HomeMy WebLinkAboutZero Emmision Vehical Appendix C Investment Commitment 10-26-2016-VWAPPENDIX C TO
PARTIAL CONSENT DECREE
MDL No. 2672 CRB (JSC)
APPENDIX C
THE ZEV INVESTMENT COMMITMENT
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APPENDIX C
THE ZEV INVESTMENT COMMITMENT
This Appendix sets forth the requirements for Settling Defendants to direct $2 billion of
investments over a period of up to 10 years into actions that will support increased use of zero
emission vehicle (“ZEV”) technology in the United States, including, but not limited to, the
development, construction, and maintenance of zero emission vehicle-related infrastructure.
These efforts will be directed pursuant to two separate investment planning processes, one for
the State of California and the other for the rest of the United States. The State of California Air
Resources Board (“CARB”) will manage the process relating to California and the United States
Environmental Protection Agency (“EPA”) will manage the process for the rest of the United
States.
I. DEFINITIONS
Terms used in this Appendix C that are defined in Section III (Definitions) of the Consent
Decree shall have the meaning set forth in Section III (Definitions) of the Consent Decree. In
addition, and unless otherwise provided, the following terms when used in this Appendix C shall
have the following meanings:
1.1. “Appendix C” shall mean this Appendix, and any modifications, revisions, or
amendments to it.
1.2. “California ZEV Investment Plan” shall mean the CARB-approved plan
developed by the Settling Defendants and implemented in four 30-month cycles, with $200
million invested in each such cycle, for implementation in the State of California, resulting in the
investment of $800 million over a period of up to 10 years, pursuant to Section III of this
Appendix C, and any CARB-approved revisions, modifications, or amendments to it.
1.3. “California Creditable Cost Guidance” shall mean a guidance document prepared
by Settling Defendants, for review and approval by CARB, which establishes the requirements
regarding the Settling Defendants’ accounting for, and documentation of, costs incurred in the
implementation of the California ZEV Investment Plan. The requirements for the California
Creditable Cost Guidance are set forth in Appendix C-1 to this Appendix.
1.4. “Creditable Costs” shall mean costs incurred by Settling Defendants for the
planning, installation, operation, and maintenance of a ZEV Investment identified in an approved
National ZEV Investment Plan or California ZEV Investment Plan that satisfies the criteria set
forth in the National Creditable Cost Guidance or California Creditable Cost Guidance, as
applicable. Creditable Costs shall include costs incurred by the Settling Defendants after the
date of lodging of the Consent Decree to the extent those costs fall within the definition of
Creditable Costs. Creditable Costs shall not include any expenditure that: (i) was approved by a
Board of Management of any Settling Defendant prior to September 18, 2015; (ii) was required
by a contract entered into by any of the Settling Defendants prior to the date of lodging of the
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Consent Decree; or (iii) is part of a joint effort by Settling Defendants and other automobile
manufacturers to create ZEV infrastructure.
1.5. “National Creditable Cost Guidance” shall mean a guidance document prepared
by Settling Defendants that establishes the requirements regarding the Settling Defendants’
accounting for, and documentation of, costs incurred in the implementation of the National ZEV
Investment Plan. The requirements for the National Creditable Cost Guidance are set forth in
Appendix C-1 to this Appendix.
1.6. “National ZEV Investment Plan” shall mean the EPA-approved plan developed
by the Settling Defendants for the investment of $1.2 billion in 30-month investment cycles in
areas of the United States other than the State of California pursuant to Section II of this
Appendix C, and any revisions, modifications, or amendments to the EPA-approved National
ZEV Investment Plan.
1.7. “Paragraph,” unless otherwise specified, shall mean a paragraph or a
subparagraph of this Appendix C designated by a number.
1.8. “Section,” unless otherwise specified, shall mean a section of this Appendix C
designated by an upper case Roman numeral.
1.9. “ZEV” or “zero emission vehicle” shall mean any:
1.9.1. on-road passenger car or light duty vehicle, light duty truck, medium duty
vehicle, or heavy duty vehicle that produces zero exhaust emissions of all of the
following pollutants: non-methane organic gases, carbon monoxide, particulate matter,
carbon dioxide, methane, formaldehyde, oxides of nitrogen, or nitrous oxide, including,
but not limited to, battery electric vehicles (“BEV”) and fuel cell vehicles (“FEV”);
1.9.2. on-road plug-in hybrid electric vehicle (“PHEV”) with zero emission
range greater than 35 miles as measured on the federal Urban Dynamometer Driving
Schedule (“UDDS”) in the case of passenger cars, light duty vehicles and light duty
trucks, and 10 miles as measured on the federal UDDS in the case of medium- and
heavy-duty vehicles; or
1.9.3. on-road heavy-duty vehicle with an electric powered takeoff.
