SETTLEMENT AGREEMENT WHEREAS,on August 20,2010,the United States Environmental Protection Agency ( "EPA" or "Agency")published the "National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines;Final Rule," 75 Fed.Reg. 51,570 (August 20, 2010) ( "RICE NESHAP"); WHEREAS,the Engine Manufacturers Association (hereinafter "EMA.") filed a petition for review ofthe RICE NESHAP in the United States Court of Appeals for the District of Columbia Circuit (Case No. 10-1331) ( "Petition"), which case was consolidated with other cases, with Case No. 10-1331 designated
as the lead; WIIEREAS,in order to avoid protracted and costly litigation,EMA and EPA (collectively the "Parties")wish to implement this Settlement Agreement to resolve Case No. 10-1331; NOW,THEREFORE,the Parties, intending to be bound by this Agreement, hereby stipulate and agree as follows: 1. Promptly after execution ofthis Agreement,the Parties will notify the Court that they have reached a settlement, subject to required notice provisions described in paragraph 6 below. 2. EPA anticipates that, by June 15, 2012,the Agency will sign a notice ofproposed rulemalcing that includes a proposal to revise the RICE NESHAP to

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### allow owners and operators of spark-ignition 4-stroke rich burn engines that meet

an emission standard requiring a 76 percent or greater reduction ofthe pollutant formaldehyde,to prove compliance with the standard based on approved testing that shows at least a thirty percent reduction in total hydrocarbons and that, by March 14,2013,the Administrator ofEPA will sign a final action on this proposal, which may include signature ofa final rule by the Administrator. 3. IfEPA promulgates in final form an amendment to the RICE NESHAP that includes changes that are substantially the same substance as that set forth in the description ofthe proposal in paragraph 2 above,then EMA shall promptly file a stipulation ofdismissal ofNo. 10-1331. Such stipulation of dismissal shall be in accordance with Rule 42 ofthe Federal Rules ofAppellate Procedure,with each party to bear its own costs and attorneys'fees. In addition, EMA shall not challenge the validity ofthe pox-tion ofthe final rule adopting such amendments ofsubstantially the same substance as that set forth in the description ofthe proposal in paragraph 2 above in any court or administrative proceeding. EMA reserves any rights it may have to challenge in any court or administrative proceeding any portion ofsuch final rule that is not ofsubstantially the same substance as in paragraph 2 above. 4. Subject to paragraph 5 below,and ifand only ifEPA does not sign the proposal described in paragraph 2 above by the date set forth in paragraph 2 above,

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### or ifand only ifEPA does not sign a final action that amends the RICE NESHAP

that includes a change that is substantially the same substance as that set forth in the description ofthe proposal in paragraph 2 above by the date set forth in paragraph 2 above,then EMA may file a motion that requests that the Court lift the stay ofproceedings and establish a schedule for briefing to adjudicate its challenge in petition No. 10-1331. The right to make such a request constitutes EMA's sole remedy available under this Agreement. 5. In the event that EPA fails to take an action set out in paragraphs 2 and 4 above by the specified dates, before EMA may under paragraph 4 file a motion that requests the Court to lift the stay and establish a briefing schedule to adjudicate its challenge in petition No. 10-1331,EMA must first notify the undersigned signatories 20 days prior to exercising such rights, so that the Parties may negotiate any appropriate modification ofthis Agreement. IfEPA completes the relevant action within this 20-day period, or ifthe Parties enter a modification ofthis Agreement that modifies the date for the completion ofthe relevant action, then EMA shall not file a motion that requests the Court to lift the stay and to establish a briefing schedule to adjudicate its challenge in petition No. 10-1331. If EPA does not complete the relevant action within this 20-day period or the Parties do not enter into a modification ofthis Agreement that modifies the date for the completion ofthe relevant action,then EMA may under paragraph 4 file a motion

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-that requests the Court to lift the stay and to establish a briefing schedule to

adjudicate its challenge in petition No. 10-1331 in accordance with paragraph 4. 6. EPA and EMA agree and acknowledge that before this Agreement is final, EPA must provide notice in the Federal Re i~ ster and an opportunity for comment pursuant to Clean Air Act section 113(g),42 U.S.C. § 7413(g). EPA shall submit said notice ofthis Agreement to the Federal Rueter 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 determining whether to withdraw or withhold her consenfi to the Agreement, in accordance with section 113(g)ofthe Clean Air Act. This Agreement shall become final on the date that EPA provides written notice of such finality to Petitioners. 7. Nothing in the terms ofthis Agreement shall be construed to limit or modify the discretion accorded EPA by the Clean Air Act or by general principles ofadministrative law. Nothing in the terms ofthis Agreement shall be construed to limit EPA's authority to alter, amend,or revise any final rule EPA may issue or to promulgate superseding regulations. 8. Any obligations ofEPA to obligate or expend funds under this Agreement are subject to the availability ofappropriations in accordance with the Anti
-Deficiency Act, 31 U.S.C. § 1341. This Settlement Agreement shall not be

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-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 E~greement,none ofthe parties hereto waives or relinquishes any legal rights, claims or defenses it may have. 1.0. The undersigned representatives ofeach party certify that they are fully authorized by the party that they represent to bind that respective party to the terms ofthis Agreement. IGNACIA S. MORENO Assistant Attorney General on

U.S.Department ofJustice Environmental Defense Section PO Box 23986 Washington D.C. 20026-3986 (202)514-0997 Counsel for United States Environmental Protection Agency

Dated: `~ 6 ~~ !

~t( T A. -~ C O LAW PARTNERS,LLC 333 Wacker Drive Suite 810 Chicago,Ill. 60b06 (312)929-1954 Counsel for Engine Manufacturers Association

Dated: ~p -fit.{- ~

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