reasonably preventable failure of air pollution control equipment, process equipment, or a process to operate in a normal or usual manner. Failures that a re caused in part by poor maintenance or careless operation are not Malfunctions.
33. “MW” means a megawatt or one million Watts.
34. “National Ambient Air Quality Standards” or “NAAQS” means national ambient air quality standards that are promulgated p ursuant to Section 109 of the Act, 42 U.S.C. § 7409. 35. “New CC/CT Unit” shall have the meaning indicated in Paragraph 12 1 , below.
36. “NSPS” means New Source Performance Standards within the meaning of Part A of Subchapter I of the Act, 42 U.S.C. § 7411, and 40 C.F.R. Part 60.12 37. “Nonattainment NSR ” means the nonattainment area new source r eview program within the meaning of Part D of Subchapter I of the Act, 42 U.S.C. §§ 7501

- 7515, 40 C.F.R. Part 51 , and the federally

- approved Nonattainment NSR provis ions of the Alabama, Kentucky, and
Tennessee S tate I mplementation P lans (“SIP s ”) , including Ala. Admin. Code r. 335

- 3

- 14

- .05, 401 Ky. Admin. Regs. 51:052, Tenn. Comp. R. & Regs. 1200

- 3

- 9

- .01 (5), and the Memphis/Shelby County local program

. 38. “NO x ” means oxides of nitrogen, measured in accordance with the provisions of this Compliance Agreement. 39. “NO x Allowance” means an authorization or credit to emit a specified amount of
NO x that is allocated or issued under an emissions trading or marketable permit prog ram of any kind that has been established under the Act and/or the Alabama, Kentucky, or Tennessee SIPs

. 40. “North Carolina” means the State of North Carolina.
41. “Other Unit” means any Unit at the Shawnee Plant that is not an Improved Unit for the pollutant in question.
42. “Operational or Ownership Interest” means part or all of TVA ’ s legal or equitable operational or ownership interest in any Unit in the TVA System or any New CC /CT Unit(s)

. 43. “Parties” means EPA and TVA.
44. “Parallel Provision” means a requi rement or prohibition of this Compliance Agreement that is also a requirement or prohibition of the Consent Decree. 45. “PM” means particulate matter, as measured in accordance with the requirements of this Compliance Agreement.13 46. “PM Control Device ” means any device, including an ESP or a Baghouse, which reduces emissions of PM . If a Wet FGD is the only device controlling PM on a particular Unit, then the Wet FGD is the PM Control Device.
47. “PM Emission Rate” means the number of pounds of filterable PM emitted per million B ritish thermal units of heat input ( “ lb/mmBTU ” ), as measured in accordance with this Compliance Agreement.
48. “Project Dollars” means TVA = s expenditures and payments incurred or made in carrying out the Environmental Mitigation Projects identified in Section V

. F (Environmental Mitigation Projects) of this Compliance Agreement to the extent that suc h expenditures or payments both (a) comply w ith the requirements set forth in Section V

. F (Environmental Mitigation Projects) and Appendix C of this Compliance Agreement, and (b) constitute TVA = s direct payments for such projects and TVA = s external costs for contractors, vendors, and equipment. 49. “PSD” means Prevention of Significant Deterioration within the meaning of Part
C o f Subchapter I of the Act, 42 U.S.C. §§ 7470

- 7492 and 40 C.F.R. Part 52 , and the federally

approved PSD provisions of the Alabama, Kentucky, and Tennessee SIPs, i ncluding Ala. Admin. Code r. 335

- 3

- 14

- .04 , 401 K y. Admin. Reg. 51:017 , Tenn. Comp. R. & Regs. 1200

- 3

- 9

- .01(4) , and the Memphis/Shelby County local program

. 50. “Region 4 Air Director” means the EPA Region 4 Director of Air, Pesticides and Toxics Management Div ision. 51. “Remove from Service” means :14 a. with regard to the John Sevier pla n t , that two (2) Units of the four (4) Units shall cease to operate and emit any pollutants whatsoever by the dates specified in Paragraphs 7 3 and 8 9 for the 2 Units to be Removed f rom Service unless and until an SCR and FGD are installed and commence Continuous Operation for each such Unit, or the Unit ( s ) is Repowered to Renewable Biomass or Retired, which shall occur by no later than the second date specified in Paragraphs 7 3 and 8 9 for the 2 Units that are Removed from Service provided that TVA may elect which 2 Units at the John Sevier plant it will Remove from Service and that the remaining 2 Units shall be Retir ed as set forth in Paragraphs 73 and 89 , and b. with regard to Col bert Units 1

- 5, that such Units shall cease to operate and emit any pollutants whatsoever by the dates specified in Paragraphs 73 and 8 9 unless and until, by no later than three (3) years thereafter, an SCR and FGD are installed and commence Continuous Ope ration for each such Unit(s) or the Unit(s) is Repowered to Renewable Biomass or Retired, as specified therein

. 52. “Renewable Biomass” means , solely for purposes of this Compliance Agreement, any organic matter that is available on a renewable basis from non

- Federal land or from federal land that TVA m anages, including renewable plant material; waste material, including crop residue; other vegetative waste material, including wood waste and wood residues; animal waste and byproducts; construction, food and yar d waste; and residues and byproducts from wood pulp or paper products facilities. Biomass is renewable if it originates from forests that remain forests, or from croplands and/or grasslands that remain cropland and/or grassland or revert to forest. Bioma ss residues and byproducts from wood pulp or paper products facilities includes by

-15 products, residues, and waste streams from agriculture, forestry, and related industries , but does not include used oil or expired pesticides

. “Renewable Biomass” does not include any treated wood, including but not limited to, railroad ties, painted woods, or wood that has been treated with pentachlorophenol, copper

- based and borate

- based compounds, or creosote

. 53. “Repower” or “Repowered” means Repower to Renewable Biomass or Repowered to Renewable Biomass. 54. “Repower to Renewable Biomass” or “Repowered to Renewable Biomass” for purposes of this Compliance Agreement means a TVA System Unit that is repowered to combust a fuel other than coal. Such a Repowered Unit shall only com bust Renewable Biomass; provided, however, that such Repowered Unit may co - fire a fuel other than Renewable Biomass (but not used oil, expired pesticides, or any treated wood, including but not limited to, railroad ties, painted wood, or wood that has been treated with pentachlorophenol, copper

- based and borate

- based compounds, or creosote ) up to six percent ( 6% ) of heat input each calendar year for the U nit . Notwithstanding Section V

. H (Resolution of Claims Against TVA) and Paragraph 120 , for Shawnee Unit 10 and any other TVA System Unit that TVA Repower s to Renewable Biomass pursuant to Paragraphs 73 or 89 , TVA shall apply for all required perm its. A new

source r eview permit under the PSD and/or Nonattainment NSR programs is a required permit within the meaning of thi s Paragraph; s uch a Repowered Unit is a “new emissions unit” as that term is defined in 40 C.F.R. § § 52.21(b)(7)(i), 51.165(a)(1)(vii)(A), and 51.166 (b)(7)(i), and the relevant SIP; and such Unit shall be subject to the test described in 40 C.F.R. § § 52.21(a)(2)(iv)(d), 51.165(a)(2)(ii)(D), and 51.166(a)(7)(d), and the relevant SIP. In such16 permitting action, TVA shall apply to include the limitation on co

- firing a fuel other than Renewable Bioma ss as specified above. Any TVA System Unit that has the option to Repower to Renewable Biomass in Paragraphs 7 3 and 8 9 that TVA elects to Repower to Renewable Biomass as the Control Requirement under this Compliance Agreement, shall be subject to the proh ibitions in Section V

. E (Prohibition on Netting or Offsets From Required Controls). If Shawnee Unit 10 is Repowered to Renewable Biomass, i t shall be subject to the prohibitions in Section V.E (Prohibition on Netting or Offsets From Required Controls) reg arding netting credits. 55. “Retire” means that TVA shall permanently cease to operate the Unit such that the Unit cannot legally burn any fuel nor produce any steam for electricity production and TVA shall comply with applicable state and/or federal requirements for permanently retiring a coal

- fired electric generating unit, including removing the Unit from the relevant state = s air emissions inventory, and amending all applicable permits so as to reflect the permanent shutdown status of such U nit. Nothing herein shall prevent TVA from seeking to re

- start the Retired Unit provided that TVA applies for, and obtains, all required per mits. A n ew s ource r eview permit under the PSD and/or Nonattainment NSR programs is a required permit within the m eaning of this Paragraph; such Retired U nit shall be a “new emissions unit” as that term is defined in 40 C.F.R. § § 52.21(b)(7)(i), 51.165(a)(1)(vii)(A), and 51.166 (b)(7)(i), and the relevant SIP; and such Retired Unit shall be subject to the test describe d in 40 C.F.R. § § 52.21(a)(2)(iv)(d), 51.165(a)(2)(ii)(D), and 51.166(a)(7)(d), and the relevant SIP.17 56. “Selective Catalytic Reduction” or “SCR” means a pollution control device that employs selective catalytic reduction technology for the reduction of NO x emissions. 57. “Selective Non

- Catalytic Reduction” or “SNCR” means a pollution control device for the reduction of NO x emissions that utilizes ammonia or urea injection into the boiler. 58. “Startup” and “Shutdown” mean, as to each of those terms, the definition of those respective terms in 40 C.F.R. § 60.2. 59. “States” or “the States” refers collectively to Alabama, Kentucky, North Carolina, and Tennessee.
60. “SO 2 ” means sulfur dioxide, as measured in accordance with the provisions of this Compliance Agreement.
61. “SO 2 Allowance” means an authorization or credit to emit a specified amount of
SO 2 that is allocated or issued under an emissions trading or marketable permit program of any kind that has been established under the Act or the Alabama, Kentucky, or Tennessee SI Ps

. 62. “Surrender” or “surrender of allowances” means, for purposes of SO 2 or NO x allowances, permanently surrendering allowances as required by this Compliance Agreement from the accounts administered by EPA and Alabama, Kentucky, and Tennessee for all Units in the TVA System, so that such allowances can never be used thereafter by any entity to meet any

co mpliance requirement under the Act, a SIP , or this Compliance Agreement.
63. “System

- Wide Annual Tonnage Limitation” means the number of tons of the
p ollutant in question that may be emitted collectively from the TVA System and any New CC/CT Units during the relevant calendar year ( i.e. , January 1 through December 31), and shall include18 all emissions of the pollutant emitted during all periods of operat ion, including Startup, Shutdown, and Malfunction.
64. “Tennessee” means the State of Tennessee, Tennessee Department of Environment and Conservation (“TDEC”)

. 65. “Tennessee State Implementation Plan” and “Tennessee Title V program” shall include, when applicable , the new source r eview provisions of the Memphis/ Shelby County local
program , and its implementing regulations , and its Title V permit program

. 66. “TVA” means Tennessee Valley Authority, a federal agency and instrumentality of the United States.
67. “TVA System ” means solely for purposes of this Compliance Agreement, the following coal

- fired, electric steam generating Units (with nameplate MW capacity of each Unit , for identification purposes only ) or such coal

- fired Unit that is Repowered to Renewable Biomass , located at the following plants:

a Allen Unit 1 (330 MW), Allen Unit 2 (330 MW), and Allen Unit 3 (330 MW) located at the Allen Fossil Plant near Memphis, Tennessee; b. Bull Run Unit 1 (950 MW) located at the Bull Run Fossil Plant near Oak Ridge, Tennesse e;

c. Colbert Unit 1 (200 MW), Colbert Unit 2 (200 MW), Colbert Unit 3 (200 MW), Colbert Unit 4 (200 MW), and Colbert Unit 5 (550 MW) located at the Colbert Fossil Plant in Tuscumbia, Alabama;19 d. Cumberland Unit 1 (1300 MW) and Cumberland Unit 2 (1300 MW) located at the Cumberland Fossil Plant in Cumberland City, Tennessee;

e. Gallatin Unit 1 (300 MW), Gallatin Unit 2 (300 MW), Gallatin Unit 3 (327.6 MW), and Gallatin Unit 4 (327.6 MW) located at the Gallatin Fossil Plant in Gallatin, Tennessee;
f

. John Sevier Unit 1 (200 MW), John Sevier Unit 2 (200 MW), John Sevier Unit 3 (200 MW), and John Sevier Unit 4 (200 MW) located at the John Sevier Fossil Plant near Rogersville, Tennessee;
g. Johnsonville Unit 1 (125 MW), Johnsonville Unit 2 (125 MW), Joh nsonville Unit 3 (125 MW), Johnsonville Unit 4 (125 MW), Johnsonville Unit 5 (147 MW), Johnsonville Unit 6 (147 MW), Johnsonville Unit 7 (172.8 MW), Johnsonville Unit 8 (172.8 MW), Johnsonville Unit 9 (172.8 MW), and Johnsonville Unit 10 (172.8 MW) located at the Johnsonville Fossil Plant near Waverly, Tennessee; h. Kingston Unit 1 (175 MW), Kingston Unit 2 (175 MW), Kingston Unit 3 (175 MW), Kingston Unit 4 (175 MW), Kingston Unit 5 (200 MW), Kingston Unit 6 (200 MW), Kingston Unit 7 (200 MW), Kingston Uni t 8 (200 MW), and Kingston Unit 9 (200 MW) located at the Kingston Fossil Plant near Kingston, Tennessee;20 i. Paradise Unit 1 (704 MW), Paradise Unit 2 (704 MW), and Paradise Unit 3 (1150.2 MW) located at the Paradise Fossil Plant in Drakesboro, Kentucky; j. Shawnee Unit 1 (175 MW), Shawnee Unit 2 (175 MW), Shawnee Unit 3 (175 MW), Shawnee Unit 4 (175 MW), Shawnee Unit 5 (175 MW), Shawnee Unit 6 (175 MW), Shawnee Unit 7 (175 MW), Shawnee Unit 8 (175 MW), Shawnee Unit 9 (175 MW), and Shawnee Unit 1 0 (175 MW) located at the Shawnee Fossil Plant near Paducah, Kentucky; and k. Widows Creek Unit 1 (140.6 MW), Widows Creek Unit 2 (140.6 MW), Widows Creek Unit 3 (140.6 MW), Widows Creek Unit 4 (140.6 MW), Widows Creek Unit 5 (140.6 MW), Widows Creek Unit 6 (140.6 MW), Widows Creek Unit 7 (575 MW), and Widows Creek Unit 8 (550 MW) located at the Widows Creek Fossil Plant near Stevenson, Alabama.
68. “Title V Permit” means the permit required of TVA ’ s major sources under Subchapter V of the Act, 42 U.S.C. §§ 766 1