ZEVs shall not include: zero emission off-road equipment and vehicles; zero emission
light rail; additions to transit bus fleets utilizing existing catenary electric power; or any vehicle
not capable of being licensed for use on public roads.
1.10. “ZEV Investment” shall mean an investment of money by the Settling Defendants
that promotes and advances the use and availability of ZEVs within the categories of actions set
forth below. The specific types of ZEV investments that may be implemented under the
National ZEV Investment Plans are to be determined by reference to the provisions of this
Appendix C relating to those Plans. ZEV Investments may include:
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1.10.1. Design/planning, construction/installation, operation, and maintenance of
ZEV infrastructure. That infrastructure should support and advance the use of ZEVs in
the United States by addressing an existing need or supporting a reasonably anticipated
need. Such expenditures may include the installation of: (i) Level 2 charging at multi-
unit dwellings, workplaces, and public sites, (ii) DC fast charging facilities accessible to
all vehicles utilizing non-proprietary connectors, (iii) new heavy-duty ZEV fueling
infrastructure (in California); (iv) later generations of the types of charging infrastructure
listed in i, ii, and iii; and (v) ZEV fueling stations;
1.10.2. Brand-neutral education or public outreach that builds or increases public
awareness of ZEVs. As used here, “brand-neutral” means that the educational or
outreach efforts, materials or activities do not feature or favor Settling Defendants’
vehicles or services. Such educational or outreach efforts, materials or activities may
contain a statement that they are “sponsored by Volkswagen,” but that statement shall not
be prominently displayed, and the efforts, materials or activities shall not feature, favor,
or advertise Settling Defendants’ services or vehicles;
1.10.3. Programs or actions to increase public exposure and/or access to ZEVs
without requiring the consumer to purchase or lease a ZEV at full market value, e.g., the
operation of ZEV car sharing services, or ZEV ride hailing services, including, but not
limited to, ZEV autonomous vehicles, and, in California, scrap and replace with ZEV
vehicles;
1.10.4. The “Green City” initiative in California, including, but not limited to: the
operation of ZEV car sharing services, zero emission transit applications, and zero
emission freight transport projects. The selection of the city (e.g., Los Angeles) will be
made by the Settling Defendants in consultation with appropriate local authorities in
California.
ZEV Investments shall exclude any investments that are related to projects or activities
that the Settling Defendants are or will be required to perform pursuant to any federal,
state, or local laws. The excluded projects include, but are not limited to, any aspects of
injunctive relief required by this Consent Decree and any of its Appendices other than
this Appendix C, any ongoing or potential legal enforcement action, any part of an
existing settlement or order in any legal action, or any current or future federal, state, or
local legal requirement. Provided, however, a federal, state or local requirement that
becomes effective after the approval of a National ZEV Investment Plan or a California
ZEV Investment Plan will not preclude a cost from qualifying as a Creditable Cost unless
such requirement was reasonably anticipated to become effective during the period
covered by such approved Plan.
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II. NATIONAL ZEV INVESTMENT PLAN
2.1. National ZEV Investments: Within 10 years after the Effective Date, or such
additional time as may be approved by EPA in writing, Settling Defendants shall spend $1.2
billion in Creditable Costs on ZEV Investments in areas of the United States other than the State
of California (“National ZEV Investments”). These expenditures shall be structured so that
Settling Defendants shall spend $300 million in Creditable Costs every 30 months unless
otherwise agreed to in writing by EPA. National ZEV Investments to be made during the first
30-month period following the Effective Date shall be made in accordance with this Section and
the timelines set forth in this Section. National ZEV Investments to be made during the
remaining three 30-month periods shall be made in accordance with the National ZEV
Investment Plan requirements set forth herein and the specific plans that shall be submitted by
the Settling Defendants 30 months, 60 months, and 90 months from the Effective Date,
respectively. Settling Defendants may incur Creditable Costs under the National ZEV
Investment Plan only for the types of ZEV Investments described in Paragraphs 1.10.1., 1.10.2.,
and 1.10.3., except for new heavy-duty ZEV fueling infrastructure and scrap and replace with
ZEV vehicles. Settling Defendants are solely responsible for every aspect of selecting the
National ZEV Investments, including, but not limited to, the category or combination of the three
categories of investments listed above, as well as the timing and locations of any National ZEV
Investment. Notwithstanding the preceding, costs incurred in connection with ZEV charging
infrastructure installed at or adjacent to Settling Defendants’ dealerships shall not constitute
Creditable Costs. Costs incurred for programs or actions to increase public exposure and access
to ZEVs may only qualify as Creditable Costs if the program or action is specifically agreed to in
writing by EPA in advance of its implementation, and any necessary amendments to the National
Creditable Cost Guidance for determining the specific costs allowable have been agreed to by
Settling Defendants and EPA.
