IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF INDIANA

UNITED STATES OF AMERICA ) ) Pl ai nt i ff, ) ) v. ) SOUTHERN INDIANA GAS & ELECTRIC ) COMPANY, INC. ) ) Defendant. ) ) ) C ivil Action No. IP99-1692 C-M/F

CONSENT DECREETABLE OF CONTENTS

I. JURISDICTION AND VENUE ................................................3 II. APPLICABILITY ..........................................................3 III. DEFINITIONS ............................................................4 IV. UNIT TO BE RE-POW ERED AND CONTROLLED OR RETIRED .................8 V. NO x EMISSION REDUCTIONS AND CONTROLS ...............................8 A. NO x Em ission Controls ................................................8

x Em ission Allowances or Credits ...............................1 0 B. Use of NO C. General NO x Provisions ...............................................1 0 VI. SO 2 EMISSION REDUCTIONS AND CONTROLS .............................1 0 A. SO 2 Em ission Controls ................................................1 0 B. Use and Surrender of SO 2 Allowances ....................................1 1 C. General SO 2 Provisions ...............................................1 4 VII. PM EMISSION REDUCTIONS AND CONTROLS .............................1 4 A. Optim ization of PM Controls ...........................................1 4 B. Installation and Operation of a Baghouse .................................1 4 C. PM Monitoring .....................................................1 5 VIII. PROHIBITION ON NETTING CREDI TS FROM REQUIRED CONTROLS .........1 5 IX. ENVIRONMENTAL PROJECT .............................................1 5 X. CIVIL PENALTY ..........................................................1 7 XI. RESOLUTION OF PAST CLAIMS ..........................................1 8

iiXII. PERIODIC REPORTING ..................................................1 9 XIII. REVIEW AND APPROVAL OF SUBMITTALS ..............................2 0 XIV. STIPULATED PENALTIES ...............................................2 0 XV. FORCE MAJEURE .......................................................2 5 XVI. DISPUTE RESOLUTION .................................................2 8 XVII. PERMITS AND STATE IMPLEMENTATION PLAN .........................3 0 XVIII. INFORMATION COLLECTION AND RETENTION .........................3 1 XIX. NOTICES ..............................................................3 3 XX. SALES OR TRANSFERS OF OW NERSHIP INTERESTS .......................3 4 XXI. EFFECTIVE DATE ......................................................3 5 XXII. RETENTION OF JURISDICTION .........................................3 6 XXIII. MODIFICATION ......................................................3 6 XXIV. GENERAL PROVISIONS ...............................................3 6 XXV. SIGNATORIES AND SERVICE ..........................................3 8 XXVI. PUBLIC COMMENT ...................................................3 8 XXVII. TERMINATION OF CONSENT DECREE .................................3 9 XVIII. FINAL JUDGMENT ...................................................4 0

iiiW H EREAS, the United States of Am erica (“the United States”), on behalf of the United States Environm ental Protection Agency (“EPA”), has filed an Am ended Com p laint, against Southern Indiana Gas and Electric Com p any, Inc. (“SIGECO”) pursuant to Sections 113(b) and 167 of the Clean Air Act (the “Act"), 42 U.S.C. §§ 7413(b) and 7477, for injunctive relief and the assessm ent of civil penalties at SIGECO’s F.B. Culley Station (“Culley Station”) coal f i red electric generation plant, for alleged violations of: (a) the Prevention of Significant Deterior ation provisions in Part C of Subchapter I of the Act, 42 U.S.C. §§ 7470-92; (b) the New Source Perform a nce Standards (NSPS) in 42 U.S.C. §7411; and (c) the federally approved and enforceable Indiana State Im plem entation Plan (“Indiana SIP”). W H EREAS, in the Am ended Com p laint, Plaintif f alleges, inter alia, that SIGECO f a iled to obtain the necessary perm its and install the controls necessary under the Act to reduce its sulfur dioxide, nitrogen oxides, and/or particulat e m a tter em issions, and that such em issions can dam a ge hum an health and the environm ent; W H EREAS, Plaintiff alleges that its Am ended Com p laint states claim s upon which relief can be granted against SIGECO under Sections 113 and 167 of the Act, 42 U.S.C. §§ 7413 and 7477, and 28 U.S.C. § 1355; W H EREAS, SIGECO has denied and continues to deny the violations alleged in the Am ended Com p laint, m a intains that it has been and rem a ins in com p liance with the Act and is not liable f o r civil penalties or injunctive relief , and states that it is agreeing to the obligations im posed by this Consent Decree solely to avoid the costs and uncertainties of litigation, and to

1reduce its em issions; also, SIGECO acknowledges that had the United States succeeded in this litigation, SIGECO would have been required, am ong other things, to install Best Available Control Technology at the Culley units in order to continue operation of the units; W H EREAS, EPA provided SIGECO and the State of Indiana with actual notice of violations pertaining to SIGECO’s alleged viol ations, in accordance with Section 113(a)(1)of the Act; W H EREAS, the parties anticipate that the installation and operation of pollution control equipm ent pursuant to this Consent Decree will achieve signif i cant reductions in SO 2 , NO xand PM em issions and thereby im prove air quality and that certain actions that SIGECO has agreed to undertake are expected to advance technologies and m e thodologies for reducing certain air

em issions; W H EREAS, Plaintiff and SIGECO have agreed, and the Court by entering this Consent Decree finds: that this Consent Decree has been negotiated in good faith and at arm s length; that this settlem e nt is fair, reasonable, in the best interest of the Parties and in the public interest, consistent with the goals of the Act; and that entry of this Consent Decree without further litigation as to the Culley Station is the m o st appropriate m eans of resolving this m a tter; and W H EREAS, Plaintiff and SIGECO have consented to entry of this Consent Decree without trial of any issue; NOW , THEREFORE, without any adm i ssion of fact or law, and without any adm i ssion of the violations alleged in the Am ended Com p laint, it is hereby ORDERED, ADJUDGED, AND DECREED as follows:

2I. JURISDICTION AND VENUE 1. This Court has jurisdiction over this action, the subject m a tter herein, and the Parties consenting hereto, pursuant to 28 U.S.C. §§ 1331, 1345, 1355, and 1367, Sections 113(b) and 167 of the Act, 42 U.S.C. §§ 7413(b) and 7477, and the Indiana SIP, 40 C.F.R. § 52.23. Venue is proper under Section 113(b) of the Act, 42 U.S.C. § 7413(b), and under 28 U.S.C. § 1391(b) and (c). Solely for the purposes of this Consent Decree and the Plaintiff’s underlying Am ended Com p laint, SIGECO waives all objections and defenses that it m a y have to the claim s set forth in the underlying Am ended Com p laint, and to the jurisdiction of the Court over SIGECO and this action, and to venue in this District. SIGECO shall not challenge the term s of this Consent Decree or this Court’s jurisdiction to enter and enforce this Consent Decree. For purposes of the Am ended Com p laint filed by Plaintiff in this m a tter and resolved by the Consent Decree, and for purposes of entry and enforcem ent of this Decree, SIGECO waives any defense or objection based on standing. Except as expre ssly provided for herein, this Consent Decree shall not create any rights in any Party other th an Plaintiff and SIGECO. Except as provided by Section XXVI (Public Comm e nt), the Parties cons ent to entry of this Consent Decree without further notice. II. APPLICABILITY 2. Upon entry, the provisions of this Consent Decree shall apply to and be binding upon the United States and upon SIGECO, its succe ssors and assigns, and SIGECO’s officers,

em ployees, and agents solely in their capacities as such. 3. SIGECO shall provide a copy of this Consent Decree to all vendors, suppliers, consultants, contractors, agents, and any other com p any or organization retained to perform any

