[PROPOSED] CONSENT DECREE C ASE N O .: 3:13-cv-3953-SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SAM HIRSCH Acting Assistant Attorney General Environment and Natura l Resources Division MARTHA C. MANN U.S. Department of Justice Environmental Defense Section P.O. Box 7611 Washington, D.C. 20044 Tel: (202) 514-2664 Fax: (202) 514-8865 Email: martha.mann@usdoj.gov Attorneys for Defendant Gina McCarthy, Administrator, United States Environmental Protection Agency [Additional counsel liste d on signature page]

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

SIERRA CLUB and NATURAL RESOURCES DEFENSE COUNCIL, Plaintiffs,

v. GINA MCCARTHY, in her official capacity as Administrator of the United States Environmental Protection Agency, Defendant. Case No.: 3:13-cv-3953-SI

[PROPOSED] CONSENT DECREE Case3:13-cv-03953-SI Document163 Filed03/02/15 Page1 of 102 [PROPOSED] CONSENT DECREE C ASE N O .: 3:13-cv-3953-SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WHEREAS, on August 26, 2013, Plaintiffs Sier ra Club and Natural Resources Defense Council (“Plaintiffs”) filed the complaint (“Co mplaint”) in the above-c aptioned matter against Defendant Regina McCarthy in her official cap acity as Administrator of the United States Environmental Protection Agency (“EPA”) allegi ng that EPA has failed to undertake a certain nondiscretionary duty under the Clean Air Act (“CAA”), 42 U.S.C. §§ 7401-7671q, and that such alleged failure is actionabl e under section 304(a )(2) of the CAA, 42 U. S.C. § 7604(a)(2); WHEREAS, within one year after promulgation of a re vised national ambient air quality standard (“NAAQS”), sectio n 107(d)(1)(A) of the CAA directs states to submit lists of initial designations of all areas, or porti ons thereof, as attainment, nonattainment, or unclassifiable for the revised NAAQS, 42 U.S.C. § 7407(d)(1)(A); WHEREAS, EPA is required to promulgate designations for all areas of the country (including tribal areas and certa in U.S. territories) within tw o years of promulgation of the revised NAAQS, or within three years if EPA ha s insufficient information to promulgate the designations within two years, pursuant to sectio n 107(d)(1)(B) of the CAA, 42 U.S.C. § 7407(d)(1)(B); WHEREAS, EPA is required to publish a noti ce in the Federal Register promulgating designations, pursuant to sect ion 107(d)(2)(A) of the CAA, 42 U.S.C. § 7407(d)(2)(A); WHEREAS, EPA revised the primar y NAAQS for sulfur dioxide (“SO 2 ”) on June 2, 2010, see 75 Fed. Reg. 35,520 (June 22, 2010); WHEREAS, states were direct ed to submit their area designations for the 2010 revised primary SO 2 NAAQS by June 2, 2011, see 75 Fed. Reg. at 35,385/col. 2; WHEREAS, on August 3, 2012, EPA invoked the a dditional year to issue designations,