2.2. National Creditable Cost Guidance: Within 30 Days after the Effective Date,
Settling Defendants shall submit to EPA for review and approval in accordance with Section V
(Approval of Submissions and EPA/CARB Decisions) of the Consent Decree a proposed
National Creditable Cost Guidance developed in accordance with the requirements set forth in
Appendix C-1. EPA and the Settling Defendants shall meet and confer as soon as practicable
after that submission to discuss the proposed National Creditable Cost Guidance. The final
National Creditable Cost Guidance shall be developed by the Settling Defendants in accordance
with the requirements set forth in Appendix C-1, taking into account feedback received from
EPA during the meet-and-confer session. Unless otherwise agreed in writing with EPA, Settling
Defendants shall submit the final National Creditable Cost Guidance within 60 days after the
Effective Date.
2.3. National ZEV Outreach Plan: Within 15 days after the Effective Date, Settling
Defendants shall submit to EPA for review and approval in accordance with Section V
(Approval of Submissions and EPA/CARB Decisions) of the Consent Decree a detailed plan that
addresses how Settling Defendants will solicit input from interested States, municipal
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governments, federally-recognized Indian tribes (“Tribes”), and federal agencies relevant to
Settling Defendants’ development of each 30-month phase of the National ZEV Investment Plan
(the “National ZEV Outreach Plan”). The National ZEV Outreach Plan shall include a
description of how Settling Defendants will provide information sufficient to allow States,
municipal governments, Tribes, and federal agencies to offer meaningful input on the
development of the National ZEV Investment Plan, or an update thereto, including the
identification of opportunities within States, municipal governments, Tribes, and federal
agencies to make National ZEV Investments where most needed. Although this Consent Decree
does not impose upon Settling Defendants any obligation to act upon or respond to any
suggestions received, Settling Defendants shall provide a reasonable opportunity for suggestions
on the development of the National ZEV Investment Plan. Upon approval of the National ZEV
Outreach Plan, the Settling Defendants shall implement it. To this end, at a minimum, the
National ZEV Outreach Plan shall:
2.3.1. Describe how Settling Defendants will provide States, municipal
governments, Tribes, and federal agencies with notice and opportunities to provide
suggestions, observations, and offers of assistance or support for actions that the Settling
Defendants may take under the National ZEV Investment Plan. At a minimum, Settling
Defendants shall provide reasonable notice of these opportunities on a website
established by the Settling Defendants in accordance with Paragraph 32 of the Consent
Decree. Settling Defendants shall accept for consideration comments by States,
municipal governments, Tribes, and federal agencies in advance of submitting a Draft
National ZEV Investment Plan to EPA;
2.3.2. Describe the manner in which States, municipal governments, Tribes, and
federal agencies will be given an opportunity to offer input on the development of the
National ZEV Investment Plan or an update thereto, including specifying the lead time
provided for such input and any relevant guidance to facilitate transmission and receipt of
such input (e.g., web-based submission, transmittal of hard copy document, preferred
document and data formats, etc.); and
2.3.3. Provide a timeline for the implementation of the National ZEV Outreach
Plan, including the proposed begin and end dates for the acceptance of comments.
