IN THE UNITED STATES DISTRICT COURT 

FOR THE SOUTHERN DISTRICT OF INDIANA 

UNITED STATES OF AMERICA, et al. ) 

)

 Plaintiffs, )

 )

 v. ) Civil Action No. 1:99-cv-01693-LJM-JMS 

) 

CINERGY CORPORATION, et al. ) 

)

 Defendants. ) 

)

 )
 

PARTIAL CONSENT DECREE
 
 

TABLE OF CONTENTS
 

I. JURISDICTION AND VENUE ..........................................................................................6 

II. APPLICABILITY................................................................................................................7 

III. DEFINITIONS.....................................................................................................................8 

IV. CIVIL PENALTY..............................................................................................................15 

V. SO2 EMISSION REDUCTIONS AND CONTROLS .......................................................16 

VI. SO2 ALLOWANCE SURRENDER REQUIREMENTS ..................................................18 

VII. PROHIBITION ON NETTING CREDITS OR OFFSETS FROM REQUIRED 

CONTROLS ......................................................................................................................20 

VIII. ENVIRONMENTAL MITIGATION PROJECTS............................................................21 

IX. RESOLUTION OF CIVIL CLAIMS AGAINST DUKE..................................................25 

X. PERIODIC REPORTING..................................................................................................25 

XI. REVIEW AND APPROVAL OF SUBMITTALS............................................................27 

XII. STIPULATED PENALTIES.............................................................................................28 

XIII. FORCE MAJEURE ...........................................................................................................32 

XIV. DISPUTE RESOLUTION.................................................................................................36 

XV. PERMITS...........................................................................................................................38 

XVI. INFORMATION COLLECTION AND RETENTION ....................................................40 

XVII. NOTICES...........................................................................................................................41 

XVIII. SALES OR TRANSFERS OF OPERATIONAL OR OWNERSHIP INTERESTS.........44 

XIX. EFFECTIVE DATE...........................................................................................................46 

XX. RETENTION OF JURISDICTION...................................................................................47 

XXI. MODIFICATION ..............................................................................................................47 

XXII. GENERAL PROVISIONS ................................................................................................47 

XXIII. SIGNATORIES AND SERVICE .....................................................................................51 

XXIV. PUBLIC COMMENT........................................................................................................51 

XXV. CONDITIONAL TERMINATION OF ENFORCEMENT UNDER DECREE.................51 

XXVI.FINAL JUDGMENT ..........................................................................................................53
 

APPENDIX A – ENVIRONMENTAL MITIGATION PROJECTS 

APPENDIX B – MONITORING REQUIREMENTS AND EMISSION LIMITATIONS 

 CALCULATIONS 

2 
WHEREAS, the United States of America (“United States”), on behalf of the 

United States Environmental Protection Agency (“EPA”), filed a complaint on November 

3, 1999, and amended complaints on March 1, 2000, December 19, 2002, and June 24, 

2004, against Cinergy Corp., Cinergy Services, Inc., PSI Energy, Inc., and the Cincinnati 

Gas and Electric Company, (collectively, “Cinergy”) pursuant to Sections 113(b), 165, 

and 167 of the Clean Air Act (the “Act”), 42 U.S.C. §§ 7413, 7475, and 7477; 

WHEREAS, the States of New York, New Jersey, and Connecticut (“the States”), 

after their motion to intervene was granted, filed a complaint on August 17, 2001, and 

amended complaints on May 29, 2003 and June 24, 2004, pursuant to Section 304 of the 

Act, 42 U.S.C. § 7604; 

WHEREAS, Hoosier Environmental Council and Ohio Environmental Council 

(“Citizen Plaintiffs”), after their motion to intervene was granted, filed a complaint on 

May 1, 2002, and an amended complaint on June 24, 2004, pursuant to Section 304 of the 

Clean Air Act, 42 U.S.C. § 7604; 

WHEREAS, in the Fifth and Sixth Claims for Relief in the United States’ Third 

Amended Complaint, the United States alleges that Cinergy, now Duke Energy 

Corporation, including Duke Energy Indiana, Inc., Duke Energy Ohio, Inc., and Duke 

Energy Shared Business Services LLC (collectively, “Duke”) violated the Clean Air Act 

and the Indiana State Implementation Plan by illegally modifying Units 1 and 3 at the 

Gallagher Generating Station (“Gallagher Plant”), a major emitting facility located in 

New Albany, Floyd County, Indiana, without obtaining the necessary permits and 

installing the necessary controls to reduce sulfur dioxide (“SO2”), and further alleged that 

such emissions damage human health and the environment; 

3 
WHEREAS, in the Thirteenth Claim for Relief in the States’ Second Amended 

Complaint, the States allege that Cinergy violated the Clean Air Act and the Indiana State 

Implementation Plan by illegally modifying Gallagher Units 1 and 3 without obtaining 

the necessary permits and installing the necessary controls to reduce SO2, and further 

alleged that such emissions damage human health and the environment; 

WHEREAS, in the Fifth, Sixth, and Seventh Claims for Relief in the Citizen 

Plaintiffs’ First Amended Complaint, the Citizen Plaintiffs allege that Cinergy violated 

the Clean Air Act and the Indiana State Implementation Plan by illegally modifying 

Gallagher Units 1 and 3 without obtaining the necessary permits and installing the 

necessary controls to reduce SO2, and further alleged that such emissions damage human 

health and the environment; 

WHEREAS, the complaints filed against Duke sought injunctive relief and the 

assessment of civil penalties for alleged violations of, inter alia, the: 

(a) Prevention of Significant Deterioration and Nonattainment New 

Source Review provisions in Part C and D of Subchapter I of the Act, 42 U.S.C. 

§§ 7470-7492, 7501-7515; and 

(b) federally-enforceable state implementation plan developed by Indiana; 

WHEREAS, EPA issued a notice of violation (“NOV”) to Duke with respect to 

such allegations on November 2, 1999 and March 31, 2004; 

WHEREAS, EPA provided Duke and the State of Indiana with actual notice 

pertaining to Duke’s alleged violations, in accordance with Section 113(a)(1) and (b) of 

the Act, 42 U.S.C. § 7413(a)(1) and (b); 

4 
WHEREAS, the Plaintiffs allege that the complaints state claims upon which 

relief can be granted against Duke under Sections 113, 165, and 167 of the Act, 42 U.S.C. 

§§ 7413, 7475, and 7477, and 28 U.S.C. § 1355; 

WHEREAS, a jury trial on liability was held in May 2008 that resulted, inter alia, 

in findings of Clean Air Act violations at Duke’s Wabash River Station located in West 

Terre Haute, Vigo County, Indiana, and after a bench trial on remedy was held in 

February 2009, a partial final judgment was entered under Fed. R. Civ. P. 54(b) on the 

Wabash River claims, and the Plaintiffs and Duke have appealed that judgment to the 

United States Court of Appeals for the Seventh Circuit; 

WHEREAS the Parties to this Consent Decree do not intend for entry of this 

Consent Decree to have any effect on the judgment or appeals of the Wabash River 

claims, but the Parties intend to release all other rights to appeal they may have in this 

matter (including, without limitation, rights to appeal any other claims dismissed before 

the trials or claims decided by the juries) as provided herein; 

WHEREAS, a jury trial on liability was held in May 2009 which found that Duke 

violated the law by performing pulverizer projects at Unit 1 and Unit 3 at the Gallagher 

Plant without complying with New Source Review for SO2 at each Unit; 

WHEREAS, a trial is scheduled to commence on January 25, 2010, to determine 

the appropriate injunctive relief for the two SO2 violations at Gallagher Unit 1 and Unit 3 

found by the jury on May 19, 2009; 

WHEREAS, the Plaintiffs anticipate that this Consent Decree, which requires 

Duke to Repower Gallagher Unit 1 and Unit 3 to combust Natural Gas or to Retire 

Gallagher Unit 1 and Unit 3, install and Continuously Operate Dry Sorbent Injection at 

5 
Gallagher Unit 2 and Unit 4, and perform Environmental Mitigation Projects, will 

achieve significant reductions of SO2 emissions and thereby significantly improve air 

quality; and 

WHEREAS, the Parties 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 settlement is fair, reasonable, in the public interest, and consistent with 

the goals of the Act; and that entry of this Consent Decree without further litigation 

regarding the appropriate injunctive relief for the violations found by the jury on May 19, 

2009, is the most appropriate means of resolving this matter. 

NOW, THEREFORE, without further adjudication of the appropriate injunctive 

relief for the two SO2 violations found by the jury on May 19, 2009, it is hereby 

ORDERED, ADJUDGED, AND DECREED as follows: 

I. JURISDICTION AND VENUE 

1. This Court has jurisdiction over this action, the subject matter herein, and 

the Parties consenting hereto, pursuant to 28 U.S.C. §§ 1331, 1345, 1355, and 1367, 

Sections 113, 167, and 304 of the Act, 42 U.S.C. §§ 7413, 7477, and 7604. Solely for the 

purposes of this Consent Decree, and no other purpose, 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 for no other purpose, Duke waives all 

objections and defenses that it may have to the Court’s jurisdiction over this action, to the 

Court’s jurisdiction over Duke, and to venue in this District. Duke shall not challenge the 

terms of this Consent Decree or this Court’s jurisdiction to enter and enforce this Consent 

Decree. Solely for the purposes of the claims filed by the Plaintiffs in this matter and 

6 
resolved by this Consent Decree, for the purposes of entry and enforcement of this 

Consent Decree, and for no other purpose, Duke waives any defense or objection based 

on standing. Except as expressly provided for herein, this Consent Decree shall not 

create any rights in or obligations of any party other than the Plaintiffs and Duke. Except 

as provided in Section XXIV (Public Comment) of this Consent Decree, the Parties 

consent to entry of this Consent Decree without further notice. 

II. APPLICABILITY 

2. Upon entry, the provisions of the Consent Decree shall apply to and be 

binding upon and inure to the benefit of Plaintiffs and Duke, and their respective 

successors and assigns, and upon Duke’s officers, employees, and agents, solely in their 

capacities as such. 

3. Duke shall be responsible for providing a copy of this Consent Decree to 

all vendors, suppliers, consultants, contractors, agents, and any other company or 

organization retained to perform any of the work required by this Consent Decree. 

Notwithstanding any retention of contractors, subcontractors, or agents to perform any 

work required under this Consent Decree, Duke shall be responsible for ensuring that all 

work is performed in accordance with the requirements of this Consent Decree. For this 

reason, in any action to enforce this Consent Decree, Duke shall not assert as a defense 

the failure of its officers, directors, employees, servants, agents, or contractors to take 

actions necessary to comply with this Consent Decree, unless Duke establishes that such 

failure resulted from a Force Majeure Event, as defined in Paragraph 94 of this Consent 

Decree. 

7 
III. DEFINITIONS 

4. For purposes of this Consent Decree, every term expressly defined by this 

Consent Decree shall have the meaning given to that term by this Consent Decree and, 

except as otherwise provided in this Consent Decree, every other term used in this 

Consent Decree that is also a term under the Act or the regulations implementing the Act 

shall mean in this Consent Decree what such term means under the Act or those 

implementing regulations. 

5. A “30-Day Rolling Average Emission Rate” for SO2 shall be expressed in 

lb/mmBTU calculated using the following procedure: first, develop hourly average 

lb/mmBTU values for each hour of the Operating Day and the previous twenty nine (29) 

Operating Days in accordance with Appendix B of this Consent Decree, and second, 

average the hourly averages for the Operating Day and the previous twenty nine (29) 

Operating Days. A new 30-Day Rolling Average Emission Rate shall be calculated for 

each new Operating Day. Each 30-Day Rolling Average Emission Rate shall include all 

emissions of SO2 that occur during all periods within each Operating Day including 

startup, shutdown, and Malfunction, provided, however, that reported emissions 

associated with a Malfunction shall be excluded for purposes of determining compliance 

with this Decree if the Malfunction is determined to be a Force Majeure Event pursuant 

to Section XIII (Force Majeure). The Parties expressly recognize that compliance with a 

30-Day Rolling Average Emission Rate shall commence immediately upon the date 

specified, and that compliance as of such specified date (e.g., January 30) shall be 

determined based on data from that Operating Day and the 29 prior Operating Days (e.g., 

January 1-29). 

