IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

)

AMERICAN CHEMISTRY COUNCIL, )

) v. )Petitioner, )

)

U.S. ENVIRONMENTAL PROTECTION ) AGENCY, )

)

Respondent. )

)

No. 09-1325

SETTLEMENT AGREEMENT

WHEREAS the American Chemistry Council in No. 09-1325 (referred to as

"Petitioner") filed in the Court of Appeals for the D.C. Circuit a petition for review

captioned above that challenges the regulation titled "Mandatory Reporting of

Greenhouse Gases," 74 Fed. Reg. 56,260 (Oct. 30, 2009) ("GHG Reporting

Rule"), which was promulgated under the Clean Air Act by the Environmental

Protection Agency ("EP A");

WHEREAS No. 09-1325 has been consolidated with other petitions

challenging the GHG Reporting Rule, with No. 09-1325 designated as the lead

petition;

WHEREAS EP A intends to undertake a rulemaking to make certain

amendments to portions of the GHG Reporting Rule that may resolve the concerns

raised by Petitioners in their petition for review;

WHEREAS the EP A and American Chemistry Council (collectively the

"Parties") wish to implement this Settlement Agreement ("Agreement") to avoid

protracted and costly litigation and to preserve judicial resources;

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NOW, THEREFORE, the Parties, intending to be bound by this Agreement,

hereby stipulate and agree as follows:

1. Promptly after execution of this Agreement, the Parties will notify the

Court that they have reached a settlement, subject to required notice provisions

described in paragraph 6 below, and will request that No. 09-1325 be severed from

the other consolidated cases and be held in abeyance pending finalization and

completion of the terms of their settlement, with EP A to file status reports on 120-

day intervals.

2. EP A shall as expeditiously as practicable publish a notice of proposed

rulemaking on the issue of whether the GHG Reporting Rule should be amended

by the inclusion of proposed amendments of the same substance as set forth in

Attachment A to this Agreement.

3. If and when EP A promulgates in final form an amendment to the

GHG Reporting Rule that include changes that are substantially the same

substance as set forth in Attachment A to this Agreement, then Petitioner shall

promptly file a stipulation of dismissal with prejudice of No. 09-1329, or in the

event not all such changes are made, a stipulation of dismissal with prejudice of

No. 09-1325 for the issues that correspond to such changes that were made, with

the creation of a new docket for those issues that were not resolved. Such

stipulation of dismissal shall be in accordance with Rule 42 of the Federal Rules

of Appellate Procedure, with each party to bear its own costs and attorneys' fees.

In addition, Petitioner shall not challenge the validity of the portion of the final

rule adopting such amendments of substantially the same substance as set forth in

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Attachment A in any court or administrative proceeding, and the right to raise such

challenge is waived, provided that Petitioner reserves any rights it may have to

challenge in any court or administrative proceeding any portion of such final rule

that is not of substantially the same substance as set forth in Attachment A to this

Agreement.

4. For purposes of this Agreement, EPA and Petitioner recognize that

the publication of new or modified regulations in the proposed or final rule that

addresses other matters or provisions than set forth in Attachment A or that in the

proposed or final rule are otherwise substantially more detailed, extensive and

comprehensive than that set forth in Attachment A would not on that basis alone

cause the final changes referenced in paragraphs 2 and 3 above not to be the same

substance or substantially the same substance as set forth in Attachment A.

5. IfEPA does not take action in accordance with the terms of this

agreement then Petitioner's sole remedy under this Agreement regarding the rules

under review in these cases shall be the right to request that the Court lift the stay

of proceedings and establish a schedule for briefing and oral argument.

6. EP A and Petitioner agree and acknowledge that before this

Agreement is final, EP A must provide notice in the Federal Register and an

opportunity for comment pursuant to Clean Air Act section 113(g), 42 U.S.C. §

7413(g). EPA shall submit said notice of this Agreement to the Federal Register

for publication as expeditiously as possible, After this Agreement has undergone

an opportunity for notice and comment, the Administrator and/or the Attorney

General, as appropriate, shall promptly consider any such written comments in

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determining whether to withdraw or withhold her consent to the Agreement, in

accordance with section 113(g) of the Clean Air Act. This Agreement shall

become final on the date that EP A provides written notice of such finality to

Petitioner.

7. Nothing in the terms of this Agreement shall be construed to limit or

modify the discretion accorded EP A by the Clean Air Act or by general principles

of administrative law.