- 7661e; Ala. Code §§ 22

- 22A

- 1 to

- 16, §§ 22

- 28

- 1 to

- 23 (2006 Rplc. Vol.), and A la. Admin. Code r . 335

- 3

- 16; Ky . Rev. Stat. Ann. §§ 224.20

- 100 to

- 120, and 401 Ky. Admin. Reg. 52:020; and Tenn. Comp. R. & Regs. R. 1200

- 3

- 9

- .02

. 69. “Unit” means collectively, the coal pulverizer, stationary equipment that feeds coal to the boiler, the boiler that produces steam for the steam turbine, the steam turbine, the generator, the equipment necessary to operate the generator, steam turbine and boiler, and all ancillary equipment, including pollution control equipment. An electric steam generating station21 may comprise one or more Units. “Unit” shall also include any coal

- fired TVA System Unit identified in Paragraph 6 7 that is Repowered to Rene wable Biomass pursuant to this Compliance Agreement. 70. “VOC” means volatile organic compounds as defined in 40 C.F.R. § 51.100.
B. NO x EMISSION REDUCTIONS AND CONTROLS
1. NO x Emission Limitations.
71. System

- Wide Annual Tonnage Limitations for NO x . During each calendar year specified in the table below, all Units in the TVA System and any New CC /CT Units constructed pursuant to Parag raph 12 1 , collectively, shall not emit NO x in excess of the following System

Wide Annual Tonnage Limitations:

Calendar Year System
- Wide Tonnage Limitation for NO x 2011 100,600 2012 100,600 2013 90,791 2014 86,842 2015 83,042 2016 70,667 2017 64, 9 5 1 2018 , and each year thereafter 52,000
72. I f TVA elects to Remove from Service any or all of Colbert Units 1

- 5 either pursuant to Paragraph 7 3 or Paragraph 8 9, then the System

- Wide Annual Tonnage Limitations for NO x in each calendar year for which such Unit(s) is Removed from Service shall be adjusted as follows:22 Unit Tons b y Which System
- Wide Annual Tonnage Limitation for NO x S hall be Reduced If Unit is Removed From Service in a Calendar Year Colbert Unit 1 700 tons Colbert Unit 2 500 tons Colbert Unit 3 500 tons Colbert Unit 4 500 tons Colbert Unit 5 1,200 tons
2. NO x Control Requirements

. 73. No later than the dates set forth in the table below, and continuing thereafter, TVA shall install and commence Continuous Operation of the pollution control technology identified therein or, if indicated in the table, Retire or Repower each Unit identified therein , or, solely for Colbert Units 1

- 4 and two (2) Units at the J ohn Sevier plant , Remove from Service as defined here in :

Plant Unit Control Requirement Date
Allen Unit 1 SCR Effective Date Allen Unit 2 SCR Effective Date Allen Unit 3 SCR Effective Date Bull Run Unit 1 SCR Effective Date Colbert Unit 1 Remove from Service, SCR, R epower to Renewable Biomass, or Retire June 30, 2016

Colbert Unit 2 Remove from Service, SCR, R epower to Renewable Biomass, or Retire June 30, 2016

Colbert Unit 3 Remove from Service, SCR, R epower to Renewable Biomass, or Retire June 30, 201623 Plant Unit Control Requirement Date
Colbert Unit 4 Remove from Service, SCR, R epower to Renewable Biomass, or Retire June 30, 2016

Colbert Unit 5 SCR Effective Date Cumberland Unit 1 SCR Effective Date Cumberland Unit 2 SCR Effective Date Gallatin Unit 1 SCR, Repower to Renewable Biomass, or Retire December 31, 2017
Gallatin Unit 2 SCR, Repower to Renewable Biomass, or Retire December 31, 2017
Gallatin Unit 3 SCR, Repower to Renewable Biomass, or Retire December 31, 2017
Gallatin Unit 4 SCR, Repower to Renewable Biomass, or Retire December 31, 2017
John Sevier 2 Units Retire December 31, 2012

John Sevier 2 other Units Remove from Service December 31, 2012 SCR, Repower to Renewable Biomass, or Retire December 31, 2015
Johnsonville Units 1

- 10 Retire 6 Units by December 31, 2015
4 additional Units by December 31, 2017 Kingston Unit 1 SCR Effective Date Kingston Unit 2 SCR Effective Date Kingston Unit 3 SCR Effective Date Kingston Unit 4 SCR Effective Date Kingston Unit 5 SCR Effective Date Kingston Unit 6 SCR Effective Date Kingston Unit 7 SCR Effective Date Kingston Unit 8 SCR Effective Date Kingston Unit 9 SCR Effective Date24 Plant Unit Control Requirement Date
Paradise Unit 1 SCR Effective Date Paradise Unit 2 SCR Effective Date Paradise Unit 3 SCR Effective Date Shawnee Unit 1 SCR, Repower to Renewable Biomass, or Retire December 31, 2017
Shawnee Unit 4 SCR, Repower to Renewable Biomass, or Retire December 31, 2017

Widows Creek Unit s 1

- 6 Retire 2 Units by July 31, 2013 2 additional Units by July 31, 2014 2 additional Units by July 31, 2015 Widows Creek Unit 7 SCR Effective Date Widows Creek Unit 8 SCR Effective Date
74. Notwithstanding Paragraph 7 3 , TVA ’ s failure to (a) complete installation and commence Continuous Operation of a pollution control technology by the date specified in the table in Paragraph 7 3 or (b) Repower to Renewable Biomass by the date specified in the table in Paragraph 7 3 , shall not be a violation of this Compliance Agreement if such Unit: ( i ) ceases to operate and emit any pollutants whatsoever at least sixty (60) days before the date specified in the table in Paragraph 7 3 , and (ii) the installation is completed and the Unit co mmences Continuous Operation of the pollution control technology specified in the table in Paragraph 7 3 or as a Repowered Unit no later than ninety (90) days after the date specified in the table in Paragraph
73 . If TVA fails to commence Continuous Operat ion of the pollution control technology or the25 Repowered Unit ninety ( 90 ) days after such date, then TVA shall be subject to stipulated penalties for the entire period commencing on the date specified in the Table in Paragraph 7 3

. 75. Beginning upon the Effec tive Date of this Compliance Agreement and continuing thereafter, TVA shall (a) Continuously Operate existing LNB, OFA, and SOFA combustion controls at all Units in the TVA System and (b) Continuously Operate existing SNCR technology at all Units in the TVA System equipped with such technology as of the Date of Execution of this Compliance Agreement ( i.e. , John Sevier Units 1

- 4 and Johnsonville Units 1

- 4) unless and until such Unit is equi pped with an SCR and TVA Continuously Operates such SCR pursuant to this Compliance Agreement, or such Unit is Retired or Repowered pursuant to this Compliance Agreement.
76. For TVA System Units with two or more methods specified in the Control Requ irement column in the table in Paragraph 7 3 , above, TVA shall provide notice to EPA, the
States , and the Citizen Plaintiffs pursuant to Section X (Notices) of its election as to which of the Control Requirement method s it will employ at such Unit by no lat er than three (3) years prior to the date specified in the table for that Unit

. For the Units at the John Sevier plant, TVA shall provide notice to EPA, the States, and the Citizen Plaintiffs pursuant to Section X (Notices) of this Complia nce Agreement of its election as to which two (2) Units it will Retire and which two (2) Units it will at least initially Remove from Service, by no later than June 30, 2012. For any TVA System Unit that TVA timely elects to control with SCR or Repower to Renewable Bioma ss, TVA may change its election to Retire at any time prior to the date specified in the table in Paragraph 7 3 . TVA shall provide notice to EPA , the States , and the Citizen Plaintiffs26 pursuant to Section X (Notices) of its decision to Retire the Unit, wit h an explanation for its decision to change the election, by no later than ten (10) business days following its decision to change its election from SCR or Repower to Renewable Biomass to Retire.
77. Solely for the Units at the Colbert plant, if TVA elects th e Remove from Service option, it shall provide notice to EPA, the States , and the Citizen Plaintiffs pursuant to Section X (Notices) at the time such Units are required to be Removed from Service as to which method specified in the Control Requirement colu mn in the table in Paragraph 7 3 it will employ at such Unit.
3. Use and Surrender of NO x Allowances.
78. TVA shall not use NO x Allowances to comply with any requirement of this Compliance Agreement, including by claiming compliance with any emission limitation required by this Compliance Agreement by using, tendering, or otherwise applying NO x Allowances to offset any excess emis sions.
79. Beginning with calendar year 2011 , and continuing each calendar year thereafter, TVA shall surrender all NO x Allowances allocated to the TVA System for that calendar year that TVA does not need in order to meet its own federal and/or state Clean Air Act regulatory requirements for the TVA System for that calendar year . However, NO x Allowances allocated to the TVA Sy stem may be used by TVA to meet its own federal and/or state Clean Air Act regulatory requirements for the Units included in the TVA System.
80. Nothing in this Compliance Agreement shall prevent TVA from purchasing or otherwise obtaining NO x Allowances from another source for purposes of complying with federal27 and/or state Clean Air Act regulatory requirements (i.e., emissions trading or marketable permit programs) to the extent otherwise allowed by law.
81. The requirements of this Compliance Agreement pertaining to TVA = s use and surrender of NO x Allowances are permanent injunctions not subject to any termination provision of this Compliance Agreement.
4. Super

- Compliance Allowances.
82. Notwithstanding Paragraph 79 , in each calendar year beginning in 2011 , and continuing thereafter, TVA may sell, bank, use, trade, or transfer any NO x Allowances made available in that calendar year as a result of maintaining actual NO x emissions from the combined total of (a) the TVA System and (b) any New CC /CT Unit(s) constructed pursuant to Paragrap h
12 1 below the System

- Wide Annual Tonnage Limitations for NO x for such calendar year ( “ Super

- Compliance Allowances ” ); provided, however, that reduction s in NO x emission s that
TVA utilizes as provided in Paragraph 1 2 1 to support the permitting of a New CC / CT Unit(s) shall not be available to generate Super

- Compliance Allowances within the meaning of this Paragraph in the calendar year in which TVA utilizes such emission reductions and all calendar years thereafter. TVA shall timely report the generation of all Super

- Compliance NO x Allowances in accordance with Section V

. I (Periodic Reporting) of this Compliance Agreement, and shall specifically identify any Super

- Compliance NO x Allowances that TVA generates from Retiring a TVA System Unit and that TVA did n ot utilize for purposes of Paragraph 1 2 1

. 5. Method for Surrender of NO x Allowances

. 83. TVA shall surrender all NO x Allowances required to be surrendered pursuant to Paragraph 79 by April 30 of the immediately following calendar year.28 84. For all NO x Allowances required to be surrendered, TVA shall first submit a NO x Allowance transfer request form to EPA = s Office of Air and Radiation = s Clean Air Markets Division directing the transfer of such NO x Allowances to the EPA Enforcement Surrender
Account or to any other EPA account that EPA may direct in writing. As part of submitting these transfer requests, TVA shall irrevocably authorize the transfer of these NO x Allowances and identify

-- by name of account and any applicable serial or other identificat ion numbers or station names

-- the source and location of the NO x Allowances being surrendered.
6. NO x Monitoring Provisions

. 85. TVA shall use CEMS in accordance with 40 C.F.R. Part 75 to monitor its emissions of NO x from the TVA System Units a nd any New CC /CT Unit(s) for purposes of demonstrating compliance with the applicable System

- Wide Annual Tonnage Limitations specified in Paragraph 7 1 of this Compliance Agreement.
C. SO 2 EMISSION REDUCTIONS AND CONTROLS
1. SO 2 Emission Limitations.
86. System

- Wide Annual Tonnage Limitations for SO 2. During each calendar year specified in the table belo w, all Units in the TVA System and any New CC /CT Unit(s) constructed pursuant to Paragraph 1 2 1 , collectively, shall not emit SO 2 in excess of the followi ng System

- Wide Annual Tonnage Limitations:

Calendar Year System
- Wide Tonnage Limitation for SO 2 2011 285,000 2012 285,000 2013 235,518 2014 228,107 2015 220,631 2016 175,62629 Calendar Year System
- Wide Tonnage Limitation for SO 2 2017 164,257 2018 121,699 2019 , and each year thereafter 11 0,000
87. If TVA elects to Remove from Service any or all of Colbert Units 1

- 5 either pursuant to Paragraph 7 3 or Paragraph 8 9, then the System

- Wide Annual Tonnage Limitations for SO 2 in each calendar year for which such Unit(s) is Removed from Service shall be adjusted as follows: Calendar Year Tons b y Which System
- Wide Annual Tonnage Limitation for S O 2 Shall b e Reduced If Unit is Removed From Service in a Calendar Year Colbert Unit 1 700 tons Colbert Unit 2 1,100 tons Colbert Unit 3 1,000 tons Colbert Unit 4 1,100 tons Colbert Unit 5 2,600 tons
88. If TVA must shut down one or more of its nuclear units for more than one hundred and twenty (120) consecutive days within calendar year 2011 or within calendar year 2012 because of a forced outage or in response to a safety concern as required by the Nucl ear Regulatory Commission, then the System

- Wide Annual Tonnage Limitation for SO 2 for that calendar year shall be 295,000 tons rather than 285,000 tons as specified in the table in Paragraph
8 6 . If TVA must shut down one or more of its nuclear units for more than one hundred and twenty (120) consecutive days within calendar year 201 3 or within calendar year 2014 because of a forced outage or in response to a safety concern as required by the Nuclear Regulatory Commission, then the System

- Wide Annual Tonna ge Limitation for SO 2 for calendar year 2013 shall be 241,700 tons rather than 2 3 5, 518 tons as specified in the table in Paragraph 8 6 and the30 System

- Wide Annual Tonnage Limitation for SO 2 for calendar year 2014 shall be 234,000 tons rather than 228,107 ton s as specified in the table in Paragraph 8 6

. In order t o put EPA, the
States , and the Citizen Plaintiffs on notice of this potential event, TVA shall provide notice to
EPA , the States, and the Citizen Plaintiffs pursuant to Section X (Notices), and include a summary of the circumstances causing the shut down and TVA ’ s efforts to bring the unit back on line, commencing no later than thir ty (30) days following the shut down of a nuclear unit, and continuing every thirty ( 30 ) days thereaf ter until either (a) the unit comes back online or (b) the unit remains shut down for one hundred twenty ( 120 ) consecutive days, whichever is earlier. In this circumstance, TVA shall, to the extent practicable, increase utilization of any Units in the
TVA System that are controlled with FGDs and/or SCRs and/or any New CC /CT Unit(s) constructed pursuant to Paragraph 12 1 to replace the lost power generation from the nuclear unit before increasing utilization of uncontrolled TVA System Units.
2. SO 2 Control Requirements. 89. No later than the dates set forth in the table below, and continuing thereafter, TVA shall install and commence Continuous Operation of the pollution control technology at each Unit identified therein or, if indicated in the table , R etire or Repower each Unit identified therein , or, solely for Colbert Units 1