8 
6. An “Annual SO2 Tonnage Limitation” for Gallagher Unit 1 and Unit 3 means 

the limitations as specified in this Consent Decree on the total number of tons of SO2 

emitted from Gallagher Unit 1 and Unit 3, individually, during all periods of operation 

including, without limitation, all SO2 emitted during periods of startup, shutdown, and 

Malfunction, during the relevant calendar year (i.e., January 1 through December 31). 

Compliance with the Annual SO2 Tonnage Limitation for Gallagher Unit 1 and for 

Gallagher Unit 3 shall be determined for each new calendar year. 

7. “CEMS” or “Continuous Emission Monitoring System” means, for 

obligations involving SO2 under this Consent Decree, the equipment required to sample, 

analyze, measure and provide a permanent and continuous record of emissions of SO2 in 

lb/mmBTU. For purposes of this Consent Decree, the following components make up 

the Continuous Emissions Monitoring System: SO2 pollutant concentration monitor, 

diluent gas monitor (carbon dioxide), and a data acquisition and handling system. 

8. “Citizen Plaintiffs” means, collectively, Hoosier Environmental Council 

and Ohio Environmental Council. 

9. “Clean Air Act” or “Act” means the federal Clean Air Act, 42 U.S.C. §§ 

7401-7671q, and its implementing regulations. 

10. “Consent Decree” or “Decree” means this Consent Decree and the 

appendices attached hereto, which are incorporated into this Consent Decree. 

11. “Continuously Operate” or “Continuous Operation” means that when DSI 

is used at Gallagher Unit 2 or Unit 4, it shall be used at all times such Unit is in operation, 

consistent with the technological limitations, manufacturers’ specifications, and good 

engineering and maintenance practices for such equipment and the Unit. The Parties 

9 
recognize that until the thirtieth (30th) Operating Day following January 1, 2011, Duke 

will be working to optimize performance of the DSI and to identify technological 

limitations and good engineering and maintenance practices for the DSI at these Units. 

12. “Date of Entry” means the date this Consent Decree is approved or signed 

by the United States District Court Judge. 

13. “Date of Lodging” means the date this Consent Decree is filed for lodging 

with the Clerk of the Court for the United States District Court for the Southern District 

of Indiana. 

14. “Day” means calendar day, unless otherwise specified. 

15. “Dry Sorbent Injection” or “DSI” means an SO2 control system consisting 

of the injection of trona or sodium bicarbonate (or a similar material of at least equal 

effectiveness in removing SO2) in the gas stream upstream of the particulate control 

device to react with the acid gases and reduce the outlet SO2 Emission Rate. 

16. “Duke” or “Defendant” means Duke Energy Corporation, including Duke 

Energy Indiana, Inc., Duke Energy Ohio, Inc., and Duke Energy Shared Business 

Services LLC, as well as their predecessors and successors in interest, including but not 

limited to Cinergy Corp., Cinergy Services, Inc., PSI Energy, Inc., and the Cincinnati Gas 

and Electric Company. 

17. “Emission Rate” means the number of pounds of SO2 emitted per million 

BTU of heat input (“lb/mmBTU”), measured in accordance with this Consent Decree. 

18. “EPA” means the United States Environmental Protection Agency. 

19. “Environmental Mitigation Project” means a project funded or 

implemented by Duke as a remedial measure to mitigate alleged damage to human health 

10 
or the environment, including National Parks or Wilderness Areas, claimed to have been 

caused by the alleged violations described in the complaints or to compensate Plaintiffs 

for costs necessitated as a result of the alleged damages. 

20. “Gallagher Plant” means, solely for purposes of this Consent Decree, the 

electric steam generating plant located in New Albany, Floyd County, Indiana, that 

consists of four coal-fired boilers as of the Date of Lodging of this Consent Decree 

identified as Units 1, 2, 3, and 4. 

21. “IDEM” means the Indiana Department of Environmental Management. 

22. “Indiana SIP” means the Indiana State Implementation Plan, and any 

amendments thereto, as approved by EPA pursuant to Section 110 of the Act, 42 U.S.C. § 

7410. 

23. “lb/mmBTU” means one pound per million British thermal units. 

24. “Malfunction” means any sudden, infrequent, and not reasonably 

preventable failure of air pollution control equipment, process equipment, or a process to 

operate in a normal or usual manner. Failures that are caused in part by poor 

maintenance or careless operation are not Malfunctions. 

25. “MW” means a megawatt or one million watts. 

26. “Natural Gas” means natural gas received directly or indirectly through a 

connection to an interstate pipeline transporting natural gas governed by a tariff approved 

by the Federal Energy Regulatory Commission. 

27. “NSR Permit” means a permit issued pursuant to Parts C and/or D of 

Subchapter I of the Clean Air Act, and/or applicable New Source Review provisions of a 

state implementation plan. 

11 
28. “Nonattainment NSR” means the new source review program within the 

meaning of Part D of Subchapter I of the Act, 42 U.S.C. §§ 7501-7515, and the federal 

regulations codified at 40 C.F.R. Part 51, and the federally approved provisions of the 

Indiana SIP. 

29. “Operating Day” means any Day on which a Unit fires coal. 

30. “Operational or Ownership Interest” means part or all of Duke’s legal or 

equitable operational or ownership interests in any Units at the Gallagher Plant. 

31. “Parties” means the United States, the States, the Citizen Plaintiffs, and 

Duke. “Party” means one of the Parties. 

32. “Plaintiffs” means the United States, the States, and the Citizen Plaintiffs. 

33. “Project Dollars” means Duke’s expenditures and payments incurred or 

made in carrying out the Environmental Mitigation Projects identified in Section VIII.B 

(Environmental Mitigation Projects) of this Consent Decree to the extent that such 

expenditures or payments both: (a) comply with the requirements set forth in Section 

VIII.B (Environmental Mitigation Projects) and Appendix A of this Consent Decree, and 

(b) constitute Duke’s direct payments for such projects, or Duke’s external costs for 

contractors, vendors, and equipment. 

34. “PSD” means the new source review program within the meaning of Part 

C of Subchapter I of the Clean Air Act, 42 U.S.C. §§ 7470-7492, the federal regulations 

codified at 40 C.F.R. Part 52, and the federally approved provisions of the Indiana SIP. 

35. “Repower” or “Repowered” means, solely for purposes of this Consent 

Decree, the permanent decommissioning of devices, systems, equipment, and ancillary or 

supporting systems (collectively, “Equipment”) for Gallagher Unit 1 and Unit 3 that are 

12 
not shared with Gallagher Unit 2 and Unit 4, respectively, such that Gallagher Unit 1 and 

Unit 3 cannot be fired with coal, and the installation of all Equipment needed to fire 

Gallagher Unit 1 and Unit 3 with Natural Gas, including installation of the following 

combustion controls to reduce emissions of nitrogen oxides (NOx): low-NOx natural gas 

burners, an overfire air system, and flue gas recirculation. Nothing herein requires the 

decommissioning of any Equipment that Gallagher Unit 1 and Unit 2 share and/or that 

Gallagher Unit 3 and Unit 4 share, that are necessary to operate Gallagher Unit 2 and/or 

Unit 4. Nothing herein shall prevent Duke from (a) reusing any Equipment from 

Gallagher Unit 1 and/or Unit 3 at any other existing Unit or new emissions unit at the 

Gallagher Plant or another facility, provided that Duke applies for, and obtains, all 

required permits, if any, including, if applicable, an NSR Permit, or (b) selling any 

Equipment from Gallagher Unit 1 and/or Unit 3. 

36. “Retire” means that Duke shall (a) permanently shutdown and cease firing 

Gallagher Unit 1 and Unit 3 with any fuel and permanently decommission Equipment for 

Gallagher Unit 1 and Unit 3 that is not shared with Gallagher Unit 2 and Unit 4, 

respectively, such that Gallagher Unit 1 and Unit 3 cannot be fired with any fuel of any 

kind, and (b) initiate all necessary steps to remove Gallagher Unit 1 and Unit 3 from 

Indiana’s air emissions inventory and amend all applicable permits to reflect the 

permanent shutdown status of Gallagher Unit 1 and Unit 3. Nothing herein shall prevent 

Duke from (i) reusing any Equipment from Gallagher Unit 1 and/or Unit 3 at any other 

existing Unit or new emissions unit at the Gallagher Plant or at another facility, provided 

that Duke applies for, and obtains, all required permits, if any, including, if applicable, an 

NSR Permit, or (ii) selling any Equipment from Gallagher Unit 1 and/or Unit 3. For 

13 
purposes of this Paragraph, if Duke seeks to commence operation of Retired Gallagher 

Unit 1 and/or Unit 3, such Retired Unit would be considered a “new emissions unit” at 

the Gallagher Plant. 

37. “SO2” means sulfur dioxide, as measured in accordance with the 

provisions of this Consent Decree. 

38. “SO2 Allowance” means an authorization or credit to emit a specified 

amount of SO2 that is allocated or issued under an emissions trading or marketable permit 

program of any kind that has been established under the Clean Air Act or the Indiana SIP. 

39. “Surrender” or “Surrender of Allowances” means, for purposes of SO2 

Allowances, permanently surrendering allowances from the accounts administered by 

EPA and the State of Indiana, so that such allowances can never be used thereafter to 

meet any compliance requirement under the Clean Air Act, a State Implementation Plan, 

or this Consent Decree. 

40. “States” means the States of New York, New Jersey, and Connecticut. 

41. “Title V Permit” means the permit required for major sources under 

Subchapter V of the Act, 42 U.S.C. §§ 7661-7661e. 

42. “Tonnage Equivalent” means, for purposes of determining the requisite 

number of SO2 Allowances that must be surrendered pursuant to Paragraph 53, the 

number of SO2 Allowances required to be surrendered based on the year the emissions 

occur and the relationship between SO2 Allowances and tons emitted as specified in the 

definition of “CAIR SO2 allowance” in 40 C.F.R. § 96.202. 

43. “Unit” means collectively, the coal pulverizer (if applicable), stationary 

equipment that feeds fuel to the boiler, the boiler that produces steam for the steam 

14 
 

turbine, the steam turbine, the generator, the equipment necessary to operate the 

generator, steam turbine, and boiler, and all ancillary equipment, including pollution 

control equipment. An electric steam generating station may comprise one or more 

Units. 

IV. CIVIL PENALTY 

44. Within thirty (30) days from the Date of Entry of this Consent Decree, 

Duke shall pay the United States a civil penalty in the amount of $ 1,750,000. The civil 

penalty shall be paid by Electronic Funds Transfer (“EFT”) to the United States 

Department of Justice, in accordance with current EFT procedures, referencing USAO 

File Number 1999v00830 and DOJ Case Number 90-5-2-1-06965 and the civil action 

case name and case number of this action. The costs of such EFT shall be Duke’s 

responsibility. Payment shall be made in accordance with instructions provided to Duke 

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 time of payment, Duke shall provide notice of payment, referencing the 

USAO File Number, the DOJ Case Number, and the civil action case name and case 

numbers, to the Department of Justice and to EPA in accordance with Section XVII 

(Notices) of this Consent Decree. 

45. Failure to timely pay the civil penalty shall subject Duke to interest 

accruing from the date payment is due until the date payment is made at the rate 

prescribed by 28 U.S.C. § 1961, and shall render Duke liable for all charges, costs, fees, 

and penalties established by law for the benefit of a creditor or of the United States in 

securing payment. 

15 
 

 

46. Payment made pursuant to this Section is a penalty within the meaning of 

Section 162(f) of the Internal Revenue Code, 26 U.S.C. § 162(f), and is not a taxdeductible expenditure for purposes of federal law. 

V. SO2 EMISSION REDUCTIONS AND CONTROLS 

A. Annual SO2 Tonnage Limitations for Gallagher Units 1 and 3. 

47. Until such time as Gallagher Unit 1 and Unit 3 are Repowered to Natural 

Gas or Retired as required by this Consent Decree, Duke shall not exceed an Annual SO2 

Tonnage Limitation for Gallagher Unit 1 of 11,062 tons and an Annual SO2 Tonnage 

Limitation for Gallagher Unit 3 of 9,385 tons. Duke’s first compliance obligation 

pursuant to this Paragraph shall be the calendar year from January 1, 2009 through 

December 31, 2009. Compliance with the Annual SO2 Tonnage Limitation for Gallagher 

Unit 1 and Unit 3 shall be determined in accordance with Appendix B. 