see 77 Fed. Reg. 46,295 (Aug. 3, 2012); WHEREAS, on August 5, 2013, EPA published designations under the 2010 revised primary SO 2 NAAQS for twenty-nine areas in sixteen states, thus removing such areas from the potential scope of th e above-captioned matter, see 78 Fed. Reg. 47,191 (Aug. 5, 2013); WHEREAS, the Complaint alleges that EPA has a nondiscretionary duty to promulgate and publish the remaining area designa tions for the 2010 revised primary SO 2 NAAQS within Case3:13-cv-03953-SI Document163 Filed03/02/15 Page2 of 103 [PROPOSED] CONSENT DECREE C ASE N O .: 3:13-cv-3953-SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the time lines set forth in section 107(d)(1)(B) of the CAA, 42 U.S.C. § 7407(d)(1)(B), (d)(2)(A); WHEREAS, on October 29, 2013, Pl aintiffs filed a Motion for Summary Judgment on the issue of liability in the above-captioned matte r, reserving for future briefing the issue of remedy; WHEREAS, on November 12, 2013, EPA filed it s response to Plaintiffs’ Motion for Summary Judgment and did not di spute the claim of liability; WHEREAS, on December 6, 2013, the Court granted Plaintiffs’ Motion for Summary Judgment, and directed the parties to meet and confer on the remedy; WHEREAS, the Plaintiffs and EPA have ag reed to a settlement of this action; WHEREAS, the Plaintiffs and EPA, by enteri ng into this Consent Decree, do not waive or limit any claim or defense, on any gr ounds, related to any EPA final action; WHEREAS, the Plaintiffs and EPA consider this Consent D ecree to be an adequate and equitable resolution of all the claims in this matter; WHEREAS, it is in the interest of the pub lic, the Plaintiffs a nd EPA, and judicial economy to resolve this matter withou t unnecessary protracted litigation; WHEREAS, the Administrator has propos ed and anticipates promulgating a rulemaking that would direct states to conduct additional information collection and analyses regarding certain sta tionary sources of SO 2 , for purposes of informing future area designations under the 2010 revised primary SO 2 NAAQS, see 79 Fed. Reg. 27,449 (May 13, 2014); WHEREAS, the Plaintiffs and EPA agree that this Court has jurisdiction over this matter pursuant to the citizen suit prov ision of section 304(a)(2) of the CAA, 42 U.S.C. § 7604(a)(2); WHEREAS, the Court, by entering this Cons ent Decree, finds that the Consent Decree is fair, reasonable, in the public inte rest, and consistent with the CAA; NOW THEREFORE, before the taking of test imony, without trial or determination of any additional issue of fact or law that the Court has not alread y addressed in this matter, and upon consent of the Plaintiffs and EPA, it is hereby ordered, adjudged and decreed, that: Case3:13-cv-03953-SI Document163 Filed03/02/15 Page3 of 104 [PROPOSED] CONSENT DECREE C ASE N O .: 3:13-cv-3953-SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. EPA shall sign for publication in the Federal Register no la ter than sixteen (16) months from the date of this Court’s entry of this Order a notice of EPA’s promulgation of designations for the 2010 revised primary SO 2 NAAQS pursuant to section 107(d) of the CAA, and within ten (10) business days following such signature deliver the notice to the Office of the Federal Register for review and prompt publication, for remaining undesignated areas which: (a) based on air quality monitoring in the th ree (3) full calendar years preceding such deadline have monitored viol ations of the 2010 revised primary SO 2 NAAQS; or (b) contain any stationary source that has not been “announced for retirement” pursuant to subparagraph (c) by the date of this Consent Decree, and that, according to the data in EPA’s Air Markets Database, either (1) emitted more than 16,000 tons of SO 2 in 2012, or (2) emitted more than 2,600 tons of SO 2 and had an annual average emission rate of 0.45 lbs SO 2 /Mmbtu or higher in 2012; where (c) “announced for retirement” means any stat ionary source in the United States with a coal-fired unit that as of January 1, 2010, had a capacity of over five (5) megawatts (MW) and that has announced th at it will cease burning coal at that unit through a company pub lic announcement, public utilities commission filing, consent decree, public legal settle ment, final state or federal permit filing, or other similar means of communication. 2. EPA shall sign for publication in the Federal Register no later than December 31, 2017, a notice of EPA’s promulgation of de signations for the 2010 revised primary SO 2 NAAQS pursuant to section 107(d) of the CAA, and within ten (10) business days following such signature deliver th e notice to the Office of the Federa l Register for review and prompt publication, for remaining undesignated areas in which, by January 1, 2017, states have not installed and begun operating a new SO 2 monitoring network meeting EPA specifications Case3:13-cv-03953-SI Document163 Filed03/02/15 Page4 of 105 [PROPOSED] CONSENT DECREE C ASE N O .: 3:13-cv-3953-SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 referenced in EPA’s anticipated rulemaking dir ecting states to collect and analyze additional information regarding SO 2 emissions concentrations. 