- 5 and two (2) Units at the John Sevier plant , Remove from Service as defined herein :

Plant Unit Control Requirement Date
Allen Unit 1 FGD or Retire December 31, 201 8
Allen Unit 2 FGD or Retire December 31, 201831 Plant Unit Control Requirement Date
Allen Unit 3 FGD or Retire D ecember 31, 2018
Bull Run Unit 1 Wet FGD Effective Date Colbert Unit 1 Remove from Service, FGD, Repower to Renewable Biomass, or Retire June 30, 2016

Colbert Unit 2 Remove from Service, FGD, Repower to Renewable Biomass, or Retire June 30, 2016

Colbert Unit 3 Remove from Service, FGD, Repower to Renewable Biomass, or Retire June 30, 2016

Colbert Unit 4 Remove from Service, FGD, Repower to Renewable Biomass, or Retire June 30, 2016

Colbert Unit 5 Remove from Service, FGD or Retire December 31, 2015
Cumberland Unit 1 Wet FGD Effective Date Cumberland Unit 2 Wet FGD Effective Date Gallatin Unit 1 FGD, Repower to Renewable Biomass, or Retire December 31, 2017
Gallatin Unit 2 FGD, Repower to Renewable Biomass, or Retire December 31, 2017
Gallatin Unit 3 FGD, Repower to Renewable Biomass, or Retire December 31, 2017
Gallatin Unit 4 FGD, Repower to Renewable Biomass, or Retire December 31, 2017
John Sevier 2 Units Retire December 31, 2012
John Sevier 2 other Units Remove from Service December 31, 2012 FGD, Repower to Renewable Biomass, or Retire December 31, 2015
Johnsonville Units 1

- 10 Retire 6 Units by December 31, 2015 4 additional Units by December 31, 2017 Kingston Unit 1 Wet FGD Effective Date Kingston Unit 2 Wet FGD Effective Date Kingston Unit 3 Wet FGD Effective Date32 Plant Unit Control Requirement Date Kingston Unit 4 Wet FGD Effective Date Kingston Unit 5 Wet FGD Effective Date Kingston Unit 6 Wet FGD Effective Date Kingston Unit 7 Wet FGD Effective Date Kingston Unit 8 Wet FGD Effective Date Kingston Unit 9 Wet FGD Effective Date Paradise Unit 1 FGD Upgrade to 93% Removal Efficiency December 31, 2012
Paradise Unit 2 FGD Upgrade to 93% Removal Efficiency December 31, 2012
Paradise Unit 3 Wet FGD Effective Date Shawnee Unit 1 FGD, Repower to Renewable Biomass, or Retire December 31, 2017
Shawnee Unit 4 FGD, Repower to Renewable Biomass, or Retire December 31, 2017
Widows Creek Unit s 1

- 6 Retire 2 Units by July 31, 2013 2 additional units by July 31, 2014 2 additional Units by July 31, 2015 Widows Creek Unit 7 Wet FGD Effective Date
Widows Creek Unit 8 Wet FGD Effective Date

Notwithstanding any requirement specified in the preceding table to Continuously Operate a Wet FGD at Kingston Units 1

- 9, TVA shall not be required to Continuously Operate such Wet FGD(s) until either: (a) TDEC authorizes disposal of gypsum in the Class I I landfill (IDL 73

- 0211) which, as of the Date of Execution of this Compliance Agreement , is prohibited pursuant to TDEC’s Order dated December 17, 2010 in Case No . SWM10

- 0010 or (b) September 20 , 2011, whichever occurs sooner. During the period when this exemption is in effect, TVA shall (a) burn coal at Kingston that achieves a 30

- day rolling average emission rate for SO 2 of no greater than 1.1 lb/mmBTU and (b) operate Kingston only after Bull Run is dispatched first.33 This exemption shall not relieve TV A of its obligation to comply with the 2011 SO2 System

Wide Annual Tonnage Limitation and shall not relieve TVA of any other control requirements relating to Kingston , except as provided in Paragraph 104

. 90. Notwithstanding Paragraph 8 9 , TVA ’ s fa ilure to (a) complete installation and commence Continuous Operation of a pollution control technology by the date speci fied in the table in Paragraph 8 9 or (b) Repower to Renewable Biomass by the date specified in the table in Paragraph 8 9 , shall not be a violation of this Compliance Agreement if such Unit: (i) ceases to operate and emit any pollutants whatsoever at least sixty (60) days before the date speci fied in the table in Paragraph 8 9 , and (ii) the installation is completed and the Unit commen ces Continuous Operation of the pollution control technology speci fied in the table in Paragraph 8 9 or as a Repowered Unit no later than ninety (90) days after the date specified in the table in Paragraph 89 . If TVA fails to commence Continuous Operation of the pollution control technology or the Repowered Unit ninety ( 90 ) days after such date, then TVA shall be subject to stipulated penalties for the entire period commencing on the date speci fied in the Table in Paragraph 8 9

. 91. Upon the Effective Date of this Compliance Agreement, and continuing thereafter, emissions of SO 2 from Shawnee Units 1

- 10 shall not exceed 1.2 lb/mmBTU. Compliance with this limitation shall be demonstrated using the procedures specified in the Clean Air Act operating permit for the Shawnee facility. 92. For TVA System Units with two or more methods specified in the Control Requirement co lumn in the table in Paragraph 8 9 , above, TVA shall provide notice to EPA , the
States , and the Citizen Plaintiffs pursuant to Section X (Notices) of its election as to which of the34 Control Requirement method s it will employ at such Unit by no later than three (3) years prior to the date specified in the Table for that Unit

. For the Units at the John Sevier plant, TVA shall provide notice to EPA, the States, and the Citizen Plaintiffs pursuant to Section X (Notices) of this Complia nce Agreement of its election as to which two (2) Units it will Retire and which two (2) Units it will at least initially Remove from Service, by no later than June 30, 2012. For any TVA System Unit that TVA timely elects to control with FGD or Repower to Renewable Biomass, TVA may change its election to Retire at any time prior to the date specified in the table in Paragraph 8 9. TVA shall provide notice to EPA, the States , and the Citizen Plaintiffs pursuant to Section X (Notices) of its decision to Retire the Unit, with an explanation for its decision to change the election, by no later than ten (10) business days following its decision to change its election from FGD or R epower to Renewable Biomass to Retire. 93. Solely for the Units at the Colbert plant , if TVA elects the Remove from Service option, it shall provide notice to EPA , the States , and the Citizen Plaintiffs pursuant to Section X (Notices) at the time such Units a re required to be Removed from Service as to which method specified in the Control Requirement column in the table in Paragraph 8 9 it will employ at such Unit.
3. Use and Surrender of SO 2 Allowances

. 94. TVA shall not use SO 2 Allowances to comply with any re quirement of this Compliance Agreement, including by claiming compliance with any emission limitation required by this Compliance Agreement by using, tendering, or otherwise applying SO 2 Allowances to offset any excess emissions.35 95. Beginning wi th calendar year 2011 , and continuing each calendar year thereafter, TVA shall surrender all SO 2 Allowances allocated to the TVA System for that calendar year that TVA does not need in order to meet its own federal and/or state Clean Air Act regulatory requirements for the TVA System Units for that calendar year . However, SO 2 Allowances allocated to the TVA System may be used by TVA to meet its own federal and/or state Clean Air Act regulatory requirements for the TVA System Units.
96. Nothing in this Compliance Agreement shall prevent TVA from purchasing or otherwise obtaining SO 2 Allowances from anothe r source for purposes of complying with federal and/or state Clean Air Act regulatory requirements (i.e., emissions trading or marketable permit programs) to the extent otherwise allowed by law.
97. The requirements in this Compliance Agreement pertaining to TVA = s use and surrender of SO 2 Allowances are permanent injunctions not subject to any termination provision of this Compliance Agreement.
4. Super

- Compliance Allowances

. 98. Notwithstanding Paragraph 9 5 , in each calendar year beginning in 2011 , and continu ing thereafter, TVA may sell, bank, use, trade, or transfer any SO 2 Allowances made available in that calendar year as a result of maintaining actual SO 2 emissions from the combined total of (a) the TVA System and (b) any New CC /CT Unit(s) constructed purs uant to Paragraph
12 1 below the System

- Wide Annual Tonnage Limitations for SO 2 for such calendar year ( “ Super

- Compliance Allowances ” ); provided, however, that reduction s in SO 2 emission s that
TVA utilizes as provided in Paragraph 1 2 1 to support the permitt ing of a New CC /CT Unit(s) shall not be available to generate Super

- Compliance Allowances within the meaning of this36 Paragraph in the calendar year in which TVA utilizes such emission reductions and all calendar years thereafter. TVA shall timely report t he generation of all Super

- Compliance SO 2 Allowances in accordance with Section V

. I (Periodic Reporting) of this Compliance Agreement, and shall specifically identify any Super

- Compliance SO 2 Allowances that TVA generates from Retiring a TVA System Unit an d that TVA did not utilize for purposes of Paragraph 1 2 1

. 5. Method for Surrender of SO 2 Allowances.
99. TVA shall surrender all SO 2 Allowances required to be surrendered pursuant to Paragraph 9 5 by April 30 of the immediately following year.
100. For all SO 2 Allowances required to be surrendered, TVA shall first submit an SO 2 Allowance transfer request form to EPA = s Office of Air and Radiation = s Clean Air Markets Division directing the transfer of such SO 2 Allowances to the EPA Enforcement Surrender
Account o r to any other EPA account that EPA may direct in writing. As part of submitting these transfer requests, TVA shall irrevocably authorize the transfer of these SO 2 Allowances and identify

-- by name of account and any applicable serial or other identifica tion numbers or station

names -- the source and location of the SO 2 Allowances being surrendered.
6. SO 2 Monitoring Provisions.
101. TVA shall use CEMS in accordance with 40 C.F.R. Part 75 to monitor its emissions of SO 2 from the TVA System Units and any New C C /CT Unit(s) for purposes of demonstrating compliance with the applicable System

- Wide Annual Tonnage Limitations specified in Paragraph 8 6 of this Compliance Agreement.37 D. PM EMISSION REDUCTIONS AND CONTROLS
1. Optimization of Existing PM Co ntrol Devices.
102. Beginning sixty (60) days after the Effective Date of this Compliance Agreement, and continuing thereafter, TVA shall Continuously Operate each PM Control Device on each Unit in the TVA System. TVA shall, at a minimum, to the extent reasonably practicable and consistent with manufacturers = specifications, the operational design of the Unit, and good engineering practices (a) fully energize each se ction of the ESP for each Unit, and where applicable, operate each compartment of the Bag house (except for a Baghouse compartment that, as part of the original design of the Baghouse when it was first const ructed, is a spare compartment) ; (b) operate automatic control systems on each ESP to maximize PM collection efficiency; and (c) maintain power levels delivered to the ESPs , and where applicable, replace bags as needed on each Baghouse as needed to maximize collection efficienc y. 103. TVA shall complete and submit to EPA for review and approval in accordance with Section V

. J (Review and Approval of Submittals) of this Compliance Agreement , with copies of such submittal to the States and the Citizen Plaintiffs pursuant to Section VIII (Notices) of the Consent Decree, a PM emission control optimization study for each TVA System Unit except for (a) C olbert Unit 5, Paradise Units 1 and 2, and Widows Creek Unit 8, (b) those Units that TVA is required to Retire pursuant to Paragraphs 73 and 89, (c) those Units that TVA elects to Retire pursuant to Paragraphs 7 3 and 8 9 , and (d ) those Units at which TVA ha s installed and commenced Continuous Operation of a new PM Control Device . The PM emission control optimization study shall, for the range of fu els used by the Unit, recommend the best available38 maintenance, repair, and operating practices to optimize the PM Control Device availability and performance in accordance with manufacturers ’ specifications, the operational design of the Unit, and good engineering practices. TVA shall retain a qualified contractor to assist in the performance and completion of ea ch study. TVA shall perform each study and implement the
EPA

- approved recommendations in accorda nce with the following schedule : Date Studies Completed, New PM Control Device s Identified To Be Installed , O r Units Elected To Be Retired Pursuant To Paragrap hs 73 And 89 Recommendations Implemented, New PM Control Device s Installed , O r Units Retired Pursuant To Election As Required By Paragraphs 73 And 89 Individual Year Cumulative Individual Year Cumulative
12/31/2011 6 6 0 0 12/31/2012 8 14 1 1 12/31/2013 6 20 4 5 12/31/2014 6 26 10 15 12/31/2015 3 29 10 25 12/31/2016 4 33 8 33 12/31/2017 4 37 4 37 12/31/2018 0 37 0 37 12/31/2019 0 37 0 37 TVA shall submit each such PM emission control optimization study to EPA for review and approval (in consultation with the States and Citizen Plaintiffs ) pursuant to Section V.J (Review and Approval of Submittals) at least nine (9) months before the date specified in the table in this Paragraph for TVA to implement the recommendations. TVA shall main tain each PM Control Device in accordance with the approved PM emission control optimization study or other alternative actions as approved by EPA (in consultation with the States and the Citizen Plaintiffs ).39 2. PM Emission Rates.
104. No later than the dates set forth in the table below, and continuing thereafter, TVA shall Continuously Operate the PM Control Devices at each Unit identified therein so that each Unit or Units served by a common stack ach ieve and maintain a PM Emission Rate of no greater than 0.030 lb/mmBTU as determined by stack testing:
Plant Unit Date Allen Units 1

- 3 December 31, 2018 Bull Run Unit 1 Effective Date Colbert Unit 5 December 31, 2015 Gallatin Units 1

- 4 December 31, 2017 Kingston Units 1

- 9 Effective Date , subject to the exe mption provided in Paragraph 89 for the Continuous Operation of the Wet FGDs
3. PM Emissions Monitoring.

a. PM Stack Tests

. 105. Beginning in calendar year 201 1 , and continuing in each calendar year thereafter, TVA shall cond uct a PM stack test for filterable PM at each TVA S ystem Unit or Units served by a common stack that combust fossil fuels at any time in that calendar year

. 106. Beginning in calendar year 2011, and continuing for three (3) consecutive calendar years thereaft er, TVA shall conduct a PM stack test for condensable PM at each TVA System Unit or Units served by a common stack that combust fossil fuels at any time in that calendar year

. 107. The annual stack test requirement imposed on each TVA System Unit by this Sectio n may be satisfied by stack tests conducted by TVA as required by its permits from40 Alabama, Kentucky, and Tennessee for any year that such stack tests are required under the permits, provided that reference methods and procedures for performing such stack tests are consistent with the requirements specified in this Compliance Agreement.
108. Filterable PM