B. SO2 Emission Limitations and Control Requirements at Gallagher Units 1 

and 3. 

48. Beginning on January 30, 2011, and continuing thereafter until such time 

as Gallagher Unit 1 and Unit 3 are Repowered to Natural Gas or Retired as required by 

this Consent Decree, Duke shall operate Gallagher Unit 1 and Unit 3 so that each Unit 

achieves and maintains a 30-Day Rolling Average Emission Rate for SO2 of no greater 

than 1.70 lb/mmBTU. 

49. By no later than January 1, 2012, Duke shall elect whether to Retire 

Gallagher Units 1 and 3 or whether to Repower Gallagher Units 1 and 3 to Natural Gas. 

a. If Duke elects to Retire Gallagher Units 1 and 3, then by no later 

than February 1, 2012, Duke shall Retire Gallagher Units 1 and 3. 

16 
 

 

 

b. If Duke elects to Repower Gallagher Units 1 and 3, then by no 

later than December 31, 2012, Duke shall have Repowered Gallagher Units 1 and 3. 

Duke shall provide notice of its election to Plaintiffs in accordance with Section XVII 

(Notice). 

C. SO2 Emission Limitations and Control Requirements at Gallagher Units 2 

and 4. 

50. By no later than January 1, 2011, and continuing thereafter, Duke shall 

install and commence Continuous Operation of DSI at Gallagher Units 2 and 4. 

51. Commencing on the sixtieth (60th) Operating Day following January 1, 

2011, and continuing thereafter, Duke shall Continuously Operate DSI at Gallagher Unit 

2 and Unit 4 so as to achieve and maintain a 30-Day Rolling Average Emission Rate for 

SO2 of no greater than 0.800 lb/mmBTU. 

52. Duke shall not be required to Continuously Operate DSI at Gallagher Unit 

2 or Unit 4, respectively, if Duke (a) permanently ceases to emit any SO2 from Gallagher 

Unit 2 or Unit 4 or (b) makes physical or operational changes to Gallagher Unit 2 or Unit 

4 (including changes to allow combustion of Natural Gas, biomass or other low sulfur 

fuel, or the installation of an alternative SO2 pollution control technology) that: (i) alone 

and without the Continuous Operation of DSI, achieves and maintains a 30-Day Rolling 

Average Emission Rate for SO2 of no greater than 0.60 lb/mmBTU and (ii) Duke makes 

these physical or operational changes, including, if applicable, the Continuous Operation 

of the alternative SO2 pollution control technology, and the 30-Day Rolling Average 

Emission Rate of no greater than 0.60 lb/mmBTU, federally enforceable in accordance 

with applicable regulatory requirements, including obtaining all necessary construction 

and operating permits. 

17 
 VI. SO2 ALLOWANCE SURRENDER REQUIREMENTS 

A. Use and Surrender of SO2 Allowances 

53. In addition to Duke’s Title IV compliance obligations for Gallagher Units 

1 and 3, and the other requirements of this Consent Decree, Duke shall Surrender the 

Tonnage Equivalent in SO2 Allowances, in addition to the surrender required under 

existing law, for the total tons of SO2 emitted from Gallagher Unit 1 and Unit 3 from 

May 19, 2009 (the date of the jury verdict), through the date that Gallagher Unit 1 and 

Unit 3 are Repowered to Natural Gas or Retired pursuant to Paragraph 49. 

54. Except as may be necessary to comply with the SO2 Allowance Surrender 

requirements of Paragraphs 53, 55 or 86, Duke shall not use SO2 Allowances to comply 

with any requirement of this Consent Decree, including by claiming compliance with any 

emission limitation required by this Consent Decree by using, tendering, or otherwise 

applying SO2 Allowances to offset any excess emissions. 

55. Beginning in calendar year 2010, and continuing each calendar year 

thereafter, Duke shall Surrender the amount of SO2 Allowances equal to the amount 

allocated to the Gallagher Plant for that calendar year that Duke does not need in order 

meet its federal and/or state Clean Air Act regulatory requirements for the Gallagher 

Plant. Allowance Surrenders pursuant to Paragraph 53 shall be in addition to any 

Surrender required by this Paragraph. 

56. Nothing in this Consent Decree shall prevent Duke from purchasing or 

otherwise obtaining SO2 Allowances from another source for purposes of complying with 

Paragraphs 53, 55, and 86, or federal and/or state Clean Air Act regulatory requirements 

to the extent otherwise allowed by law. 

18 
57. The requirements in this Consent Decree pertaining to Duke’s use and 

Surrender of SO2 Allowances are permanent injunctions not subject to any termination 

provision of this Consent Decree. 

B. Method for Surrender of SO2 Allowances 

58. Duke shall Surrender, or transfer to a non-profit third party selected by 

Duke for Surrender, all SO2 Allowances required to be Surrendered pursuant to 

Paragraphs 53 and 55 by March 1 of the immediately following year. 

59. If any SO2 Allowances required to be Surrendered under this Consent 

Decree are transferred directly to a non-profit third party, Duke shall include a 

description of such transfer in the next report submitted to Plaintiffs pursuant to Section 

X (Periodic Reporting) of this Consent Decree. Such report shall: (i) identify the nonprofit third party recipient(s) of the SO2 Allowances and list the serial numbers of the 

transferred SO2 Allowances; and (ii) include a certification by the non-profit third party 

recipient(s) stating that the recipient(s) will not sell, trade, or otherwise exchange any of 

the allowances and will not use any of the SO2 Allowances to meet any obligation 

imposed by any environmental law. No later than the third periodic report due after the 

transfer of any SO2 Allowances, Duke shall include a statement that the non-profit third 

party recipient(s) Surrendered the SO2 Allowances for permanent Surrender to EPA in 

accordance with the provisions of Paragraph 60 within one (1) year after Duke 

transferred the SO2 Allowances to them. Duke shall not have complied with the SO2 

Allowance Surrender requirements of this Paragraph until all third party recipient(s) have 

actually Surrendered the transferred SO2 Allowances to EPA. 

19 
60. For all SO2 Allowances required to be Surrendered, Duke or the third 

party recipient(s) (as the case may be) shall first submit an SO2 Allowance transfer 

request form (in paper or electronic format) to EPA’s Office of Air and Radiation’s Clean 

Air Markets Division directing the transfer of such SO2 Allowances to the EPA 

Enforcement Surrender Account or to any other EPA account that EPA may direct in 

writing. As part of submitting these transfer requests, Duke or the third party recipient(s) 

shall irrevocably authorize the transfer of these SO2 Allowances and identify – by name 

of account and any applicable serial or other identification numbers or station names – 

the source and location of the SO2 Allowances being Surrendered. 

VII. PROHIBITION ON NETTING CREDITS OR OFFSETS FROM REQUIRED 

CONTROLS
 

61. Emission reductions that result from actions to be taken by Duke after the 

Date of Entry of this Consent Decree to comply with the requirements of this Consent 

Decree shall not be considered as a creditable contemporaneous emission decrease for the 

purpose of netting or offset under the Clean Air Act’s PSD and Nonattainment NSR 

programs. Solely for purposes of this Paragraph, Subparagraph 52.b shall not be 

considered a requirement of this Consent Decree. 

62. The limitations on the generation and use of netting or offsets set forth in 

the previous Paragraph do not apply to emission reductions achieved by Gallagher Units 

1, 2, 3, or 4 that are greater than those required under this Consent Decree. For purposes 

of this Paragraph, emission reductions at Gallagher Units 1, 2, 3, or 4 are greater than 

those required under this Consent Decree if they result from Duke's compliance with a 

federally enforceable emission limit(s) that is more stringent than those limits imposed on 

20 
Gallagher Units 1, 2, 3, or 4 under this Consent Decree and under applicable provisions 

of the Clean Air Act or the Indiana SIP. 

63. Nothing in this Consent Decree is intended to preclude the emission 

reductions generated under this Consent Decree from being considered by EPA or the 

State of Indiana for the purpose of attainment demonstrations submitted pursuant to § 110 

of the Act, 42 U.S.C. § 7410, or in determining impacts on National Ambient Air Quality 

Standards, PSD increment, or air quality related values, including visibility, in a Class I 

area. 

VIII. ENVIRONMENTAL MITIGATION PROJECTS 

64. Duke shall implement the Environmental Mitigation Projects (“Projects”) 

described in Appendix A to this Consent Decree and fund the categories of Projects 

described in Section B, below, in compliance with the approved plans and schedules for 

such Projects and other terms of this Consent Decree. 

A. Requirements for Projects Described in Appendix A ($5.25 million) 

65. In implementing the Projects described in Appendix A, Duke shall spend 

no less than $5,250,000 in Project Dollars within five (5) years from the Date of Entry of 

this Consent Decree. 

66. Duke shall submit plans for the Projects to the United States for review 

and approval pursuant to Section XI (Review and Approval of Submittals) of this 

Consent Decree in accordance with Appendix A. 

67. Duke shall maintain, and present to the United States upon request, all 

documents to substantiate the Project Dollars expended and shall provide these 

documents to the United States within sixty (60) Days of a request for the documents. 

21 
68. All plans and reports prepared by Duke pursuant to the requirements of 

this Section of the Consent Decree and required to be submitted to the United States shall 

be publicly available from Duke without charge, subject to the limitations in Paragraph 

122. 

69. Duke shall certify, as part of each plan submitted to the United States for 

any Project, that Duke is not otherwise required by law to perform the Project described 

in the plan, that Duke is unaware of any other person who is required by law to perform 

the Project, and that Duke will not use any Project, or portion thereof, to satisfy any 

obligations that it may have under other applicable requirements of law as of the date of 

approval of the Project. 

70. Duke shall use good faith efforts to secure as much environmental benefit 

as possible for the Project Dollars expended, consistent with the applicable requirements 

and limits of this Consent Decree. 

71. If Duke elects (where such an election is allowed) to undertake a Project 

by contributing funds to another person or entity that will carry out the Project in lieu of 

Duke, but not including Duke’s agents or contractors, that person or instrumentality must, 

in writing: (a) identify its legal authority for accepting such funding; and (b) identify its 

legal authority to conduct the Project for which Duke contributes the funds. Regardless 

of whether Duke elected (where such election is allowed) to undertake a Project by itself 

or to do so by contributing funds to another person or instrumentality that will carry out 

the Project, Duke acknowledges that it will receive credit for the expenditure of such 

funds as Project Dollars only if Duke demonstrates that the funds have been actually 

spent by either Duke or by the person or instrumentality receiving them, and that such 

22 
expenditures met all requirements of this Consent Decree. This Paragraph does not apply 

to the State Projects set forth in Section VII(B) or the U.S. Forest Service Mitigation set 

forth in Appendix A. 

72. Duke shall comply with the reporting requirements for Projects as 

described in Section X (Periodic Reporting) and Appendix A. 

73. In connection with any communication to the public or to shareholders 

regarding Duke’s actions or expenditures relating in any way to the Projects required 

pursuant to this Consent Decree, Duke shall include prominently in the communication 

that the actions and expenditures were required as part of a consent decree. 

B. Mitigation Projects to be Conducted by the States ($1 million) 

74. The States, by and through their respective Attorneys General, shall jointly 

submit to Duke Projects within the categories identified in this Subsection for funding in 

an amount not to exceed $1 million. The States may apply for such funds no sooner than 

thirty (30) Days from the Date of Entry of this Consent Decree. The funds shall be 

allocated as follows: $400,000 to New York, $330,000 to New Jersey, and $270,000 to 

Connecticut. Duke shall not have approval rights for the State Projects funded under this 

Consent Decree. Duke shall pay proceeds as designated by the States in accordance with 

the Projects submitted for funding within seventy-five (75) Days after being notified in 

writing by the State(s). Duke’s obligations with respect to State Projects shall be 

complete upon payment of the amount set forth above, and Duke shall have no 

responsibilities regarding the implementation of any State Projects in connection with 

this Consent Decree. 