3. EPA shall sign for publication in the Federal Register no later than December 31, 2020, a notice of EPA’s promulgation of de signations for the 2010 revised primary SO 2 NAAQS pursuant to section 107(d) of the CAA, and within ten (10) business days following such signature deliver the no tice to the Office of the Federal Register for review and publication, for all remaining undesignated areas. 4. After EPA’s obligations under Paragraphs 1 through 3 have been completed, and after the notices required by Paragraphs 1 through 3 have been published in the Federal Register, EPA may move to terminate the Consent Decree. The Plaintiffs shall have fourteen (14) days in which to respond to such motion. 5. Following delivery of the notic es of promulgation of de signations described in Paragraphs 1 through 3 to the Office of the Fe deral Register, EPA sha ll not take any action (other than is necessary to corre ct any typographical errors or othe r errors in form) to delay or otherwise interfere with publicati on of such notices in the Fede ral Register. EPA shall make available to the Plaintiffs c opies of the notices within five (5) business days following signature by the Administrator. 6. The Plaintiffs and EPA may ex tend the deadlines estab lished in Paragraphs 1 through 3 for a period of sixty (60) days or less by written stipulation executed by counsel for the Plaintiffs and EPA and filed with the Cour t. In addition, the deadlines established in Paragraphs 1 through 3 may be extended by the Court upon motion by any party to this Consent Decree for good cause sh own, after consideration of any response by the non-moving party to this Consent Decree. Any party to th is Consent Decree seeking to extend deadlines by motion and without stipulation must provide written notice to all other parties to this Consent Decree of the deadlines the party is seeking to extend at least ten (10) business days prior to filing with the Court such motion. No motion to extend a deadline shall be considered properly filed unless notice pursuant to this Paragraph is provided, or the moving party demonstrates why it could not have provided the advance written notice. Case3:13-cv-03953-SI Document163 Filed03/02/15 Page5 of 106 [PROPOSED] CONSENT DECREE C ASE N O .: 3:13-cv-3953-SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7. Nothing in this Consent D ecree shall be construed to limit or modify the discretion accorded EPA by the CAA and by ge neral principles of administrative law, including the discretion to alter, amend or revi se any response and/or fi nal action contemplated by this Consent Decree. EPA’s ob ligations to take the actions se t forth in Paragraphs 1 through 3 by the dates specified do not constitute limita tions or modifications of EPA’s discretion within the meaning of this paragraph. 8. Nothing in this Consent Decr ee shall be construed to confer upon the District Court jurisdiction to review any final decision made by EPA pursua nt to this Consent Decree. Nothing in this Consent Decree shall be construe d to confer upon the District Court jurisdiction to review any issues that are within the excl usive jurisdiction of the United States Court of Appeals pursuant to section 307( b)(1) of the CAA, 42 U.S.C. § 7607(b)(1). Nothing in the terms of this Consent Decree shall be construed to waive any remedies or defenses the parties may have under CAA section 307(b)(1), 42 U.S.C. § 7607(b)(1). 9. This Court shal l retain jurisdiction to enforce the terms of this Consent Decree and to consider any requests for costs of litigation, including attorneys’ fees. 10. In the event of a disput e between the parties to this Consent Decree concerning the interpretation or implementation of any aspect of this Consent Decree, the disputing party shall provide the other party with a written notice outlining the nature of the dispute and requesting informal negotiations. If the parties cannot reach an agreed-upon resolution within ten (10) business days after re ceipt of notice, any party may move the Court to resolve the dispute. 11. No motion or other proceeding seeking to enforce this Consent Decree shall be considered properly filed, unless the Plainti ffs have followed the procedure set forth in Paragraph 10. 12. The United States, on behalf of EPA, agrees that the Pl aintiffs are entitled to recover their costs of litigati on (including reasonable attorneys’ fees) (“litigation costs”) incurred in this matter pursuant to 42 U.S.C. § 7604(d). The deadline for filing a motion for litigation costs is hereby extended until 120 days after entry of this Consent Decree by the Case3:13-cv-03953-SI Document163 Filed03/02/15 Page6 of 107 [PROPOSED] CONSENT DECREE C ASE N O .: 3:13-cv-3953-SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Court. During this time, the Plaintiffs and EPA shall seek to resolve informally any claim for litigation costs, and if they cannot reach a resolution, the Pl aintiffs may seek such litigation costs from the Court. The Court shall retain jurisdiction to resolve any request for litigation