3of the work required by this Consent Decree. Notwithstanding any retention of contractors, subcontractors, or agents to perform any work required under this Consent Decree, SIGECO shall be responsible for ensuring that all work is perform e d in accordance with the requirem e nts of Sections IV, V, VI , VII, and IX of this Cons ent Decree. In any action to enforce this Consent Decree, SIGECO shall not assert as a defense th e failure of its officers, directors, em ployees, servants, agents, or contractors to take actions necessary to com p ly with this Consent Decree unless SIGECO establishes that such failure resulted from a Force Majeure Event, as defined in Paragraph 100 of this Consent Decree. III. DEFINITIONS 4. A “30-Day Rolling Average Em ission Rate” shall be determ ined by calculating an arithm e tic average of all hourly em ission rates in lb/mm B TU for the current day and the previous 29 Operating Days. A new 30-Day Rolling Averag e Em ission Rate shall be calculated for each new Operating Day. Each 30-Day Rolling Average Em ission Rate shall include all start-up, shut down and Malfunction periods within each Operating Day. A Malfunction shall be excluded from this Em ission Rate, however, if it is determ ined to be a Force Majeure Event and satisfies the Force Majeure provisions of this Consent Decree. 5. “30-Day Rolling Average Rem oval Efficiency” m eans the percent reduction in the m a ss of a pollutant achieved by a Unit’s pollution control device over a 30-day period. This percentage shall be calculated by subtracting the outlet 30-Day Rolling Average Em ission Rate f r om the Unit’s inlet 30-Day Rolling Average Em ission Rate, dividing that difference by the Unit’s inlet 30-Day Rolling Average Em ission Rate, and then m u ltiplying by 100. A new 30- Day Rolling Average Rem oval Efficiency shall be calculated for each new Operating Day, and

4shall include all periods of startup, shutdown and Malfunction within an Operating Day. A Malfunction shall be excluded from this rem oval efficiency, however, if it is determ ined to be a Force Majeure Event and satisfies the Force Majeure provisions of this Consent Decree. 6. “CEMS” or “Continuous Em ission Monitoring System ” m eans, for obligations involving NO x and SO 2 under this Decree, the devices defined in 40 C.F.R. § 72.2 and installed and m a intained as required by 40 C.F.R. Part 75. 7. “Clean Air Act” or “Act” m eans the federal Clean Air Act, 42 U.S.C. §§7401- 7671q, and its im plem enting regulations. 8. “Consent Decree” m eans this Consent Decree. 9. “Em i ssion Rate” m eans the num ber of pounds of pollutant em itted per m illion BTU of heat input (“lb/mm B TU”), m easured in accordance with this Consent Decree. 10. “EPA” m eans the United States Environm ental Protection Agency. 11. “ESP” m eans electrostatic precipitator, a pollution control device for the reduction of particulate m a tter (PM). 12. “Flue gas desulfurization system ,” or “FGD,” m eans a pollution control device that em ploys flue gas desulfurization t echnology for the reduction of sulfur dioxide. 13. “Fossil fuel” m eans any hydrocarbon fuel, including coal, petroleum oil, or natural gas. 14. “lb/mm B TU” m eans one pound of a pollutant per m illion British Therm a l Units of heat input. 15. “Malfunction” m eans m a lfunction as that term is defined under 40 C.F.R.§ 60.2. 16. “MW ” m eans a m e gawatt, or one m illion W a tts.

517. “NO x ” m eans oxides of nitrogen, as m easured in accordance with the provisions of this Consent Decree. 18. “NSPS” m eans New Source Perform a nce Standards within the m eaning of Part A of Subchapter I, of the Clean Air Act, 42 U.S.C. § 7411, 40 C.F.R. Part 60. 19. “Operating Day” m eans any calendar day on which a Unit fires fossil fuel. 20. “Party” m eans SIGECO or the United States. 21. “Plaintif f ” m eans the United States. 22. “PM” m eans particulate m a tter, as m easured in accordance with the provisions of this Consent Decree. 23. “PM Em ission Rate” m eans the pounds of PM em itted per m illion BTU of heat input (“lb/mm B TU”), as m easured in accordance with the reference m e thods set forth in 40 C.F.R. Part 60, Appendix A, Method 5. 24. “PM Control Device” m eans an electrostatic precipitator (ESP) or baghouse technology designed to reduce em issions of partic ulate m a tter from coal at coal-fired units, including Illinois basin coal currently used at the Culley Station as of the date of lodging of this Consent Decree. 25. “PPM” m eans parts per m illion. 26. “Project Dollars” m eans SIGECO’s expenditures and paym ents incurred or m a de in carrying out the project identified in Sec tion IX of this Consent Decree (Environm ental Project) to the extent that such expenditures or paym ents both: (a) com p ly with the Project Dollar and other requirem e nts set by this Consent Decree in Section IX of this Consent Decree (Environm ental Project); and (b) constitute SIGE CO’s external costs for contractors, vendors,

6and equipm ent, and its internal costs consisting of em ployee tim e, travel, and other expenses specifically attributable to this particular project and docum ented in accordance with Generally Accepted Accounting Principles (“GAAP”). 27. “PSD” m eans Prevention of Significant Deterioration within the m eaning of Part C of Subchapter I of the Clean Air Act, 42 U.S.C. §§ 7470 - 7492 and 40 C.F.R. Part 52. 28. “SCR” m eans a device that em ploys selective catalytic reduction technology for the reduction of nitrogen oxides. 29. “SIGECO” m eans the Southern Indiana Gas and Electric Com p any, Inc. 30. “SIGECO Culley Station” m eans, solely for purposes of this Consent Decree, the three (3) coal-fired, steam generating boilers designated as (with the rated MW (gross) capacity of each Unit noted in parentheses): F.B. Culley Unit 1 (50 MW ), F.B. Culley Unit 2 (100 MW ), and F.B. Culley Unit 3 (287 MW ). 31. “SO 2 ” m eans sulfur dioxide, as m easured in accordance with this Consent Decree. 32. “SO 2 Allowance” m eans an “allowance,” as defined at 42 U.S.C. § 7651a(3): an authorization, allocated to an affected unit, by the Adm i nistrator of EPA under Subchapter IV of the Act, to em it, during or after a specified calendar year, one ton of sulfur dioxide. 33. “State” m eans the State of Indiana. 34. “Title V Perm it” m eans the perm it required of SIGECO’s m a jor sources under Subchapter V of the Clean Air Act, 42 U.S.C. §§ 7661-7661e. 35. “Unit” m eans, for the purpose of this Consent Decree, collectively, the coal pulverizer, the stationary equipm ent that feeds coal to the boiler, the boiler that produces steam

7f o r the steam turbine, the steam turbine, the generator, the equipm ent necessary to operate the generator, steam turbine and boiler, and all ancillary equipm ent, including pollution control equipm ent, or system s necessary for the production of electricity. An electric utility steam generating station m a y be com p rised of one or m o re Unit. IV. UNIT TO BE RE-POW ERED AND CONTROLLED OR RETIRED 36. By no later than Decem ber 31, 2004, SIGECO shall elect and notify EPA of such decision, to either re-power the F.B. Culley Unit 1 from a coal-fired to a natural gas fired unit, or retire and perm anently cease to operate Unit 1. 37. By no later than Decem ber 31, 2006, SIGECO shall either com p lete the re-power of F.B. Culley Unit 1 from a coal-fired to a natural gas fired unit and satisfy the NO x em ission control requirem e nts of Paragraphs 38 and 41, or retire and perm anently cease to operate Unit 1. V. NO x EMISSION REDUCTIONS AND CONTROLS A. NO x Em ission Controls 38. If SIGECO elects to re-power F.B. Culley Unit 1 under Paragraph 36 above with

a new com b ined cycle system , SIGECO shall install and comm e nce continuous operation of Selective Catalytic Reduction technology ("SCR") so as to achieve a 30-Day Rolling Average Em ission Rate not greater than 3.5 ppm NO x at F.B. Culley Unit 1 by no later than Decem ber 31, 2006. If SIGECO elects to repower F.B. Culley Unit 1 under Paragraph 36 above using the existing boiler system , SIGECO shall install and comm e nce continuous operation of the SCR for Culley Unit 1 so as to achieve a BACT-level em ission rate for NO x as determ ined by the State perm itting process, at F.B. Culley Unit 1 by no later than Decem ber 31, 2006. 39. SIGECO shall continuously operate the SCR currently installed at F.B. Culley

8Unit 3 so as to achieve and m a intain a 30-Day Rolling Average Em ission Rate for NO greater than 0.100 lb/mm B TU by no later than Septem ber 1, 2003. x of not