23 
 

 

 

 

 

 

 

 

75. Categories of Projects. The States agree to use money funded by Duke to 

implement Projects that pertain to energy efficiency and/or pollution reduction. Such 

Projects may include, but are not limited by, the following: 

a. Retrofitting land and marine vehicles (e.g., automobiles, off-road and 

on-road construction and other vehicles, trains, ferries) and transportation terminals and 

ports, with pollution control devices, such as particulate matter traps, computer chip 

reflashing, and battery hybrid technology; 

b. Truck-stop and marine port electrification; 

c. Purchase and installation of photo-voltaic cells on buildings; 

d. Projects to conserve energy use in new and existing buildings, 

including appliance efficiency improvement projects, weatherization projects, and 

projects intended to meet EPA’s Green Building guidelines (see 

http://www.epa.gov/greenbuilding/pubs/components.htm) and/or the Leadership in 

Energy and Environmental Design (LEED) Green Building Rating System (see 

http://www.usgbc.org/DisplayPage.aspx?CategoryID=19), and projects to collect 

information in rental markets to assist in design of efficiency and conservation programs; 

e. Construction associated with the production of energy from wind, solar, 

and biomass; 

f. “Buy back” programs for dirty old motors (e.g., automobile, 

lawnmowers, landscape equipment); 

g. Programs to remove and/or replace oil-fired home heating equipment to 

allow use of ultra-low sulfur oil; 

h. Purchase and retirement of SO2 Allowances; and 

24 
 i. Funding program to improve modeling of the mobile source sector. 

IX. RESOLUTION OF CIVIL CLAIMS AGAINST DUKE 

76. Entry of this Consent Decree shall resolve all civil claims of Plaintiffs 

against Duke that arose from any modifications commenced at Gallagher Units 1, 2, 3, 

and 4 prior to the Date of Lodging of this Consent Decree, including but not limited to 

those modifications alleged in the Notices of Violation and complaints filed by Plaintiffs 

in this litigation under any or all of: (a) Parts C or D of Title I of the Act, 42 U.S.C. §§ 

7470-7492, 7501-7515, and the regulations promulgated there under as of the Date of 

Lodging, (b) Section 111 of the Act, 42 U.S.C. § 7411 and 40 C.F.R. § 60.14, (c) the 

federally-approved and enforceable PSD and Nonattainment NSR provisions of the 

Indiana SIP, or (d) Sections 502(a) and 504(a) of Title V of the Act, 42 U.S.C. § 7661a 

and 7661c, and the regulations promulgated there under as of the Date of Lodging, but 

only to the extent that such claims under Title V are based on Duke’s failure to obtain an 

operating permit that reflects applicable requirements imposed under Parts C or D of 

Title I or Section 111 of the Act. 

77. All Parties forever relinquish and waive any and all rights they may have 

to appeal any rulings, verdicts, or judgments based on the complaints filed by Plaintiffs, 

except with respect to the existing Wabash River appeal currently pending before the 

Court of Appeals for the Seventh Circuit. 

X. PERIODIC REPORTING 

78. By no later than thirty (30) Days after the end of the second full calendar 

quarter following the Date of Entry of this Consent Decree, and continuing on a semiannual basis until termination of this Consent Decree, and in addition to any other 

25 
express reporting requirement in this Consent Decree, Duke shall submit to the Plaintiffs 

a progress report. 

79. The progress report shall contain the following information: (a) the 

information necessary to determine compliance with the requirements of the following 

Paragraphs of this Consent Decree: 47, 48, 49, 49a., 49b., 50, 51, 52, 53, 55, 58, 59, 60, 

62, 111, 115-118, and Sections VIII and XVIII, and (b) if Duke makes the election under 

Subparagraph 49.b, the information indicating that the Repowering of Gallagher Unit 1 

and Unit 3 to Natural Gas may be delayed beyond December 31, 2012, including the 

nature and cause of the delay, and any steps taken by Duke to mitigate such delay. 

80. In any periodic progress report submitted pursuant to this Section, Duke 

may incorporate by reference information previously submitted under its Title V 

permitting requirements, provided that Duke attaches the Title V permit report, or the 

relevant portion thereof, and provides a specific reference to the provisions of the Title V 

permit report that are responsive to the information required in the periodic progress 

report. 

81. In addition to the progress reports required pursuant to this Section, Duke 

shall provide a written report to the Plaintiffs of any violation of the requirements of this 

Consent Decree within fifteen (15) calendar Days of when Duke knew or should have 

known of any such violation. In this report, Duke shall explain the cause or causes of the 

violation and all measures taken or to be taken by Duke to prevent such violations in the 

future. 

26 
82. Each report shall be signed by Duke’s Senior Vice President – Regulated 

Fleet Operations or his or her equivalent or designee of at least the rank of Vice 

President, and shall contain the following certification: 

This information was prepared either by me or under my direction or 

supervision in accordance with a system designed to assure that qualified 

personnel properly gather and evaluate the information submitted. Based 

on my evaluation, or the direction and my inquiry of the person(s) who 

manage the system, or the person(s) directly responsible for gathering the 

information, I hereby certify under penalty of law that, to the best of my 

knowledge and belief, this information is true, accurate, and complete. I 

understand that there are significant penalties for submitting false, 

inaccurate, or incomplete information to the United States. 

83. If any SO2 Allowances are Surrendered to any third party pursuant to this 

Consent Decree, the third party’s certification pursuant to Paragraph 59 shall be signed 

by a managing officer of the third party and shall contain the following language: 

I certify under penalty of law that,_____________ [name of third party] 

will not sell, trade, or otherwise exchange any of the allowances and will 

not use any of the allowances to meet any obligation imposed by any 

environmental law. I understand that there are significant penalties for 

submitting false, inaccurate, or incomplete information to the United 

States. 

XI. REVIEW AND APPROVAL OF SUBMITTALS 

84. Duke shall submit each plan, report, or other submission required by 

Section VIII (Environmental Mitigation Projects) of this Consent Decree to the United 

States, whenever such a document is required to be submitted for review or approval 

pursuant to this Consent Decree. The United States, in consultation with the States and 

Citizen Plaintiffs, may approve the submittal or decline to approve it and provide written 

comments explaining the basis for declining such approval. Within sixty (60) Days of 

receiving written comments from the United States, Duke shall either: (a) revise the 

submittal consistent with the written comments and provide the revised submittal to the 

27 
United States; or (b) submit the matter for dispute resolution, including the period of 

informal negotiations, under Section XIV (Dispute Resolution) of this Consent Decree. 

85. Upon receipt of the United States’ final approval of the submittal, or upon 

completion of the submittal pursuant to dispute resolution, Duke shall implement the 

approved submittal in accordance with the schedule specified therein or another United 

States’-approved schedule. 

XII. STIPULATED PENALTIES 

86. For any failure by Duke to comply with the terms of this Consent Decree, 

and subject to the provisions of Sections XIII (Force Majeure) and XIV (Dispute 

Resolution), Duke shall pay, within thirty (30) Days after receipt of written demand to 

Duke by the United States, the following stipulated penalties to the United States: 

Consent Decree Violation Stipulated Penalty 

(per Day, per violation, unless 

otherwise specified) 

a. Failure to comply with the applicable Annual SO2 $5,000 per ton for the first 100 

Tonnage Limitation for Gallagher Unit 1 and Unit 3 tons; $10,000 per ton for each 

ton over 100 tons, plus the 

Surrender of SO2 Allowances in 

an amount equal to two times the 

number of tons by which the 

tonnage limitation was exceeded 

b. Failure to comply with the applicable 30-Day $2,500 per Day where the 

Rolling Average Emission Rate at Units 1, 2, 3, or 4 violation is less than 5% in 

excess of the limits set forth in 

this Consent Decree; $5,000 per 

Day where the violation is equal 

to or greater than 5% but less 

than 10% in excess of the limits 

set forth in this Consent Decree; 

$10,000 per Day where the 

violation is equal to or greater 

than 10% in excess of the limits 

set forth in this Consent Decree 

28 
c. Failure to make a timely election pursuant to 

Paragraph 49 

$1,000 per Day for the first 15 

Days; $15,000 per Day for each 

Day thereafter 

d. Failure to Retire or Repower Gallagher Unit 1 and 

Unit 3 as required by Paragraph 49 

$10,000 per Day for the first 30 

Days; $37,500 per Day for each 

Day thereafter 

e. Failure to Surrender SO2 Allowances as required 

by Paragraphs 53 or 55 

$37,500 per Day, plus $1,000 per 

SO2 Allowance not Surrendered 

f. Using, selling, or transferring SO2 Allowances 

except as permitted under this Consent Decree 

The Surrender of SO2 

Allowances in an amount equal 

to four times the number of SO2 

Allowances used, sold, or 

transferred in violation of this 

Consent Decree 

g. Failure to install, commence operation, or 

Continuously Operate, DSI as required under this 

Consent Decree 

$10,000 per Day for the first 30 

days; $37,500 per Day for each 

Day thereafter 

h. Failure to implement any of the Environmental 

Mitigation Projects in compliance with Section VIII 

(Environmental Mitigation Projects) of this Consent 

Decree. 

$1,000 per Day for the first 30 

Days; $5,000 per Day for each 

Day thereafter 

i. Failure to operate SO2 CEMS as required by this 

Consent Decree 

$1,000 per Day 

j. Failure to apply for any permit required under this 

Consent Decree 

$1,000 per Day 

k. Failure to timely submit, modify, or implement, as 

approved, the reports, plans, studies, analyses, 

protocols, or other submittals required by this 

Consent Decree 

$750 per Day for the first 10 

Days, $1,000 per Day for each 

Day thereafter 

l. Failure to demonstrate the non-profit third-party 

Surrender of SO2 Allowances 

$2,500 per Day 

m. Failure to make payment as specified in Section 

IV (Civil Penalty) of this Consent Decree 

$10,000 per Day 

n. Any other violation of this Consent Decree. $1,000 per Day 

29 
87. Violation of a 30-Day Rolling Average Emission Rate is a violation on 

every Day on which the average is based. Where a violation of a 30-Day Rolling 

Average for the same pollutant and from the same Unit(s) recurs within periods of less 

than thirty (30) Days, Duke shall not pay a daily stipulated penalty for any Day of the 

recurrence for which a stipulated penalty has already been paid. 

88. All stipulated penalties shall begin to accrue on the Day after the 

performance is due or on the Day a violation occurs, whichever is applicable, and shall 

continue to accrue until performance is satisfactorily completed or until the violation 

ceases, whichever is applicable. Nothing in this Consent Decree shall prevent the 

simultaneous accrual of separate stipulated penalties for separate violations of this 

Consent Decree. 

89. Duke shall pay all stipulated penalties to the United States within thirty 

(30) Days of receipt of written demand to Duke from the United States, and shall 

continue to make such payments every thirty (30) Days thereafter until the violation(s) no 

longer continues, unless Duke elects within twenty (20) Days of receipt of written 

demand to Duke from the United States to dispute the accrual of stipulated penalties in 

accordance with the provisions in Section XIV (Dispute Resolution) of this Consent 

Decree. 

90. Stipulated penalties shall continue to accrue as provided in accordance 

with Paragraph 88 during any dispute, with interest on accrued stipulated 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 following: 

30 
 

 

 

a. If the dispute is resolved by agreement, or by a decision of 

Plaintiffs pursuant to Section XIV (Dispute Resolution) of this Consent Decree that is not 

appealed to the Court, accrued stipulated penalties agreed or determined to be owing, 

together with accrued interest, shall be paid within thirty (30) Days of the effective date 

of the agreement or of the receipt of Plaintiffs’ decision; 

b. If the dispute is appealed to the Court and Plaintiffs prevail in 

whole or in part, Duke shall, within sixty (60) Days of receipt of the Court’s decision or 

order, pay all accrued stipulated penalties determined by the Court to be owing, together 

with interest accrued on such penalties determined by the Court to be owing, except as 

provided in Subparagraph c, below; 

c. If the Court’s decision is appealed by any Party, Duke shall, within 

fifteen (15) Days of receipt of the final appellate court decision, pay all accrued stipulated 

penalties determined to be owing, together with interest accrued on such stipulated 

penalties determined to be owing by the appellate court. 

Notwithstanding any other provision of this Consent Decree, the accrued stipulated 

penalties agreed by Plaintiffs and Duke, or determined by the Plaintiffs through Dispute 

Resolution, to be owing may be less than the stipulated penalty amounts set forth in 

Paragraph 86. 

91. All monetary stipulated penalties shall be paid in the manner set forth in 

Section IV (Civil Penalties). All SO2 Allowance Surrender stipulated penalties shall 

comply with the allowance surrender procedures set forth in Paragraphs 59-60. 

