### IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
AMERICAN PETROLEUM INSTITUTE, GAS PROCESSORS ASSOCIATION, INTERSTATE NATURAL GAS ASSOCIATION OF AMERICA,and EXTERRAN ENERGY SOLUTIONS, L.P., et al., Petitioners,

v. ENVIRONMENTAL PROTECTION AGENCY and LISA PEREZ JACKSON, Administrator, United States Environmental Protection Agency,

Respondents Case Nos. 10-1334, 10-1335, 10-1337 and 10-1338

SETTLEMENT AGREEMENT WHEREAS,the American Petroleum Institute in 10-1334,the Gas Processors Association in 10-1335; the Interstate Natural Gas Association of America in 10-1337; and Exterran Energy Solutions, L.P., et al., in 10-1338 (collectively referred to as "Petitioners")each filed in the Court ofAppeals for the D.C. Circuit petitions for review captioned above that challenge the regulation titled "National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines," 75 Fed. Reg. 51,570 (Aug. 20, 2010) ( "RICE NESHAP Rule"), which was promulgated under the Clean Air Act by the Environmental Protection Agency ( "EPA"); WHEREAS,Nos. 10-1334, 10-1335, 10-1337 and 10-1338 have been consolidated with petitions for review by different petitioners (Nos. 10-1331 and

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### 10-1336)that are not parties to this Settlement Agreement;

WHEREAS,EPA intends to undertake a rulemaking to make certain amendments to portions ofthe RICE NESHAP Rule that may resolve the concerns raised by Petitioners in their petitions for review; WHEREAS,the EPA and the Petitioners (collectively the "Parties")wish to implement this Settlement Agreement( "Agreement")to avoid protracted and costly litigation and to preserve judicial resources; NOW,THEREFORE,the Parties, intending to be bound by this Agreement, hereby stipulate and agree as follows:

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 8 below. Ifand when appropriate to implement this Agreement,the Parties will request that Nos. 10-1334, 10-1335, 10-1337 and 10-1338 be severed from Nos. 10-1331 and 10-1336 and be held in abeyance pending finalization and completion ofthe terms ofthis Agreement,with EPA to file status reports at 90-day intervals. 2. EPA shall sign a notice ofproposed rulemaking no later than May 22, 2012,that will include a proposal to revise the RICE NESHAP Rule by including proposed regulatory text that implements substantially the same substance as set forth in Attachment A to this Agreement.

IfEPA signs a notice offinal action no later than December 14, 2012, that promulgates in final form regulatory text that amends the RICE NESHAP Rule and that implements substantially the same substance as set forth in Attachment A to this Agreement,then Petitioners shall promptly file a stipulation ofdismissal of

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### Nos. 10-1334, 10-1335, 10-1337 and 10-1338. 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, Petitioners shall not challenge the validity ofthe portion ofthe final rule adopting such amendments that implements substantially the same substance as set forth in Attachment A in any court or administrative proceeding, and the right to raise such challenge is waived,provided that Petitioners reserve any rights they may have to challenge in any court or administrative proceeding any portion ofsuch final rule that does not implement substantially the same substance as set forth in Attachment A to this Agreement. 4. IfEPA promulgates in final form regulatory text that amends the RICE NESHAP Rule that implements substantially the same substance as set forth in Attachment A to this Agreement,Petitioners' pending administrative petitions for reconsideration ofthe RICE NESHAP Rule shall be deemed withdrawn. 5. For purposes ofthis Agreement,EPA and Petitioners recognize that the publication ofnew or modified regulatory text in the proposed or final rule that addresses matters or provisions other than set forth in Attachment A or that is otherwise substantially more detailed, extensive and comprehensive than the substance set forth in Attachment A would not on that basis alone cause the final changes referenced in paragraphs 3 and 4 above not to be substantially the same substance as set forth in Attachment A. 6. If EPA does not take action in accordance with the terms ofthis Agreement then Petitioners' 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

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### ofproceedings and continue with the adjudication ofPetitioners' challenge ofthe

