COMMONWEALTH OF KENTUCKY FRANKLIN CIRCUIT COURT DIVISION NO. I CIVIL ACTION NO. 17-CI-00474 Electronically Filed KELLEY LEACH PLAINTIFF V. PARTIAL SETTLEMENT AGREEMENT AND AGREED UPON BRIEFING SCHEDULE COMMONWEALTH OF KENTUCKY ENERGY AND ENVIRONMENT CABINET AND CHARLES SNAVELY, In His Official Capacity As Secretary of the Energy and Environment Cabinet AND LOUISVILLE GAS AND ELECTRIC COMPANY, INC. DEFENDANTS ******** The parties to this Partial Settlement Agreement and Agreed Upon Briefing Schedule, Defendant Commonwealth of Kentucky by and through its Energy and Environment Cabinet, Defendant Louisville Gas and Electric Company, and Plaintiff Kelley Leach (hereinafter collectively “the Parties”) state: A. Recitals 1. On May 3, 2017, Plaintiff Kelley Leach, through Counsel, filed a Complaint and Petition for Declaration of Rights against Defendants Commonwealth of Kentucky, Energy and Environment Cabinet and Charles Snavely in his official capacity as Secretary (hereinafter collectively the “Cabinet”) and Louisville Gas and Electric Company (“LG&E”). In the Complaint and Petition, Plaintiff challenged certain newly-promulgated Cabinet regulations at 401 KAR Chapter 45 and 401 KAR Chapter 46 that incorporate regulations promulgated by the U.S. Environmental Protection Agency (“EPA”) for beneficial use and disposal of coal combustion residuals (“CCR”) generated by Kentucky electric utilities. The challenged Cabinet regulations became effective on May 4, 2017. 2. On May 9, 2017, the Parties met at the Offices of the Cabinet to discuss: (a) a potential partial resolution of the issues; (b) a potential agreement for the Cabinet and LG&E to withhold taking certain actions under the new regulations pending briefing of the merits before the Court; and (c) the establishment of an expedited briefing schedule for the claims asserted by Plaintiff in the Complaint and Petition. Pursuant to KRS 418.050, declaratory judgment actions may be docketed for early hearing by the Court. The Parties agree that in light of certain deadlines that exist for actions to be taken by electric utilities in Kentucky to accommodate continued disposal of CCR and to comply with the federal CCR regulations, prompt resolution of this declaratory judgment action is in the interest of all Parties and the citizens of the Commonwealth. NOW THEREFORE, in the interests of judicial economy, expedited resolution of the Complaint and Petition for Declaration of Rights, and of temporary maintenance of the status quo with respect to the permitting status of certain CCR facilities in the Commonwealth while ensuring facilities will be able to maintain compliance with the federal CCR regulations for onsite disposal of CCR during the interim, the Parties hereby consent to entry of this Partial Settlement Agreement and Agreed Upon Briefing Schedule (hereinafter “Agreement”) and agree as follows: 2 B. Briefing Schedule 3. The Parties agree to the following briefing schedule for any Motions to Dismiss, Cross-Motions for Summary Judgment, Responses thereto, and Replies. a. Defendants shall file their Answers to the Complaint and Petition for Declaration of Rights on or before June 22, 2017. b. Motions to Dismiss, Cross-Motions for Summary Judgment and Supporting Memoranda shall be filed and served by the Parties on or before Monday, June 22, 2017. Memoranda in Support of the Parties’ Cross-Motions shall be limited to 40 pages. All exhibits to Cross-Motions For Summary Judgment other than those already part of the public record shall be verified by affidavit. The Motions and Memoranda in Support shall be served by U.S. Mail and electronic mail. c. The Parties’ respective Memoranda in Response to Motions to Dismiss and Cross-Motions for Summary Judgment shall be filed and served on or before Monday, July 10, 2017. Memoranda in Response shall be limited to 25 pages. All exhibits to Memoranda in Response other than those already part of the public record shall be verified by affidavit. Memoranda in Response shall be served by U.S. Mail and electronic mail. d. The Parties’ respective Reply Memoranda shall be filed on or before Friday, July 24, 2017. Reply Memoranda shall be limited to 15 pages. All exhibits to Reply Memoranda other than those already part of the public record shall be verified by affidavit. Reply Memoranda shall be served by U.S. Mail and electronic mail. e. The Parties reserve all rights to contest the admissibility of all tendered exhibits. 