. The reference methods and procedures for performing PM stack tests for filterable PM and for determining compliance with the PM Emission Rate shall be the

a pplicable reference methods and procedures specified in the relevan t Clean Air Act permit for the p lant. TVA shall calculate the PM Emission Rate from the stack test results in accordance with 40 C.F.R. § 60.8(f). The results of each PM stack test shall be submitted to EPA , the States , and the Citizen Plaintiffs pursuant to Section X (Notices) of this Compliance Agreement within forty

- five (45) days of completion of each test. 109. Condensable PM

. The reference methods and procedures for performing PM stack tests to monitor condensable PM shall be those specified in 40 C.F.R. Part 51, Appendix M, Method 202. TVA shall calculate the Emission Rate for condensable PM from the stack test results in a ccordance with 40 C.F.R. § 60.8(f). The results of each PM stack test shall be submitted to EPA, the States , and the Citizen Plaintiffs pursuant to Section X (Notices) of this Compliance Agreement within forty

- five (45) days of completion of each test.
110. Although stack testing shall be used to determine compliance with the PM Emission Rate established by this Compliance Agreement, data from PM CEMS shall be used, at a minimum, to monitor progress in reducing PM emissions. b. PM CEMS

. 111. TVA shall install, co rrelate, maintain, and operate PM CEMS as specified below. Each PM CEMS shall comprise a continuous particle mass monitor measuring PM41 concentration, directly or indirectly, on an hourly average basis and a diluent monitor used to convert the concentratio n to units of lb/mmBTU. The PM CEMS installed at each stack, or, at Kingston, installed at each flue within the stack, must be appropriate for the anticipated stack conditions. TVA shall maintain, in an electronic database, the hourly average emission val ues produced by each PM CEMS in lb/mmBTU. Except for periods of monitor malfunction, maintenance, or repair, TVA shall continuously operate the PM CEMS at all times when at least

one Unit it serves is operating

. 112. No later than twelve (12) mo nths after the Effective Date of this Compliance Agreement, TVA shall submit to EPA for review and approval pursuant to Section V

. J (Review and Approval of Submittals) of this Compliance Agreement , with copies of such submittal to the States and the Citize n Plaintiffs pursuant to Section VIII (Notices) of the Consent Decree, a plan for the installation and correlation of each PM CEMS and a proposed Quality Assurance/Quality Control ( “ QA/QC ” ) protocol that shall be followed in correlating such PM CEMS. At T VA ’ s option, and to the extent practicable, TVA may submit one plan and one QA/QC protoco l that shall take into account U nit

- specific measures, as needed, for the PM CEMS required by Paragraphs 1 1 1 and 11 3 . In developing both the plan for installation and correlation of the PM CEMS and the QA/QC protocol, TVA shall use the criteria set forth in 40 C.F.R. Part 60, Appendix B, Performance Specification 11, and Appendix F, Procedure 2. Following approval by EPA (in consultation with the States and the Citize n Plaintiffs ) of the plan ( s ) and protocol (s) , TVA shall thereafter operate each PM CEMS in accordance with the approved plan ( s ) and QA/QC protocol (s)

.42 113. No later than twelve (12) months after the date that EPA approves the plan for installation and correlati on of the PM CEMS and the QA/QC protocol, TVA shall install, correlate, maintain and operate six (6) PM CEMS on stacks at the following Units: Paradise Unit 3, Bull Run Unit 1, Colbert Unit 5, Kingston Units 1

- 9 (one (1) PM CEMS on each flue), and Shawnee Units 1

- 5.
114. In the event that TVA elects to Retire a Unit scheduled to receive a PM CEMS or, with respect to Colbert Unit 5, elects the Remove from Service option, TVA shall locate a PM CEMS (either the same PM CEMS or a new PM CEMS) at an alternate Unit in the TVA System. TVA shall provide notice to EPA, the States , and the Citizen Plaintiffs pursuant to Section X (Notices) of the alternate Unit by no later than three (3) years prior to the date that the Unit specified in Paragraph 11 3 is Retired or Removed from Service. TVA shall comply with all the requirements of this Section for such PM CEMS. The deadline identified in Paragraph 1 1 2 shall be adjusted to twelve (12) months after TVA ’ s notice pursuant to this Paragraph. 115. No later tha n ninety (90) days after TVA begins operation of the PM CEMS, TVA shall conduct tests of each PM CEMS to demonstrate compliance with the PM CEMS installation and correlation plan ( s ) and QA/QC protocol (s) . Within forty

- five (45) days of each such test, TVA shall submit the results to EPA , the States , and the Citizen Plaintiffs pursuant to Section X (Notices) of this Compliance Agreement.
116. When TVA submits the applications for amendments to its Title V Permits pursuant to Paragraph 1 6 4 , those applications shal l include a Compliance Assurance Monitoring (“CAM”) plan, under 40 C.F.R. Part 64, for the PM Emission Rate specified in Paragraph 10 4

.43 The PM CEMS required by Paragraphs 1 1 1 and 11 3 may b e used in that CAM plan for Bull Run Unit 1, Colbert Unit 5, and Ki ngston Units 1

- 9

.

c. PM Reporting

. 117. Within one hundred eighty (180) days after the date established by this Compliance Agreement for TVA to achieve and maintain a PM Emission Rate at any TVA System Unit, TVA shall conduct a stack performanc e test for PM that demonstrates compliance with the Emission Rate required by this Compliance Agreement. Within forty

- five (45) days of the performance test, TVA shall submit the results of the performance test to EPA , the States , and the Citizen Plaintif fs pursuant to Section X (Notices) of this Compliance Agreement. TVA may use the annual stack test requirement established in Paragraph 10 5 , above, to satisfy its obligation to conduct a performance test as required by this Paragraph.
118. Following the installation of each PM CEMS, TVA shall begin and continue to report, pursuant to Section V

. I (Periodic Reporting), the data recorded by the PM CEMS, expressed in lb/mmBTU on a three

- hou r (3

- hour) rolling average basis and a twenty

- four

- hour (24

- hour) rolling average basis in electronic format to EPA, the States , and the Citizen Plaintiffs
in cluding identification of each 3

- hour average and 24

- hour average above the applicable PM Emission Rate for Bull Run Unit 1 , Colbert Unit 5, and Kingston Units 1

- 9, as required by Paragraph 10 4

. E. PROHIBITION ON NETTING OR OFFSETS FROM REQUIRED CONTROLS 119. Emission reductions that result from actions to be taken by TVA after the Effective Date of this Compliance Agreement to comply with the requirements of th is Compliance Agreeme nt shall not be considered as creditable contemporaneous emission44 decrease s for the purpose of netting or offset under the Act = s PSD and Nonattainment NSR
programs (including any applicable SIP provisions)

. 120. The limitations on the gene ration and use of netting credits and offsets set forth in the previous Paragraph do not apply to emission reductions achieved at a particular TVA System Unit that are greater than those required under this Compliance Agreement for that particular TVA Syst em Unit. For purposes of this Paragraph, and except as ot herwise provided in Paragraph 54 , emission reductions achieved at a particular TVA System Unit are greater than those required under this Compliance Agreement only if they result from the actions described in Subparagraphs 120.a and/or 120 .b, below :

a. controlling Shawnee Units 2, 3, 5, 6, 7, 8 and/or 9 to reduce emissions of NO x and/or SO 2 beyond t he requirements of Paragraphs 75 and 91 of this Compliance Agreement through a federally

- enforceable emission limitation , provided that TVA is not otherwise required by the Act or the applicable SIP to control such Units to reduce emissions of NO x and/or SO 2 , or b. for emission reductions of NO x , except for Shawnee Unit 10, Retiring a TVA Sy stem Unit that does not have the Retire option in the Control Requirement c olumn in the Table
in Paragraph 73 , except to the extent that TVA Retires such Unit as Additio nal MW pursuant to Paragraph 123 .b, and provided that TVA is not otherwise required by the Act or the applicable SIP to Retire such Unit ; and for emission reductions of SO 2 , except for Shawnee Unit 10, Retiring a TVA System Unit that does not have the Retire option in the Control Requirement column in the Table in Paragraph 89 , except to the extent that TVA Retires such Unit as Additio nal MW pursuant to Paragraph 123 .b, and provided that TVA is not othe rwise required by the Act or the applicable SIP to Retire such Unit

.45 121. Notwithstanding Paragraph 119 , TVA may utilize emission reductions of NO x , SO 2 , VOCs, and PM resulting solely from Retiring up to two thousand seven hundred ( 2,700 ) MW from the TVA System, as creditable contemporaneous emission decreases for the purpose of obtaining netting credits for these four pollutants to construct and ope rate no more than a total of four thousand ( 4,000 ) MW of new combined cycle (“CC”) combustion turbine electric generating units (“New CC Units”) and simple cycle (“CT”) turbine electric generating units (“New CT Units”) ( collectively referred to herein as “New C C/CT Units”) to be located at the stationary source where a TVA System Unit is Retired, subject to the limitations described in this Paragraph and S ubparagraphs

. Of the total 4,000 MW specified herein, TVA shall not construct more than a total of tw o thousand ( 2,000 ) MW of CT capacity.

a. The emission reductions of NO x , SO 2 , VOC, and PM resulting from Retiring a TVA System Unit that TVA intends to utilize for netting purposes to avoid major NSR for such New CC/CT Unit must be contemporaneous and otherwise creditable within the meaning of the Act and the applicable SIP, and TVA must comply with, and is subject to, all requirements and criteria for creating contemporaneous creditable decreases as set forth in 40 C.F.R. § 52.21(b) and the applicable SIP, subject to the limitations of this Paragraph 121. b. TVA must apply for, and obtain, minor NSR permits for the construction and operation of such New CC /CT Unit(s) from the relevant permitting authority . S uch minor NSR permit must include federally

- e nforceable emission limitations that reflect either Best Available Control Technology ( “ BACT ” ) or Lowest Achievable Emiss ion Rate ( “ LAER ” ), as appropriate, depending upon the attainment classification for the relevant regulated pollutants for which TVA is utilizing emission reductions as provided in this Paragraph to net out of major new source46 review and that will be emitted from such New CC /CT Unit(s) (including NO x , SO 2, and PM regulated as primary criteria pollutants and NO x , SO 2 , and VOCs r egulated as precursor pollutants to the formation of the criteria pollutants PM 2.5 and Ozone) in the area where such
New CC /CT Units will be located. The relevant permitting authority where the New CC /CT Units will be constructed shall determine emission limitations for NO x , SO 2 , VOCs, PM, PM 10 and PM 2.5 that reflect BACT or LAER, as appropriate, consistent with Sections 165(a)(4), 169(3), 171(3), and 173(a)(2) of the Act, 42 U.S.C. §§ 7475(a)(4), 7479(3), 7501(3), and 7503(a)(3); 40 C.F.R. §§ 52.21(b)(12) and 51.165(a)(1)(xiii); the applicable SIP; and relevant EPA guidance and/or interpretations pertaining to determining BACT and LAER, including
EPA ’ s “New Source Review Workshop Manual

– Prevention of Significant Deterioration an d Nonattainment Area Permitting ” (Draft Oct

. 1990). In no event shall the emission limitations determined by the relevant permitting authority for NO x , SO 2 , VOC, and PM 2.5 (filterable) be any less stringent than the emission limitations set forth in Appendix B to this Compliance Agreem ent. The emission limitations set forth in Appendix B serve solely as the minimum stringency for emission limitations that will be determined by the relevant permitting authority for such New CC /CT Units and shall not be presumed to be BACT or LAER. Alt hough the permitting authority as part of the permitting action described in this Paragraph shall not determine BACT or LAER to be less stringent than the emission limitations set forth in Appendix B , n othing in this Compliance Agreement (including Appendi x B ) shall prevent the permitting authority from establishing more stringent emission limi tations than those set forth in Appendix B

. For purposes of the permitting action described in this Paragraph, TVA shall not assert that this Compliance Agreement (i ncluding Appendix B ) supports imposing a BACT or47 LAER emission limitation that is no more stringent than the emission limitations set forth in Appendix B

.

c . For the minor NSR permitting action specified in Subp aragraph 121 .a , above, t he relevant permitting authority shall comply with the public participation requirements in its SIP
f

or major NSR permitting actions, including: A la. Admin. Code r. 335

- 3

- 14

- .01(7) for permitting actions in Alabama, 401 K y. A dmin. R egs. 52:100 for perm itting actions in Kentucky, and Tenn. Comp. R. & Regs. 1200

- 3

- 9

- .01(4)(l) for permitting actions in Tennessee. TVA shall provide notice and a copy of its permit application to EPA , the States , and the Citizen Plaintiffs pursuant to Section X (Notices) concurrent with its permit application submission to the relevant permitting authority. d

. All emissions of NO x and SO 2 from any New CC /CT Unit(s) where TVA has utilized netting credits in order to construct such New CC /CT Unit as provided in this Paragraph, shall be treated as emissions from a TVA System Unit solely for purpos es of the System

- W ide Annual Tonnage Limitations for NO x and SO 2 and such emissions of NO x and SO 2 from the New
CC /CT Unit(s) are therefore subject to, and shall be included under, the System

- W ide Annual Tonnage Limitations for NO x and SO 2 for the relevant calendar year(s) as specified in the tables in Paragraphs 7 1 and 8 6

.

e . Nothing in this Paragraph affects the U nit

- specific schedule specified in the tables in Paragraphs 7 3 and 8 9 for each TVA System Unit.
122. For every emission reduction of NO x and SO 2 that TVA utilizes as provided in Paragraph 1 2 1 to construct a New CC /CT Unit(s), such reduction shall not be available to generate Super

- Compliance Allowances within the meaning of Paragraphs 8 2 and 98 in the48 calendar year in which TVA utilizes such emission reductions and all calendar years thereafte r. In the next p eriodic progress r eport required pursuant to Section V.I (Periodic Reporting), TVA shall report the amount of emission reductions of NO x and the amount of emission reductions of
SO 2 resulting from Retiring a TVA System Unit that TVA utilized as netting cred its as provided in Paragraph 12 1 to construct a New CC /CT Unit(s).
123. Notwithstanding Paragraph 119 , TVA may utilize emission reductions of Greenhouse Gases resulting solely from Retiring a TVA System Unit as creditable contemporaneous emission decreases for the pu rpose of obtaining netting credits for Greenhouse
Gases to construct and operate no more than a total of four thousand ( 4,000 ) MW of New CC Units to be located at the stationary source where a TVA System Unit is Retired, subject to the limitations described in this Paragraph and Subparagraphs 123.a through 123.c, below.