RICE NESHAP Rule. 7. In the event that EPA fails to take action in accordance with the terms ofthis Agreement,before Petitioners may under paragraph 6 file a motion that requests the Court to lift the stay and continue with the adjudication ofPetitioners' challenge, Petitioners must first notify the undersigned signatories 14 days prior to exercising such rights, so that the Parties may negotiate any appropriate modification ofthis Agreement. IfEPA completes the relevant action within this 14 day period, or ifthe Parties enter a modification ofthis Agreement that modifies the date for the completion ofthe relevant task, then Petitioners may not file a motion that requests the Court to lift the stay and continue with the adjudication of Petitioners' challenge. If EPA completes the relevant action within this 14 day period, or ifEPA does so after that period but before a stay ofproceedings has been lifted for the continuation ofPetitioners' challenge, then the requirements of paragraph 3 shall attach as if EPA had taken the action by the date set out in paragraph 3. If EPA does not complete the action within this 14 day period, and the Parties do not enter into a modification ofthis Agreement that modifies the date for the completion ofthe relevant action, then Petitioners may under paragraph 6 file a motion that requests the Court to lift the stay ofproceedings and continue with the adjudication ofPetitioners' challenge ofthe RICE NESHAP Rule. 8. EPA and Petitioners agree and acknowledge that before this Agreement is final, EPA must provide notice in the Federal Rester 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 Re ig ster

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### 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 consent 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. 9. 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. 10. 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. 11. Except as provided in this Settlement Agreement,none ofthe parties hereto waives or relinquishes any legal rights, claims or defenses they may have. 12. 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. // // //

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-IGNACIA S. MORENO

Assistant Attorney General ~s Division

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

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VI~iLLIAM L. WEHRUIVI Hunton & Williams LLP 2200 Pennsylvania Ave.,NW Washington, DC 20037 wwehrtu~n@hunton.com (202) 955 -1637 Counsel for Gas Processors Association Dated: ~ `~ ~ ~ Z—

Dated: ~ _ (~,~' (`~-

Dated.: DAN BEGAN,Regulatory Attorney Interstate Natural Gas Association of America 20 F Street, N W,Suite 450 'Washington, DC 2000] 202

- 216-5908 Counsel for Interstate Natural Gas Association of America

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-IGNACIA S. MORENO

Assistant Attorney General Envirorunent and Natural Resources Division

Dated: DAVID J. KAPLAN 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: WILLIAM L. WEHRUM Hunton &Williams LLP 2200 Pennsylvania Ave.,NW Washington, DC 20037 wwehrum(a~hunton.com (202)955-1637 Counsel for Gas P ocessors Association ~-~`— Cc's`__ ~ 8 - ~ Dated: .~ - Z DAN REGAN, e ulatory Attorney Interstate Natural Gas Association ofAmerica 20 F Street, NW,Suite 450 Washington, DC 20001 202-216-5908 Counsel for Interstate Natural Gas Association of America

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# ~~.~,L ,

MICHAEL F. MCBRIDE BRITT S.FLEMING ANDREA HUDS(7N CAMPBELL Van Ness Feldman,P.C., ~o~o r~+o•►•as Washington,DC 20007-3877 Tel.: (202)298-1800 Counsel for American Petroleum Institute

JEFF R.H~LMSTEAD Bracewell &Giuliani LLP 2000 K Street, NW Suite 500 Washington,DC 2Q(}06-1872 202-828-5852 Dated: _____'L~J ~-a ~,~, u

Dated:

Counsel for Exteiran Energy Solutions, L.P.,and E~I.P O~ratirg r

LC

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-Dated:

MICHAEL F,MC$RIDE BRIT°I'S. FLEMING ANDREA HUDSON CAMPBELL Van Ness Feldman,P.C. Washington,DC 20007-3877 Tel.: (202)298-1800 Counsel for American Petroleum Institute

Dated: ~ °° ~ ~ FF EY . H LMSTEAD Bracewell uliani LLP 2000 K Street,NW Suite S00 Washington,DC 2006-1872 

## Zoz-sag-sss2 Counsel for Exterran Energy Solutions,L.P., and EXLP Operating LLC

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-ATTACHMENT A Requirements for Existing Non
-Emergency Spark Ignition 4SLB and 4SRB Stationary RICE >500 HP Located at Area Sources ofHAP (a)Owners and operators ofexisting non-emergency spark ignition four

