### SETTLEMENT AGREEMENT

WHREAS, on March 3, 2010, the United States Environmental Protection Agency ("EPA" or "Agency") published the "National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines; Final 

### Rule," 75 Fed. Reg. 9,648 (March 3,2010) ("RICE NESHA"); WHREAS, EnerNOC, Inc., EnergyConnect, Inc., CPower, Inc., and Innoventive Power, LLC ("RICE NESHA Petitioners") filed a petition for review

of

### the RICE NESHA in the United States Cour of Appeals for the District of Columbia Circuit (Case No. 10-1090) ("Petition"); 

### WHREAS, on August 20, 2010, EPA published the "National Emission Stadards for Hazardous Air Pollutants for Reciprocating Internal Combustion 

### Engines," 75 Fed. Reg. 51,570 (August 20,2010) ("RICE NESHA II"); WHREAS, EnerNOC , Inc., EnergyConnect, Inc., and Innoventive Power,

LLC ("RICE NESHA II Petitioners") filed a petition for review of the RICE 

### NESHA II in the United States Cour of Appeals for the District of Columbia Circuit (Case No. 10-1336), which case was consolidated with other cases, with Case No. 10-1331 designated as the lead;

- 1 -WHREAS, EPA intends to undertke a rulemaking to make certn

amendments to portions of 

### the RICE NESHA and RICE NESHA II that may resolve the concerns raised by Petitioners in the above-noted petitions for review; WHEREAS, EPA intends to amend the New Source Performance Standards ("NSPS") for Stationary Compression Ignition Internal Combustion Engines, 40 C.F .R. Par 60, subpart IIII, and NSPS for Stationary Spark Ignition Internal Combustion Engines, 40 C.F .R. Part 60, subpar JJJJ, (collectively the "ICE 

### NSPSs") to be consistent with the stationary RICE NESHA and RICE NEHSAP II regulations regarding demand response operation for emergency engines, see 76 Fed. Reg. 37,954,37,962 (June 28, 2011); 

### WHREAS, RICE NESHA Petitioners, RICE NESHA II Petitioners, and EPA (collectively the "Paries") wish to implement this Settlement Agreement ("Agreement") in order to avoid protracted and costly litigation and to preserve judicial resources; NOW, THEREFORE, the Paries, intending to be bound by this Agreement, hereby stipulate and agree as follows:

1. Promptly after execution of this Agreement, the Paries wil notify the Court in No. 10-1090 and 10-1336 that they have reached a settlement, subject to required notice provisions described in paragraph 6 below, and wil 

## - 2 -request that No. 10-1336 be severed from No. 10-1331 and consolidated cases, and

be instead consolidated with Case No. 10-1090 and be held in abeyance pending finalization and completion of the terms of this Agreement, with EPA to file status reports in No. 10-1090 and 10-1336 at 90-day intervals.

2. By April 20,2012, the Administrator of 

### EPA wil sign a notice of proposed rulemaking that includes a proposal to revise the RICE NESHA, RICE 

### NESHA II, and ICE NSPSs to allow owners and operators of emergency stationar internal combustion engines to operate emergency stationary internal combustion engines in emergency conditions, as defined in those regulations, as part of an emergency demand response program for 60 hours per year or the minimum hours required by Independent System Operator tariff, whichever is less. The notice of proposed rulemaking may also allow for more hours of operation

than the number of 

### hours set forth in this paragraph 2, above. By December 14, 2012, the Administrator of EPA wil sign a final action on this proposal, which may include signature of a final rule by the Administrator.

3. If 

### EPA promulgates in final form amendments to the RICE NESHA, RICE NESHA II, and ICE NSPSs that include changes that are substantially the same in substace as that set forth in the description of the proposal in paragraph 2 

### above, then RICE NESHA Petitioners and RICE NESHA II Petitioners shall



# - 3 -promptly file a stipulation of dismissal of 

### Nos. 10-1090 and 10-1336. Such

stipulation of dismissal shall be filed pursuant to Rule 42 of 

### the Federal Rules of Appellate Procedure, with each part to bear its own costs and attorneys' fees. In 

### addition, neither RICE NESHA Petitioners nor RICE NESHA II Petitioners shall challenge the validity of the portion of the final rule adopting such amendments of substantially the same substace as that set forth in the description of the proposal in paragraph 2 above, in any court or administrative proceeding. 

### RICE NESHA Petitioners and RICE NESHA II Petitioners reserve any rights they may have to challenge in any court or administrative proceeding any portion of such final rule that is not of substantially the same in substance as set forth in

paragraph 2 above.

