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 of Appeals 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 of the 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 of this Agreement, the Parties will notify the

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

described in paragraph 8 below. If and 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 of the terms of this Agreement, with EPA to

file status reports at 90-day intervals.

2. EPA shall sign a notice of proposed 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.

If EPA signs a notice of final 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 of dismissal 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 of the Federal Rules of Appellate Procedure, with

each party to bear its own costs and attorneys' fees. In addition, Petitioners shall

not challenge the validity of the portion of the 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 of such final rule that does not

implement substantially the same substance as set forth in Attachment A to this

Agreement.

4. If EPA 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 of the RICE NESHAP Rule shall be deemed withdrawn.

5. For purposes of this Agreement, EPA and Petitioners recognize that

the publication of new 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 of this

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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of proceedings and continue with the adjudication of Petitioners' challenge of the

RICE NESHAP Rule.

7. In the event that EPA fails to take action in accordance with the terms

of this Agreement, before Petitioners may under paragraph 6 file a motion that

requests the Court to lift the stay and continue with the adjudication of Petitioners'

challenge, Petitioners must first notify the undersigned signatories 14 days prior to

exercising such rights, so that the Parties may negotiate any appropriate

modification of this Agreement. If EPA completes the relevant action within this

14 day period, or if the Parties enter a modification of this Agreement that modifies

the date for the completion of the 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 if EPA does so after that period but before a stay of proceedings has

been lifted for the continuation of Petitioners' 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 of this Agreement that modifies the date

for the completion of the relevant action, then Petitioners may under paragraph 6

file a motion that requests the Court to lift the stay of proceedings and continue

with the adjudication of Petitioners' challenge of the 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 of this 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) of the 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 of this Agreement shall be construed to limit or

modify the discretion accorded EPA by the Clean Air Act or by general principles

of administrative law.

10. Any obligations of EPA 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 of the parties

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

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

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

terms of this Agreement.

//

//

//

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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

n %~ i ~~ ~ - ;f

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 of Justice

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`__ 

Dated: .~ - ~ 8 - ~Z

DAN REGAN, e ulatory Attorney

Interstate Natural Gas Association of America

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

- 7 -
ATTACHMENT A

Requirements for Existing Non-Emergency Spark Ignition 4SLB and 4SRB

Stationary RICE >500 HP Located at Area Sources of HAP

(a) Owners and operators of existing non-emergency spark ignition four-stroke lean burn (4SLB) and

four-stroke rich burn (4SRB) stationary RICE >500 HP located at area sources of HAP 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 of HAP (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 of ordinary low water along that

portion of the coast of the United States that is in direct contact with the open seas and beyond the line

marking the seaward limit of inland waters.

(2) Stationary RICE located on a pipeline segment that meets both of the 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 of the centerline of any continuous 1-mile (1.6 kilometers) length of pipeline.

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) of either a building or a small, welldefined outside area (such as a playground, recreation area, outdoor theater, or other place of public

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 of the day.

(iii) For purposes of this paragraph (2), the term pipeline segment means all parts of those 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) of the pipeline

segment providing power for equipment on a pipeline segment are part of the pipeline segment.

Transportation of gas means the gathering, transmission, or distribution of gas by pipeline, or the storage

of gas. A building is intended for human occupancy if its primary use is for a purpose involving the

presence of humans.

(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 of existing non-emergency spark ignition 4SLB and 4SRB stationary RICE

>500 HP located at area sources of HAP meeting the criteria in paragraph (a) must evaluate the status of

their stationary RICE every 12 months. If the 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 of existing non-emergency spark ignition 4SLB and 4SRB stationary RICE

>500 HP located at area sources of HAP that do not meet the criteria in paragraph (a) must meet the

requirements of this paragraph (c).

(1) Install a catalyst to reduce emissions of HAP.

(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 of the 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 of three test runs. Each subsequent

annual test must consist of one test run. Each test run must be of at least 15 minute duration, except that

each test run with CTM-034 must consist of one measurement cycle as defined by the method and

include at least 2 minutes of test 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) If any of the 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 of being 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 of the requirements of paragraphs (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.