-stroke lean burn (4SLB)and four

-stroke rich burn (4SRB)stationary RICE >500 HP located at area sources ofHAP meeting any of the criteria in paragraphs (a)(l)through (3)must meet identical requirements to those currently specified for existing non-emergency spark ignition 4SLB and 4SRB stationary RICE <500 HP located at area sources ofHAP (i.e., the management practices in items 7 and 9 in Table 2d to subpart ZZZZ and the operation and maintenance requirements in §63.6625(e),(h), and (j)). (1)Stationary RICE located in an offshore area that is beyond the line ofordinary low water along that portion ofthe coast ofthe United States that is in direct contact with the open seas and beyond the line marking the seaward limit ofinland waters. (2)Stationary RICE located on a pipeline segment that meets both ofthe criteria in paragraphs (a)(2)(i) and (ii). (i) A pipeline segment with 10 or fewer buildings intended for human occupancy within 220 yards (200 meters)on either side ofthe centerline ofany continuous 1 -mile (1.6 kilometers) length ofpipeline. Each separate dwelling unit in a multiple dwelling unit building is counted as a separate building intended for human occupancy. (ii)The pipeline segment does not lie within 100.yards (91 meters) ofeither a building or a small, welldefined outside area (such as a playground, recreation area, outdoor theater, or other place ofpublic assembly)that is occupied by 20 or more persons on at least 5 days a week for 10 weeks in any 12- month period. The days and weeks need not be consecutive. The building or area is considered occupied for a full day if it is occupied for any portion ofthe day. (iii) For purposes ofthis paragraph (2), the term pipeline segment means all parts ofthose physical facilities through which gas moves in transportation, including but not limited to pipe, valves, and other appurtenance attached to pipe, compressor units, metering stations, regulator stations, delivery stations, holders, and fabricated assemblies. Stationary RICE located within 50 yards (46 m)ofthe pipeline segment providing power for equipment on a pipeline segment are part ofthe pipeline segment. Transportation ofgas means the gathering, transmission, or distribution ofgas by pipeline, or the storage ofgas. A building is intended for human occupancy if its primary use is for a purpose involving the presence ofhumans. (3)Stationary RICE that are not located on pipelines and that have 5 or fewer buildings intended for human occupancy within a 0.25 mile radius around the engine. (b)Owners and operators ofexisting non-emergency spark ignition 4SLB and 4SRB stationary RICE >500 HP located at area sources ofHAP meeting the criteria in paragraph (a)must evaluate the status of their stationary RICE every 12 months. Ifthe stationary RICE no longer meets the criteria in paragraph (a), the owner or operator must comply with the requirements specified in paragraph (c)within one year.(c)Owners and operators ofexisting non-emergency spark ignition 4SLB and 4SRB stationary RICE

>500 HP located at area sources ofHAP that do not meet the criteria in paragraph (a)must meet the requirements ofthis paragraph (c). (1)Install a catalyst to reduce emissions ofHAP. (2)Meet the requirements of paragraph (i) or (ii): (i) Continuously monitor the catalyst inlet temperature and maintain the temperature between the specified range in subpart ZZZZ,or (ii) Equip the engine with automated shutdown so that the catalyst inlet temperature does not exceed the specified maximum temperature ofthe range in subpart ZZZZ. (3)Conduct an initial test, and subsequent annual tests, to show the catalyst reduces emissions as specified in paragraphs (c)(3)(i) and (ii). The initial test must consist ofthree test runs. Each subsequent annual test must consist of one test run. Each test run must be ofat least 15 minute duration, except that each test run with CTM-034 must consist ofone measurement cycle as defined by the method and include at least 2 minutes oftest data phase measurement. (i) For 4SLB stationary RICE,CO emissions must be reduced by 93 percent or more, or limited to 47 ppmvd at 15% Oz. (ii) For 4SRB stationary RICE,CO must be reduced by 75 percent or more, or alternatively, THC must be reduced by 30 percent or more. (4)The CO and OZ testing required in paragraph (c)(3)can be conducted using EPA Conditional Test Method 034 or the methods already specified in subpart ZZZZ.The THC testing required in paragraph (c)(3) can be conducted using EPA Method 25A. (5) Ifany ofthe tests required in paragraph (c)(3) show that the emissions exceed the levels specified in paragraph (c)(3), the stationary RICE must be shut down as soon as safely possible and appropriate corrective action must be taken (e.g., repairs, the catalyst cleaned or replaced). The stationary RICE must be retested within 7 days ofbeing restarted and the emissions must meet the levels specified in paragraph (c)(3). If the retest shows that the emissions continue to exceed the specified levels, the stationary RICE must again be shut down as soon as safely possible, and the engine may not operate, except for purposes of start-up and testing, until the owner/operator demonstrates through testing that the emissions do not exceed the levels specified in paragraph (c)(3). (6)Failure to meet any ofthe requirements ofparagraphs (c)(1), (c)(2), and (c)(5) is a violation of subpart ZZZZ.Failure to conduct an initial test and subsequent annual tests, as specified in paragraph (c)(3), is a violation of subpart ZZZZ.