SETTLEMENT AGREEMENT

WHEREAS, on August 11, 2004, the United States Environmental Protection Agency

("EPA") reclassified the Imperial Valley Planning Area ("Imperial Valley") as a "serious"

nonattainment area for coarse particulate matter ("PM 10") national ambient air quality standards

("NAAQS") under the Clean Air Act, 69 Fed. Reg. 48,792 (Aug. 11, 2004), triggering the Clean

Air Act requirement in 42 U.S.C. § 7513a(b)(1)(B) that the State of California submit to EPA

within four years a state implementation plan containing provisions for the implementation of

best available control measures ("BACM") for the control of PM 10;

WHEREAS, in 2005 the Imperial County Air Pollution Control District ("Air District")

adopted Rules 800 through 806 (known as "Regulation VIII") intended to limit emissions of

PM 10 within Imperial County;

WHEREAS, in 2006 the California Air Resources Board submitted the 2005 version of

Regulation VIII to EPA as a revision to the state implementation plan;

WHEREAS, on July 8, 2010, EPA published a final rule in the Federal Register

approving in part and disapproving in part the 2005 version of Regulation VIII, 75 Fed. Reg.

39,366 (July 8, 2010) ("Final Rule");

WHEREAS, the Air District filed a petition for review of the Final Rule in the United

States Court of Appeals for the Ninth Circuit (Case No. 10-72709);

WHEREAS, the California Department of Parks and Recreation ("Parks") filed a petition

for review of the Final Rule in the United States Court of Appeals for the Ninth Circuit (Case

No. 10-72729);

WHEREAS, the petitions for review were consolidated (referred to hereinafter as "the

Existing Litigation");
WHEREAS, briefing on the Existing Litigation has concluded and oral argument was

held on February 15, 2012;

WHEREAS, on February 17, 2012 the United States Court of Appeals for the Ninth

Circuit issued an Order (Docket No. 83) that referred the Existing Litigation to mediation,

vacated submission of the Existing Litigation to the Court until further order, and noted that in

the event that mediation efforts fail, the panel will finalize a disposition of the Existing Litigation

without further briefing or argument from the parties;

WHEREAS, the Air District, Parks (hereinafter referred to together as "Petitioners"), and

EPA (collectively, "the Parties") have a mutual interest in ensuring that the Air District's

Regulation VIII satisfies the Clean Air Act's requirements for best available control measures for

the control of PM10 air pollution, 42 U.S.C. § 7513a(b)(1)(B);

WHEREAS, EPA's determination of whether an exceedance of the PM10 NAAQS is an

"exceptional event" within the meaning of section 319 of the Act, 42 U.S.C. § 7619, and EPA's

regulations at 40 C.F.R. §§50.1 and 50.14 requires that EPA consider, among other criteria,

whether the exceedance was "reasonably controllable or preventable" and EPA's consideration

of this factor, evaluates, among other criteria, whether "reasonably available reasonable and

appropriate measures" are in place to control anthropogenic PM10 sources and to abate or

minimize the exposure of the public associated with the exceptional event (hereinafter referred to

as "reasonable control");

WHEREAS, the Air District intends to prepare and transmit to the California Air

Resources Board for submittal to EPA a revision to the state implementation plan as required by

Clean Air Act section 189(d), 42 U.S.C. § 7513a(d);

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WHEREAS,. in order to avoid the uncertainty, delay, and costs associated with continued

litigation, the Air District, Parks, and EPA wish to implement this Settlement Agreement;

NOW THEREFORE, the Parties agree as follows:

The parties to this Settlement Agreement ("Agreement") are the Petitioners and

EPA. Nothing in this Agreement shall be construed to make any other person or entity not

executing this Agreement athird-party beneficiary to this Agreement.

2. This Agreement applies to, is binding upon, and inures to the benefit of the

Petitioners (and their successors, assigns, and designees) and EPA.

This Agreement shall not constitute an admission or evidence of any fact,

wrongdoing, misconduct, or liability on the part of the Parties, their officers, or any person

affiliated with them.

4. Within fourteen days (14) after this Agreement is finalized pursuant to Paragraph

22 of this Agreement, the Parties shall file a motion and proposed order (attached hereto as

Attachment A) in the Ninth Circuit Court of Appeals requesting that the case continue to be

withheld from submission to the panel pending completion of, and subject to, the terms of this

Agreement.