31 
92. Should Duke fail to pay a stipulated penalty in compliance with the terms 

of this Consent Decree, the United States shall be entitled to collect interest on such 

stipulated penalties, as provided for in 28 U.S.C. § 1961. 

93. The stipulated penalties provided for in this Consent Decree shall be in 

addition to any other rights, remedies, or sanctions available to Plaintiffs by reason of 

Duke’s failure to comply with any requirement of this Consent Decree or applicable law, 

except that for any violation of the Act for which this Consent Decree provides for 

payment of a stipulated penalty, Duke shall be allowed a credit for stipulated penalties 

paid against any statutory penalties also imposed for such violation. 

XIII. FORCE MAJEURE 

94. For purposes of this Consent Decree, a “Force Majeure Event” shall mean 

an event that has been or will be caused by circumstances beyond the control of Duke or 

any entity controlled by Duke that delays compliance with any provision of this Consent 

Decree or otherwise causes a violation of any provision of this Consent Decree despite 

Duke’s best efforts to fulfill the obligation. “Best efforts to fulfill the obligation” include 

using the best efforts to anticipate any potential Force Majeure Event and to address the 

effects of any such event (a) as it is occurring and (b) after it has occurred, such that the 

delay and any adverse environmental effect of the violation is minimized to the greatest 

extent possible. 

95. Notice of Force Majeure Events. If any event occurs or has occurred that 

may delay compliance with or otherwise cause a violation of any obligation under this 

Consent Decree, as to which Duke intends to assert a claim of Force Majeure, Duke shall 

notify the Plaintiffs in writing as soon as practicable, but in no event later than twenty32 
one (21) Days following the date Duke first knew, or by the exercise of due diligence 

should have known, that the event caused or may cause such delay or violation. In this 

notice, Duke shall reference this Paragraph of this Consent Decree and describe the 

anticipated length of time that the delay or violation may persist, the cause or causes of 

the delay or violation, all measures taken or to be taken by Duke to prevent or minimize 

the delay and any adverse environmental effect of the violation, the schedule by which 

Duke proposes to implement those measures, and Duke’s rationale for attributing a delay 

or violation to a Force Majeure Event. Duke shall adopt all reasonable measures to avoid 

or minimize such delays or violations. Duke shall be deemed to know of any 

circumstance which Duke or any entity controlled by Duke knew or should have known. 

96. Failure to Give Notice. If Duke fails to comply with the notice 

requirements of this Section, the United States (after consultation with the States and 

Citizen Plaintiffs) may void Duke’s claim for Force Majeure as to the specific event for 

which Duke has failed to comply with such notice requirement. 

97. The United States’ Response. The United States shall notify Duke in 

writing regarding Duke’s claim of Force Majeure as soon as reasonably practicable. If 

the United States (after consultation with the States and Citizen Plaintiffs) agrees that a 

delay in performance has been or will be caused by a Force Majeure Event, the United 

States and Duke shall stipulate to an extension of deadline(s) for performance of the 

affected compliance requirement(s) by a period equal to the delay actually caused by the 

event, or the extent to which Duke may be relieved of stipulated penalties or other 

remedies provided under the terms of this Consent Decree. In such circumstances, an 

33 
appropriate modification shall be made pursuant to Section XXI (Modification) of this 

Consent Decree. 

98. Disagreement. If the United States (after consultation with the States and 

Citizen Plaintiffs) does not accept Duke’s claim of Force Majeure, or if the United States 

and Duke cannot agree on the length of the delay actually caused by the Force Majeure 

Event, the matter shall be resolved in accordance with Section XIV (Dispute Resolution) 

of this Consent Decree. 

99. Burden of Proof. In any dispute regarding Force Majeure, Duke shall bear 

the burden of proving that any delay in performance or any other violation of any 

requirement of this Consent Decree was caused by or will be caused by a Force Majeure 

Event. Duke shall also bear the burden of proving that Duke gave the notice required by 

this Section and the burden of proving the anticipated duration and extent of any delay(s) 

attributable to a Force Majeure Event. An extension of one compliance date based on a 

particular event may, but will not necessarily, result in an extension of a subsequent 

compliance date. 

100. Events Excluded. Unanticipated or increased costs or expenses associated 

with the performance of Duke's obligations under this Consent Decree shall not constitute 

a Force Majeure Event. 

101. Potential Force Majeure Events. The Parties agree that, depending upon 

the circumstances related to an event and Duke’s response to such circumstances, the 

kinds of events listed below are among those that could qualify as Force Majeure Events 

within the meaning of this Section: construction, labor, or equipment delays; Malfunction 

of a Unit or emission control device; unanticipated coal supply or pollution control 

34 
reagent delivery interruptions; acts of God; acts of war or terrorism; and orders by a 

government official, government agency, other regulatory authority, or a regional 

transmission organization, acting under and authorized by applicable law, that directs 

Duke to supply electricity in response to a system-wide (state-wide or regional) 

emergency. Depending upon the circumstances and Duke’s response to such 

circumstances, failure of a permitting authority to issue a necessary permit in a timely 

fashion may constitute a Force Majeure Event where the failure of the permitting 

authority to act is beyond the control of Duke and Duke has taken all steps available to it 

to obtain the necessary permit, including, but not limited to: submitting a complete permit 

application; responding to requests for additional information by the permitting authority 

in a timely fashion; and accepting lawful permit terms and conditions after expeditiously 

exhausting any legal rights to appeal terms and conditions imposed by the permitting 

authority. 

102. As part of the resolution of any matter submitted to this Court under 

Section XIV (Dispute Resolution) regarding a claim of Force Majeure, the United States 

and Duke by agreement, or this Court by order, may in appropriate circumstances extend 

or modify the schedule for completion 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 United States 

or approved by the Court. Duke shall be liable for stipulated penalties for its failure 

thereafter to complete the work in accordance with the extended or modified schedule 

(provided that Duke shall not be precluded from making a further claim of Force Majeure 

with regard to meeting any such extended or modified schedule). 

35 
XIV. DISPUTE RESOLUTION 

103. The dispute resolution procedure provided by this Section shall be 

available to resolve all disputes arising under this Consent Decree, provided that the Party 

invoking such procedure has first made a good faith attempt to resolve the matter with the 

other Party. 

104. The dispute resolution procedure required herein shall be invoked by one 

Party giving written notice to the other Party 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 meeting to discuss the dispute informally not later than fourteen (14) Days following 

receipt of such notice. 

105. Disputes submitted to dispute resolution under this Section shall, in the 

first instance, be the subject of informal negotiations among the disputing Parties. Such 

period of informal negotiations shall not extend beyond thirty (30) calendar Days from 

the date of the first meeting among the disputing Parties’ representatives unless they 

agree in writing to shorten or extend this period. During the informal negotiations period, 

the disputing Parties may also submit their dispute to a mutually agreed upon alternative 

dispute resolution (ADR) forum if the Parties agree that the ADR activities can be 

completed within the 30-Day informal negotiations period (or such longer period as the 

Parties may agree to in writing). 

106. If the disputing Parties are unable to reach agreement during the informal 

negotiation period, the Plaintiffs shall provide Duke with a written summary of their 

36 
position regarding the dispute. The written position provided by Plaintiffs shall be 

considered binding unless, within forty-five (45) Days thereafter, Duke seeks judicial 

resolution of the dispute by filing a petition with this Court. The Plaintiffs may respond 

to the petition within forty-five (45) Days of filing. In their initial filings with the Court 

under this Paragraph, the disputing Parties shall state their respective positions as to the 

applicable standard of law for resolving the particular dispute. 

107. The time periods set out in this Section may be shortened or lengthened 

upon motion to the Court of one of the Parties to the dispute, explaining the Party’s basis 

for seeking such a scheduling modification. 

108. This court shall not draw any inferences nor establish any presumptions 

adverse to any disputing Party as a result of invocation of this Section or the disputing 

Parties’ inability to reach agreement. 

109. As part of the resolution of any dispute under this Section, in appropriate 

circumstances the disputing Parties may agree, or this Court may order, an extension or 

modification of the schedule for the completion of the activities required under this 

Consent Decree to account for the delay that occurred as a result of dispute resolution. 

Duke shall be liable for stipulated penalties for its failure thereafter to complete the work 

in accordance with the extended or modified schedule, provided that Duke shall not be 

precluded from asserting that a Force Majeure Event has caused or may cause a delay in 

complying with the extended or modified schedule. 

110. The Court shall decide all disputes pursuant to applicable principles of law 

for resolving such disputes. 

37 
XV. PERMITS 

111. Unless expressly stated otherwise in this Consent Decree, in any instance 

where otherwise applicable law or this Consent Decree requires Duke to secure a permit 

to authorize Duke to Retire or Repower Gallagher Units 1 and 3 to Natural Gas, or to 

authorize construction and/or operation of DSI at Gallagher Units 2 and 4, including all 

preconstruction, construction, and operating permits required under state law, Duke shall 

make such application in a timely manner. 

112. Notwithstanding the previous Paragraph, nothing in this Consent Decree 

shall be construed to require Duke to apply for or obtain an NSR Permit for physical 

changes in, or changes in the method of operation of, Gallagher Units 1, 2, 3, or 4 that 

gave rise to claims that were resolved by Paragraph 76. 

113. When permits are required pursuant to Paragraph 111, Duke shall 

complete and submit applications for such permits to the appropriate authorities to allow 

sufficient time for all legally required processing and review of the permit request, 

including requests for additional information. Any failure by Duke to submit a timely 

permit application shall bar any use by Duke of Section XIII (Force Majeure) of this 

Consent Decree, where a Force Majeure claim is based on permitting delays. 

114. Notwithstanding the reference to Title V permits in this Consent Decree, 

the enforcement of such permits shall be in accordance with their own terms and the 

Clean Air Act and its implementing regulations, including the federally approved Indiana 

Title V program. The Title V permit shall not be enforceable under this Consent Decree, 

although any term or limit established by or under this Consent Decree shall be 

enforceable under this Consent Decree regardless of whether such term has or will 

38 
become part of a Title V permit, subject to the terms of Section XXV (Conditional 

Termination of Enforcement Under Decree) of this Consent Decree. 

115. Within one hundred eighty (180) Days from the Date of Entry of this 

Consent Decree, and in accordance with federal and/or state requirements for modifying 

or renewing a Title V permit, Duke shall amend any applicable Title V permit 

application, or apply for amendments to its Title V permit, to include a schedule for all 

Unit-specific and Gallagher Plant-specific requirements established by this Consent 

Decree, including performance, operational, maintenance, and control technology 

requirements. 

116. By no later than January 1, 2012, Duke shall either apply to include the 

requirements and limitations enumerated in this Consent Decree into a federally 

enforceable non-Title V permit or request a site-specific amendment to the Indiana SIP to 

include the requirements and limitations enumerated in this Consent Decree. The permit 

or Indiana SIP amendment shall require compliance with the following: (a) any 

applicable 30-Day Rolling Average Emission Rate, (b) the Annual SO2 Tonnage 

Limitation, (c) the requirement to Continuously Operate DSI at Gallagher Units 2 and 4, 

(d) the requirement to either Retire or Repower Gallagher Units 1 and 3, as appropriate, 

and (e) the requirements pertaining to the Surrender of SO2 Allowances. 

117. Duke shall provide notice to the Plaintiffs under Section XVII (Notices) 

when it submits an application for any permit described in this Section, and shall provide 

the Plaintiffs with a copy of its application for any federally-enforceable non-Title V 

permit or SIP amendment, as well as a copy of any permit proposed as a result of such 

application, to allow for timely participation in any public comment period. 

39 
 

 

118. Prior to termination of this Consent Decree, Duke shall obtain enforceable 

provisions in its Title V permit for Gallagher Units 1-4 that incorporate (a) Unit-specific 

and Gallagher Plant-specific performance, operational, maintenance, and control 

technology requirements established by this Consent Decree and (b) the SO2 Allowance 

Surrender requirements. 

119. If Duke sells or transfers to an entity unrelated to Duke (“Third Party”) 

part or all of Duke’s Operational or Ownership Interest in Gallagher Units 1-4, Duke 

shall comply with the requirements of Section XVIII (Sales or Transfers of Operational 

or Ownership Interests) with regard to that Unit(s) prior to any such sale or transfer. 