2.4. Submission of Draft National ZEV Investment Plan: Within 120 Days after
the Effective Date or 30 Days after the end of the comment acceptance period under the National
ZEV Outreach Plan in Paragraph 2.3., whichever occurs later, Settling Defendants shall submit a
Draft National ZEV Investment Plan to EPA that describes proposed National ZEV Investments
that will be implemented for at least the next 30 months. Settling Defendants shall provide an
Executive Summary of the Draft National ZEV Investment Plan that does not contain
confidential business information (“CBI”), that could be made public upon request, and that
would include all key elements of the Draft National ZEV Investment Plan, as well as a general
summary of comments received and how the Settling Defendants considered such
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comments. EPA and the Settling Defendants shall meet and confer as soon as practical after the
submission in order to discuss the Draft National ZEV Investment Plan. The purpose of the meet
and confer is for EPA to provide Settling Defendants with preliminary views on the Draft
National ZEV Investment Plan in advance of Settling Defendants’ submission of the National
ZEV Investment Plan.
2.5. Submission and Content of National ZEV Investment Plan: Within 30 Days
after the meet and confer on a Draft National ZEV Investment Plan, Settling Defendants shall
submit a National ZEV Investment Plan to EPA for EPA’s review and approval as consistent
with the requirements of this Appendix C in accordance with Section V (Approval of
Submissions and EPA/CARB Decisions) of the Consent Decree. To the extent that the Plan
contains any CBI, Settling Defendants shall provide a version of it that contains all the key
elements and that can be posted on a website established by the Settling Defendants in
accordance with Paragraph 32 of the Consent Decree. Following EPA’s approval, Settling
Defendants shall publish a link to the National ZEV Investment Plan on the website specified
above. The National ZEV Investment Plan shall include at the minimum:
2.5.1. Both types of ZEV Investments described in Paragraphs 1.10.1. and
1.10.2., except for new heavy-duty ZEV fueling infrastructure;
2.5.2. A specific description of the National ZEV Investments, and the
associated timelines (with interim milestones), to be implemented within the 30 months
covered by the National ZEV Investment Plan that shall result in the expenditure of $300
million in Creditable Costs during that period;
2.5.3. A projection of anticipated Creditable Costs associated with each National
ZEV Investment, on an itemized basis, with items of cost broken down into at least the
following categories: (1) personnel costs (including salaries and fringe benefits);
(2) travel expenses; (3) office rent; (4) company vehicles; (5) office fixtures and
equipment; (6) insurance; (7) office supplies; (8) taxes and governmental fees (excluding
corporate income taxes); (9) information technology expenses (including infrastructure,
hardware, and software); (10) utilities; (11) services - - such as accounting, human
resources, legal, and procurement - - obtained from affiliated companies pursuant to
service level agreements; and (12) goods and services obtained via contracts with third
parties. Settling Defendants shall not obtain services from affiliated companies pursuant
to service level agreements if services of equal quality that meet Settling Defendants’
specifications and requirements are available from a third party at a materially lower cost.
The approval of any National ZEV Investment Plan by EPA does not constitute approval
of any anticipated costs set forth therein, and a good faith failure of Settling Defendants
to include a cost does not preclude such cost from qualifying as a Creditable Cost;
2.5.4. The location(s) and type(s) (e.g., Level 2 or DC fast charging) of any
infrastructure that Settling Defendants will construct or cause to be constructed under a
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National ZEV Investment Plan; the quantities of sites that will be constructed, chargers or
ZEV fueling stations per site, costs per site, and the type and number of connectors per
charger or site; dates by which each specific construction will commence; specific or
estimated dates of completion of such construction; a plan to provide for maintenance of
ZEV charging infrastructure for a period of not less than 10 years after the Effective
Date, which includes a requirement of periodic maintenance and provides that the
charging equipment be marked with a toll-free number for maintenance issues that will
be answered by a live operator who is subject to Settling Defendants’ control; peer-
reviewed research reports or summaries of such reports, to the extent applicable, that
provide supporting evidence that such infrastructure type and location can be reasonably
expected to advance the use of ZEVs; and an explanation of how such infrastructure
meets a reasonable need and advances the use of ZEVs. Any charging infrastructure
proposed by the Settling Defendants shall have the ability to service all plug-in ZEVs
using non-proprietary connectors as the field evolves by: (i) if necessary, using multiple
connectors; and/or (ii) using charging protocols and approaches that anticipate and
address the evolving field of vehicle charging. Settling Defendants are free to support
evolving standards in the field of non-proprietary connectors, and are not obligated to
provide equal support for different types of non-proprietary connectors;
2.5.5. With the exception of the first 30-month National ZEV Investment Plan,
any programs or actions to increase public exposure or access to ZEVs, including
measures to increase access in underserved areas. Such programs or actions may include,
but will not be limited to: partnering with rental fleet and car-share providers to make
ZEVs available at no incremental cost to customers; creating new ZEV car-share
programs; hosting “ride and drive” events or donating ZEVs to such events; or
facilitating other opportunities for members of the public to drive a ZEV other than
through purchase or planned purchase. Provided, however, that any such program or
action must be specifically approved in writing by EPA, and EPA and the Settling
Defendants must agree to any necessary amendments to the National Creditable Cost
Guidance prior to incurrence of any costs for such program or action for the costs to
qualify as Creditable Costs;
2.5.6. A description of the brand-neutral media activities that Settling
Defendants will initiate to provide education and raise awareness regarding ZEVs and
ZEV technology, such as: identities of Settling Defendants’ third party partners; the
media, platforms or fora in which information will be provided (i.e., television,
smartphones, print, websites, etc.); geographic placement of any physical advertisements;
and quantity and length of placement of any television, radio, or online advertisements.