a. The emission reductions of Greenhouse Gases resulting from Retiring a TVA System Unit that TVA intends to utilize for netting purposes to avoid major NSR for such New CC Unit must be contemporaneous and otherwise creditable within the meaning of the Clean Air Act and the applicable SIP, and TVA must comply with, and is subject to, all requirements and criteria for creating contemporaneous creditable decreases as set forth in 40 C.F .R. § 52.21(b) and the applicable SIP, subject to the limitations of this Paragraph. b. For every one (1) MW of New CC Unit capacity that TVA proposes to construct and operate by utilizing Greenhouse Gas emission reductions to avoid major NSR for such New CC Unit, TVA shall Retire at least one (1) MW from the TVA System that is above and beyond the 2,728.8 MW that TVA is required to Retire pursuant to Paragraphs 73 and 89 (referred to herein as “Additional MW”). TVA shall Retire such Additional MW from th e TVA System49 either within one (1) year from the date the New CC Unit commences operation or by no later than the date set for th in the table in Paragraphs 73 and 89 for the TVA System Unit that TVA is Retiring pursuant to this Paragraph, whichever is soon er. Emission reductions resulting from Retiring such Additional MW are subject to Paragraph 119

.

c. Greenhouse Gas emission reductions resulting from Retiring a TVA System Unit may only be available to TVA for netting purposes to avoid major NSR permittin g requirements for Greenhouse Gases for the construction and operation of a New CC Unit if TVA satisfies the following requirements: (i) TVA must apply for a minor NSR permit described in Paragraph 121 for the construction and operation of such New CC Uni t by no later than June 30, 2012, (ii) TVA must commence construction of the New CC Unit that is the subject of such minor NSR permit application by no later than January 1, 2015, and (iii) by no later than thirty (30) days after the date TVA commences con struction of such New CC Unit, TVA must provide notice pursuant to Paragraphs 76 and 92 as to which TVA System Unit(s) TVA will Retire in order for TVA to Retire the requ isite Additional MW.
124. Nothing in this Compliance Agreement shall prevent anyone, incl uding EPA , the States, and the Citizen Plaintiffs from submitting comments during the publ ic comment period specified in Subp aragraph 12 1 .b regarding the emission limitations developed by the permi tting authority as required by Subp aragraph 12 1 .a, includin g comments regarding the stringency of the emission limitations prescribed in Appendix B , or taking any other lawfully permissible action to challenge any permitting authority ’ s determination pursuant to Subp aragraph 12 1 .a or the minor NSR permitting actio n for such New CC /CT Units.50 125. Nothing in this Compliance Agreement is intended to preclude the emission reductions generated under this Compliance Agreement from being considered by EPA or Alabama, Kentucky, or Tennessee for the purpose of attainment demo nstrations submitted pursuant to § 110 of the Act, 42 U.S.C. § 7410, or in determining impacts on NAAQS, PSD increment, or air quality related values, including visibility, in a Class I area.
F. ENVIRONMENTAL MITIGATION PROJECTS 126. TVA shall implement the Environmental Mitigation Projects (“Projects”) described in Appendix C to this Compliance Agreement, in compliance with the approved plans and schedules for such Projects and other terms of this Compliance Agreement

. These Projects will result in a further reduction of NO x , SO 2 , and PM emissions, and additionally will have the collateral benefit of reducing Greenhouse Gases. In implementing the Projects described in Appendix C , TVA shall spend no less than $290 million in Project D ollars and pay no less than $60 million to the States to fund Projects described in Section III.F of the Consent Decree

. 127. TVA shall implement the Projects described in Appendix C b y no later than five (5) years f rom the date of plan approval, as specified i n Appendix C

. 128. TVA shall maintain, and present to the EPA upon request, all documents to substantiate the Project Dollars expended and shall provide these documents to EPA within thirty (30) days of a request by EPA for the documents. 129. All plans and reports prepared by TVA pursuant to the requirements of this Section of the Compliance Agreement and required to be submitted to EPA shall be publicly available from TVA without charge.51 130. TVA shall certify, as pa rt of each plan submitted to EPA for any Proje ct, that TVA is not otherwise required by law to perform the Project described in the plan, that TVA is unaware of any other person who is required by law to perform the Project as of the Effective Date of this Compliance Agreement, and that TVA will not u se any Project, or portion thereof, to satisfy any existing obligations as of the Effective Date of this Compliance Agreement that it may have under other applicable requirements of law, including any applicable renewable or energy efficiency portfolio sta ndards.
131. TVA shall use good faith efforts to secure as much benefit as possible for the Project Dollars expended, consistent with the applicable requirements and limits of this Compliance Agreement. TVA shall describe the expected emissions reduced or avoi ded for all air pollutants, so that EPA can evaluate the benefits of the proposed projects as part of the plan approval process.
132. If TVA elects (where such an election is allowed) to undertake a Project by contributing funds to another person or entity that will carry out the Project in lieu of TVA, but not including TVA ’ s agents or contractors, that person or instrumentality must, in writing: (a) identify its legal author ity for accepting such funding and (b) identify its legal authority to conduct the Proj ect for which TVA contributes the funds. Regardless of whether TVA elected (where such election is allowed) to undertake a Project by itself or to do so by contributing funds to another person or instrumentality that will carry out the Project, TVA acknow ledges that it will receive credit for the expenditure of such funds as Project Dollars only if TVA demonstrates that the funds have been actually spent by either TVA or by the person or instrumentality receiving them, and that such expenditures met all re quirements of this Compliance Agreement.52 133. Beginning on the date of each plan submission required pursuant to Appendix C , and continuing until completion of each Project (including any applicable periods of demonstration or testing), TVA shall provide EPA wi th semi

- annual reports detailing the progress of each Appendix C Project and the disbursement of funds pursuant to Section III.F of the Consent Decree

. 134. Within sixty (60) days following the completion of each Project required under this Compliance Agreement (including any applicable periods of demonstration or te sting), TVA shall submit to EPA a report that documents the date that the Project was completed, TVA ’ s results of implementing the Project, including the emission reductions or other environmental be nefits achieved, and the Project Dollars expended by TVA in implementing the Project.
G. CIVIL PENALTY 135. TVA shall pay a total of $10,000,000 in civil penalties as further described in this
Section.
136. Pursuant to, and as specified in , Paragraph 91 of the Consent Agreement and Final Order in In re Tennessee Valley Auth

. , Docket No. CAA

- 04

- 2010

- 1528(b), TVA shall pay the sum of $8,000,000 in civil penalties to EPA.
137. Pursuant to, and as specified in, Paragraph 131 of the Consent Decree, TVA shall pay a to tal of $2,000,000 in civil penalties to Alabama, Kentucky, and Tennessee as follows: $1,000,000 to Tennessee, $500,000 to Alabama, and $500,000 to Kentucky.53 H. RESOLUTION OF CLAIMS AGAINST TVA
1. Resolution of EPA ’ s Claims.
138. Claims based on modificati ons occurring before th e Date of Execution of this Compliance Agreement

. This Compliance Agreement shall resolve all administrative claims of EPA against TVA, and, subject to t he reservation in Paragraph 3, EPA covenants not to refer civil claims against TVA to the Department of Justice, arising from any modifications commenced at any TVA System Unit prior to the Date of Execution of this Compliance Agreement, except for claims base d upon the regulated pollutant sulfuric acid m ist, including but not limite d to, those mo difications alleged in Section I V of this Compliance Agreement under any or all of:

a. Sections 165 and 173 of Parts C and D of Subchapter I of the Act, 42 U.S.C. §§ 7475 and 7503, and the implementing PSD and Nonattainment NSR provisions o f the relevant SIPs ; b. Section 111 of the Act, 42 U.S.C. §§ 7411, and 40 C.F.R. §§ 60.14 and 60.15 ;

c. Sections 502(a) and 504(a) of the Act, 42 U.S.C. §§ 7661a(a) and 7661c(a), but only to the extent that such claims are based on TVA’s failure to obtain an operating permit that reflects applicable requirements imposed under the PSD and Nonattainment NSR provisions of Subchapter I or Section 111 of the Act ; and d

. The federally approved and enforceable minor NSR programs of Alabama,
Kentu cky, and Tennessee.54 The claims resolved for purposes of this Paragraph under Parts C or D of Subchapter I of the Act shall not include claims based upon Greenhouse Gases

. 139. Claims based on modifications occurring after th e Date of Execution of this Complian ce Agreement . This Compliance Agreement also shall resolve all administrative claims of EPA against TVA, and, subject to the reservation in Paragraph 3 , EPA covenants not to refer civil claims against TVA to the Department of Justice, that arise from a m odification commenced before June 30 , 2019, for pollutants regulated under Parts C or D of Subchapter I of the Act and under regulations promulgated thereunder as of the Date of Execution of this
Co mpliance Agreement, except for s ulfuric acid m ist and PM a s provided below, and:

a. where such modification is commenced at any TVA System Unit after the Date of Execution of this Compliance Agreement; or b. where such modification is one that this Compliance Agreement expressly directs
TVA to un dertake. This Compliance Agreement does not resolve any such claims based upon modifications for

s ulfuric a cid m ist at any TVA System Unit or for PM at any TVA System Unit that is not subject to a PM Emission Rate pursuant to Paragraph 10 4 . The claims res olved for purposes of this Paragraph under Parts C or D of Subchapter I of the Act shall not include claims based upon Greenhouse Gases

. 140. Reopeners

. The resolution of EPA = s claims against TVA, as provided by this Subsection 1, is subject to the provisions of Subsection 2 of this Section.55 2. Pursuit by EPA of Claims Otherwise Resolved by Subsection 1.
141. Bases for Pursuing Resolved Claims for the TVA System

. If TVA violates a System

- Wide Annual Tonnage Limitation required pursuant to Paragraph 7 1 (as ad justed, as applicable, by Paragraph 7 2 ) or Paragraph 8 6 (as adjusted, as applicable, by Paragraph 8 7 ) , or operates a Unit more than ninety (90) days past a date established in this Compliance Agreement without completing the required installation, upgrade, Repowering, Retirement, or commencing Continuous Operation of any pollution control device required pursuant to Paragraphs 7 3 or 8 9, or operates 2 Units at the John Sevier plant and/ or Colbert Units 1, 2, 3, 4, and/or 5 ninety ( 90 ) days past the date established in this Compliance Agreement for such Units to be Removed from Service, then EPA may pursue any claim at any TVA System Unit that is otherwise resolved under Subsection 1 (Resolution of EPA = s Claims), subject to a and b, bel ow.

a. For any claims based on modifications undertaken at an Other Unit ( i.e. , any Unit at the Shawnee Plant that is not an Improved Unit for the pollutant in question), claims may be pursued only where the modification(s) on which such claim is based was commenced within the five (5) years preceding the violation or failure specified in this Paragraph. b. For any claims based on modifications undertaken at an Improved Unit, claims may be pursued only where the modification(s) on which such claim is based was commenced (i) after the Date of Execution this Compliance Agreement and (ii) within the five (5) years preceding the violation or failure specified in this Paragraph.
142. Additional Bases for Pursuing Resolved Claims for Modifications at an Improved Unit. Solely with respect to an Improved Unit, EPA may also pursue claims arising from a modification (or collection of modifications) at an Improved Unit that has otherwise been56 resolved under Subsection 1 (Resolution of EPA = s Claims), if the mo dification (or collection of modifications) at the Improved Unit on which such claims are based (a) was commenced after the Date of Execution of this Compliance Agreement, and (b) individually (or collectively) increased the maximum hourly emission rate of that Unit for NO x and/ or SO 2 (as measured by 40
C.F.R. §§ 60.14(b) and (h) ) by more than ten percent ( 10%). 143. Additional bases for pursuing resolved claims for modifications at Other Units. Solely with respect to Other Units, EPA may also pursue claims arising from a modification (or collection of modifications) at an Other Unit that has otherwise been resolved under Subsection 1 (Resolution of EPA = s Claims), if the modification (or collectio n of modifications) at the Other Unit on which the claim is based was commenced within the five (5) years preceding any of the following events:

a. a modification (or collection of modifications) at such Other Unit commenced after the Date of Execution of this Compliance Agreement increases the maximum hourly emission rate for such Other Unit for the relevant pollutant (NO x or SO 2 ), as measured by 40
C.F.R. § 60.14(b) and (h); b. the aggregate of all Capital Expenditures made at such Other Unit exceed $150 /KW on the Unit = s Boiler Island (based on the generating capacities identified in Paragraph
6 7 ) during the period from the Date of Execution of this Compliance Agreement through December 31, 2014, and the period from January 1, 2015 through December 31, 20 19. (Capital Expenditures shall be measured in calendar year 2009 constant dollars, as adjusted by the
McGraw

- Hill Engineering News

- Record Construction Cost Index); or57 c. a modification (or collection of modifications) at such Other Unit comme nced after the Date of Execution of this Compliance Agreement results in an emissions increase of
NO x and/or SO 2 at suc h Other Unit, and such increase (i) presents, by itself, or in combination with other emissions or sources, “ an imminent and substantial endangerment ” within the meaning of Section 303 of the Act, 42 U.S.C. § 7603; (ii) causes or contributes to violation of a NAAQS in any Air Quality Control Area that is in attainment with that NAAQS; (iii) causes or contributes to violation of a PSD increme nt; and/ or (iv) causes or contributes to any adverse impact on any formally

- recognized air quality related values in any Class I area. The introduction of any new or changed NAAQS shall not, standing alone, provide the showing needed under Subparagraphs ( c)(ii) or (c)(iii) to pursue any claim for a modification at an Other Unit resolved under Subsection 1 of this Section.
I. PERIODIC REPORTING
144. Beginning six (6) months after the Effective Da te of this Compliance Agreement and continuing annually on April 30 each year thereafter until conditional termination of enforcement through this Compliance Agreement as provided in Paragraph 2 1 3 , and in addition to any other express reporting requirement in this Compliance Agr eement, TVA shall submit to EPA, the State s , and the Citizen Plaintiffs a progress report in compliance with Appendix A