8. Any obligations ofEPA to obligate or expend funds under this

Agreement are subject to the availability of appropriations in accordance with the

Anti-Deficiency Act, 31 U.S.C. § 1341. This Settlement Agreement shall not be

construed to require the United States to obligate or pay funds in contravention of

said Anti-Deficiency Act, 31 U.S.C. § 1341.

9. Except as provided in this Settlement Agreement, none of the parties

hereto waives or relinquishes any legal rights, claims or defenses it may have.

10. The undersigned representatives of each party certify that they are

fully authorized by the party that they represent to bind that respective party to the

terms of this Agreement.

IGNACIA S. MORENO

Assistant Attorney General

Environment and Nat. Resources Division

DAVID J. KAPLAN

U.S. Department of Justice

Environmental Defense Section

PO Box 23986

Washington D.C. 20026-3986

(202) 514-0997

DAVID FRIEDLAND

Beveridge & Diamond, PC

1350 I Street, N.W. .

Suite 700

Washington, DC 20005-3311

(202) 789-6047

- 4 -
Counsel for United States

Environmental Protection Agency

Dated:

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LESLIE A. HUSE

Assistant General Counsel

American Chemistry Council

1300 Wilson Blvd.

Arlington, VA 22209

(703)741-5165

Counsel for

American Chemistry Council

Dated:
ATTACHMENT A

(b) To produce a fluorinated GHG means to manufacture a

fluorinated GHG from any raw material or feedstock chemical.

Producing a fluorinated GHG includes the manufacture of a

fluorinated GHG as an isolated intermediate for use in a process

that will result in its transformation either at or outside of

the production facility. Producing a fluorinated GHG also

includes the creation of a fluorinated GHG (with the exception

of HFC-23) that is captured and shipped off site for any reason,

including destruction. Producing a fluorinated GHG does not

include the reuse or recycling of a fluorinated GHG, the

creation of HFC-23 during the production of HCFC-22, the

creation of intermediates that are created and transformed in a

single process with no storage of the intermediates, or the

creation of by productofluorinated GHGs that are released or

destroyed at the production facility before the production

measurement at 98.414 (a) .

40 C.F.R. § 98.410(b)

(a) The mass of fluorinated GHGs or nitrous oxide coming

out of the production process shall be measured using

flowmeters, weigh scales, or a combination of volumetric and
density measurements with an accuracy and precision of one

percent of full scale or better. --If the measured mass

includes more than one fluorinated GHG, the concentrations of

each of the fluorinated GHGs, other than low-concentration

constituents, shall be measured as set forth in paragraph (n) of

this section. For each fluorinated GHG, the mean of the

concentrations of that fluorinated GHG (mass fraction) measured

under paragraph (n) of this section shall be multiplied by the

mass measurement to obtain the mass of that fluorinated GHG

coming out of the production process.

40 C.F.R. § 98.414(a)

(h) Tfyou must measure the mass of each fluorinated

CIICo GHG that is fed into the destruction device oh~ll be

me~oured uoingand that was previously produced as defined at

98.410 (b). Such fluorinated GHGs include but are not limited to

quantities that are shipped to the facility by another facility

for destruction and quantities that are returned to the facility

for reclamation but are found to be irretrievably contaminated

and are therefore destroyed. You must use flowmeters, weigh

scales, or a combination of volumetric and density measurements

. with an accuracy and precision of one percent of full scale or

better. If the measured mass includes more than trace

2
concentrations of materials other than the fluorinated GHG being

destroyed, you must estimate the concentrations of fluorinated

GHG being destroyed oh~ll be eotim~ted considering current or

previous representative concentration measurements and other

relevant process information. TfYou must multiply this

concentration (mass fraction) oh~ll be multiplied by the mass

measurement to obtain the mass of the fluorinated GHG destroyed.

40 C.F.R. § 98.414(h)

(j) You muot eotim~te the oh~re of the m~oo of fluorin~ted

CIICo in p~r~gr~ph(h) of thio oection th~t io comprioed of

fluorin~ted CECo th~t ~re not included in the m~oo produced in

§98 .413 (~) bec~uoe they ~re removed from the production proceoo

~o by producto or other ',..~oteo.