Unless otherwise agreed to in writing by EPA, Settling Defendants shall spend no less
than $25 million and no more than $50 million on such activities during each 30-month
investment cycle;
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2.5.7. An explanation, taking into account relevant literature from academia,
industry, and government, if available, that each National ZEV Investment, to the extent
applicable: increases the use of ZEVs in the United States; addresses a clearly existing
need or supports a reasonably anticipated need; has a high likelihood of utilization and
provides accessibility/availability where most needed and most likely to be regularly
used; supports and/or advances the market penetration of ZEVs in the United States;
helps build positive awareness of ZEVs; is intended for, and compatible with, ZEV
technology brands that are not limited to the Settling Defendants and/or their subsidiaries;
and uses non-proprietary or multiple connectors or charging protocols that anticipate
technological changes; and
2.5.8. A certification, in accordance with Paragraph 33 of the Consent Decree,
that none of the proposed projects or activities: (1) was approved by the Board of
Management of any Settling Defendant prior to September 18, 2015, was required by a
contract entered into by the Settling Defendants prior to the date of lodging of the
Consent Decree, or is part of a joint effort by Settling Defendants and other automobile
manufacturers to create ZEV infrastructure; or (2) is one that the Settling Defendants
either are required to perform by any federal, state, or local law, or anticipate will be
required to perform during the planned 30-month period.
2.6. Settling Defendants shall start implementing the National ZEV Investment Plan
upon its approval and shall maintain or provide for maintenance of any ZEV charging
infrastructure for a period of not less than ten (10) years from the Effective Date.
2.7. Independent Third Party Review of Creditable Costs and Attestation for
National and California ZEV Investment Plans: Settling Defendants shall retain, upon
approval by the United States, after consultation with CARB, a person or entity to serve as the
independent third-party certified public accounting firm (“Third-Party Reviewer”) to: (i) audit
and review costs asserted by Settling Defendants to be Creditable Costs in the Annual National
ZEV Investment Reports or the Annual California ZEV Investment Reports; (ii) perform duties
as required by Paragraphs 2.7.4. and 3.4.2.; and (iii) provide an attestation as provided in
Paragraphs 2.9.3. and 3.4.1. and the Attestation Requirements listed in Appendix C-1. Settling
Defendants or the Third-Party Reviewer shall develop the proposed attestation agreement
consistent with the National Creditable Cost Guidance and the California Creditable Cost
Guidance, as applicable, developed pursuant to Appendix C-1 and this Appendix. EPA or
CARB, as applicable, will approve or disapprove the attestation agreement in accordance with
Section V (Approval of Submissions and EPA/CARB Decisions) of the Consent Decree.