. 145. In any periodic progress report submitted pursuant to this Section, TVA may incorporate by reference information previously submitted under its Title IV and/ or Title V permitti ng requirements, provided that TVA attaches the Title IV and/or Title V permit report, or the relevant portion thereof, and provides a specific reference to the provisions of the Title IV58 and/or Title V permit report that are responsive to the information required in the periodic progress report. 146. Other express reporting requirements. In addition to the annual progress reports required pursuant to Paragraph 144 and Appe ndix A , TVA shall submit to EPA, the States , and the Citizen Plaintiffs the information o therwise required by this Compliance Agreement in the manner and by the dates set forth herein, including but not limited to, the information required by Paragraphs 7 6 , 7 7 , 88 , 9 2 , 9 3 , 108, 109, 11 4 , 11 5 , 11 7 , 14 7 , 15 6 , 167 , and 19 2 and Subparagraph
12 1 .c . 147. In addition to the progress reports required pursuant to this Section, TVA shall provide a written report to EPA , the States , and the Citizen Plaintiffs of any violation of the requirements of this Compliance Agreement within fifteen (15) day s of when TVA knew or should have known of any such violation. In this report, TVA shall explain the cause or causes of the violation and all measures taken or to be taken by TVA to prevent such violations in the future and measures taken or to be taken t o mitigate the environmental effects of such violation, if any.
148. Each report shall be signed by TVA = s Vice President of Environmental Permitting and Compliance or his or her equivalent or designee of at least the rank of Vice President, and shall contain th e following certification: This information was prepared either by me or under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my evaluati on, or the direction and my inquiry of the person(s) who manage the system, or the person(s) directly responsible for gathering the information, I hereby certify under penalty of law that, to the best of my knowledge and belief, this information is true, a ccurate,59 and complete. I understand that there are significant penalties for submitting false, inaccurate, or incomplete information to EPA.
J. REVIEW AND APPROVAL OF SUBMITTALS 149. Whenever a plan, report, or other submission required by this Compliance Agreement is required to be submitted to EPA for review or approval pursua nt to this Compliance Agreement , EPA (in consultation with the States and the Citizen Plaintiffs ) may approve the submittal or decline to approve it and provide written comments explaining the basis for declining such approval. Within sixty (60) days of receiving written comm ents from EPA, TVA shall either (a) revise the submittal consistent with the written comments and provide the revised submittal to EPA with copies to the States and the Citizen Plaintiffs pursuant to Section X (Notices) of this Compliance Agreement ; or (b) submit the matter for dispute resolution pursuant to Section VI II (Dispute Resolution) of th is Compliance Agreement. 150. Upon receipt of EPA = s final approval of the submittal, or upon completion of dispute resolution pursuant to Section VIII (Dispute Resolution) of this Compliance Agreement , and, if applicable, dispute resolution under Section VI (D ispute Resolution) of the Consent Decree as provided by Section IV (Coordination of Oversight and Enforcement) of the Consent Decree, TVA shall implement the approved submittal in accordance with the schedule specified therein , or if subject to dispute res olution pursuant to Section VI (Dispute Resolution) of this Consent Decree as provided by Section IV (Coordination of Oversight and Enforcement) of the Consent Decree, a schedule established by the Court

.60 K. STIPULATED PENALTIES 151. For any failure by TVA to comply with the terms of this Compliance Agreement, and subject to the provisions of Sections V II (Force Majeure) and VI II (Dispute Resolution) of this Compliance Agreement, and Section IV (Coordination of Oversight and Enforcement) of the
Consent Decree , TVA shall pay, within thirty (30) days after receipt of written demand to TVA by EPA, the follo wing stipulated penalties :

Compliance Agreement Violation Stipulated Penalty
a. Failure to pay the civil penalty as specified in Section V

. G (Civil Penalty) of this Compliance Agreement $10,000 per day
b. Failure to comply with any applicable PM Emission Rate where the violation is less than five percent ( 5% ) in excess of the limits set forth in this Compliance Agreement $2,500 per day per violation

c. Failure to comply with any applicable PM Emission Rate where the violation is equal to or greater than five percent ( 5% ) but less than ten percent ( 10% ) in excess of the limits set for th in this Compliance Agreement $5,000 per day per v iolation

d. Failure to comply with any applicable PM Emission Rate where the violation is equal to or greater than ten percent ( 10% ) in excess of the limits set for th in this Compliance Agreement $10,000 per day per violation

e. Failure to comply w ith an applicable System

- Wide Annual Tonnage Limitation for SO 2 set forth in this Compliance Agreement $5,000 per ton for the first 1 , 000 tons, and $10,000 per ton for each additional ton above 1 , 000 tons, plus the surrender of SO 2 Allowances in an amount equal to two (2) times the number of tons by which the limitation was exceeded.61 Compliance Agreement Violation Stipulated Penalty

f. Failure to Remove from Service as required by Pa ragraphs 73 and 89 of this Compliance Agreement any one or more of the following Units: the two (2) Units at the John Sevier plant that TVA indicated pursuant to Paragraphs 73 and 89 that it will Remove from Service and Colbert Units 1

- 5 $10,000 per day per violation during the first thirty ( 30 ) days, $37,500 per day per violation thereafter

g. Failure to comply with an applicable System

- Wide Annual Tonnage Limitation for NO x set forth in this Compliance Agreement $5,000 per ton for the first 1 , 000 tons, and $10,000 per ton for each additional ton above 1 , 000 tons, plus the surrender of annual NO x Allowances in an amount equal to two (2) times the number of tons by which the limitation was exceeded. h. Failure to comply with the requirements for NO x or SO 2 in Paragraphs 7 5 or 9 1 of this Compliance Agreement $2,500 per day per violation

i. Failure to provide notice as required by Paragraphs 7 6 , 7 7, 88 , 9 2 , and/ or 9 3 of this Compliance Agreement $1,000 per day for the first fifteen ( 15 ) days, $15,000 per day for each day thereafter j. Failure to install, commence operation of , and/or Continuously Operate a pollution control technology as required by Paragraphs 7 3 , 8 9, and/ or 10 2 of this Compliance Agreement $10,000 per day per violation during the first thirty ( 30 ) days, $37,500 per day per violation thereafter k. Failure to Retire or Repower a Unit as required by Paragraphs 7 3 and 8 9 of this Compliance Agreement $10,000 per day per violation during the first thirty ( 30 ) days, $37,500 per day per violation thereafter l. Failure to comply with the PM optimiz ation requirements of Paragraph 10 3 of this Compliance Agreement $2,500 per day per violation during the first thirty ( 30 ) days, $7,500 per day per violation thereafter

m . Failure to install and/ or operate CEMS as required under this Compliance Agreement $1,000 per day per violation62 Compliance Agreement Violation Stipulated Penalty
n. Failure to conduct stack tests for PM as required under this Compliance Agreement $1,000 per day per violation
o. Failure to apply for any permit required under this Compliance Agreement $1,000 per day per violation
p. Failure to timely submit, modify, and/ or implement, as approved, the reports, plans, studies, analyses, protocols, and/ or other submittals required by this Compliance Agreement $750 per day per violation during the first ten (10) days, $1,000 per day per violation thereafter q. Using, selling, banking, trading, or transferring SO 2 Allowances except as permitted under this Compliance Agreement The surrender of SO 2 Allowances in an amount equal to four (4) times the number of SO 2 Allowances used, sold, banked, traded, or transferred in violation of this Compliance Agreement r. Failure to surrender SO 2 Allowances as required under this Compliance Agreement (a) $37,500 per day plus (b) $1,000 per allowance not surrendered s. Using, selling, banking, trading, or transferring NO x Allowances except as permitted under this Compliance Agreement The surrender of NO x Allowances in an amount equal to four (4) times the number of NO x Allowances used, sold, banked, traded, or trans ferred in violation of this Compliance Agreement t. Failure to surrender NO x Allowances as required under this Compliance Agreement (a) $37,500 per day plus (b) $1,000 per allowance not surrendered u. Using emission reductions from Retiring a TVA System Unit except as provided in Paragraph s 119 and 12 0 of this Compliance Agreement $2,500 per day per violation during the first 30 days, $10,000 per day per violation thereafter v. Failing to comply with the requirements of Paragraph 12 1 of this Compliance Agreement if TVA uses emission reductions from Retiring a TVA System Unit to construct a New CC/CT Unit $2,500 per day per violation during the first thirty ( 30 ) days, $10,000 per day per violation thereafter63 Compliance Agreement Violation Stipulated Penalty w. Failing to comply with the requirements of Paragraph 123 of this Compliance Agreement if TVA uses emission reductions in Greenhouse Gases to construct a New CC Unit $2,500 per day per violation during the first thirty (30) days, $10,000 per day per vio lation thereafter

x . Failure to implement any of the Environmental Mitigation Projects in compliance with Section V

. F (Environmental Mitigation Project s) of this Compliance Agreement $5,000 per day for the first thirty ( 30 ) days, $10,000 per day for ea ch day thereafter

y . Any other violati on of this Compliance Agreement $1,000 per day per violation
152. All stipulated penalties shall begin to accrue on the day after the performance is due or on the day a violation occurs, whichever is applicable, and shall continue to accrue until performance is satisfactorily completed or until the violation ceases, whichever is applicable. Nothing in this Compliance Agreement shall prevent the simultaneous accrual of separate stipulated penalties for separate violations of this Compliance Agreement. 153. TVA shall pay all stipulated penalties within thirty (30) days of receipt of written demand to TVA from EPA, and shall continue to make such payments every thirty (30) days thereafter until the violation(s ) no longer continues, unless TVA elects within fifteen (15 ) business days of receipt of written demand to TVA from EPA to dispute the accrual of stipulated penalties in accordance with the provisions in Section V II I (Dispute Resolution) of this Compliance Agreement. 154. Stipulated penalties shall continue to accrue as provided in accordance with Paragraph 1 5 2 during any dispute, with interest on accrued stipulated penalties payable and calculated at the rate established by the Secretary of the Treasury, pursua nt to 28 U.S.C. § 1961, but need not be paid until the following:64 a. If the dispute is resolved by agreement through the Negotiation Period of Paragraph 1 8 2 of this Compliance Agreement, accrued stipulated penalties agreed or determined to be owing, toget her with accrued interest, shall be paid within thirty (30) days of the effective date of the agreement; b. If the dispute is resolved by the Region 4 Air Director pursuant to Paragraph 1 8 2 and the Region 4 Air Director issues a decision in whic h EPA prevails in whole or in part, TVA shall, within sixty (60) days of receipt of the decision, pay all accrued stipulated penalties determined to be owing, together with interest accrued on such penalties determined to be owing. 155. Notwithstanding any othe r provision of this Compliance Agreement, the accrued stipulated penalties agreed to by EPA and TVA, or determined th rough Dispute Resolution, to be owing may be less than the stipulated penalty amounts set forth in Paragraph 1 5 1

. 156. Monetary sti pulated penalties due and owing to EPA shall be paid by Electronic Funds Transfer (“EFT”) in accordance with current EFT procedures, referencing Docket No

. CAA

- 04

- 2010

- 1760 . The costs of such EFT shall be TVA ’ s responsibility. Payment shall be made in ac cordance with instructions provided to TVA by EPA. Any funds received after 2:00
p.m. EST or EDT , as appropriate, shall be credited on the next business day. At the time of payment, TVA shall provide notice of payment to EPA, referencing all relevant cas e names and case numbers in accordance with Section X (Notices) of this Compliance Agreement. Monetary stipulated penalties due and owing to a State shall be paid in the manner set forth in the Consent Decree for the relevant State. All SO 2 and NO x Allow ance surrender stipulated penalties shall65 comply with the allowance surrender procedures set forth in Paragraphs 8 4 (for NO x ) and 10 0 (for SO 2 ). 157. Should TVA fail to pay a stipulated penalty, EPA shall be entitled to collect interest on such stipulated penal ties, as provided for in 31 U.S.C. § 3717

. 158. The stipulated penalties provided for in this Compliance Agreement shall be in addition to any other rights, remedies, or sanctions available to EPA by reason of TVA = s failure to comply with any requirement of thi s Compliance Agreement or applicable law, except that for any violation of the Act for which this Compliance Agreement provides for payment of a stipulated penalty, TVA shall be allowed a credit for stipulated penalties paid against any statutory penalties also imposed for such violation. 159. EPA shall share the payment of a stipulated penalty with Alabama, Kentucky, and Tennessee where the violation giving rise to payment of a stipulated penalty is also a violation of a Parallel Provision of the Consent Decree . EPA shall instruct TVA in the written demand issued pursuant to Paragraph 15 1 as to the amount to be paid to EPA and the amount to be paid to the relevant State(s). Where the violation of a Parallel Provision is facility specific, payment of any stipul ated penalty amount shall be made 50% to EPA and 50% to the State where such facility is located. Where a violation of a Parallel Provision is not facility specific, payment of any stipulated penalty amount shall be made as follows: 50% to EPA and 50% al located equally among Alabama, Kentucky, and Tennessee.
L. PERMITS 160. Unless expressly stated otherwise in this Compliance Agreement, in any instance where otherwise applicable law or this Compliance Agreement requires TVA to secure a permit66 to authorize construction or operation of any device, including all construction and operating permits required under state law, TVA shall make such application in a timely manner.
161. Notwithstanding Paragraph 1 60 , nothing in this Compliance Agreement sha ll be construed to require TVA to apply for or obtain a PSD or Nonattainment NSR permit for physical changes in, or changes in the method of operation of, any TVA System Unit that would give rise to claims resolved by Paragraphs 1 38 or 1 39 , subject to Para graphs 1 40 through 1 4 3

. 162. When permits or permit applications are required pursuant to Paragraphs 1 60 , 1 6 4 , 1 6 5 , and 1 6 8 , TVA shall complete and submit applications for such permits to Alabama, Kentucky, and Tennessee , whichever is appropriate, to allow suff icient time for all legally required processing and review of the permit request, including requests for additional information by such S tates. Any failure by TVA to submit a timely permit application for TVA System Units shall bar any use by TVA of Secti on V II (Force Majeure) of this Compliance Agreement, where a Force Majeure claim is based on permitting delays.
163. Notwithstanding the reference to Title V permits in this Compliance Agreement, the enforcement of such permits shall be in accordance with th eir own terms and the Act and its implementing regulations, including the federally approved Alabama, Kentucky, and Tennessee Title V programs. The Title V permit shall not be enforceable under this Compliance Agreement, although any term or limit established by or under this Compliance Agreement shall be enforceable under this Compliance Agreement regardless of whether such term has or will become part of a Title V permit, subject to the terms of Section XVI (Conditional Termination of Enforcement Under Compliance Agreement) o f this Compliance Agreement.67 164. Within three (3) years from the Effective Date of this Compliance Agreement, unless otherwise specified in this Paragraph, and in accordance with federal and/or state requirements for modifying or renewing a Title V permit, TVA shall amend any applicable Title V permit application, or apply for amendments to its Title V permits, to include a schedule for all system