40. At any tim e after Septem ber 30, 2003, SIGECO m a y subm it to the Plaintiff a proposed revision to the applicable 30-Day Rolling Average Em issions Rate for NO x on any SIGECO Culley Station Unit equipped with S CR and subject to a 30-Day Rolling Average Em ission Rate. To m a ke a successful petition, SIGECO m u st dem onstrate that it cannot consistently achieve the Decree-m a ndated NO x em issions rate for the Unit in question, considering all relevant inform ation, including but not lim ited to the past perform a nce of the SCR, reasonable m easures to achieve the designed level of perform a nce of the SCR in question, the expected frequency of catalyst replacem ent, the perform a nce of other NO x controls installed at the U nit, and the operational history of the Unit. SIGECO shall include in such proposal an alternative 30-Day Rolling Average Em issions Rate. SIGECO also shall retain a qualif ied contractor to assist in the perf orm a nce and com p letion of the petition f o r an alternate 30-Day Rolling Average Em issions Rate for NO x . SIGECO shall deliver with each subm ission all pertinent docum ents and data that support or were considered in preparing such subm ission. If the Plaintiff disapproves the revised em ission rate , such disagreem ent is subject to Section XVI (“Dispute Resolution”). SIGECO shall m a ke any subm ission for any Unit under this Paragraph no later than fifteen m onths after the com p liance date specified for that Unit in Paragraph 39. 41. SIGECO shall continuously operate each SCR at Units 1 (if elected) and 3 at all tim es that the Unit it serves is in operation, consistent with the technological lim itations,

m a nufacturers’ specifications, and good operating practices for the SCR.

9B. Use of NO x Em ission Allowances or Credits 42. For any and all actions taken by SIGECO to conform to the requirem e nts of this

x em issions trading or m a rketing program of any kind. Consent Decree, SIGECO shall not sell or trade any resulting NO allowances or credits in an

43. For any and all actions taken by SIGECO to conform to the requirem e nts of this Consent Decree, NO x Allowances or credits generated at Culley Units 1, 2, and 3, m a y be used at Culley Units 1, 2, and 3 only, for com p liance with any em issions trading or m a rketing program requirem e nt. However, nothing in this Consent Decree shall be deem ed to prohibit the use system -wide of any early reduction NO xcredits resulting from the operation of Culley Unit 3 SCR during the 2003 NO x ozone season, in accordance with the Indiana NO x SIP. 44. SIGECO m a y not use, purchase or otherwise obtain NO x allowances or credits from another source for purposes of com p lying with the requirem e nts of this Consent Decree. C. General NO x Provisions 45. In determ ining Em ission Rates for NO x, with those reference m e thods specified in 40 C.F.R. Part 75. SIGECO shall use CEMS in accordance

46. In calculating the 30-day Rolling Average Em ission Rate for NO Unit, SIGECO shall not exclude any period of tim e that the Unit is in operation, including

x em ission control technology for those Units is not in operation. x for a given

periods in which any NO VI. SO 2 EMISSION REDUCTIONS AND CONTROLS A. SO 2 Em ission Controls 47. SIGECO shall im prove the FGD serving Units 2 and 3 so as to achieve and

m a intain a 30-Day Rolling Average SO 2 Rem oval Efficiency of at least 95 percent, by no later

10than June 30, 2004. 48. SIGECO shall continuously operate the FGD serving Units 2 and 3 at all tim es that the Units are in operation, except as provided in Paragraph 49 below. Following startup of the Units, SIGECO need not operate the FGD until either Unit is f i red with any coal. 49. In the event of a planned FGD outage, SIGECO m a y continue to operate Unit 2 but shall burn down the coal existing in the Unit 2 bunker to the extent practicable, and, prior to shutting down the FGD, load Com p liance Coal into the bunker for use until such tim e as the FGD resum e s operation. In the event of an unplanned FGD outage, SIGECO shall feed Com p liance Coal to the Unit 2 bunker until such tim e as the FGD resum e s operation. Com p liance Coal is defined as 2.0 lb/mm B TU SO 2 as dem onstrated by a 4-hour com posite

sam p le of the feed stock. B. Use and Surrender of SO 2 Allowances 50. SIGECO shall not sell or trade, in an em issions trading or m a rketing program of any kind, SO 2 Allowances that correspond to the increm ental em issions reductions that result from : (1) the im proved percent rem oval efficiency of the Unit 2 and 3 FGD system as described in Paragraph 47 (the difference between a 95 percent rem oval efficiency and the average

rem oval efficiency from the years 2000, 2001, and 2002 as applied to the year in question); (2) the em issions reductions associated with the Unit 1 natural gas repowering or retirem ent as described in Paragraph 36; and (3) the em issions reductions associated with the feeding of Com p liance Coal to Unit 2 in accordance with Paragraph 49. 51. SIGECO m a y use the increm ental em issions allowances described in Paragraph 50 only to satisfy the operational needs of Culley Station, provided SIGECO first uses

11Allowances allocated for the given year that the em issions occur that are not the increm ental allowances described in Paragraph 50 to satisfy the Culley Station operational needs. 52. SIGECO shall surrender the increm ental allowances described in Paragraph 50 that exceed such allowances allocated for the given year necessary to m eet the Culley Station operational needs as described in Paragraph 51. 53. SIGECO m a y not use, purchase or otherwise obtain SO 2 allowances from another source for purposes of com p lying with the requirem e nts of this Consent Decree. 54. For purposes of this Subsection, the “surrender of allowances” m e ans perm anently surrendering allowances from the accounts adm i nistered by EPA for all units at SIGECO’s Culley Station as specified in Paragraph 52, so that such allowances can never be used to m eet any com p liance requirem e nt under the Clean Air Act, the Indiana State Im plem entation Plan, or this Consent Decree. 55. Beginning with calendar year 2004, SIGECO shall surrender to EPA, or transfer to a non-profit third party selected by SIGECO for surrender, any SO 2 Allowances that are required to be surrendered under Paragraph 52. Surrender shall occur annually thereafter and within 45 days of SIGECO’s receipt from EPA of the Annual Deduction Reports for SO 2 . SIGECO shall surrender SO 2 Allowances by the use of applicable United States Environm ental Protection Agency Acid Rain Program Allowance Transfer Form

. 56. If any allowances are transferred directly to a third party for purposes of surrender, SIGECO shall include a description of such transf er in the next report subm itted to the Plaintiff pursuant to Section XII (Periodic Reporti ng) of this Consent Decree. Such report shall: (i) provide the identity of the non-profit third-party recipient(s) of the SO 2 Allowances and a

12listing of the serial num bers of the transferred SO 2 Allowances; and (ii) include a certif ication by the third-party recipient(s) stating that the recipient will not sell, trade, or otherwise exchange any of the allowances and will not use any of the SO 2 Allowances to m eet any obligation im posed by any environm ental law. No later than the next periodic report due 12 m onths after the f i rst report due af ter the transf er, SIGECO shall include in the periodic report to Plaintif f

, required under Section XII, a statem ent that the third-party recipient(s) surrendered the SO 2 Allowances f o r perm anent surrender to EPA with in one year after SIGECO transferred the SO 2 Allowances to them

. SIGECO shall not have com p lied with the SO 2 Allowance surrender requirem e nts of this Paragraph until all third-party recipient(s) shall have actually surrendered the transferred SO 2 Allowances to EPA for surrender. 57. For all SO 2 Allowances surrendered to EPA, SIGECO shall first subm it an SO 2 Allowance transfer request form to EPA’s O ffice of Air and Radiation’s Clean Air Markets Division directing the transfer of the SO 2 Allowances held or controlled by SIGECO to the EPA Enforcem ent Surrender Account or to any other EPA account that the Agency m a y direct. As part of subm itting these transf er requests, SIGECO shall irrevocably authorize the transf er of these SO 2 Allowances and identify -- by nam e of account and any applicable serial or other identification num bers or station nam e s -- the source and location of the SO 2 Allowances being surrendered. 58. The requirem e nts in Paragraphs 52 and 55 of this Decree pertaining to SIGECO’s surrender of SO 2 Allowances are perm anent injunctions not subject to any term ination provision of this Decree. These provisions shall survive any term ination of this Decree in whole or in part.