costs. 13. The obligations imposed upon EPA by this Consent Decree may only be undertaken using appropriated funds. No pr ovisions of this Cons ent Decree shall be interpreted as or constitute a commitment or requirement that EPA obligate or pay funds in contravention of the Anti-Defic iency Act, 31 U.S.C. § 1341, or any other applicable federal law. 14. The parties recognize that the possibility exists that a lapse in the appropriations that fund EPA could delay complia nce with the timetable s contained in this Consent Decree. Should a delay occur due to a lapse in appropria tions, any deadlines occurring within ninety (90) days of the termin ation of the delay shall be extended one day for each day of the delay. EPA will provide Plaintiffs with notice as soon as is reasonably possible under the circumstances in the event that EPA invokes this Paragraph of the Consent Decree and will provide Plaintiffs with an explanation of EPA's basis for invoking this Paragraph. Plaintiffs may challenge the invocation of this Paragraph of the Consent Decree under the dispute resolution terms of this Consent Decree, and EPA shall bear the burden of justifying its invocation of this Paragraph. 15. The Plaintiffs and EPA shall not challenge the terms of this Consent Decree or this Court’s jurisdiction to enter this Consent Decree. 16. The Plaintiffs and EPA agr ee and acknowledge that before this Consent Decree is entered by the Court, EP A must provide notice of this Consent Decree in the Federal Register and provide an opport unity for public comment pursuan t to section 113(g) of the CAA, 42 U.S.C. § 7413(g). After this Consent Decree has undergone notice and comment, the Administrator and/or the Attorney General, as appropriate, shall promp tly consider any such written comments in determining whether to with draw or withhold their consent to the Consent Decree, in accordance with se ction 113(g) of the CAA. If the Administrator and/or the Case3:13-cv-03953-SI Document163 Filed03/02/15 Page7 of 108 [PROPOSED] CONSENT DECREE C ASE N O .: 3:13-cv-3953-SI 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Attorney General do not el ect to withdraw and w ithhold their consent, EPA shall promptly file a motion that requests the Court to enter this Consent Decree. 17. Any notices required or prov ided by this Consent Decree shall be made in writing, via facsimile, e-mail, or other means, and sent to the following: For Plaintiffs: Nicholas Morales David S. Baron Earthjustice 1625 Massachusetts Ave., STE 702 Washington, DC 20036 nmorales@earthjustice.org dbaron@earthjustice.org Fax: 202-667-2356 Zachary M. Fabish The Sierra Club 50 F Street, NW – 8th Floor Washington, DC 20001 zachary.fabish@sierraclub.org Fax: 202-547-6009 Emily K. Davis Natural Resources Defense Council 1152 15th Street, NW, Suite 300 Washington, DC 20005 edavis@nrdc.org Fax: 202-289-1060

For Defendant:

Martha C. Mann United States Department of Justice Environmental Defense Section P.O. Box 7611 Washington, DC 20044 martha.mann@usdoj.gov Fax: 202-514-8865 Case3:13-cv-03953-SI Document163 Filed03/02/15 Page8 of 10Case3:13-cv-03953-SI Document163 Filed03/02/15 Page9 of 101

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COUNSEL FOR DEFENDANT: Dated: ~) us~- ~ ~'LQ~~

~~~

SO ORDERED on this day of SAM HIRSCH Acting Assistant Attorney General Environment &Natural Resources Division MARTHA C. MANN United States Department of Justice Environment &Natural Resources Division P.O. Box 7611 Washington, D.C. 20044 Tel: (202) 514-2664 E-mail: martha.mann(a~usdoj~ov_

Counsel for Defendant EPA

2014

SUSAN ILLSTON United States District Judge

10 [PROPOSED] CONSENT DECREE CASE No.: 3:13-cv-3953-SI Case3:13-cv-03953-SI Document163 Filed03/02/15 Page10 of 10