40 C.F.R. § 98.414(j)

(n) If the mass coming out of the production process

includes more than one fluorinated GHG, you shall measure the

concentrations of all of the fluorinated GHGs, other than lowconcentration constituents, as follows:

(i) Analytical Methods. Use a quality-assured analytical

measurement technology capable of detecting the analyte of

interest at the concentration of interest and use a procedure

validated with the analyte of interest at the concentration of

3
interest. Where standards for the analyte are not available, a

chemically similar surrogate may be used. Acceptable analytical

measurement technologies include but are not limited to gas

chromatography (GC) with an appropriate detector, infrared (IR),

fouriertransform infrared (FTIR), and nuclear magnetic

resonance (NMR). Acceptable methods include EPA Method 18 in

Appendix A-1 of 40 CFR part 60, EPA Method 320 in Appendix A of

40 CFR part 63, the Draft EPA DRE Protocol, ASTM D6348-03

(incorporated by reference in §98. 7), or other analytical

methods validated using EPA Method 301 or some other

scientifically sound validation protocol. The validation

protocol may include analytical technology manufacturer

specifications or recommendations.

(ii) Documentation in GHG Monitoring Plan. Describe the

analytical method(s) used under paragraph (n) (i) in the site GHG

Moni toring Plan as required under § 98.3 (g) (5) of this part. At

a minimum, include in the description of the method a

description of the analytical measurement equipment and

procedures, quanti tati ve estimates of the method's accuracy and

precision for the analytes of interest at the concentrations of

interest, as well as a description of how these accuracies and

precisions were estimated, including the validation protocol

used.

4
(iii) Frequency of measurement. Perform the measurements

at least once by (insert date 60 days after publication of this

rule) if the fluorinated GHG product is being produced on

(insert date of publication of this rule). Perform the

measurements within 60 days of commencing production of any

fluorinated GHG product that was not being produced on (insert

date of publication of this rule). Repeat the measurements if

an operational or process change occurs that could change the

identities or significantly change the concentrations of the

fluorinated GHG constituents of the fluorinated GHG product.

Complete the repeat measurements within 60 days of the

operational or process change.

(iv) Measure all product grades. Where a fluorinated GHG

is produced at more than one purity level (e. g., pharmaceutical

grade and refrigerant grade), perform the measurements for each

puri ty level.

(v) Number of samples. Analyze a minimum of three samples

of the fluorinated GHG product that have been drawn under

conditions that are representative of the process producing the

fluorinated GHG product. If the relative standard deviation of

-the measured concentrations of any of the fluorinated GHG

consti tuents (other than low-concentration constituents) is

greater than or equal to 15 percent, draw and analyze enough

5
addi tional samples to achieve a total of at least six samples of

the fluorinated GHG product.

40 C.F.R. § 98.414(n)

(0) All analytical equipment used to determine the

concentration of fluorinated GHGs, including but not limited to

gas chromatographs and associated detectors, IR, FTIR and NMR

devices, shall be calibrated at a frequency needed to support

the type of analysis specified in the site GHG Monitoring Plan

as required under §98.414 (n) and §98.3 (g) (5) of this part.

Quali ty assurance samples at the concentrations of concern shall

be used for the calibration. Such quality assurance samples

shall consist of or be prepared from certified standards of the

analytes of concern where available; if not available,

calibration shall be performed by a method specified in the GHG

Moni toring Plan.

40 C.F.R. § 98.414(0)

(p) Isolated intermediates that are produced and

transformed at the same facility are exempt from the monitoring

requirements of this section.

40 C.F.R. § 98.414(p)

6
(q) Low-concentration constituents are exempt from the

moni toring and QA/QC requirements of this section.

40 C.F.R. § 98.414(q)

(3) Mass in metric tons of each fluorinated GHG that is

destroyed at that facility, except fluorin~ted CHCo not included

in the c~lcul~tion of m~oo and that was previously produced 4f

~as defined at 98.413(~) bec~uoe they ~re removed from the

production proceoo ~o by producto or other 'y..~oteo. 410 (b) .

Quantities to be reported under this paragraph (a) (3) of this

section could includel- but are not limited to quantities that

are shipped to the facility by another facility for

ex~mple, destruction and quanti ties that are returned to the

facili ty for reclamation but are found to be irretrievably

contaminated and are therefore destroyed.

(4) M~oo in metric tono of e~ch fluorin~ted CHC th~t io

deotroyed ~t th~t f~cility except CIICo not included in the

c~lcul~tion of m~oo produced in §98. 413 (~) bec~uoe they ~re

removed from the production proceoo ~o byproducto or other

'y..~oteo. (Reserved)

* * *

(11) Mass in metric tons of each fluorinated GHG that is

fed into the destruction device and that was previously produced

as defined at 98.410 (b). Quantities to be reported under this

7
paragraph (a) (11) of this section include but are not limited to

quantities that are shipped to the facility by another facility

for destruction and quantities that are returned to the facility

for reclamation but are found to be irretrievably contaminated

and are therefore destroyed.