13C. General SO 2 Provisions 59. In determ ining Em ission Rates for SO 2 , SIGECO shall use CEMS in accordance with those reference m e thods specified in 40 C.F.R. Part 75 and 40 C.F.R. Part 60. 60. For Units that are required to be equipped with SO 2 control equipm ent and that are subject to the 95% rem oval provisions, the outlet SO 2 Em ission Rate and the inlet SO 2 Em ission Rate shall be determ ined in accordance with 40 C.F.R. § 75.15 (using SO 2 CEMS data from both the inlet and outlet of the control device). VII. PM EMISSION REDUCTIONS AND CONTROLS A. Optim ization of PM Controls 61. By no later than July 15, 2003 and continuing thereafter, SIGECO shall continuously operate, at all tim es the Unit is com busting coal, each ESP on its Culley Station Units to m a xim i ze PM em ission reductions, consistent with the operational and m a intenance lim itations of the Units. Specifically, SIGECO shall take m easures including: (a) energize each section of the ESP for each Unit, regardless of whether that action is needed to com p ly with opacity lim its; (b) m a intain the energy or power levels delivered to the ESPs for each Unit to achieve the greatest possible rem oval of PM; and (c) m a ke best efforts to expeditiously repair and return to service transf orm e r-rectif ier sets when they f a il. B. Installation and Operation of a Baghouse 62. By no later than June 30, 2007, SIGECO shall install and operate a Baghouse (a PM Control Device) at Unit 3 that achieves and m a intains a PM Em ission Rate of 0.015 lb/mm B TU. 63. SIGECO shall continuously operate the Baghouse at all tim es that Unit 3 is

14com busting coal. C. PM Monitoring 64. By no later than Decem ber 31, 2003, and continuing biennially thereafter, SIGECO shall conduct perform a nce testing on F.B. Culley Unit 3. Such perform a nce tests m a y be satisfied by stack tests conducted in accordance with SIGECO’s perm it from the State of Indiana. 65. In determ ining the PM Em ission Rate, SIGECO shall use the reference m e thods specified in 40 C.F.R. Part 60, Appendix A, Method 5, using stack tests, or alternative m e thods that are requested by SIGECO and approved by EPA. SIGECO shall also calculate the PM Em ission Rates from biennial stack tests in acco rdance with 40 C.F.R. § 60.8(f). The results of each PM stack test shall be subm itted to EPA within 45 days of com p letion of each test. VIII. PROHIBITION ON NETTING CREDI TS FROM REQUIRED CONTROLS 66. For any and all actions taken by SIGECO to com p ly with the requirem e nts of this Consent Decree, any em ission reductions generated shall not be considered as a creditable contem poraneous em ission decrease for the purpose of obtaining a netting credit under the Clean Air Act’s PSD program

. IX. ENVIRONMENTAL PROJECT 67. SIGECO shall design, construct, operate, and analyze a Sulfuric Acid Reduction Project (“Project”) to reduce SO 3 content in the flue gas of Culley Unit 3. The Project requires the injection of sodium bi-sulfite/sulfate in variable concentrations to determ ine the rem oval efficiency and viability of operation. The Project includes, but is not lim ited to, installation of pollution control technology including an injec tion grid, piping, pum ps, storage tanks and a

15control system

. 68. SIGECO shall, by no later than June 30, 2004, comm e nce operation of the Project. 69. By no later than Decem ber 31, 2003, SIGECO shall subm it to the Plaintiff for review and approval pursuant to Section XIII of this Consent Decree a plan for the im plem entation of the Project, including the date by which SIGECO will comm e nce design and construction of the Project. To the extent that any changes to the Project m a y be required, SIGECO shall notify the Plaintiff of such change s within 60 days of becom i ng aware a change is necessary. SIGECO shall im plem ent the Project in com p liance with the schedules and term s of this Consent Decree and the plans for such Project approved under this Decree. 70. For purposes of this Consent Decree, in perform i ng the Project, including costs of operation (which includes the fair m a rket value of the sodium bisulfite/sulfate solution), SIGECO shall, prior to Decem ber 31, 2007, spend no less than $2.5 m illion in Project Dollars (m easured in calendar year 2003 constant dollars). SIGECO shall m a intain all docum ents required by Generally Accepted Accounting Principles to substantiate the Project Dollars spent by SIGECO, and shall provide copies of these docum ents to the Plaintiff within 30 days of a request by the Plaintiff for these docum ents. 71. All plans and reports prepared by SIGECO pursuant to the requirem e nts of this Section in this Consent Decree shall be public ly available without charge, subject to the lim itations contained in Paragraph 127. 72. SIGECO shall certify, as part of each plan subm itted to the Plaintiff for the Project, that it is unaware that the Project is required by law, other than by this Consent Decree.

1673. W ithin 60 days following the com p letion of the Project, SIGECO shall subm it to EPA a report that docum ents the date that the Project was com p leted, SIGECO’s results of im plem enting the Project, including the em ission reductions, the ability to am eliorate any increm ental particulate loading from the SCR, or other environm ental benefits achieved, and the Project Dollars expended by SIGECO in im plem enting the Project. 74. Following the expenditure of $2.5 m illion for this Project, SIGECO shall continue to operate the Project, unless the Parties agree that the Project is no longer viable and effective to reduce em ission of sulfuric acid, or the Project is no longer cost-effective to operate. In no event shall SIGECO be required to continue to operate the Project beyond Decem ber 31, 2010. 75. SIGECO shall not financially benefit from the sale or transfer of the technology or the collection or distribution of in form ation collected during the Project. 76. SIGECO shall provide EPA with sem i -annual updates concerning the progress of the Project. SIGECO also shall m a ke inform ation concerning the perform a nce of the Project available to the public in an expeditious m a nner. Such inform ation disclosure shall include, but not be lim ited to, release of periodic progress reports identifying the reduction of sulfuric acid, sorbent injection rates, and cost. In addition, periodic technology transfer open houses and plant tours shall be scheduled. X. CIVIL PENALTY 77. W ithin thirty (30) calendar days of entry of this Consent Decree, SIGECO shall pay to the United States a civil penalty in the am ount of $600,000. The civil penalty shall be paid by Electronic Funds Transfer ("EFT") to the United States Departm e nt of Justice, in accordance with current EFT procedures, referencing the USAO File Num b er 1999V00828 and

17DOJ Case Num b er 90-5-2-1-06966 and the civil action case nam e and case num ber of this action, with notice given to the Plaintiff, in accordance with Section XIX (Notices) of this Consent Decree. The costs of such EFT shall be SIGECO’s responsibility. Paym ent shall be

m a de in accordance with instructions provided to SIGECO by the Financial Litigation Unit of the U.S. Attorney' s Office for the Southern District of Indiana. Any funds received after 2:00 p.m . EDT shall be credited on the next business day. At the tim e of paym ent, SIGECO shall provide notice of paym ent, referencing the USAO File Num b er, DOJ Case Num b er 90-5-2-1- 06966, and the civil action case nam e and case num ber, to the Departm e nt of Justice and to EPA, as provided in Paragraph 129 (Notice) of this Consent Decree. 78. Failure to tim ely pay the civil penalty shall subject SIGECO to interest accruing f r om the date paym ent is due until the date paym ent is m a de at the rate prescribed by 28 U.S.C. § 1961, and shall render SIGECO liable for all charges, costs, fees, and penalties established by law for the benefit of a creditor or of the United States in securing paym ent. 79. Paym ents m a de pursuant to this Section are penalties within the m e aning of Section 162(f) of the Internal Revenue Code , 26 U.S.C. § 162(f), and are not tax-deductible expenditures for purposes of federal law. XI. RESOLUTION OF PAST CLAIMS 80. Entry of this Consent Decree shall resolve all civil claim s of the United States that arose from any m odifications that comm e nced at the Culley plant prior to the date of lodging of this Consent Decree, including those m odifications alleged against SIGECO in the Am ended Com p laint filed January 4, 2000.