4. Subject to paragraph 5 below, and if and only if EPA does not sign the 

### propòsal described in paragraph 2 above by the date set fort in paragraph 2 above,

or if and only if 

### EPA does not sign a final action that amends the RICE NESHA and ICE NSPSs that includes a change that is substantially the same substace as that set forth in the description of the proposal in paragraph 2 above by the date set 

### forth in paragraph 2 above, then RICE NESHA Petitioners and/or RICE NESHA II Petitioners may request that the Court lift the stay of proceedings and establish a schedule for briefing to adjudicate their challenges.in case Nos. 10-1090 

## - 4 -and 10-1336. The right to make such a request constitutes Petitioners' sole remedy

under this Agreement and any provision of law. Should Petitioners file such a request with the Cour, EPA may file an opposition contesting the basis for said request.
5. In the event that EPA fails to take an action set out in paragraph 2 

### above by the specified dates, before RICE NESHA Petitioners or RICE NESHA II Petitioners may under paragraph 4 request that the Cour lift the stay and establish a briefing schedule to adjudicate their challenges in case Nos. 10-1090 

### and 10-1336, RICE NESHA Petitioners and RICE NESHA II Petitioners must first notify the undersigned signatories 30 days prior to exercising such rights. If EPA completes the relevant action within this 30-day period, or if the Parties enter a modification of this Agreement that modifies the date for the completion of the 

### relevant action, then neither RICE NESHA Petitioners nor RICE NESHA II Petitioners shall request the Cour to lift the stay and to establish a briefing . schedule to adjudicate their challenges in petition Nos. 10-1090 and 10-1336. If EPA does not complete the relevant action within this 30-day period or the Parties . do not enter into a modification of this Agreement that modifies the date for the

completion of 

### the relevant action, then RICE NESHA Petitioners and/or RICE NESHA II Petitioners may under paragraph 4 request the Court to lift the stay



# - 5 -and to establish a briefing schedule to adjudicate their challenges in case Nos. 10-

1090 and 10-1336 in accordance with paragraph 4. The right to make such a request constitutes Petitioners' sole remedy under this Agreement and any provision of law. Should Petitioners file such a request with the Court, EPA may file an opposition contesting the basis for said request.
6. The Parties agree and acknowledge that before this Agreement is
final, EPA must provide notice in the Federal Register and an opportity for 

### comment puruant to Clean Air Act section 113(g), 42 U.S.C. § 7413(g). EPA

shall submit said notice of this Agreement to the Federal Register for publication as expeditiously as possible. After this Agreement has undergone an opportunity for notice and comment, the Administrator and/or the Attorney General, as appropriate, shall promptly consider any such written comments in determining whether to withdraw or withhold her consent to the Agreement, in accordance with section 113(g) of the Clean Air Act. This Agreement shall become final on the 

### date that EPA provides written notice of such finality to RICE NESHA 

### Petitioners and RICE NESHA II Petitioners.

7. Nothing in the terms of this Agreement shall be construed to limit or modify the discretion accorded EPA by the Clean Air Act or by general principles

of administrative law. Nothing in the terms of this Agreement shall be construed

- 6 -to limit EPA's authority to alter, amend, or revise any final rule EPA may issue or

to promulgate superseding regulations.

8. Any obligations of EPA to obligate or expend fuds under this Agreement are subject to the availabilty of appropriations in accordance with the Anti-Deficiency Act, 31 U.S.C. § 1341. This Settlement Agreement shall not be 

### construed to require the United States to obligate or pay fuds in contravention of said Anti-Deficiency Act, 31 U.S.C. § 1341.
9. Except as provided in this Settlement Agreement, none of the paries hereto waives or relinquishes any legal rights, claims or defenses it may have. 

### 10. The undersigned representatives of each part certify that they are fully authorized by.the part or parties that they represent to bind those respective parties to the terms of this Agreement.

IGNACIA S. MORENO Assistant Attorney General Environment and Nat. Resources Div. 

# ~~ AUSTIN D. SA YLO U.S. Department of Justice Environmental Defense Section

PO Box 23986 

### Washington D.C. 20026-3986 (202) 514-1880 

# DA~~r!gND BEVERIDGE & DIAMOND, PC 1350 I Street, NW Suite 700 Washington, D.C. 20005 (202) 789-6047 

# - 7 -Counsel for United States

Environmental Protection Agency



### Dated: /2 - 16 -II

- 8 -Counsel for EnerNOC, Inc., EnergyConnect, Inc., CPower, Inc., and Innoventive Power, LLC

Dated: 1'1 - ( ~ - 1\