2.7.1. Recommendation of Candidates for the Third-Party Reviewer. Within 30
days of the Effective Date, Settling Defendants shall submit to the United States and
CARB a list of three candidates for the position of the Third-Party Reviewer. Settling
Defendants shall:
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2.7.1.1. Submit a resume, biographical information, and any relevant
material concerning each of the candidate firms and its competence and
qualifications to serve as Third-Party Reviewer; the selected staff assigned to
perform the review in California must be licensed in California and the selected
firm must maintain an office in California;
2.7.1.2. Describe any past, present, or future business or financial
relationship that the candidate has with the Settling Defendants, EPA, or CARB. A
candidate may not be an employee or an agent of the Settling Defendants, Settling
Defendants’ subsidiaries, the United States, or California, nor may the candidate be
currently engaged in any work for, or in representation of, Settling Defendants;
2.7.1.3. Verify that, to the Settling Defendants’ best knowledge and based
on the reasonably available information, either the candidate has no conflicts of
interest with regard to this matter or any actual or apparent conflict has been waived
by the Settling Defendants, CARB, and the United States;
2.7.1.4. Verify that the candidate has agreed not to be employed by any
Settling Defendant, or its subsidiary, for a minimum of two years after the
termination of its term as the Third-Party Reviewer; and
2.7.1.5. Accompany all of the information listed above in Paragraph 2.7.1.1
through Paragraph 2.7.1.4. with a certification in accordance with Paragraph 33 of
the Consent Decree.
2.7.2. Selection of the Third-Party Reviewer. After receiving the list of
candidates from the Settling Defendants, the United States, after consultation with
CARB, shall select a Third-Party Reviewer from among the candidates, and notify the
Settling Defendants of such selection. If the United States does not select any of the
candidates submitted by the Settling Defendants, the process under Paragraph 2.7.1. shall
be repeated until the Third-Party Reviewer is selected.
2.7.3. Vacancy in the Position of the Third-Party Reviewer. In the event that the
Third-Party Reviewer, once selected, is unable or unwilling to fulfill its duties as the
Third-Party Reviewer, the processes under Paragraphs 2.7.1. and 2.7.2. shall be used to
select a new Third-Party Reviewer.
2.7.4. Duties of the Third-Party Reviewer. Within 30 days of selection, the
Third-Party Reviewer shall develop a plan that will establish a checklist of relevant
compliance requirements, procedures for the exchange of any documents and
information that the Third-Party Reviewer needs to perform its duties, and any other
terms that the Third-Party Reviewer may deem necessary to effectuate its duties.
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2.7.5. Information and Access Rights Accorded to Third-Party Reviewer.
Settling Defendants shall provide the Third-Party Reviewer with any information that the
Reviewer requests or may reasonably need to fulfill the duties listed in Paragraph 2.7.4.
and Paragraph 3.4.2., including, but not limited to: any information regarding the
National ZEV Investments or the California ZEV Investments; any costs associated with
any National ZEV Investment or any California ZEV Investment; and access to any
employees of the Settling Defendants that the Third-Party Reviewer may need to gain to
gather further information in the fulfillment of its duties.
2.7.6. Compensation of the Third-Party Reviewer. Settling Defendants shall be
responsible for compensating the Third-Party Reviewer for the performance of its duties
in accordance with the terms agreed upon by the Settling Defendants and the selected
Third-Party Reviewer. Such terms of agreement shall clarify that the Third-Party
Reviewer is not an employee or an agent of the Settling Defendants. Upon EPA’s or
CARB’s request, any agreements between the Settling Defendants and the Third-Party
Reviewer shall be made available for EPA’s or CARB’s review. None of the costs
incurred by the Settling Defendants in connection with the selection, retention, or
compensation of the Third-Party Reviewer are Creditable Costs within the meaning of
Appendix C.
2.8. EPA’s Approval of Costs: Settling Defendants shall include in their Annual
National ZEV Investment Reports submitted in accordance with Paragraph 2.9. a request for a
determination of Creditable Costs expended for approved ZEV Investments during the period
covered by the applicable Report. EPA will approve or disapprove such claimed costs as
Creditable Costs as soon as practicable in accordance with the National Creditable Cost
Guidance after the receipt of the applicable Annual National ZEV Investment Report and all
information listed in Paragraph 2.9.3.
2.9. Annual National ZEV Investment Reports: No later than April 30 of each year
following EPA’s approval of the first National ZEV Investment Plan, Settling Defendants shall
submit an annual report regarding the status of each National ZEV Investment. Annual National
ZEV Investment Reports shall be submitted in addition to any other reporting obligations under
the Decree or any other federal, state, or local law, regulation, permit, or other requirement.
Annual National ZEV Investment Reports may be submitted as a part of the Settling Defendants’
reports under Section VI (Reporting and Certification Requirements) of the Consent Decree.