3 4. The Parties agree that briefing on the merits shall be complete with submittals of the Reply Memoranda on July 24, 2017, and that the matter will stand submitted to the Court for a ruling on the merits unless any party requests oral argument before the Court or the Court directs that oral argument shall be had on the respective motions and cross-motions. Further, the Parties shall collectively submit AOC Form 280 at the time of final submission. C. Cabinet Action on CCR Landfill Registrations 5. Until the briefing schedule is complete and the matter stands submitted to the Court, the Cabinet agrees that it shall not issue a registered permit-by-rule for new or existing CCR landfills pursuant to 401 KAR 46:120 with the exception of those facilities identified in numerical paragraph 7. 6. Following submittal of the matter to the Court, and until the issuance of a ruling on the merits by the Franklin Circuit Court, the Cabinet shall notify the Plaintiff’s counsel in writing ten (10) days prior to approval of a registered permit-by-rule under 401 KAR 46:120 for a new or existing CCR landfill. Plaintiff reserves all rights to seek injunctive relief from the Court with respect to any such actions. 7. Notwithstanding the Cabinet’s agreement in numerical paragraphs 5 and 6, until the issuance of a ruling on the merits by the Franklin Circuit Court, with respect to proposed registered permits-by-rule under 401 KAR Chapter 46 for construction and/or operation of new CCR landfills and horizontal expansions of existing CCR landfills, the Cabinet may issue a registered permit-by-rule in accordance with Section 1 of 401 KAR 46:120 prior to the expiration of the ten (10) day notice under numerical paragraph 6 provided that: a. A determination is made by the Cabinet that construction and/or operation of such new landfill or expansion is necessary for the utility to have adequate on-site 4 capacity that complies with federal CCR requirements and the capacity is necessary to accommodate closure in place or “closure by removal” of existing on-site special waste impoundment(s); b. The facility submits an engineering certification that the new landfill or horizontal expansion is sited and designed in accordance with the federal CCR requirements for CCR landfills, and following construction, the facility submits an engineering certification that the new landfill or horizontal expansion has been constructed in accordance with the federal CCR requirements; c. The utility provides public notice published in the newspaper of largest circulation of the county in which the proposed construction of a new landfill or horizontal expansion would occur of the filing of the siting and design certification described in subparagraph b. of this paragraph; and d. The Cabinet will, after review of a certification submitted pursuant to subparagraph b. issue its finding as to whether the new landfill or horizontal expansion will satisfy the siting, design, or construction requirements of the federal CCR rules, as applicable. D. LG&E Registration for Trimble County Station CCR landfill 8. Until the briefing is complete and the matter stands submitted to the Court, LG&E agrees that it shall not submit a registered permit-by-rule registration (DWM 4600) or otherwise request to transition to 401 KAR Chapter 46 for its Trimble County Station CCR landfill pursuant to 401 KAR 46:120 Section 1. 9. Following submittal of the matter to the Court, and until the issuance of a ruling on the merits by the Franklin Circuit Court, LG&E agrees not to undertake the action described 5 in numerical paragraph 8 unless it first provides ten (10) days’ notice of its intent to do so to the Plaintiff. Plaintiff reserves all rights to seek injunctive relief from the Court with respect to any such actions. 