XVI. INFORMATION COLLECTION AND RETENTION 

120. Any authorized representative of the United States, including attorneys, 

contractors, and consultants, upon presentation of credentials, shall have a right of entry 

upon the premises of the Gallagher Plant at any reasonable time for the purpose of: 

a. monitoring the progress of activities required under this Consent 

Decree; 

b. verifying any data or information submitted to the United States in 

accordance with the terms of this Consent Decree; 

c. obtaining samples and, upon request, splits of any samples taken 

by Duke or its representatives, contractors, or consultants; and 

d. assessing Duke’s compliance with this Consent Decree. 

121. Duke shall retain, and instruct its contractors and agents to preserve, all 

non-identical copies of all records and documents (including records and documents in 

electronic form) now in its or its contractors’ or agents’ possession or control, and that 

40 
directly relate to Duke’s performance of its obligations under this Consent Decree for the 

following periods: (a) until December 31, 2018 for records concerning physical or 

operational changes undertaken in accordance with Section V (SO2 Emission Reductions 

and Controls) or (b) until December 31, 2015 for all other records. This record retention 

requirement shall apply regardless of any corporate document retention policy to the 

contrary. The record retention periods specified herein shall be extended by the length of 

any delay caused by a Force Majeure Event pursuant to Section XIII (Force Majeure). 

122. All information and documents submitted by Duke pursuant to this 

Consent Decree shall be subject to any requests under applicable law providing public 

disclosure of documents unless (a) the information and documents are subject to legal 

privileges or protection or (b) Duke claims and substantiates in accordance with 40 

C.F.R. Part 2 that the information and documents contain confidential business 

information. 

123. Nothing in this Consent Decree shall limit the authority of EPA to conduct 

tests and inspections at Duke’s facilities under Section 114 of the Act, 42 U.S.C. § 7414, 

or any other applicable federal or state laws, regulations, or permits. 

XVII. NOTICES 

124. Unless otherwise provided herein, whenever notifications, submissions, or 

communications are required by this Consent Decree, they shall be made in writing and 

addressed as follows: 

41 
 

As to the United States: 

Chief, Environmental Enforcement Section 

Environment and Natural Resources Division 

U.S. Department of Justice 

P.O. Box 7611, Ben Franklin Station 

Washington, DC 20044-7611 

 DJ# 90-5-2-1-06965 

and 

Director, Air Enforcement Division 

Office of Enforcement and Compliance Assurance 

U.S. Environmental Protection Agency 

Ariel Rios South, Room 1117 

1200 Pennsylvania Avenue, N.W. 

Washington, DC 20004 

and 

Air Enforcement & Compliance Assurance Branch 

U.S. EPA Region V 

77 W. Jackson St. 

 Mail Code AE17J 

 Chicago, IL 60604 

As to the State of Connecticut: 

Office of the Attorney General 

 Environmental Department 

P.O. Box 120 

 Hartford, Connecticut 

06141-0120 

As to the State of New Jersey: 

Kevin P. Auerbacher 

 Section Chief 

Environmental Enforcement Section 

R.J. Hughes Justice Complex 

25 Market Street 

P.O. Box 093 

Trenton, New Jersey 08625-0093 

As to the State of New York: 

42 
 

 

 

Joseph M. Kowalczyk 

Assistant Attorney General 

Environmental Protection 

New York State 

Office of the Attorney General 

The Capitol 

Albany, New York 12224 

As to the Citizen Plaintiffs:

 Tim Maloney 

Senior Policy Director 

 Hoosier Environmental Council 

3951 N. Meridian St. Suite 100 

Indianapolis, IN 46208 

317-685-8800 ext. 115 

 812-369-8677 (cell) 

tmaloney@hecweb.org 

Trent A. Dougherty, Esq. 

Director of Legal Affairs 

Ohio Environmental Council 

1207 Grandview Ave. Suite 201 

Columbus, OH 43212 

 614.487.7506 (T) 

 614.487.7510 (F) 

trent@theoec.org 

Ann Brewster Weeks 

Senior Counsel, Legal Director 

Clean Air Task Force 

18 Tremont Street, Suite 530 

Boston, MA 02108 

(617) 624-0234 

(617) 359-4077 (cell) 

(617) 624-0230 (fax) 

aweeks@catf.us

 Keith Guthrie 

 Attorney at Law 

13242 South 600 East 

Elizabethtown IN 47232 

812-579-5926 

kgmail@comcast.net 

As to Duke: 

43 
Vice President – Environmental Health and Safety 

Duke Energy Corporation 

526 South Church Street 

Charlotte, North Carolina 28202 

 704 382-8451 

Mitchell.Griggs@duke-energy.com

 and 

Chief Legal Officer 

Duke Energy Corporation 

526 South Church Street 

Charlotte, North Carolina 28202 

 704 382-2204 

Marc.Manly@duke-energy.com
 

125. All notifications, communications, or submissions made pursuant to this 

Section shall be sent as follows: (a) by overnight mail or overnight delivery service to 

the United States; (b) by electronic mail to all Plaintiffs, if practicable, but if not 

practicable, then by overnight mail or overnight delivery service to the States and Citizen 

Plaintiffs, and (c) by certified mail or registered mail, return receipt requested with a copy 

by electronic mail to Duke. All notifications, communications, and transmissions sent by 

overnight delivery service shall be deemed submitted on the date they are delivered to the 

delivery service. 

126. Any Party may 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. 

XVIII. SALES OR TRANSFERS OF OPERATIONAL OR OWNERSHIP INTERESTS 

127. If Duke proposes to sell or transfer an Operational or Ownership Interest 

to an entity unrelated to Duke (“Third Party”), it shall advise the Third Party in writing of 

44 
the existence of this Consent Decree prior to such sale or transfer, and shall send a copy 

of such written notification to the Plaintiffs pursuant to Section XVII (Notices) of this 

Consent Decree at least sixty (60) Days before such proposed sale or transfer. 

128. No sale or transfer of an Operational or Ownership Interest shall take 

place before the Third Party and Plaintiffs have executed, and the Court has approved, a 

modification pursuant to Section XXI (Modification) of this Consent Decree making the 

Third Party a party to this Consent Decree and jointly and severally liable with Duke for 

all the requirements of this Consent Decree that may be applicable to the transferred or 

purchased Interests. 

129. This Consent Decree shall not be construed to impede the transfer of any 

Interests between Duke and any Third Party so long as the requirements of this Consent 

Decree are met. This Consent Decree shall not be construed to prohibit a contractual 

allocation – as between Duke and any Third Party – of the burdens of compliance with 

this Consent Decree, provided that both Duke and such Third Party shall remain jointly 

and severally liable for the obligations of the Consent Decree applicable to the transferred 

or purchased Interests. 

130. Notwithstanding Paragraph 129, if the Plaintiffs agree, the Plaintiffs, 

Duke, and the Third Party that has become a party to this Consent Decree pursuant to 

Paragraph 128, may execute a modification that relieves Duke of liability under this 

Consent Decree for, and makes the Third Party liable for, all obligations and liabilities 

applicable to the purchased or transferred Interests. Notwithstanding the foregoing, 

however, Duke may not assign, and may not be released from, any obligation under this 

Consent Decree that is not specific to the purchased or transferred Interests, including the 

45 
 

obligations set forth in Section VIII (Environmental Mitigation Projects). Duke may 

propose and the Plaintiffs may agree to restrict the scope of the joint and several liability 

of any purchaser or transferee for any obligations of this Consent Decree that are not 

specific to the transferred or purchased Interests, to the extent such obligations may be 

adequately separated in an enforceable manner. 

131. Paragraphs 127-130 of this Consent Decree do not apply if an Interest is 

sold or transferred solely as collateral security in order to consummate a financing 

arrangement (not including a sale-leaseback), so long as Duke: (a) remains the operator 

(as that term is used and interpreted under the Clean Air Act) of the subject Unit(s); (b) 

remains subject to and liable for all obligations and liabilities of this Consent Decree; and 

(c) supplies Plaintiffs with the following certification within thirty (30) Days of the sale 

or transfer: 

Certification of Change in Ownership Interest Solely for Purpose of 

Consummating Financing. We, the Chief Executive Officer and General Counsel 

of Duke Energy (“Duke”), hereby jointly certify under Title 18 U.S.C. Section 

1001, on our own behalf and on behalf of Duke, that any change in Duke’s 

Ownership Interest in any Unit at the Gallagher Plant that is caused by the sale or 

transfer as collateral security of such Ownership Interest in such Unit(s) pursuant 

to the financing agreement consummated on [insert applicable date] between 

Duke and [insert applicable entity]: a) is made solely for the purpose of providing 

collateral security in order to consummate a financing arrangement; b) does not 

impair Duke’s ability, legally or otherwise, to comply timely with all terms and 

provisions of the Consent Decree entered in United States, et al. v. Cinergy Corp., 

et al., Civil Action No. IP99-1693; c) does not affect Duke’s operational control 

of any Unit covered by that Consent Decree in a manner that is inconsistent with 

Duke’s performance of its obligations under the Consent Decree; and d) in no 

way affects the status of Duke’s obligations or liabilities under that Consent 

Decree.” 

XIX. EFFECTIVE DATE 

132. The effective date of this Consent Decree shall be the Date of Entry. 

46 
 

 

XX. RETENTION OF JURISDICTION 

133. The Court shall retain jurisdiction of this case after the Date of Entry of 

this Consent Decree to enforce compliance with the terms and conditions of this Consent 

Decree and to take any action necessary or appropriate for the interpretation, 

construction, execution, or modification of the Consent Decree, or for adjudication of 

disputes. During the term of this Consent Decree, any Party to this Consent Decree may 

apply to the Court for any relief necessary to construe or effectuate this Consent Decree. 

XXI. MODIFICATION 

134. The terms of this Consent Decree may be modified only by a subsequent 

written agreement signed by the Plaintiffs and Duke. Where the modification constitutes 

a material change to any term of this Consent Decree, it shall be effective only upon 

approval by the Court 

XXII. GENERAL PROVISIONS 

135. Monitoring Provisions. 

a. 30-Day Rolling Average Emission Rates. For purposes of 

demonstrating compliance with the 30-Day Rolling Average Emission Rate for a Unit, 

Duke shall install and use CEMS in accordance with Appendix B of this Consent Decree. 

b. Annual SO2 Tonnage Limitations. For purposes of demonstrating 

compliance with the Annual SO2 Tonnage Limitations specified in Paragraph 47, for 

calendar years 2009-2010 Duke shall use continuous emission monitoring systems in 

accordance with 40 C.F.R Part 75. For purposes of demonstrating compliance with the 

Annual SO2 Tonnage Limitation specified in Paragraph 47, for calendar year 2011 and 

each year thereafter until the Units have been Repowered or Retired in accordance with 

47 
Paragraph 49, Duke shall calculate the total annual number of tons of SO2 from Gallagher 

Unit 1 and Unit 3 using data from the CEMS installed in accordance with Appendix B 

and apportioned heat input data derived from the flow rate monitors and CO2 monitors in 

the common stacks of Units 1-2 and Units 3-4 that are installed and certified pursuant to 

40 C.F.R. Part 75. The equations for determining the total annual number of tons of SO2 

from Gallagher Unit 1 and Unit 3 are set forth in Section III of Appendix B. Duke shall 

use the data substitution procedures of 40 C.F.R. § 75.33(b) (for SO2) and § 75.35 (for 

CO2) for any missing data period for the duct CEMS required by this Consent Decree. 

136. Nothing in this Consent Decree shall be construed as an obligation for 

Duke to operate Gallagher Units 1, 2, 3, or 4. However, even if Duke is not operating 

Gallagher Units 1, 2, 3, or 4, it shall still comply with all Consent Decree requirements 

pertaining to such Units. 

137. If Duke seeks to obtain rate recovery for the work that is required by this 

Consent Decree, the Plaintiffs shall take no position regarding the appropriateness of 

such request. 

138. This Consent Decree is not a permit. Compliance with the terms of this 

Consent Decree does not guarantee compliance with all applicable federal, state, or local 

laws or regulations. The limitations and requirements set forth herein do not relieve 

Duke from any obligation to comply with other state and federal requirements under any 

applicable laws. 

139. This Consent Decree does not apply to any claim(s) of alleged criminal 

liability. 