18XII. PERIODIC REPORTING 81. W ithin 180 days of the installation of the Baghouse in Paragraph 62, or the SCR on Unit 1 if elected in accordance with Paragraph 36, SIGECO shall conduct perform a nce tests that dem onstrate com p liance with the Em ission Rate or Rem oval Efficiency required by this Consent Decree. W ithin 45 days of each such perform a nce test, SIGECO shall subm it the results of the perform a nce test to EPA at the address sp ecified in Section XIX (Notices) of this Consent Decree. 82. Beginning thirty days after the calendar quarter ending Decem ber 31, 2003, continuing on a sem i -annual basis until Decem ber 31, 2010, unless prior to this date the Consent Decree term inates under Section XXVII, and in addition to any other express reporting requirem e nt in this Consent Decree, SIGECO shall subm it to EPA a progress report. 83. The progress report shall contain the following inform ation:

a. all inf o rm ation necessary to determ ine com p liance with this Consent Decree; and b. all inform ation indicating that the installation and/or comm e ncem ent of operation for a pollution control device m a y be delayed, including the nature and cause of the delay, and any steps taken by SIGECO to m itigate such delay. 84. In any periodic progress report subm itted pursuant to this Section, SIGECO m a y incorporate by reference inform ation previously subm itted under its Title V perm itting requirem e nts, provided that SIGECO attaches the Title V perm it report and provides a specif ic reference to the provisions of the Title V perm it report that are responsive to the inform ation sought in the periodic progress report.

1985. In addition to the progress reports required pursuant to this Section, SIGECO shall provide a written report to the Plaintif f of any violation of the requirem e nts of this Consent Decree, including, but not lim ited to, exceedances of required Em ission Rates and rem oval efficiencies, within 10 business days of whenSIGECO knew or should have known of any such violation. In this report, SIGECO shall explai n the cause or causes of the violation and all

m easures taken or to be taken by SIGECO to prevent such violations in the future. 86. Each SIGECO report shall be signed by a SIGECO Vice President, Environm ental Director, the General Counsel, or sim ilarly ranked com p any official, and shall contain the f o llowing certif ication: This inform ation was prepared either by m e or under mydirection or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the inform ation subm itted. Based on myevaluation, or the directions and myinquiry of the person(s) who m a nage the system , or the person(s) directly responsible for gathering the inform ation, I hereby certify under penalty of law that, to the best of myknowledge and belief, this inform ation is true, accurate, and com p lete. I understand that there are significant penalties for subm itting false, inaccurate, or incom p lete inform ation to the United States. 87. If any allowances are surrendered to any third party pursuant to Section VI.B of this Consent Decree, the third party’s certification shall be signed by a m a naging officer of the third party and shall contain the following language: I certify under penalty of law that,_____________ [nam e of third party] will not sell, trade, or otherwise exchange any of the allowances and will not use any of the allowances to m eet any obligation im posed by any environm ental law. I understand that there are significant penalties for m a king false, inaccurate, or incom p lete inf o rm ation to the United States. XIII. REVIEW AND APPROVAL OF SUBMITTALS 88. SIGECO shall subm it and com p lete each plan, report, or other item to Plaintiff whenever such a docum ent is required to be subm itted f o r review or approval pursuant to this

20Consent Decree. EPA m a y approve the subm ittal or decline to approve it and provide written

comm e nts. W ithin 60 days of receiving written comm e nts from EPA, SIGECO shall either: (i) alter the subm ittal consistent with the written comm e nts and provide the revised subm ittal f o r final approval to EPA if called for in this Consent Decree; or (ii) subm it the m a tter for dispute resolution, including the period of inform al negotiations, under Section XVI (Dispute Resolution) of this Consent Decree. 89. Upon receipt of EPA’s final approval of the subm ittal, or after dispute resolution, SIGECO shall im plem ent the approved subm ittal or the subm ittal as revised by dispute resolution. XIV. STIPULATED PENALTIES 90. For any failure by SIGECO to com p ly with the term s of this Consent Decree, and subject to the provisions of Sections XV (F orce Majeure) and XVI (Dispute Resolution), SIGECO shall pay, within 30 days af ter written dem a nd to SIGECO by the United States the f o llowing stipulated penalties to EPA: Consent Decree Violation S tipulated Penalty (Per day per violation, unless otherw ise specified) a. Failure to pay the civil penalty as specified in Section X (Civil Penalty) of this Consent Decree $10,000 b. Failure to m eet any 30-Day Rolling Average Em ission Rate, any 30-Day Rolling Average Rem oval Efficiency, or any other Em ission Rate or em ission lim itation, where the violation is less than 5% in excess of the lim its set f o rth in this Consent Decree $2,500

21c. Failure to m eet any 30-Day Rolling Average Em ission Rate, any 30-Day Rolling Average Rem oval Efficiency, or any other Em ission Rate or em ission lim itation, where the violation is equal to or greater than 5% but less than 10% in excess of the lim its set f o rth in this Consent Decree $5,000

d. Failure to m eet any 30-Day Rolling Average Em ission Rate, any 30-Day Rolling Average Rem oval Efficiency, or any other Em ission Rate or em ission lim itation, where the violation is equal to or greater than 10% in excess of the lim its set f o rth in this Consent Decree $10,000

e. Failure to install, comm e nce operation, or continue operation of the NO x , SO 2 , and PM pollution control devices on any Unit, or failure to retire a Unit $10,000 during the first 30 days, $27,500 thereafter f. Failure to conduct perform a nce tests of PM em issions, as required by Section VII $1,000

g. Failure to apply for the perm its required by Section XVII $1,000 h. Failure to tim ely subm it, m odify, or im plem ent as approved the reports, plans, studies, analyses, protocols, or other subm ittals required by this Consent Decree $750 for the first ten days, $1,000 thereafter. i. Using, selling, or transferring SO 2 Allowances in contravention of Section VI (a) $2,000 per SO 2 Allowance ton, plus (b) the surrender of SO 2 Allowances in an am ount equal to the SO 2 Allowances used, sold, or transferred in violation of the Decree j. Using, selling or transferring NO x allowances or credits in contravention of Section V (a) $4,000 per NO x Allowance and credit ton, plus (b) the surrender of NO x allowances or credits in an am ount equal to the NO x allowances or credits used, sold, or transferred in violation of the Decree k. Failure to surrender an SO 2 Allowance in accordance with Section VI (a) $27,500 plus (b) $1,000 per SO 2 Allowance

22l. Failure to dem onstrate the third-party surrender of an SO 2 Allowance in accordance with Section VI $2,500

m . Failure to undertake and com p lete the Environm ental Project in com p liance with Section IX (Environm ental Project) $1,000 for the first 30 days, $5,000 thereafter

n. Any other violation of this Consent Decree $1,000 91. Violation of an Em ission Rate or Rem oval Efficiency that is based on a 30-Day Rolling Average is a violation on every day on which the average is based. 92. Wh ere a violation of a 30-Day Rolli ng Average Em ission Rate or Rem oval Efficiency (for the sam e pollutant and from the sam e source) recurs within periods less than 30 days, SIGECO shall not pay a daily stipulated penalty for any day of the recurrence for which a stipulated penalty has already been paid. 93. All stipulated penalties shall begin to accrue on the day after the perform a nce is due or on the day a violation occurs, whichever is applicable, and shall continue to accrue until perform a nce is satisfactorily com p leted or until the violation ceases. Nothing herein shall preclude the sim u ltaneous accrual of separate penalties for separate violations of this Consent Decree. 94. SIGECO shall not be liable f o r stipulated penalties f o r f a ilure to m eet the

em issions rate requirem e nt in Paragraph 39 until January 1, 2004. 95. SIGECO shall pay all stipulated penalties to the United States, in the m a nner set forth below in Paragraph 97, within 30 days of any violation of this Consent Decree, and shall continue to m a ke such paym ents every 30 days thereafter until the violation(s) no longer continues, unless SIGECO elects within 20 days of the violation to dispute the accrual of stipulated penalties in accordance with the provisions in Section XVI (Dispute Resolution) of

23this Consent Decree. 96. Penalties shall continue to accrue as provided in accordance with Paragraph 93 during any dispute, with interest on accrued penalties payable and calculated at the rate established by the Secretary of the Treasury, pursuant to 28 U.S.C. § 1961, but need not be paid until the f o llowing:

a. If the dispute is resolved by agreem ent or by a decision of the Plaintiff that is not appealed to the Court, accrued penalties determ ined to be owing, together with accrued interest, shall be paid to the United States within thirty (30) days of the effective date of the agreem ent or the receipt of EPA’s decision or order; b. If the dispute is appealed to the Court and the Plaintiff prevails in whole or in part, SIGECO shall, within sixty (60) da ys of receipt of the Court’s decision or order, pay all accrued penalties determ ined by the Court to be owing, together with accrued interest, except as provided in Subparagraph c, below;

c. If the District Court’s decision is appealed by any Party, SIGECO shall, within fifteen (15) days of receipt of the final appellate court decision, pay all accrued penalties determ ined to be owing to the United States, together with accrued interest. 97. All stipulated penalties m u st be paid within thirty (30) days of the date payable, and paym ent shall be m a de in the m a nner set fo rth in Section X of this Consent Decree (Civil Penalty). 98. Should SIGECO fail to pay stipulated penalties in com p liance with the term s of this Consent Decree, the United States shall be entitled to collect interest on such penalties, as