Any deadline stated herein that falls on a Saturday, a Sunday, or a legal holiday

shall be extended to the next day which is not one of the aforementioned days.

6. Within 90 days after this Agreement is executed by all Parties, but before

finalization pursuant to Paragraph 22 of this Agreement, the Air District shall submit to its

Governing Board revisions to the Regulation VIII rules that are substantially the same in

substance as set forth in Attachment B to this Agreement, and supporting documentation

(including off-highway vehicle BACM demonstration).

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7. Within fourteen (14) days of the Governing Board's adoption of the revised

Regulation VIII rules, the Air District shall submit the revised Regulation VIII rules and

supporting documentation (including off-highway vehicle BACM demonstration) to the

California Air Resources Board and request expedited submittal to EPA for incorporation into

the California state implementation plan.

8. Within sixty (60) days of the California Air Resources Board's submittal of the

revised Regulation VIII rules and supporting documentation (including off-highway vehicle

BACM demonstration) to EPA as a revision to the California state implementation plan, the EPA

Region 9 Regional Administrator will sign for publication in the Federal Register a notice of

proposed rulemaking that proposes taking action on the submittal pursuant to Clean Air Act

section 110(k), 42 U.S.C. § 7410(k). If the rules are substantially the same in substance as set

forth in Attachment B to this Agreement, the notice to be signed by the Regional Administrator

shall propose full approval of the submittal pursuant to Clean Air Act sections 110(k) and

189(b)(1)(B), 42 U.S.C. §§ 7410(k), 7513a(b)(1)(B)..EPA shall include in the notice of

proposed rulemaking a statement that EPA's preliminary view is that the revised Regulation VIII

rules constitute "reasonable control" of the sources covered by Regulation VIII for the purpose

of evaluating whether an exceedance of the PM10 NAAQS is an "exceptional event" including

reasonable and appropriate control measures on significant contributing anthropogenic sources.

This statement does not extend to exceedances of NAAQS other than the PM10 NAAQS, or to

events that differ significantly in terms of meteorology, sources, or conditions from the events

that are at issue in the Existing Litigation. Once signed, EPA shall promptly deliver the notice of

proposed rulemaking to the Office of Federal Register for review and publication.

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9. If the Regional Administrator proposes full approval of the submittal referenced

in Paragraph 8, then concurrently with signature of the notice in Paragraph 8, the Regional

Administrator shall sign for publication in the Federal Register a notice making an interim final

determination to defer imposition of sanctions pursuant to the Administrative Procedure Act, 5

U.S.C. § 553(d)(1). However, as is standard for such determinations, EPA may lift the deferral

of sanctions if EPA receives significant and substantive public comments that change its

assessment described in the determination and the proposed approval of the revised Regulation

VIII rules.

10. Within sixty (60) days of the close of public comment on EPA's proposed rule

referenced in Paragraph 8 of this Agreement, the EPA Region 9 Regional Administrator will sign

for publication in the Federal Register a notice of final rulemaking taking action pursuant to

Clean Air Act section 110(k), 42 U.S.C. § 7410(k). Once signed, EPA shall promptly deliver the

notice of final rulemaking to the Office of Federal Register for review and publication.

11. Within ninety (90) days after publication in the Federal Register of EPA's notice

of final rulemaking on a section 189(d) plan for the Imperial Valley PM10 serious nonattainment

area, the Petitioners shall act to terminate the Existing Litigation by filing motions to dismiss

their petitions with prejudice pursuant to Fed. R. App. Pro. 42, with each party to bear its own

costs and attorneys' fees.

12. If EPA does not comply with any requirement of Paragraphs 8 through 10 of this

Agreement, or if the final action required by Paragraph 10 does not finalize approval of the

revised Regulation VIII rules, then the Air District and Parks may at their election, move to

request that the Ninth Circuit Court of Appeals submit the Existing Litigation to the panel and

proceed to a decision on the Existing Litigation. The Parties agree that this Paragraph 12

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constitutes the Petitioners' sole remedy under this Agreement if EPA does not comply with any

requirement of Paragraphs 8 through 10.