48 
140. In any subsequent administrative or judicial action initiated by any of the 

Plaintiffs for injunctive relief or civil penalties relating to the Gallagher Plant, Duke 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 claims raised by any of the Plaintiffs in the subsequent 

proceeding were brought, or should have been brought, in the instant case; provided, 

however, that nothing in this Paragraph affects the validity of Paragraph 76. 

141. Except as specifically provided by this Consent Decree, nothing in this 

Consent Decree shall relieve Duke of its obligation to comply with all applicable federal, 

state, and local laws and regulations. Subject to the provisions in Section IX (Resolution 

of Civil Claims Against Duke), nothing contained in this Consent Decree shall be 

construed to prevent or limit the rights of the Plaintiffs to obtain penalties or injunctive 

relief under the Act or other federal, state, or local statutes, regulations, or permits. 

142. Nothing in this Consent Decree is intended to, or shall, alter or waive any 

applicable law (including but not limited to any defenses, entitlements, challenges, or 

clarifications related to the Credible Evidence Rule, 62 Fed. Reg. 8314 (Feb. 24, 1997)) 

concerning the use of data for any purpose under the Act generated either by the 

reference methods specified herein or otherwise. 

143. Each limit and/or other requirement established by or under this Consent 

Decree is a separate, independent requirement. 

144. Performance standards, emissions limits, and other quantitative standards 

set by or under this Consent Decree must be met to the number of significant digits in 

which the standard or limit is expressed. For example, an Emission Rate of 1.10 is not 

49 
met if the actual Emission Rate is 1.11. Duke shall round the fourth significant digit to 

the nearest third significant digit. For example, if an actual Emission Rate is 1.104, that 

shall be reported as 1.10, and shall be in compliance with an Emission Rate of 1.10, and 

if an actual Emission Rate is 1.105, that shall be reported as 1.11, and shall not be in 

compliance with an Emission Rate of 1.10. Duke shall report data to the number of 

significant digits in which the standard or limit is expressed. 

145. This Consent Decree does not limit, enlarge, or affect the rights of any 

Party to this Consent Decree as against any third parties. 

146. This Consent Decree constitutes the final, complete, and exclusive 

agreement and understanding among the Parties with respect to the settlement embodied 

in this Consent Decree, and supersedes all prior agreements and understandings among 

the Parties related to the subject matter herein. No document, representation, 

inducement, agreement, understanding, or promise constitutes any part of this Consent 

Decree or the settlement it represents, nor shall they be used in construing the terms of 

this Consent Decree. 

147. Except as provided below, each Party to this action shall bear its own costs 

and attorneys’ fees. Duke shall reimburse the Citizen Plaintiffs’ attorneys’ fees and 

costs, pursuant to 42 U.S.C. § 7604(d), in the amount of $150,000 within thirty (30) Days 

of the Date of Entry of this Consent Decree. Payment instructions shall be provided to 

Duke by the Citizen Plaintiffs within ten (10) days after the Date of Lodging. 

50 
XXIII. SIGNATORIES AND SERVICE 

148. Each undersigned representative of the Parties certifies that he or she is 

fully authorized to enter into the terms and conditions of this Consent Decree and to 

execute and legally bind to this document the Party he or she represents. 

149. This Consent Decree may be signed in counterparts, and such counterpart 

signature pages shall be given full force and effect. 

XXIV. PUBLIC COMMENT 

150. The Parties agree and acknowledge that final approval by the United 

States and the entry of this Consent Decree is subject to the procedures of 28 C.F.R. § 

50.7, which provides for notice of lodging of this Consent Decree in the Federal Register, 

an opportunity for public comment, and the right of the United States to withdraw or 

withhold consent if the comments disclose facts or considerations which indicate that the 

Consent Decree is inappropriate, improper, or inadequate. Duke shall not oppose entry of 

this Consent Decree by this Court or challenge any provision of this Consent Decree 

unless the United States has notified Duke, in writing, that the United States no longer 

supports entry of the Consent Decree. 

XXV. CONDITIONAL TERMINATION OF ENFORCEMENT UNDER DECREE 

151. Termination as to Completed Tasks. As soon as Duke completes a 

requirement of this Consent Decree that is not ongoing or recurring, Duke may, by 

motion to this Court, seek termination of the provision or provisions of this Consent 

Decree that imposed the requirement. 

152. Conditional Termination of Enforcement Through the Consent Decree. 

Subject to the provisions of Paragraph 153, after Duke: 

51 
 

 

a. has, for a period of three (3) years (i) successfully Repowered or 

Retired Gallagher Unit 1 and Unit 3 pursuant to Paragraph 49, and (ii) has successfully 

installed and commenced Continuous Operation of DSI at Gallagher Unit 2 and Unit 4 

pursuant to Paragraphs 50 and 51; and 

b. has obtained final permits (i) as required by Paragraphs 111, 115, 

and 118 of this Consent Decree; (ii) that cover all Units in this Consent Decree; and (iii) 

that include as enforceable permit terms all Unit-specific and Gallagher Plant-specific 

performance, operational, maintenance, and control technology requirements established 

by this Consent Decree, the SO2 Allowance Surrender requirements, and other 

requirements specified in this Consent Decree; 

then Duke may so certify these facts to the United States and this Court. If the United 

States does not object in writing with specific reasons within forty-five (45) Days of 

receipt of Duke’s certification, then, for any Consent Decree violations that occur after 

the filing of notice, the Plaintiffs shall pursue enforcement through the applicable 

permit(s) and not through this Consent Decree. 

153. Resort to Enforcement Under this Consent Decree. Notwithstanding 

Paragraph 152, if enforcement of a provision in this Consent Decree cannot be pursued 

by Plaintiffs under the applicable permit(s) issued pursuant to the Clean Air Act or its 

implementing regulations (“CAA Permit”), or if a Consent Decree requirement was 

intended to be part of a CAA Permit and did not become or remain part of such permit, 

then such requirement may be enforced under the terms of this Consent Decree at any 

time. 

52 
_________________________________________ 

XXVI. FINAL JUDGEMENT 

154. Upon approval and entry of this Consent Decree by this Court, this 

Consent Decree shall constitute a final judgment among the Parties as to claims 

addressed by this Consent Decree, pursuant to Section IX (Resolution of Claims). 

SO ORDERED, THIS _____ DAY OF ________________, 2009. 

HONORABLE LARRY J. McKINNEY, JUDGE 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF INDIANA 

53 
 

 

APPENDIX A 

ENVIRONMENTAL MITIGATION PROJECTS 

In compliance with and in addition to the requirements in Section VIII of this Consent 

Decree (Environmental Mitigation Projects), Duke shall comply with the requirements of this 

Appendix to ensure that the benefits of the $5,250,000 in federally directed Environmental 

Mitigation Projects (“Projects”) are achieved. 

I.	 Forest Service Mitigation 

A.	 Within forty-five (45) days from the Date of Entry, Duke shall pay to the United 

States Forest Service the sum of $250,000 to be used in accordance with 16 

U.S.C. ' 579c, for the improvement, protection, or rehabilitation of lands under 

the administration of the Forest Service. The Forest Service Project(s) will focus 

on one or more of the following areas alleged by Plaintiffs in the underlying 

action to have been injured by emissions from the Gallagher Plant: Hoosier 

National Forest, Pisgah National Forest, Nanatahala National Forest, Cherokee 

National Forest, Jefferson National Forest, and Daniel Boone National Forest. 

B.	 Payment of the amount specified in the preceding paragraph shall be made to the 

Forest Service pursuant to payment instructions provided to Duke before or after 

the Date of Lodging. Notwithstanding Section I.A of this Appendix, payment of 

funds by Duke is not due until ten (10) days after receipt of payment instructions, 

or forty-five (45) days after the Date of Entry, whichever is later. 

C.	 Upon payment of the amount specified in Section I.A of this Appendix, Duke 

shall have no further responsibilities regarding the implementation of any Projects 

selected by the Forest Service in connection with this provision of the Consent 

Decree. 

II.	 Additional Environmental Mitigation Projects 

A.	 Within one hundred and twenty (120) days of the Date of Entry, as further 

described below, Duke shall submit proposed Project(s) plan(s) to EPA for review 

and approval pursuant to Section XI of the Consent Decree (Review and 

Approval of Submittals) for completing the remaining $5 million in federally 

directed Projects over a period of not more than five (5) years from the Date of 

Entry, except as provided below. The Parties agree, subject to the requirements 

of this Appendix, that Duke may in its discretion decide which of the Projects 

specified in Sections III, IV, and V to propose for United States approval. Duke 

may, at its election, consolidate the plans required by this Appendix into a single 

plan. 

1 
APPENDIX A 

ENVIRONMENTAL MITIGATION PROJECTS 

B. The Parties agree that Duke is entitled to spread its payments for Environmental 

Mitigation Projects over the five-year period commencing upon the Date of Entry. 

Duke is not, however, precluded from accelerating payments to better effectuate a 

proposed mitigation plan, provided that Duke shall not be entitled to any 

reduction in the nominal amount of the required payments by virtue of the early 

expenditures. EPA shall determine prior to approval that all projects are 

consistent with federal law. 

C.	 All proposed Project plans shall include the following: 

1. A plan for implementing the Project; 

2. A summary-level budget for the Project; 

3. A time-line for implementation of the Project; and 

4. A description of the anticipated environmental benefits of the Project 

including an estimate of emission reductions (e.g., SO2, NOx, PM, CO2) expected 

to be realized. 

D.	 Upon approval of the plan(s) required by this Appendix by the United States, 

Duke shall complete the approved Project(s) according to the approved plan(s). 

Nothing in this Consent Decree shall be interpreted to prohibit Duke from 

completing the Project(s) ahead of schedule. 

E.	 Duke shall spend no less than a total of $5 million in Project Dollars on one or 

more of the Projects specified in Section III, IV, and V of this Appendix, in 

accordance with the approved plan(s) for such Project(s). 

F.	 Commencing with the first progress report due pursuant to Section X (Periodic 

Reporting) of the Consent Decree, and continuing annually thereafter until 

completion of the Project(s), Duke will include in the progress report information 

describing the progress of the Project and the Project Dollars expended on the 

Project. 

G.	 In accordance with the requirements of Paragraph 84, within sixty (60) days 

following the completion of each Project, Duke shall submit to the United States 

for approval (with a courtesy copy to the States and Citizen Plaintiffs), a report 

that documents: 

1. The date the Project was completed; 

2. The results of implementation of the Project, including the estimated 

emission reductions or other environmental benefits achieved; and 

3. The Project Dollars incurred by Duke in implementing the Project. 

2 
APPENDIX A 

ENVIRONMENTAL MITIGATION PROJECTS 

III.	 Acquisition and Restoration of Ecologically Significant Areas in Indiana, Kentucky, 

Ohio, Pennsylvania, West Virginia, or Virginia 

A.	 Duke may submit a plan to EPA for acquisition and/or restoration of ecologically 

significant areas in Indiana, Kentucky, Ohio, Pennsylvania, West Virginia, or 

Virginia (ALand Acquisition and Restoration@). 

B.	 In addition to the requirements of Section II.C of this Appendix, the proposed 

plan shall: 

1.	 Describe the proposed Land Acquisition and Restoration projects in 

sufficient detail to allow the reader to ascertain how each proposed action 

meets the requirements set out below. For purposes of this Appendix and 

Section VIII of this Consent Decree (Environmental Mitigation Projects), 

land acquisition means purchase of interests in land, including fee 

ownership, easements, or other restrictions that run with the land that 

provide for perpetual protection of the acquired land. Restoration may 

include, by way of illustration, direct reforestation (particularly of tree 

species that may be affected by acidic deposition) and soil enhancement. 

Any restoration action must also incorporate the acquisition of an interest 

in the restored lands sufficient to ensure perpetual protection of the 

restored land. Any proposal for acquisition of land must identify fully all 

owners of the interests in the land. Every proposal for acquisition of land 

must identify the ultimate holder of the interests to be acquired and 

provide a basis for concluding that the proposed holder of title is 

appropriate for long-term protection of the ecological or environmental 

benefits sought to be achieved through the acquisition. 

2.	 Describe generally the ecological significance of the area to be acquired or 

restored. In particular, identify the environmental/ecological benefits 

expected as a result of the proposed action. In proposing areas for 

acquisition and restoration, Duke shall focus on those areas that are in 

most need of conservation action or that promise the greatest conservation 

return on investment. 