24provided for in 28 U.S.C. § 1961. 99. The stipulated penalties provided f o r in this Consent Decree shall be in addition to any other rights, rem e dies, or sanctions av ailable to the Plaintiff by reason of SIGECO’s failure to com p ly with any requirem e nt of this Consent Decree or applicable law, except that for any violation of the Act for which this Consent Decree also provides for paym ent of a stipulated penalty, SIGECO shall be allowed a credit f o r stipulated penalties paid against any statutory penalties im posed for such violation. XV. FORCE MAJEURE 100. For purposes of this Consent Decree, a “Force Majeure Event” shall m ean an event that has been or will be caused by circum stances beyond the control of SIGECO, its contractors, or any entity controlled by SIGECO that delays com p liance with any provision of this Consent Decree or otherwise causes a viol ation of any provision of this Consent Decree despite SIGECO’s best efforts to fulfill the oblig ation. “Best efforts to fulfill the obligation” includes using best efforts to anticipate any potential Force Majeure Event and to address the effects of any such event (a) as it is occurring a nd (b) after it has occurred, such that the delay or violation is m i nim i zed to the greatest extent possible. 101. Notice

. If any event occurs or has occurred that m a y delay com p liance with or otherwise cause a violation of any obligation under this Consent Decree, as to which SIGECO intends to assert a claim of force m a jeure, SIGE CO shall notify the Plaintiff in writing as soon as practicable, but in no event later than fourteen (14) business days following the date SIGECO first knew, or by the exercise of due diligence should have known, that the Force Majeure Event caused or m a y cause such delay or violation. In this notice SIGECO shall reference this

25Paragraph of this Consent Decree and describe the anticipated length of tim e that the delay or violation m a y persist, the cause or causes of the delay or violation, all m easures taken or to be taken by SIGECO to prevent or m i nim i ze the de lay or violation, the schedule by which SIGECO proposes to im plem ent those m easures, and SIGECO’s rationale for attributing a delay or violation to Force Majeure Event. SIGECO shall adopt all reasonable m easures to avoid or

m i nim i ze such delays or violations. SIGECO shall be deem ed to know of any circum stance of which SIGECO, its contractors, or any en tity controlled by SIGECO knew or should have known. 102. Failure to Give Notice

. If SIGECO fails to com p ly with the notice requirem e nts of this Section, the Plaintiff m a y void SIGECO’s claim for Force Majeure as to the specific event for which SIGECO has failed to com p ly with such notice requirem e nt. 103. Plaintiff’s Response

. The EPA shall notify SIGECO in writing regarding SIGECO’s claim of Force Majeure within (20) twenty business days of receipt of the notice provided under Paragraph 101. If the Plaintiff agrees that a delay in perform a nce has been or will be caused by a Force Majeure Event, the Parties shall stipulate to an extension of deadline(s) for perform a nce of the affected com p liance requirem e nt by a period not to exceed the delay actually caused by the event. In such circum stances, an appropriate m odification shall be m a de pursuant to Section XXIII of this Consent Decree (Modification). 104. Disagreem ent

. If the Plaintiff does not accept SIGECO’s claim of Force Majeure, the m a tter shall be resolved in accordance withSection XVI of this Consent Decree (Dispute Resolution). 105. Burden of Proof

. In any dispute regarding Force Majeure, SIGECO shall bear the

26burden of proving that any delay in perform a nce or any other violation of any requirem e nt of this Consent Decree was caused by or will be caused by a Force Majeure Event. SIGECO shall also bear the burden of proving that SIGECO gave the notice required by this Section and the anticipated duration and extent of any delay(s) attributable to a Force Majeure Event. An extension of one com p liance date based on a particular event m a y, but will not necessarily, result in an extension of a subsequent com p liance date. 106. Events Excluded

. Unanticipated or increased costs or expenses associated with the perform a nce of SIGECO’s obligations unde r this Consent Decree shall not constitute a Force Majeure Event. 107. Potential Force Majeure Events

. The Parties agree that, depending upon the circum stances related to an event and SIGECO’s response to such circum stances, the kinds of events listed below are am ong those that could qualify as Force Majeure Events within the

m eaning of this Section: construction, labor, or equipm ent delays; acts of God; acts of war or terrorism ; and Malfunctions, as defined herein. Depending upon the circum stances and SIGECO’s response to such circum stances, failure of a perm itting authority to issue a necessary perm it in a tim ely f a shion m a y constitute a Force Majeure Event where the f a ilure of the perm itting authority to act is beyond the control of SIGECO and SIGECO has taken all steps available to it to obtain the necessary perm it, including, but not lim ited to, subm itting a com p lete perm it application, responding to requests for additional inform ation by the perm itting authority in a tim ely fashion, accepting lawful perm it term s and conditions, and prosecuting in an expeditious fashion appeals of any allegedly unlawful term s and conditions im posed by the perm itting authority.

27108. For purposes of this Section, a “Malfunction” shall have the m eaning set forth in 40 C.F.R. § 60.2: any sudden, infrequent, and not reasonably preventable failure of air pollution control equipm ent, process equipm ent, or a process to operate in a norm a l or usual m a nner. Failures that are caused in part by poor m a intenance or careless operation are not Malfunctions. 109. As part of the resolution of any m a tter subm itted to this Court under this Section, the Parties by agreem ent, or this Court by order, m a y in appropriate circum stances extend or

m odify the schedule for com p letion of work under this Consent Decree to account for the delay in the work that occurred as a result of any delay agreed to by the Plaintiff or approved by this Court. SIGECO shall be liable f o r stipulated penalties f o r its f a ilure thereaf ter to com p lete the work in accordance with the extended or m odified schedule. XVI. DISPUTE RESOLUTION 110. The dispute resolution procedure provided by this Section shall be available to resolve all disputes arising under this Consent Decree, except as provided in either this Section (Dispute Resolution) or Section XV (Force Majeure) of this Consent Decree, provided that the Party m a king such application has first m a de a good faith attem p t to resolve the m a tter with the other Party. 111. The dispute resolution procedure required herein shall be invoked by one Party to this Consent Decree giving written notice to the other party to this Consent Decree advising of a dispute pursuant to this Section. The notice shall describe the nature of the dispute and shall state the noticing Party' s position with regard to such dispute. The Party receiving such a notice shall acknowledge receipt of the notice, and the Parties in dispute shall expeditiously schedule a

m eeting to discuss the dispute inform ally not later than fourteen (14) days following receipt of

28such notice. 112. Disputes subm itted to dispute resolution under this Section shall, in the first instance, be the subject of inform al negotiations am ong the disputing Parties. Such period of inform al negotiations shall not extend beyond thirty (30) calendar days from the date of the first

m eeting am ong the disputing Parties’ representatives unless they agree to shorten or extend this period. 113. If the disputing Parties are unable to reach agreem ent during the inform al negotiation period, the Plaintiff shall provide SIGECO with a written summ a ry of its position regarding the dispute. The written position provide d by the Plaintif f shall be considered binding unless, within forty-five (45) calendar days ther eafter, SIGECO seeks judicial resolution of the dispute by filing with this Court a petition. The Plaintiff m a y respond to the petition within forty-five (45) calendar days of filing. 114. Wh ere the nature of the dispute is such that a m o re tim ely resolution of the issue is required, the tim e periods set out in this Section m a y be shortened upon m o tion of one of the Parties to the dispute. 115. This Court shall not draw any inferences nor establish any presum ptions adverse to any disputing Party as a result of invocation of this Section or the disputing Parties' inability to reach agreem ent. 116. As part of the resolution of any dispute under this Section, in appropriate circum stances the disputing Parties m a y agree, or this Court m a y order, an extension or

m odification of the schedule for the com p letion of the activities required under this Consent Decree to account for the delay that occurred as a result of dispute resolution. SIGECO shall be