10. The Parties acknowledge that the Trimble County Station CCR landfill received a construction permit from the Cabinet under 401 KAR Chapter 45 on February 15, 2017. Pursuant to 401 KAR 46:120 Section 3, the Trimble County Station CCR landfill permit would not transition to 401 KAR Chapter 46 until issuance by the Cabinet of a registered permit-by-rule under 401 KAR Chapter 46. E. Interim Status Of Existing CCR Surface Impoundment Closures 11. Plaintiff acknowledges that the Complaint and Petition for Declaration of Rights does not challenge the Cabinet regulations at 401 KAR 4:070 relating to CCR surface impoundments, and it is not the intention of Plaintiff to delay the process of closure by removal of CCR or closure in place of existing CCR surface impoundments under the federal CCR requirements in this litigation. Pursuant to this Agreement, a utility may proceed with “closure by removal” of any existing CCR surface impoundment, or closure in place of an existing CCR surface impoundment, provided that: a. Such closure is in compliance with the federal CCR requirements; b. The utility provides notice to the Cabinet of the location of all CCR surface impoundments owned or operated by the utility and informs the Cabinet as to whether the impoundment(s) will be closed in place or will be subject to “closure by removal” by removing the contents of the impoundment for disposal at a permitted facility; and c. Upon completion of closure, an engineering certification of compliance with the federal CCR requirements is filed with the Cabinet, and public notice is published in 6 the newspaper of largest circulation in the county in which the impoundment is located, informing the public that such documentation has been filed. F. Injunctive Relief 12. Plaintiff agrees to not seek any additional temporary relief relating to his claims, until after receipt of notifications under numerical paragraphs 6 and 9, above, relating to the Cabinet’s intent to approve new or existing CCR landfill registrations or LG&E’s submittal of a registered permit-by-rule application for its Trimble County Station CCR landfill. G. Notice. Any notice required or made with respect to this agreement shall be made in writing and shall be provided by U.S. Mail and electronic mail to the following persons: For the Plaintiff: Thomas FitzGerald Liz D. Edmondson Kentucky Resources Council, Inc. P.O. Box 1070 Frankfort, KY 40602-1070 (502) 875-2428 FitzKRC@aol.com Liz.D.Edmondson@gmail.com For the Defendant LG&E: J. Gregory Cornett Robert J. Ehrler LG&E and KU Energy LLC 220 West Main Street Louisville, KY 40202 (502) 627-2756 Greg.Cornett@lge-ku.com Bob.Ehrler@lge-ku.com 7 John C. Bender R. Clay Larkin Dinsmore & Shohl LLP 250 West Main Street, Suite 1400 Lexington, KY 40507 (859) 425-1093 jack.bender@dinsmore.com clay.larkin@dinsmore.com For the Defendant Kentucky Energy and Environment Cabinet: John G. Horne, II Jacquelyn A. Quarles Daniel C. Cleveland Office of General Counsel Energy and Environment Cabinet 300 Sower Boulevard, 3rd Floor Frankfort, KY 40601 (502) 782-6978 - Horne John.horne@ky.gov (502) 782-782-7043 – Quarles Jackie.Quarles@ky.gov (502) 782-6921 – Cleveland Daniel.Cleveland@ky.gov Upon written notice to the other parties, any party may designate a successor contact for any matter related to this Agreement. H. Reservation of Rights. 13. The Parties agree this Agreement does not constitute a waiver of any claims or defenses, procedural or substantive, with respect to the Complaint and Petition for Declaration of Rights, except for Plaintiff’s limitation on his claims set forth in numerical paragraphs 11 and 12, above. The Defendants expressly reserve all rights and defenses with respect to claims set forth in the Complaint and Petition. 8 AGREED TO: /s/ Thomas FitzGerald Thomas FitzGerald Attorney for Plaintiff May 25, 2017_____________ Date /s/ John G. Horne II ______________ John G. Horne, II, General Counsel Energy and Environment Cabinet May 25, 2017_____________ Date /s/ J. Gregory Cornett_______________ J. Gregory Cornett Associate General Counsel LG&E and KU Energy, LLC May 25, 2017_____________ Date SO ORDERED, this _____ day of May, 2017. ______________________________________ PHILLIP J. SHEPHERD, JUDGE FRANKLIN CIRCUIT COURT, DIVISION I DISTRIBUTION This is to certify that a true and correct copy of the foregoing was sent this of May, 2017 to the following, via U.S. mail, first class, postage prepaid: Thomas FitzGerald Liz D. Edmondson Kentucky Resources Council, Inc. P.O. Box 1070 Frankfort, KY 40602-1070 John G. Horne, II Jacquelyn A. Quarles Daniel C. Cleveland Office of General Counsel Energy and Environment Cabinet 300 Sower Boulevard, 3rd Floor Frankfort, KY 40601 9 th day Barbara B. Edelman John C. Bender R. Clay Larkin Dinsmore &Shohl LLP 250 West Main Street, Suite 1400 Lexington, KY 40507 ____________________________________ Franklin Circuit Court Clerk 10