3.	 Describe the expected cost of the Land Acquisition and Restoration, 

including the fair market value of any areas to be acquired. 

4.	 Identify any person or entity other than Duke that will be involved in the 

3 
APPENDIX A 

ENVIRONMENTAL MITIGATION PROJECTS 

land acquisition or restoration action. Duke shall describe the third-party=s 

role in the action and the basis for asserting that such entity is able and 

suited to perform the intended role. For purposes of this Section of the 

Appendix, third-parties shall only include non-profits; federal, state, and 

local agencies; or universities. Any proposed third-party must be legally 

authorized to perform the proposed action or to receive Project Dollars. 

5.	 Include a schedule for completing and funding each portion of the project. 

IV.	 Hybrid Fleet Project 

A.	 Duke may submit a plan for a hybrid and/or electric fleet project to reduce 

emissions from Duke’s fleet of motor vehicles. Duke has a substantial fleet of 

motor vehicles in the states where it operates, including vehicles in Indiana, 

Kentucky, and Ohio. These motor vehicles are generally powered by 

conventional diesel or gasoline engines and include vehicles such as diesel 

“bucket” trucks. The use of hybrid engine technologies in Duke’s motor vehicles, 

such as diesel-electric engines, will improve fuel efficiency and reduce emissions 

of NOX, PM, VOCs, and other air pollutants. 

1.	 As part of the plan for the Hybrid Fleet Project, Duke may elect to spend 

Project Dollars on the replacement of conventional motor vehicles in its 

fleet with newly manufactured hybrid and/or electric vehicles. 

2.	 In addition to the requirements of Section II.C of this Appendix, the 

proposed plan for the Hybrid Fleet Project shall: 

a.	 Propose the replacement of convention diesel engines in bucket 

trucks or other mobile sources with hybrid or electric engines, 

and/or propose the replacement of portions of Duke’s fleet 

(including cars, vans, and pickup trucks) in Indiana, Ohio, and/or 

Kentucky with hybrid and/or electric vehicles. For purposes of 

this subsection of this Appendix, “hybrid and/or electric vehicle” 

means a vehicle that can generate and/or utilize electric power to 

reduce the vehicle=s consumption of diesel or gasoline fuel. Any 

such vehicle proposed for inclusion in the Hybrid Fleet Project 

shall meet all applicable engine standards, certifications, and/or 

verifications. 

b.	 Propose a method to account for the amount of Project Dollars that 

will be credited for each replacement made under subparagraph (a) 

4 
APPENDIX A 

ENVIRONMENTAL MITIGATION PROJECTS 

above, taking into account the incremental cost of such engines or 

vehicles as compare to conventional engines or vehicles and 

potential savings associated with the replacement; 

c.	 Prioritize the replacement of diesel-powered vehicles in Duke’s 

fleet. 

d.	 Certify that Duke will use the Hybrid Vehicles for their useful life 

(as defined in the proposed Plan). 

B.	 Notwithstanding any other provision of this Consent Decree, including 

this Appendix, Duke shall only receive credit toward Project Dollars for 

the incremental cost of hybrid and/or electric vehicles as compared to the 

cost of a newly manufactured, similar motor vehicle. 

V.	 Markland Hydro Station Upgrade Project 

A.	 Duke may propose the Markland Hydroelectric Generation Station (“Markland 

Station”) Upgrade Project. The Markland Station is an 81 MW gross capacity 

plant located on the site of a U.S. Army Corps of Engineers’ lock and dam project 

along the Ohio River in Switzerland County, Indiana. The Markland Station was 

constructed in the 1960=s. The Markland Station Upgrade Project is designed to 

significantly modernize the complete plant by replacing the three identical turbine 

runners with larger more efficient runners and spherical hub systems. Replacing 

the turbine runners with more advanced technology will provide additional 

capacity at the plant, while using existing water flow volume more efficiently, 

and at the same time improve the dissolved oxygen levels. Additional megawatt 

output will be achieved with a wider spherical discharge ring for each unit and 

modern hydraulically matched blade designs for the turbine runners. The 

modernization of the design of the units at Markland Station will allow for 

additional output using existing available renewable resources, and is expected to 

increase the gross generating capacity by as much as 16 megawatts. However, a 

specific increase in megawatt output is not guaranteed. The uprating of the 

megawatt capacity of the Markland Station=s three turbine generators is expected 

to offset fossil fuel generation, thereby reducing emissions of SO2, NOX, PM, and 

other air pollutants. 

B.	 This Project shall use $5 million in Project Dollars. These Project Dollars will act 

as seed funding for the entire Project, which is expected to cost significantly 

more. For purposes of this Consent Decree, this Project includes the work 

necessary to increase the output of the dam, not other work that may be necessary 

5 
APPENDIX A 

ENVIRONMENTAL MITIGATION PROJECTS 

to maintain the existing equipment or output. However, other such work may be 

performed by Duke along with the work required by this Project, in which case 

Duke shall not count its expenditures for any other such work as Project Dollars. 

The total expected cost of the Project work required to increase the output of the 

dam is expected to be on the order of several tens of millions of dollars. 

C.	 Notwithstanding Paragraph 69 of this Consent Decree, nothing in this Consent 

Decree or Appendix shall prevent Duke from using the Markland Station Upgrade 

Project to satisfy capacity reserve or other similar requirements that it may have, 

including but not limited to obligations imposed by a regional transmission 

operator such as the Midwest Independent Transmission System Operator. 

Furthermore, for purposes of the last clause of Paragraph 69 of the Consent 

Decree only, (i.e., “Duke will not use any Project, or portion thereof, to satisfy 

any obligations that it may have under other applicable requirements of law as of 

the date of approval of the Project”), the Project shall be construed as including 

the equipment and/or work funded by the expenditure of up to $5 million in 

Project Dollars only. 

D.	 Notwithstanding any other provision of the Consent Decree or this Appendix, the 

cost of the Markland Station Upgrade Project shall be deemed to satisfy up to $5 

million of the federally directed Environmental Mitigation Projects specified in 

this Appendix, provided that Duke completes the Project within seven (7) years 

from the Date of Entry of this Consent Decree. 

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APPENDIX B 

MONITORING REQUIREMENTS AND 

EMISSION LIMITATION CALCULATIONS 

I. Monitoring Requirements 

1.	 Duke shall install CEMS as defined in Paragraph 5 of the Consent Decree at 

each of the Gallagher Units 1 through 4. The CEMS shall include at least one 

SO2 pollutant concentration monitor and one diluent monitor (CO2) at each of 

the Gallagher Units 1 through 4. The SO2 and diluent monitors shall be 

installed in the outlet ductwork of the baghouses for each Unit. Duke shall 

continue the use and operation of the Part 75 continuous emissions monitors 

in the two common stacks at the Gallagher Facility as required by 40 C.F. R 

Part 75. 

2.	 Duke represents that it believes it would be unable to certify flow rate 

monitors pursuant to 40 C.F.R. Part 75 in the outlet ductwork of the 

baghouses of each Unit prior to the common stacks. 

3.	 Duke shall comply with the following requirements for purposes of 

monitoring Unit-specific SO2 emission rates from Gallagher Units 1 through 

4: 

a.	 Duke shall install, calibrate, certify and maintain the CEMS required by 

this Appendix pursuant to the procedures specified in 40 C.F.R. Part 60, 

Appendix B, Performance Specification 2 for SO2. Duke shall certify the 

CEMS in accordance with Performance Specification 2. Seven day drift 

tests shall be conducted in accordance with Performance Specification 2 at 

loads of at least 50% capacity, and the relative accuracy test audit 

(“RATA”) shall be conducted at a single load of at least 80% capacity. 

Duke shall conduct a performance evaluation to certify such CEMS by no 

later than December 1, 2010. Duke shall provide the United States with a 

copy of the written results of the performance evaluation certification tests 

pursuant to Section X (Periodic Reporting) within 30 Days of completion 

of such tests. 

b.	 Duke shall perform daily zero and span checks in accordance with 

40 C.F.R. § 60.13(d) and shall operate the CEMS in accordance with 

40 C.F.R. 60.13(e). 

c.	 Duke shall perform, and comply with, the Quality Assurance Procedures 

of 40 C.F.R. Part 60, Appendix F, including all annual and quarterly 

testing. Duke shall conduct each RATA at the load specified in Paragraph 

3.a, above. 

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d.	 Duke shall determine the SO2 emission rate in lb/mmBTU as provided in 

40 C.F.R. § 60.46(d) and 40 C.F.R. Part 60, Appendix A, Method 19. 

e.	 “Diluent capping” (i.e., 5% CO2) will be applied to the SO2 emission rate 

for any hours where the measured CO2 concentration is less than 5% 

following the procedures in 40 C.F.R. Part 75, Appendix F, Section 

3.3.4.1. 

f.	 Results of quality assurance testing, data gathered by the CEMS, and the 

resultant 30-day Rolling Average Emission Rates for Gallagher Units 1-4 

are not required to be reported in the quarterly reports submitted to EPA’s 

Clean Air Markets Division for purposes of 40 C.F.R. Part 75. Results 

will be maintained at the facility and available for inspection, and the 30-

day Rolling Average Emission Rate will be reported in accordance with 

the requirements of the Consent Decree and Appendix B. Equivalent data 

retention and reporting requirements will be incorporated into the 

applicable permits for these Units. 

g.	 Missing Data Substitution of 40 C.F.R § 75.33(b) for (SO2) and § 75.35 

(for CO2) will be implemented as required by Paragraph 135 of the 

Consent Decree. 

II. Calculation of 30-Day Rolling Average Emission Rate 

1. Outlet emission rates shall be calculated using the methodology specified 

in 40 C.F.R. Part 60 Appendix A, Method 19. Outlet emission rates will 

be based on the average of the valid recorded values calculated at each 

Unit, and calculated as follows: 

Emission rate (lb SO2/mmBtu) = 1.660 x 10-7 * SO2 (in ppm) * Fc * 100 / CO2 (in %) 

2. The electronic data system must calculate the SO2 and CO2 values 

required by the equation in Section II, Paragraph 1 on an hourly basis as 

follows: The CEMS shall collect data once a second and such one-second 

readings shall be used to develop sixty-second averages which shall then 

be used to develop one-hour averages. Prior to the calculation of the SO2 

emission rate, hourly SO2 and CO2 readings will be rounded to the nearest 

tenth (i.e., 0.1 ppm or 0.1 % CO2) and the resulting SO2 emission rate will 

be rounded to the nearest thousandth (i.e., 0.001 lb/mmBTU) as provided 

in the Consent Decree. Duke must retain all sixty-second average SO2 and 

CO2 readings in accordance with 40 C.F.R. § 60.7(f). 

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3. From these hourly SO2 emission rates, Duke shall comply with Paragraph 

5 of the Consent Decree to calculate the applicable 30-Day Rolling 

Average Emission Rate for each Unit. 

III. Calculation of Annual Tons of SO2 Emissions for Compliance With The 

Annual SO2 Tonnage Limitation for Gallagher Unit 1 and Unit 3 

The equations for determining the annual number of tons of SO2 from Gallagher 

Unit 1 and Unit 3 shall be as follows: 

a. From 40 C.F.R. Part 75, Appendix F, equation F-15 (already 

calculated and reported under Part 75): 

Stack total heat input mmBTU/hr = Volumetric Flow scfh x (1/Fc) * % CO2 / 100 

b. From 40 C.F.R. Part 75, Appendix F, Equation F-21a (already 

calculated and reported under Part 75): 

Unit level heat input = Stack total heat input x (TOLcs / TOLunit) x ((MWunit x 

TOLunit) / (sum of all (MWunit x TOLunit)) 

c. From 40 C.F.R. Part 75, Appendix F, Equation F-24a (adapt the 

equation by substituting SO2 lb/mmBTU from the duct SO2 CEMS for 

NOx lb/mmBTU in the equation. Use unit level heat input in the 

equation): 

SO2 lb/hr = duct SO2 lb/mmBTU x unit level heat input mmBTU/hr 

d. From 40 C.F.R. Part 75, Appendix F, Equation F-24 (adapt the 

equation by substituting SO2 lb/hr, from Equation F-24a, for NOx 

lb/hr): 

SO2 lb = SO2 lb/hr x TOLunit 

e. To calculate tons of SO2: 

Total SO2 tons = sum of hourly SO2 lb values / 2000 

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