13. If EPA takes any final action to require the State of California, on behalf of the

Air District, to submit any plan required under Clean Air Act section 189(d), 42 U.S.C. §

7513a(d), prior to the dismissal described in Paragraph 11 of this Agreement, then the Air

District may at its election, move to request that the Ninth Circuit Court of Appeals submit the

Existing Litigation to the panel and proceed to a decision on the Existing Litigation. The Parties

agree that this Paragraph 13 constitutes the Petitioners' sole remedy under this Agreement if

EPA takes any final action to require a section 189(d) plan from the State of California on behalf

of Imperial County.

14. If the California Air Resources Board does not submit the revised Regulation VIII

rule submission to EPA within sixty (60) days after receiving it, then any of the Parties may at

their election move to request that the Ninth Circuit Court of Appeals submit the Existing

Litigation to the panel and proceed to a decision on the Existing Litigation.

15. In any event, no later than four years after the implementation dates) within

Imperial County for the revised Regulation VIII rules, the Petitioners shall act to terminate the

Existing Litigation by filing motions to dismiss their petitions with prejudice pursuant to Fed. R.

App. Pro. 42, with each party to bear its own costs and attorneys' fees.

16. This Agreement constitutes a full and final resolution of all matters related to the

Existing Litigation, subject to the rights of the Parties to terminate this Agreement as referenced

herein. Petitioners agree to release, discharge, and covenant not to assert (by way of the

commencement of an action, the joinder of EPA in an existing action or in any other fashion) any

and all claims, causes of action, suits or demands of any kind whatsoever in law or equity which
they may have had, or may now or hereafter have, against the United States based upon matters

related to the Existing Litigation.

17. If EPA's final action taken pursuant to Paragraph 10 of this Agreement is full

approval, then Petitioners shall not bring a legal challenge to such action. Nothing in this

Agreement shall preclude Petitioners from bringing a legal challenge to a final action taken

pursuant to Paragraph 10 of this Agreement, other than full approval.

18. Nothing in this Agreement shall be construed to limit or modify the discretion

accorded to EPA by the Clean Air Act, or by general principles of administrative law, nor shall it

in any way be deemed to limit EPA's discretion in adopting any final rule.

19. Nothing in this Agreement shall be construed to limit or modify EPA's discretion

to alter, amend, or revise any regulations, guidance, or interpretation EPA may issue in

accordance with or on matters related to this Agreement from time to time or to promulgate or

issue superseding regulations, guidance, or interpretations, or to limit any right that the

Petitioners may have to seek judicial review in a subsequent case of any such action by EPA.

20. The Parties agree that they do not waive or limit any defense relating to the

Existing Litigation if the Ninth Circuit Court of Appeals submits the Existing Litigation to the

panel and the panel proceeds to a decision. EPA specifically reserves the right to argue that the

Existing Litigation is moot in the event that any request to the Ninth Circuit Court of Appeals to

submit the Existing Litigation to the panel occurs after EPA's final rulemaking referenced in

Paragraph 10 of this Agreement and such final rulemaking is a full approval of the revised

Regulation VIII rules.

21. No provision of this Agreement shall be interpreted as or constitute a commitment

or requirement that EPA obligate or pay funds in contravention of the Anti-Deficiency Act, 31

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U.S.C. § 1341, or take actions in contravention of the Administrative Procedure Act, 5 U.S.C. §§

551-559, 70~-706, the Clean Air Act, or any other law or regulation, either substantive or

procedural.

22. The Parties agree and acknowledge that before this Agreement is final, EPA must

provide notice in the Federal Register and an opportunity for comment pursuant to Clean Air Act

§ 113(g), 42 U.S.C. § 7413(g). 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 consent to

this Agreement, in accordance with section 113(g) of the Clean Air Act. If the federal

government elects to withdraw or withhold consent to this Agreement, Petitioners shall have the

right to withdraw from this Agreement. This Agreement shall become final on the date that EPA

provides written notice of such finality to Petitioners.

23. The Parties may modify any deadline or other term of this agreement by written

stipulation.