- wide , Unit

- specific, and plant

- specific performance, operational, maintenance, and control technology re quirements established by this Compliance Agreement including, but not limited to, emission rates, installation and/or Continuous Operation of SCRs and/or FGDs, tonnage limitations , and the requirements pertaining to the surrender of NO x and SO 2 Allowances . For Units in Paragraphs 7 3 and 8 9 with two or more methods specified in the Control Requirement column and that do not have a Remove from Service option , TVA shall apply to modify, renew, or obtain any applicable Title V permit as required by this Parag raph within twelve (12) months of making an election as to the method TVA will employ for the Unit. For Units with the Remove from Service option in the Control Requirement column in Paragraphs 73 and 89, TVA shall apply to modify, renew, or obtain any ap plicable Title V permit as required by this Paragraph within twelve (12) months of electing to either install and operate FGD(s) and SCR(s), Repower to Renewable Biomass, or Retire. 165. By no later than one (1) year after the date specified in Paragraphs 7 3 an d 8 9 for the Control Requirement for each Unit, TVA shall (a) apply to include the requirements and limitations enumerated in this Compliance Agreement into federally

- enforceable permits such that the requirements and limitations of this Compliance Agreeme nt become and remain “applicable requirements” as that term is defined in 40 C.F.R. § 70.2 and/or (b) request site

specific amendments to the applicable SIPs for Alabama and Tennessee (but not for Kentucky) to68 reflect all new requirements applicable to eac h Unit and at each plant in the TVA System. For purposes of this Compliance Agreement, the federally enforceable permit(s) issued by Kentucky must be issued by Kentucky under its authority under its SIP to issue permits and not solely under Kentucky ’ s aut hority to issue permits pursuant to its Title V program.
166. Prior to conditional termination of enforcement through this Compliance Agreement, TVA shall apply for and obtain enforceable provisions in its Title V permits for the TVA System that incorporate (a) any Unit

- specific requirements and limitations of this Compliance Agreement, such as performance, operational, maintenance, and control technology requirements, (b) the requirement to Surrender NO x and SO 2 Allowances, and (c) the System

Wide Annual Tonnag e Limitations.
167. TVA shall provide EPA, the States , and the Citizen Plaintiffs with a copy of each application for any permit required pursuant to this Section, including any federally enforceable permit or Title V permit or modification, and any site

- sp ecific SIP amendment, as well as a copy of any permit or SIP amendment proposed as a result of such application, to allow for timely participation in any public comment opportunity.
168. In the event that EPA promulgates a final rule containing revisions to the Effluent Limitations Guidelines for the Steam Electric Power Generating point source category, b y no later than twelve (12) months after the date EPA publishes the final rule in the Federal Register (unless additional time is required for studies or data collection mandated by the final rule) , TVA shall submit application s to the relevant permitting authority to obtain National Pollutant Discharge Elimination System ( “ NPDES ” ) permit renewals (in the case of expiring permits); permit renewal modifications (in the case of already submitted permit renewal applications); or69 permit modification requests (in the case of existing, non

- expired permits) to include legally

applicable requirements of the revised Effluent Limitation s Guidelines relating to wastewaters from Flue Gas Desulfurization Systems in each of its NPDES permits for the TVA System U nit s that are subject to the revised Effluent Limitation Guidelines and are equipped with a Flue Gas Desulfuriza tion System. TVA shall include all the relevant information necessary for the permitting authority to expeditiously incorporate the Effluent Limitation Guideline requirements into each of TVA ’ s NPDES permit s , and shall promptly respond to any additional r equests for information from the permitting authority. 169. If TVA proposes to sell or transfer to an entity unrelated to TVA ( “ Third Party ” ) part or all of TVA = s operati onal or ownership interest in a TVA System Unit, TVA shall comply with the requirements of Section XI (Sales or Transfers of Operational or Ownership Interests) with regard to that Unit prior to any such sale or transfer.
VI. COORDINATION O F OVERSIGHT AND ENFORCEMENT 170. EPA shall be the lead agency, in consultation with the States and the Citizen Plaintiffs , regarding TVA ’ s implementation of, and compliance with, the Parallel Provisions of this Compliance Agreement and the Consent Decree as described in Section IV ( Coordination of Oversight and Enforcement) of the Consent Decree.
V II. FORCE MAJEURE
171. For purposes of this Compliance Agreement, a “Force Majeure Event” shall mean an event that has been or will be caused by circumstances beyond the control of TVA, its contractors, or any entity controlled by TVA that delays compliance wi th any provision of this Compliance Agreement or otherwise causes a violation of any provision of this Compliance70 Agreement despite TVA = s best efforts to fulfill the obligation. “Best efforts to fulfill the obligation” include using the best efforts to an ticipate any potential Force Majeure Event and to address the effects of any such event (a) as it is occurring and (b) after it has occurred, such that the delay and any adverse environmental effect of the violation is minimized to the greatest extent poss ible.
172. Notice of Force Majeure Events . If any event occurs or has occurred that may delay compliance with or otherwise cause a violation of any obligation under this Compliance Agreement, as to which TVA intends to assert a claim of Force Majeur e, TVA shall notify EPA , the States , and the Citizen Plaintiffs in writing as soon as practicable, but in no event later than twenty

- one (21) business days following the date TVA first knew, or by the exercise of due diligence should have known, that the e vent caused or may cause such delay or violation. In this notice, TVA shall reference this Paragraph of this Compliance Agreement and describe the anticipated length of time that the delay or violation may persist, the cause or causes of the delay or viol ation, all measures taken or to be taken by TVA to prevent or minimize the delay and any adverse environmental effect of the violation, the schedule by which TVA proposes to implement those measures, and TVA = s rationale for attributing a delay or violation to a Force Majeure Event. TVA shall adopt all reasonable measures to avoid or minimize such delays or violations. TVA shall be deemed to know of any circumstance which TVA, its contractors, or any entity controlled by TVA knew or should have known.
173. Fai lure to Give Notice . If TVA fails to comply with the notice requirements of this Section, EPA (in consultation with the States and the Citizen Plaintiffs ) may void TVA = s71 claim for Force Majeure as to the specific event for which TVA has failed to comply w ith such notice requirement.
174. EPA = s Response . EPA shall notify TVA in writing regarding TVA = s claim of Force Majeure as soon as reasonably practicable. If EPA, after consultation with the States and the Citizen Plaintiffs , agrees that a delay in performance has been or will be caused by a Force Majeure Event, EPA and TVA shall stipulate to an extension of deadline(s) for performance of the affected compliance requirement(s) by a period equal to the delay actually caused by the event. In such circumstances, an appropriate modification shall be made pursuant to Section XII (Modification) of this Compliance Agreement. 175. Disagreement . If EPA, after consultation with the States and the Citizen Plaintiffs , does not accept TVA = s claim of Force Majeure, or if EPA and TVA cannot agree on the length of the delay actually caused by the Force Majeure Event, the matter shall be resolved in accordance with Section V II I (Dispute Resolution) of this Compliance Agreement.
176. Burden of Proof . In any dispute regarding Force Majeure, TVA shall bear the burden of proving that any delay in performance or any other violation of any requirement of this Compliance Agreement was caused by or will be caused by a Force Majeure Event. TVA sha ll also bear the burden of proving that TVA gave the notice required by this Section and the burden of proving the anticipated duration and extent of any delay(s) attributable to a Force Majeure Event. An extension of one compliance date based on a partic ular event may, but will not necessarily, result in an extension of a subsequent compliance date.72 177. Events Excluded . Unanticipated or increased costs or expenses associated with the performance of TVA ’ s obligations under this Compliance Agreement shall not constitute a Force Majeure Event.
178. Potential Force Majeure Events . D epending upon the circumstances related to an event and TVA = s response to such circumstances, the kinds of events listed below are among those that could qualify as Force Majeure Events w ithin the meaning of this Section: construction, labor, or equipment delays; Malfunction of a Unit or emission control device; unanticipated coal supply or pollution control reagent delivery interruptions; acts of God; acts of war or terrorism; and, other than by TVA, orders by a government official, government agency, other regulatory authority, or a regional transmission organization, acting under and authorized by applicable law, that directs TVA to supply electricity in response to a system

- wide (state

- wide or regional) emergency. Depending upon the circumstances and TVA = s response to such circumstances, failure of a permitting authority to issue a necessary permit in a timely fashion may constitute a Force Majeure Event where the failure of the permitt ing authority to act is beyond the control of TVA and TVA has taken all steps available to it to obtain the necessary permit , including, but not limited to submitting a complete permit application; responding to requests for additional information by the p ermitting authority in a timely fashion; and accepting lawful permit terms and conditions after expeditiously exhausting any legal rights to appeal terms and conditions imposed by the permitting authority. 179. As part of the resolution of any matte r by the Region 4 Air Director under Section
VIII (Dispute Resolution) regarding a claim of Force Majeure, EPA (in consultation with the
States and the Citizen Plaintiffs ) and TVA by agreement, or the Region 4 Air Director as part of73 Dispute Resolution, ma y in appropriate circumstances extend or modify the schedule for completion of work under this Compliance Agreement to account for the delay in the work that occurred as a result of any delay agreed to by EPA or as decided by the Region 4 Air Director.
TV A shall be liable for stipulated penalties if applicable for its failure thereafter to complete the work in accordance with the extended or modified schedule (provided that TVA shall not be precluded from making a further claim of Force Majeure with regard to meeting any such extended or modified schedule).
VIII. DISPUTE RESOLUTION 180. If a dispute arises under this Compliance Agreement, the procedures of this Section VI II (Dispute Resolution) shall apply. The Parties shall make reasonable efforts to resolve d isputes informally, at the level of TVA = s Vice President, Environmental Permits and Compliance and the EPA Region 4 Chief of Air & EPCRA Enforcement Branch.
181. If TVA objects to any EPA action or determination taken pursuant to this Compliance Agreement, including any EPA disapproval, modification, or other decision, TVA shall notify EPA in writing of its objections (with copies to the States and the Citizen Plaintiffs ) , and the basis thereof, within fifteen (15) business days of such action. S uch notice shall set forth the specific points of the dispute, the position which TVA asserts should be adopted as consistent with the requirements of this Compliance Agreement, the basis for TVA = s position, and any

matters that it considers necessary for EPA = s determination. For purposes of this Compliance Agreement, EPA actions, orders or determinations will include those actions taken by or on behalf of EPA or any of its employees, agents, or designees.74 182. EPA (in consultation with the States and the Citiz en Plaintiffs ) and TVA shall have an additional fifteen (15) days after receipt by EPA of the notification of objection (Negotiation Period), during which time representatives of EPA and TVA may confer in person or by telephone to resolve any disagreement. If an agreement is reached during the Negotiation Period, the resolution shall be in writing, signed by an authorized representative of both Parties. Such agreement shall be incorporated into and become an enforceable part of this Compliance Agreement. The Negotiation Period may be extended at the sole discretion of EPA, although such extensions shall not be unreasonably withheld. EPA = s decision regarding an extension of the Negotiation Period shall not constitute an EPA action subject to Dispute R esol ution.
183. If the Parties are unable to reach an agreement within the Negotiation Period, the dispute shall be elevated to the Region 4 Air Director and TVA = s Environmental Executive. The Region 4 Air Director and TVA = s Environmental Executive shall have an a dditional fourteen (14) days to resolve the dispute and issue a written decision signed by both Parties. If the Region 4 Air Director and TVA = s Environmental Executive cannot reach a mutual agreement within the
14

- day period, the Region 4 Air Director wil l issue a written decision on the dispute to TVA that provides the basis for his or her decision. This decision shall be incorporated into and become an enforceable part of this Compliance Agreement. TVA = s obligations under this Compliance Agreement shal l not be tolled by submission of any objections for dispute resolution or by any other procedure under this Section.
184. Following resolution of the dispute, as provided by this Section, TVA shall fulfill the requirement that was the subject of the dispute in accordance with the agreement reached or in accordance with EPA = s decision.75 I X

. INFORMATION COLLECTION AND RETENTION 185. Any authorized representative of EPA, including its attorneys, contractors, and consultants, upon presentation of credential s, shall have a right of entry upon the premises of any facility in the TVA System at any reasonable time for the purpose of:

a. monitoring the progress of activities required under this Compliance Agreement; b. verifying any data or information submitted to EPA in accordance with the terms of this Compliance Agreement;

c. obtaining samples and, upon request, splits of any samples taken by TVA or its representatives, contractors, or consultants; and d. assessing TVA = s compliance with this Compliance Agree ment. 186. TVA shall retain, and instruct its contractors and agents to preserve, all non

identical copies of all records and documents (including records and documents in electronic form) in its or its contractors ’ or agents ’ possession and/ or control, and that directly relate to
TVA ’ s performance of its obligations under this Compliance Agreement until six (6) years following completion of performance of such obligations. This record retention requirement shall apply regardless of any TVA document retentio n policy to the contrary.
187. All information and documents submitted by TVA pursuant to this Compliance Agreement shall be subject to any requests under applicable law providing public disclosure of documents unless (a) the information and documents are subject to legal privileges or protection or (b) TVA claims and substantiates in accordance with 40 C.F.R. Part 2 that the information and documents contain confidential business information.76 188. Nothing in this Compliance Agreement shall limit the authority of EPA or Alabama, Kentucky, and Tennessee to conduct tests and inspections at TVA ’ s facilities under Section 114 of the Act, 42 U.S.C. § 7414, or any other applicable federal or state laws, regulations or per mits.
X. NOTICES 189. Unless otherwise provided herein, whenever notifications, submissions, and/ or communications are required by this Compliance Agreement, they shall be made in writing and addressed as follows:
As to EPA: ( If b y first class mail) Director, Air Enforcement Division Office of Enforcement and Compliance Assurance U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, NW Mail Code 2242A Washington, DC 20460

or ( If b y commercial delivery service) Director, Air Enforcement Division O ffice of Enforcement and Compliance Assurance U.S. Environmental Protection Agency Ariel Rios South Building, Room 1119 1200 Pennsylvania Avenue, NW Washington, DC 20004 and Director Air, Pesticides and Toxics Management Division U.S. EPA

- Region 4 Sam Nunn Atlanta Federal Center 61 Forsyth Street, SW77 Atlanta, GA 30303

- 8960 As to Alabama : Chief, Air Division Alabama Department of Environmental Management 1400 Coliseum Boulevard Montgomery, A L 36110

- 2059 As to Kentucky : Direct or Division for Air Quality Energy and Environment Cabinet 200 Fair Oaks Lane Frankfort, K Y 40601 As to North Carolina : Director NCDENR, Division of Air Quality 1641 Mail Service Center Raleigh, NC 27699

- 1641 Senior Deputy Attorney General Environmental Division North Carolina Department of Justice P.O. Box 629 (114 W. Edenton Street, R oo m 306A) Raleigh, NC 27602

- 0629
As to Tennessee : Division Director/Technical Secretary Tennessee Department of Environment & Conservation Air Pollution Co ntrol Division 401 Church Street L&C Annex, 9th Floor Nashville, T N 37243

- 1548 As to the Citizen Plaintiffs : George E. Hays Attorney at Law78 236 West Portal Avenue #110 San Francisco, CA 94127 Office: 415/566