40 C.F.R. § 98.416(a) (3), (4) & (11)

(c) AEach bulk importer of fluorinated GHGs or nitrous

oxide shall submit an annual report that summarizes theirits

imports at the corporate level, except for shipments including

less than 250 metric tonotwenty-five kilograms of GG~efluorinated

GHGs or nitrous oxide, transshipments, and heels that meet the

conditions set forth at §98. 417 (e). The report shall contain

the following information for each import:

(1) Total mass in metric tons of nitrous oxide and each

fluorinated GHG. imported in bulk, including each fluorinated GHG

constituent of the fluorinated GHG product that makes up between

0.5 percent and 100 percent of the product by mass.

40 C.F.R. § 98.416(c) (1)

(d) AEach bulk exporter of fluorinated GHGs or nitrous

oxide shall submit an annual report that summarizes theirits

exports at the corporate level, except for shipments including

less than 250 metric tonotwenty-five kilograms of GG~efluorinated

8
GHGs or nitrous oxide, transshipments, and heels. The report

shall contain the following information for each export: * *

*

40 C.F.R. § 98.416(d)

(f) By March 31, 2011, all fluorinated GHG production

facilities shall submit a one-time report that includes the

concentration of each fluorinated GHG constituent in each

fluorinated GHG product as measured under 98.414(n). If the

facility commences production of a fluorinated GHG product that

was not included in the initial report or performs a repeat

measurement under 98.414 (n) that shows that the identities or

concentrations of the fluorinated GHG constituents of a

fluorinated GHG product have changed, then the new or changed

concentrations, as well as the date of the change, must be

reflected in a revision to the report. The revised report must

be submitted to EPA by the March 31st that immediately follows

the measurement under 98.414 (n) .

40 C.F.R. § 98.416(f)

(g) Isolated intermediates that are produced and

transformed at the same facility are exempt from the reporting

requirements of this section.

40 C.F.R, § 98.416(g)

9
(h) Low-concentration constituents are exempt from the

reporting requirements of this section.

40 C.F.R. § 98.416(h)

(a) In addition to the data required by §98. 3 (g), the

fluorinated GHG production facility shall retain the following

records: * * *

(2) Records documenting the initial and periodic

calibration of the g~o chrom~togr~phonot analytical equipment

(including but not limited to GC, IR, FTIR, or NMR), weigh

scales, flowmeters, and volumetric and density measures used to

measure the quantities reported under this subpart, including

the industry standards or manufacturer directions used for

calibration pursuant to §98. 414 (j~) and (*0).

40 C.F.R. § 98.417(a)

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(f) Isolated intermediates that are produced and

transformed at the same facility are exempt from the

recordkeeping requirements of this section.

40 C.F.R. § 98.417(f)

-- --- - - - - - -- - ---- - - - ------ - - ---- - - ---- - - - -- --- - - - - --

(g) Low-concentration constituents are exempt from the

recordkeeping requirements of this section.

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40 C.F.R. § 98.417(g)

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --Al

Except as provided below, all of the terms used in this

subpart have the same meaning given in the Clean Air Act and

subpart A of this part. If a conflict exists between a

definition provided in this subpart and a definition provided in

subpart A, the definition in this subpart shall take precedence

for the reporting requirements in this subpart.

Isolated intermediate means a product of a process that is

stored before subsequent processing. An isolated intermediate

is usually a product of chemical synthesis. Storage of an

isolated intermediate marks the end of a process. Storage

occurs at any time the intermediate is placed in equipment used

solely for storage.

Low- concentration constituent means, for purposes of

fluorinated GHG production and export, a fluorinated GHG

constituent of a fluorinated GHG product that occurs in the

product in concentrations below 0.1 percent by mass. For

purposes of fluorinated GHG import, low-concentration

constituent means a fluorinated GHG constituent of a fluorinated

GHG product that occurs in the product in concentrations below

0.5 percent by mass. Low-concentration constituents do not

include fluorinated GHGs that are deliberately combined with the

11
product (e. g., to affect the performance characteristics of the

produc t) .

40 C.F.R. § 98.418

12