24. Any notices required or provided for by this Agreement shall be in writing, and

shall be deemed effective (i) upon receipt if sent by U.S. Post or (ii) upon the date sent if sent by

overnight delivery, facsimile, or email. In addition, to be effective, any such notice must be sent

to the following:

For the Air District:

Rick Rothman

Bingham McCutchen LLP

355 South Grand Avenue, Suite 4400

Los Angeles, CA 90071-3106

telex (213) 680-6400

fax: (213) 680-6499

email: rick.rothman@bingham.com

E:3
Michael Rood

County of Imperial

Office of the County Counsel

County Administration Center

940 Main Street, Suite 205

El Centro, CA 92243-2869

telex (760) 482-4400

fax: (760) 353-9347

email: michaelrood@co.imperial.ca.us

For Parks:

Hayley Peterson

Office of the Attorney General

110 West A Street, Suite 1100

San Diego, CA 92101

telex (619) 645-2540

fax: (619) 645-2012

email: hayley.peterson@doj.ca.gov

Legal Office

California Department of Parks and Recreation

1416 9th Street, 14th Floor

Sacramento, CA 95814

For EPA:

Christina L. Richmond

Environmental Defense Section

Environment and Natural Resources Division

United States Department of Justice

P.O. Box 7611

Washington, D.C. 20026-3986

telex (202) 514-3376

fax: (202) 514-8865

email: christina.richmond2@usdoj.gov

Geoffrey L. Wilcox

Office of General Counsel

United States Environmental Protection Agency

Ariel Rios Building

1200 Pennsylvania Avenue, N. W.

Mail Code: 2344A

Washington, DC 20460

D
parties.

telex (202) 564-5601

fax: (202) 564-5603

email: wilcox.geoffrey@epa.gov

Kara Christenson

Office of Regional Counsel

United States Environmental Protection Agency

75 Hawthorne Street

San Francisco, CA 94105

telex (415) 972-3881

fax: (415) 947-3570

email: christenson.kara@epa.gov

or such other person as any party may subsequently identify in writing to the other

25. The various terms, paragraphs, and sections contained herein shall be deemed

separable and severable. If any provision of this Agreement is deemed invalid or unenforceable,

the balance of the Agreement shall remain in full force and effect.

26. It is hereby expressly understood and agreed that this Agreement was jointly

drafted by Petitioners and EPA. Accordingly, the Parties hereby agree that any and all rules of

construction to the effect that ambiguity is construed against the drafting Party shall be

inapplicable in any dispute concerning the terms, meaning, or interpretation of this Agreement.

27. Each undersigned representative of the Parties to this Agreement certifies that he

or she is fully authorized by the party to enter into and execute the terms and conditions of this

Agreement, and to legally bind such party to this Agreement.

28. This Agreement may be executed in any number of counterpart originals, each of

which shall be deemed to constitute an original agreement, and all of which shall constitute one

agreement. The execution of one counterpart by any party shall have the same force and effect

as if that party had signed all other counterparts.

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FOR THE AIR DISTRICT:

Date:

MICHAEL W. KELLEY

Chairman of the Board

Imperial County Air Pollution Control District

IOC~_~'~' `~

Date:

RUTH COLEMAN

Director

California Department of Parks and Recreation

FOR EPA:

Date: ~~ z 7 z~7~

CHRISTIN .RICHMOND, Trig Attorney

Environmental Defense Section

Environment and Natural Resources Division

United States Department of Justice

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FOR THE AIR DISTRICT:

;:

Date: / ,~1 %2 

/ r /~~ ~~ -~~~

MICHAEL W. KELLEY

Chairman of the Board

Imperial County Air Pollution Control District

Date;

FOR EPA:

Date:

RUTH COLEMAN

Director

California Department of Parks and Recreation

CHRISTINA L. RICHMOND, Trial Attorney

Environmental Defense Section

Environment and Natural Resources Division

United States Department of Justice

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FOR THE AIR DISTRICT:

Date:

MICHAEL W. KELLEY

Chairman of the Board

Imperial County Air Pollution Control District

FOR PARKS:

Date: ~ 2 5 ~ 2 ~~ ~B

~~K~ ~~~ lifornia Departmen of Parks and Recreation

FOR EPA:

Date:

CHRISTINA L. RICHMOND, Trial Attorney

Environmental Defense Section

Environment and Natural Resources Division

United States Department of Justice

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