29liable f o r stipulated penalties f o r its f a ilure thereaf ter to com p lete the work in accordance with the extended or m odified schedule. 117. The Court shall decide all disputes pursuant to applicable principles of law for resolving such disputes. In their initial filings with the Court under Paragraph 113, the disputing Parties shall state their respective positions as to the applicable standard of law f o r resolving the particular dispute. XVII. PERMITS AND STATE IMPLEMENTATION PLAN 118. Unless expressly stated otherwise in this Consent Decree, in any instance where otherwise applicable law or this Consent Decree requires SIGECO to secure a perm it to authorize constructing or operating any device, including all preconstruction, construction, and operating perm its required under state law, SIGECO shall m a ke such application in a tim ely

m a nner. EPA will use its best ef f o rts to expeditiously review all perm it applications subm itted pursuant to this Consent Decree. 119. Wh en perm its are required by Paragraph 118, SIGECO shall com p lete and subm it applications f o r such perm its to the appropriate authorities to allow suf f i cient tim e f o r all legally required processing and review of the perm it request. Any failure by SIGECO to subm it a tim ely perm it application for any Unit at the Culley plant shall bar any use by SIGECO of Section XV (Force Majeure), where a Force Majeure claim is based on that perm itting delay. 120. Notwithstanding the reference to Title V perm its in this Consent Decree, the enforcem ent of such perm its shall be in accordan ce with their own term s and the Act. The Title V perm its shall not be directly enforceable under this Decree, although any term or lim it established by or under this Decree shall be enforceable under this Decree regardless of whether

30such term has or will becom e part of a Title V perm it, subject to the term s of Section XXVII (Term i nation of Consent Decree). 121. W ithin ninety (90) days of entry of this Consent Decree, SIGECO shall am end any applicable Title V perm it application, or apply for am endm ents of its Title V perm its, to include a schedule for all perform a nce, operational, m a intenance, and control technology requirem e nts established by this Consent Decree, including but not lim ited to, Em ission Rates, Rem oval Efficiencies, and the requirem e nts in Paragraphs 52 and 55 pertaining to surrender of SO 2 Allowances. 122. W ithin one year from the comm e ncem ent of operation of each pollution control device to be installed, upgraded or operated on a continuous basis under this Consent Decree, SIGECO shall apply to m odif yits Title V perm it f o r the Unit where such device is installed, upgraded or operated to reflect all new requirem e nts applicable to that Unit, including, but not lim ited to any applicable 30-Day Rolling Average Em ission Rate or Rem oval Efficiency. 123. SIGECO shall provide Plaintiff with a copy of each application to am end its Title V perm it, as well as a copy of any perm it proposed as a result of such application, to allow for tim ely participation in any public comm e nt opportunity. 124. SIGECO shall request a source-specific SI P revision that incorporates enforceable unit-specific em ission lim itations and control requirem e nts. XVIII. INFORMATION COLLECTION AND RETENTION 125. Any authorized representative of the United States or Indiana, including their attorneys, contractors, and consultants, upon presentation of credentials, shall have a right of entry upon the prem ises of the Culley Generation Station at any reasonable tim e for the purpose

31of:

a. m onitoring the progress of activities required under this Consent Decree; b. verifying any data or inform ation subm itted to the Plaintiff in accordance with the term s of this Consent Decree;

c. obtaining sam p les and, upon request, splits of any sam p les taken by SIGECO or its representatives, contractors, or consultants; and d. assessing SIGECO’s com p liance with this Consent Decree. 126. SIGECO shall retain, and instruct its contractors and agents to preserve all nonidentical copies of all records and docum ents (including records and docum ents in electronic form ) now in its or its contractors’ or agents’ possession or control, and that directly relate to SIGECO’s perform a nce of its obligations under this Consent Decree for a period of ten years from date of entry of the decree. This record retention requirem e nt shall apply regardless of any corporate docum ent-retention policy to the contrary. 127. All inform ation and docum ents subm itted by SIGECO pursuant to this Consent Decree shall be subject to any requests under applicable law providing public disclosure of docum ents unless (a) the inform ation and docum ents are subject to legal privileges or protection or (b) SIGECO claim s and substantiates that the inform ation and docum ents contain confidential business inform ation in accordance with 40 C.F.R. Part 2. 128. Nothing in this Consent Decree shall lim it the authority of the Plaintiff to conduct tests and inspections at Culley Generation Station under Section 114 of the Act, 42 U.S.C. § 7414, or any other applicable federal or state laws, regulations, or perm its.

32XIX. NOTICES 129. Unless otherwise provided herein, whenever notifications, subm issions, or

comm unications are required by this Consent Decree, they shall be m a de in writing and addressed as follows: As to the United States of Am erica: Chief , Environm ental Enf o rcem ent Section Environm ent and Natural Resources Division U.S. Departm e nt of Justice P.O. Box 7611, Ben Franklin Station W a shington, D.C. 20044-7611 DJ# 90-5-2-1-06966 and Director, Air Enforcem ent Division Office of Enforcem ent and Com p liance Assurance U.S. Environm ental Protection Agency Ariel Rios Building [2242A] 1200 Pennsylvania Avenue, N.W

. W a shington, DC 20460 and Regional Adm i nistrator U.S. EPA Region V 77 W e st Jackson Blvd. Chicago, Illinois 60604-3590 As to SIGECO : Angila M. Retherford, Environm ental Director SOUTHERN INDIANA GAS & ELECTRIC COMPANY 20 NW Fourth Street Evansville, Indiana 47741 and Ronald E. Christian Executive Vice President

33SOUTHERN INDIANA GAS & ELECTRIC COMPANY 20 NW Fourth Street Evansville, Indiana 47741 130. All notifications, comm unications, or subm issions m a de pursuant to this Section shall be sent by overnight m a il or by certified or registered m a il, return receipt requested. All notifications, comm unications, and transm issions sent by overnight, certified or registered m a il shall be deem ed subm itted on the date they are postm arked. 131. Any Party m a y change either the notice recipient or the address for providing notices to it by serving all other Parties with a notice setting forth such new notice recipient or address. XX. SALES OR TRANSFERS OF OW NERSHIP INTERESTS 132. If SIGECO proposes to sell or transfer part or all of its ownership interest in any Unit at SIGECO Culley Station (“Ownership Intere st”) to an entity unrelated to SIGECO (Third Party Purchaser), it shall advise the Third Party Purchaser in writing of the existence of this Consent Decree prior to such sale or transfer, and shall send a copy of such written notification to the Plaintiff pursuant to Section XIX (Notices) at least 60 days before such proposed sale or transfer. 133. No sale or transfer of an Ownership Interest shall take place before the Third Party Purchaser and EPA have executed, and the Court has approved, a m odification pursuant to Section XXIII (Modification) of this Consent Decree m a king the Third Party Purchaser a party defendant to this Consent Decree and jointly and severally liable with SIGECO f o r all the requirem e nts of this Decree that m a y be applicable to the transferred or purchased Ownership Interests, including joint and several liability with SIGECO f o r all requirem e nts specif i c to the

34Units at SIGECO Culley Station, as well as all requirem e nts in this Consent Decree that are not specific to these Units, except as provided in Paragraph 135. 134. This Consent Decree shall not be construed to im pede the transfer of any Ownership Interests between SIGECO and any Third Party Purchaser as long the requirem e nts of this Consent Decree are m e t. This Consent Decree shall not be construed to prohibit a contractual allocation – as between SIGECO and any Third Party Purchaser of Ownership Interests – of the burdens of com p liance with th is Decree, provided that SIGECO and such Third Party Purchaser shall rem a in liable to the Plaintif f f

o r the obligations of the Decree applicable to the transferred or purchased Ownership Interests, except as provided in Paragraph 135. 135. If EPA agrees, EPA, SIGECO, and the Third Party Purchaser that has becom e a party defendant to this Consent Decree pursuant to Paragraph 133 above, m a y execute a

m odification that relieves SIGECO of its liability under this Consent Decree and m a kes the Third Party Purchaser liable f o r all obligations and liabilities applicable to the purchased or transferred Ownership Interests. Notwithstanding the foregoing, however, SIGECO m a y not assign, and m a y not be released from , any obligation under this Consent Decree that is not specific to the purchased or transferred Ownership Interests, including the obligations set forth in Sections IX (Environm ental Project) and X (Civil Penalty). SIGECO m a y propose and the EPA

m a y agree to restrict the scope of joint and several liability of any purchaser or transf eree f o r any obligations of this Consent Decree that are not specif i c to the Unit, to the extent such obligations

m a y be adequately separated in an enforceable m a nner. XXI. EFFECTIVE DATE 136. The effective date of this Consent Decree shall be the date upon which this