- 5414 Fax: 415/731

- 1609 e - mail: georgehays@mindspring.com William J. Moore , III 1648 Osceola Street Jacksonville, FL 32204 (904) 685

- 2172 (phone) (904) 685

- 2175 (fax) wmoore@wjmlaw.net
As to TVA : Vice President, Environmental Permitting and Compliance Tennessee Valley Authority 1101 Market Street Chattanooga , T N 37 4 02 and Assistant General Counsel, Environment Tennessee Valley Authority 400 West Summit Hill Drive Knoxville, T N 37902 190. All notifications, communications or submissions made pursuant to this S ection shall be sent eithe r by (a) overnight mail or overnight delivery service, or (b) certified or registered mail, return receipt requested. In addition to the foregoing, notification may also be made through electronic mail. All notifications, communications , and transmission s that are properl y addressed and prepaid and are (a) sent by overnight, certified or registered mail shall be deemed submitted on the date they are postmarked, or (b) sent by overnight delivery service shall be deemed submitted on the date they are delive red to the delivery service

.79 191. EPA, TVA, the States, and the Citizen Plaintiffs may change either the notice recipient or the address for providing notices to it by serving all other s with a notice setting forth such new notice recipient or address.
XI. SALES OR TRANSFERS OF OPERATIONAL OR OWNERSHIP INTERESTS

192. If TVA proposes to sell or transfer an Operational or Ownership Interest to an entity unrelated to TVA ( “ Third Party ” ), TVA shall advise the Third Party in writing of the existence of this Compliance Agreement prior to such sale or transfer, and shall send a copy of such written notification to EPA , the States , and the Citizen Plaintiffs pursuant to Section X (Notices) of this Compliance Agreement at least sixty (60) days before such proposed sale or transfer. 193. No sale or transfer of an Operational or Ownership Interest shall take place before the Third Party and EPA (in consultation with the States and the Citizen Plainti ffs ) have executed a modification pursuant to Section XII (Modification) of this Compliance Agreement making the Third Party a party to this Compliance Agreement and jointly and severally liable with TVA for all the requirements of this Compliance Agreemen t that may be applicable to the transferred or purchased Operational or Ownership Interests. 194. This Compliance Agreement shall not be construed to impede the transfer of any Operational or Ownership Interests between TVA and any Third Party so long as the requirements of this Compliance Agreement are met. This Compliance Agreement shall not be construed to prohibit a cont ractual allocation between TVA and any Third Party o f the burdens of compliance with this Compliance Agreement, provided that TVA shall r emain liable to EPA for80 the obligations of the Compliance Agreement applicable to the transferred or purchased Operational or Ownership Interests. 195. If EPA (in consultation with the States and the Citizen Plaintiffs ) agrees, EPA, TVA, and the Thir d Party that has become a party to this Compliance Agreement pursuant to Paragraph 19 3 , may execute a modification that relieves TVA of its liability under this Compliance Agreement for, and makes the Third Party liable for, all obligations and liabilities applicable to the purchased or transferred Operational or Ownership Interests. Notwithstanding the foregoing, however, no obligation under this Compliance Agreement may be assigned, transferred or released in connection with any sale or transfer of any O wnership Interest that is not specific to the purchased or transferred Operational or Ownership Interests, including the obligations set forth in Sections V.F (Environmental Mitigation Projects) and V

. G (Civil Penalty), and Paragraphs 7 1 and 8 6 . TVA may p ropose and EPA may agree to restrict the scope of the joint and several liability of any purchaser or transferee for any obligations of this Compliance Agreement that are not specific to the transferred or purchased Operational or Ownership Interests, to t he extent such obligations may be adequately separated in an enforceable manner using the methods provided by or approved under Section V

. L (Permits). 196. Paragraphs 1 92

- 19 5 of this Compliance Agreement do not apply if an Operational or Ownership Interest is sold or transferred solely as collateral security in order to consummate a financing arrangement (not including a sale

- leaseback), so long as TVA (a) remains the operator (as that term is used and interpreted under the Act) of the subject TVA System Unit(s ); (b) remains subject to and liable for all obligations and liabilities of this Compliance Agreement; and (c) supplies EPA with the following certification within thirty (30) days of the sale or transfer:81 Certification of Change in Ownership I nterest Solely for Purpose of Consummating Financing . We, the Chief Executive Officer(s) and General Counsel(s) of the Tennessee Valley Authority ( “ TVA ” ), hereby jointly certify under Title 18 U.S.C. Section 1001, on our own behalf and on behalf of TVA, t hat any change in TVA = s Ownership Interest in any Unit that is caused by the sale or transfer as collateral security of such Ownership Interest in such Unit(s) pursuant to the financing agreement consummated on [insert applicable date] between TVA and [ins ert applicable entity] (a) is made solely for the purpose of providing collateral security in order to consummate a financing arrangement; (b) does not impair TVA = s ability, legally or otherwise, to comply timely with all terms and provisions of the Compliance Agreement entered in In re Tennessee Valley Auth

. , Docket No

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- 1760 ; (c) does not affect TVA = s operational control of any Unit covered by that Comp liance Agreement in a manner that is inconsistent with TVA = s performance of its obligations under the Compliance Agreement; and (d) in no way affects the status of TVA = s obligations or liabilities under that Compliance Agreement.
XII. MODIFICATION 197. The terms of this Compliance Agreement may be modified only by a subsequent written agreement signed by EPA (in consultation with the States and the Citizen Plaintiffs ) and TVA. Where the modification consti tutes a material change to this Compliance Agreemen t, it shall be subject to public notice and comment. The proposed modification shall be effective sixty (60) days after the date the modification is executed by EPA and TVA or, if public comments warrant a change to the proposed modification , then the mod ification shall be effective sixty (60) days after the date that TVA and EPA have memorialized the change to the modification.
XIII. GENERAL PROVISIONS 198. At any time prior to conditional and/or partial termination of enforcement through this Comp liance Agreement, TVA may request approval from EPA to implement a pollution control technology or pollution reduction activity for SO 2 or NO x other than what is required by this Compliance Agreement. In seeking such approval, TVA must demonstrate that such82 alternative control technology or activity is capable of achieving and maintaining pollution reductions equivalent to an FGD (for SO 2 ) or SCR (for NO x ) at the Units in the TVA System at which TVA seeks approval to implement such other control technology or activity for SO 2 or NO x . Approval of such a request is solely at the discretion of EPA (in consultation with the
States and the Citizen Plaintiffs ) provided that EPA shall not approve and TVA shall not implement an alternative control technology or activity if TVA fails to demonstrate that such alternative control technology or activity is capable of achieving and maintaining pollution red uctions equivalent to an FGD (for SO 2 ) or SCR (for NO x ) at the Units in the TVA System . If EPA approves TVA = s request, nothing in this Paragraph shall relieve TVA from complying with any other requirement of this Compliance Agreement applicable to such Un it ( e.g. , the requirement to obtain a federally enforceable non

- Title V permit that includes the Unit

- specific performance, operational, maintenance, and control technology requirements fo r such Unit in addition to the system

- wide requirements and any plan t

- w ide requirements also applicable to such Unit). 199. This Compliance Agreement is not a permit. Compliance with the terms of this Compliance Agreement does n ot guarantee compliance with any applicable federal, state, and/ or local laws and/ or regulations. The emission limitations set forth herein do not relieve TVA from any obligation to comply with other state and federal requirements under the Act, including
TVA = s obligation to satisfy any modeling requirem ents set forth in the Act. 200. This Compliance Agreem ent does not apply to any claim(s) of alleged criminal liability.83 201. In any subse quent action initiated by EPA, the States , or the Citizen Plaintiffs relating to the facilities covered by this Compliance Agreement, TVA shall not assert any defense or claim ba sed upon principles of waiver, res judicata , collateral estoppel, issue preclusion, claim preclusion, or claim splitting, or any other defense based upon the contention that the claims raised by EPA and/or any of the States or the Citizen Plaintiffs in the subsequent proceeding were brought, or should have been brought, in the instant case; provided, however, that nothing in this Paragraph is intended to affect the validity of Section V

. H (Resolution of Claims Against TVA). 202. Except as specifically provided by this Compliance Agreement, nothing in this Compliance Agreement shall relieve TVA of its obligation to comply with all applicable federal, state, and /or local laws and /or regulations, including, but not limited to, TVA ’ s obligation to apply fo r a Clean Water Act NPDES permit(s) or permit renewal for the discharge of wastewater from the operation of the FGDs at any TVA System Unit, and in connection with any such application or application for permit renewal, to provide the NPDES permitting auth ority with all information necessary to appropriately characterize effluent from its operations and develop, if applicable, a ppropriate effluent limitations; provided, however, that no claimed violation of this provision regarding NPDES permitting shall be enforceable as a violation of this Compliance Agreement, by way of stipulated penalty or otherwise . Subject to the provisions in Section V

. H (Resolution of Claims Against TVA), nothing contained in this Compliance Agreement shall be construed to preven t or limit the rights of EPA, the States , or the Citizen Plaintiffs to obtain penalties or injunctive relief under the Act or other federal, state, or local statutes, regulations, or permits.84 203. Nothing in this Compliance Agreement is intended to, or shall, alter or waive any applicable law (including but not limited to any defenses, entitlements, challenges, or clarifications related to the Credible Evidence Rule, 62 Fed. Reg. 8314 (Feb. 24, 1997 )) concerning the use of data for any purpose under the Act.
204. Each limit and/or other requirement established by or under this Compliance Agreement is a separate, independent requirement. 205. Performance standards, emissions limits, and other qua ntitative standards set by or under this Compliance Agreement must be met to the number of significant digits in which the standard or limit is expressed. For example, an Emission Rate of 0.100 is not met if the actual Emission Rate is 0.101. TVA shall r ound the fourth significant digit to the nearest third significant digit, or the third significant digit to the nearest second significant digit, depending upon whether the limit is expressed to three or two significant digits. For example, if an actual
E mission Rate is 0.1004, that shall be reported as 0.100, and shall be in compliance with an Emission Rate of 0.100, and if an actual Emission Rate is 0.1005, that shall be reported as 0.101, and shall not be in compliance with an Emission Rate of 0.100. T VA shall report data to the number of significant digits in which the standard or limit is expressed.
206. Except as otherwise provided by law, t his Compliance Agreement does not limit, enlarge or affect the rights of any Party to this Compliance Agreement as a gainst any third parties.
207. This Compliance Agreement constitutes the final, complete and exclusive agreement and understanding among the Parties with respect to the settlement embodied in this Compliance Agreement, and supersedes all prior agreements and un derstandings among the85 Parties related to the subject matter herein. No document, representation, inducement, agreement, understanding, or promise constitutes any part of this Compliance Agreement or the settlement it represents, nor shall they be used in construing the terms of this Compliance Agreement.
XIV. SIGNATORIES AND SERVICE 208. Each undersigned representative of the Parties certifies that he or she is fully authorized to enter into the terms and conditions of this Compliance Agreement and to execute and legally bind to this document the Party he or she represents. 209. This Compliance Agreement may be signed in counterparts, and such counterpart signature pages shall be given full force and effect.
210. Each Party hereby agrees to accept service of process by mail with respect to all matters arising under or relating to this Compliance Agreement.
XV. PUBLIC COMMENT
211. The Parties agree and acknowledge that this Compliance Agreement shall be subject to public not ice in the Federal Register with an oppor tunity for public comment. EPA reserves the right to withdraw its consent to this Compliance Agreement, and/or to seek modifications to this Compliance Agreement, if public comments received during the comment period disclose facts or consid erations that indicate that this Compliance Agreement is inappropriate, improper , or inadequate.86 XVI. CONDITIONAL TERMINATION OF ENFORCEMENT UNDER COMPLIANCE AGREEMENT
212. Termination as to Completed Tasks at a Unit. As soon as TVA completes a requirement of this Compliance Agreement pertaining to a particular Unit that is not ongoing or recurring, TVA may, by written letter to EPA, seek termination of the provision or provisions of this Compliance Agreement that imposed the requirement.
213. Condi tional Termination of Enforcement Through the Compliance Agreement. After TVA:

a. has successfully completed construction of all pollution control technology or such other Control Requirement described in Paragraphs 7 3 and 8 9 , and has maintained Continuou s Operation of all pollution control technology or such other Control Requirement at the TVA System Units as required by this Compliance Agreement for at least two (2) years; and b. has obtained final permits and/or site

- specific SIP amendments (i) as required by Section V

. L (Permit s) of this Compliance Agreement, (ii) that cover all Uni ts in this Compliance Agreement, and (iii) that include as enforceable permit terms all of the Unit

- specific and TVA System performance, operational, maintenance, and control technology requirements specified in this Compliance Agreement; then TVA may so certify these facts to EPA. If EPA (in consultation with the States and the Citizen Plaintiffs ) does not object in writing with specific reasons within forty

- five (45) days of receipt of TVA = s certification, then, for any Compliance Agreement violations that occur after the certification is submitted , EPA shall pursue enforcement through the applicable permit(s)87 required pursuant to Paragraphs 54, 1 60 , 1 6 4 , 1 65, 16 6, and 168 and/or other enforcement authority, and not through this Compliance Agreement.
214. Resort to Enforcement under this Compliance Agreement. Notwithstanding Paragraph 2 13 , if enforcement of a provision in this Compliance Agreement cannot be pursued by EPA under the applicable permits required by this Compliance Agreement or other enforcement authority, or if a Compliance Agreement requirement was intended to be part of a permit and did not become or remain part of such permit, then such requirement may be enforced under the terms of this Compliance Agreement at any time.88 Signature Page for Federal Facilities Compliance Agreement in: In re Tennessee Valley Auth. , Docket No

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FOR THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY:

Date: __________

____________________________________ CYNTHIA GILES Assistant Administrator Office of Enforcement and Compliance

Assurance

____________________________________ ADAM M. KUSHNER Director, Office of Civil Enforcement

____________________________________ PHILLIP A. BROOKS Director, Air Enforcement Division

____________________________________ ILANA SALTZBART Attorney, Air Enforcement Division89 Signa ture Page for Federal Facilities Compliance Agreement in: In re Tennessee Valley Auth. , Docket No

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FOR THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY:

Date: __________

____________________________________ GWENDOLYN KEYES FLEMING Regional Administrator Region 4

____________________________________ A. STANLEY MEIBURG Deputy Regional Administrator Region 490 Signature Page for Federal Facilities Compliance Agreement in: In re Tennessee Valley Auth. , Docket No

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FOR THE TENNESSEE VALLEY AUTHORITY:

Date: __________

____________________________________ TOM KILGORE President and Chief Executive Officer Tennessee Valley Authority