35Consent Decree is entered by the Court. XXII. RETENTION OF JURISDICTION 137. Continuing Jurisdiction

. The Court shall retain jurisdiction of this case af ter entry of this Consent Decree to enforce com p liance w ith the term s and conditions of this Consent Decree and to take any action necessary or appropriate for its interpretation, construction, execution, m odification, or adjudication of disputes. During the term of this Consent Decree, any Party to this Consent Decree m a y apply to the Court for any relief necessary to construe or effectuate this Consent Decree. XXIII. MODIFICATION 138. The term s of this Consent Decree m a y be m odified only by a subsequent written agreem ent signed by all the Parties. Wh ere the m odif i cation constitutes a m a terial change to any term of this Decree, it shall be effective only upon approval by the Court. XXIV. GENERAL PROVISIONS 139. This Consent Decree is not a perm it. Co m p liance with the term s of this Consent Decree does not guarantee com p liance with all applicable Federal, State, or Local laws or regulations. 140. This Consent Decree does not apply to any claim ( s) of alleged crim inal liability. 141. In any subsequent adm i nistrative or j udicial action initiated by the Plaintiff for injunctive relief or civil penalties relating to the f acilities covered by this Consent Decree, SIGECO shall not assert any defense or claim based 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 claim s raised by the Plaintiff in the subsequent proceeding

36were brought, or should have been brought, in th e instant case; provided, however, that nothing in this Paragraph is intended to affect the validity of Section XI (Resolution of Past Claim s ). 142. Except as specifically provided by this Consent Decree, nothing in this Consent Decree shall relieve SIGECO of its obligation to co m p ly with all applicable Federal, State, and Local laws and regulations. Subject to the provisi ons in Section XI (Resolution of Past Claim s ) of this Consent Decree, nothing contained in this Consent Decree shall be construed to prevent or lim it the United States’s rights to obtain penalties or injunctive relief under the Act or other federal, state, or local statutes, regulations, or perm its. 143. Every term expressly defined by this Consent Decree shall have the m eaning given to that term by this Consent Decree, and, except as otherwise provided in this Decree, every other term used in this Decree that is also a term under the Act or the regulations im plem enting the Act shall m ean in this Decree what such term m eans under the Act or those im plem enting regulations. 144. Nothing in this Consent Decree alters or waives any applicable law (including but not lim ited to, any def e nses, entitlem e nts, or clarif ications related to the Credible Evidence Rule (62 Fed. Reg. 8314, Feb. 27, 1997)), concerning the use of data for any purpose under the Act, generated by the reference m e thods specified herein or otherwise. 145. Each lim it and/or other requirem e nt established by or under this Decree is a separate, independent requirem e nt. 146. This Consent Decree does not lim it, enlarge or affect the rights of any Party to this Consent Decree as against any third parties. 147. This Consent Decree constitutes the final, com p lete and exclusive agreem ent and

37understanding am ong the Parties with respect to the settlem e nt em bodied in this Consent Decree, and supercedes all prior agreem ents and understandings am ong the Parties related to the subject

m a tter herein. No docum ent, representation, inducem ent, agreem ent, or understanding, or prom ise constitutes any part of this Decree or the settlem e nt it represents, nor shall they be used in construing the term s of this Consent Decree. 148. Each Party to this action shall bear its own costs and attorneys' fees. 149. This Decree m a y be executed in two or m o re counterparts, each of which shall be deem ed an original, but all of which together shall constitute one and the sam e Decree. XXV. SIGNATORIES AND SERVICE 150. Each undersigned representative of the Parties certifies that he or she is fully authorized to enter into the term s and conditi ons of this Consent Decree and to execute and legally bind the Party he or she represents to this docum ent. 151. This Consent Decree m a y be signed in counterparts, and such counterpart signature pages shall be given full force and effect. 152. Each Party hereby agrees to accept service of process by m a il with respect to all

m a tters arising under or relating to this Consent Decree and to waive the form al service requirem e nts set forth in Rule 4 of the Federal Rules of Civil Procedure and any applicable Local Rules of this Court including, but not lim ited to, service of a summ ons. XXVI. PUBLIC COMMENT 153. The Parties agree and acknowledge that final approval by the United States and entry of this Consent Decree is subject to the procedures of 28 C.F.R. § 50.7, which provides for notice of the lodging of this Consent Decree in the Federal Register, an opportunity for public

38comm e nt, and the right of the United States to withdraw or withhold consent if the comm e nts disclose facts or considerations which indicate that the Consent Decree is inappropriate, im proper, or inadequate. SIGECO shall not oppos e entry of this Consent Decree by this Court or challenge any provision of this Consent Decree unless the United States has notified SIGECO, in writing, that the United States no longer supports entry of the Consent Decree. XXVII. TERMINATION OF CONSENT DECREE 154. Term ination as to Com p leted Tasks

. As soon as SIGECO com p letes a construction project or any other requirem e nt of this Consent Decree that is not ongoing or recurring, SIGECO m a y seek term ination of the pr ovisions of this Consent Decree that im pose the requirem e nt. 155. Plaintiff or SIGECO m a y seek term ination of this Consent Decree, provided SIGECO:

a. has successfully installed and comm e nced operation of all pollution controls required by this Decree; b. has requested and obtained a source- specific SIP revision that incorporates enforceable unit-specific em ission lim itations and other requirem e nts under this Consent Decree;

c. has requested and obtained a f i nal Title V perm it as required by the term s of this Consent Decree, that covers all Units in this Consent Decree, and that includes as enforceable perm it term s all of the Unit perform a nce and other requirem e nts under Section XVII (Perm its); d. has paid all penalties prescribed in Sections X and XIV, and has expended $2.5 m illion for the Project described in Section IX;

39e. has otherwise com p lied with every other obligation of this Consent Decree; and f. has certified the inform ation in a, b, c, d, and e above, and the Plaintiff agrees, following receipt of SIGECO’s certification, that the obligations outlined in a, b, c, d, and e above have been m e t. 156. In the event that the State of Indiana does not act on SIGECO’s request set forth in Paragraph 155b and c above, SIGECO m a y nevertheless seek to term inate this Consent Decree, with the exception of em ission rates or lim itations and m onitoring requirem e nts of the Consent Decree. XVIII. FINAL JUDGMENT 157. Upon approval and entry of this Consent Decree by the Court, this Consent Decree shall constitute a final judgm ent between the Plaintiff and SIGECO.

SO ORDERED, THIS _____ DAY OF ________________, 2003.

_________________________________________ UNITED STATES DISTRICT COURT JUDGE

40FOR THE UNITED STATES OF AMERICA:

_________________________________ THOMAS L. SANSONETTI Assistant Attorney General Environm ental and Natural Resources Division United States Departm e nt of Justice

_________________________________ ARNOLD ROSENTHAL Senior Attorney Environm ental Enforcem ent Section Environm ental and Natural Resources Division United States Departm e nt of JusticeSUSAN W

. BROOKS United States Attorney

____________________________ THOMAS E. KIEPER Assistant U.S. Attorney U.S. Attorney’s Office Southern District of Indiana________________________________ JOHN PETER SUAREZ Assistant Adm i nistrator Office of Enforcem ent and Com p liance Assurance United States Environm ental Protection Agency

________________________________ BRUCE C. BUCKHEIT Director, Air Enforcem ent Division Office of Enforcem ent and Com p liance Assurance United States Environm ental Protection Agency

________________________________ LOAN K.P. NGUYEN Attorney Advisor Air Enforcem ent Division Office of Enforcem ent and Com p liance Assurance United States Environm ental Protection Agency________________________________ THOMAS V. SKINNER Regional Adm i nistrator Region 5 United States Environm ental Protection Agency

________________________________ REGINALD A. PALLESEN Associate Regional Counsel Region 5 United States Environm ental Protection AgencyFOR SIGECO :

_____________________________ W I LLIAM S. DOTY President SOUTHERN INDIANA GAS & ELECTRIC COMPANY