Each annual report shall include at the minimum:
2.9.1. A description of completed activities/projects and a comparison of the
completed activities/projects with the activities/projects described in the approved
National ZEV Investment Plan;
2.9.2. Utilization rates of the new ZEV infrastructure, including the percentage
of time that each connector is attached to a vehicle, energy dispensed per charger per day,
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and any other metrics that indicate the maximum, minimum, and average utilization of a
charging station, including trends in usage over time;
2.9.3. For the costs incurred for activities completed in the period covered by the
applicable Report that the Settling Defendants claim as Creditable Costs: (i) a
description of actual costs incurred in connection with implementation of a specific
completed action identified in an approved National ZEV Investment Plan; (ii)
supporting documentation required by and listed in the approved National Creditable
Costs Guidance; and (iii) an attestation report by the Third-Party Reviewer that contains
an attestation that the costs claimed to be Creditable Costs are consistent with the
requirements of this Appendix C and the National Creditable Cost Guidance. The
supporting documentation shall include a list of completed activities or projects, locations
and descriptions of any charging elements placed into service, and copies of any
advertisements or other materials disseminated as a part of the activities, and a
description of any programs or actions to increase public access and exposure to ZEVs;
2.9.4. Descriptions of any issues or problems encountered in implementing the
projects, including issues with maintenance of infrastructure, working with project
partners, acquiring necessary property or equipment, and technical aspects of projects;
2.9.5. Each Annual National ZEV Investment Report shall be certified in
accordance with Paragraph 33 of the Consent Decree.
Settling Defendants shall make each Annual National ZEV Investment Report available on a
website established in accordance with Paragraph 32 of the Consent Decree. To the extent
that any Annual National ZEV Investment Report contains CBI, Settling Defendants shall
submit to EPA for its review a summary version that can be made publicly available.
2.10. Remaining Costs: If EPA concludes, based on the review of information
submitted in the Annual National ZEV Investment Reports pursuant to Paragraph 2.9., that
Settling Defendants did not spend $300 million in Creditable Costs on ZEV Investments during
any 30-month phase of the National ZEV Investment Plan, any remaining money shall be
invested in the implementation of the next 30-month investment cycle of the National ZEV
Investment Plan. EPA and the Settling Defendants shall meet and confer in the event that the
Settling Defendants do not spend or anticipate not spending $1.2 billion at the end of the final,
fourth 30-month phase of the National ZEV Investment Plan.
2.11. Dispute Resolution: Any dispute regarding obligations established in this
Section II of Appendix C shall be resolved in accordance with Dispute Resolution provisions set
forth in Section IX of the Consent Decree. Any dispute arising under Paragraph 2.5. of
Appendix C regarding EPA’s approval of the National ZEV Investment Plan and brought
pursuant to Paragraph 63 of the Consent Decree shall be subject to the standard of review set
forth in Paragraph 65.a of the Consent Decree. Any other dispute arising under Section II of
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Appendix C and brought pursuant to Paragraph 63 of the Consent Decree shall be subject to the
standard of review set forth in Paragraph 65.b of the Consent Decree.
2.12. Stipulated Penalties: The following stipulated penalties shall apply to failures to
comply with the requirements of this Section II of this Appendix C. All stipulated penalties
listed below shall be payable to the United States in accordance with Section VII (Stipulated
Penalties and Other Mitigation Trust Payments) of the Consent Decree.
2.12.1. If the Settling Defendants fail to invest a total of $600 million in EPA-
approved Creditable Costs during the first two 30-month investment cycles as provided in
Paragraph 2.1. of Appendix C, as reported in the first five Annual National ZEV
Investment Reports submitted under Paragraph 2.9., the Settling Defendants shall pay a
stipulated penalty amounting to the difference between $600 million and the cumulative
total amount that EPA approved as Creditable Costs after reviewing the first five Annual
National ZEV Investment Reports. The Settling Defendants shall pay this stipulated
penalty in addition to investing any amounts of money that were unspent or remaining
from one 30-month cycle during the next 30-month investment cycle as required by
Paragraph 2.10.
2.12.2. If the Settling Defendants fail to invest a total of $1.2 billion in EPA-
approved Creditable Costs within 10 years of the Effective Date as provided in Paragraph
2.1. of Appendix C, Settling Defendants shall pay a stipulated penalty amounting to the
difference between $1.2 billion and the cumulative total amount that EPA approved as
Creditable Costs after reviewing the Settling Defendants’ final Annual National ZEV
Investment Report.
2.12.3. If the Settling Defendants fail to submit the National Creditable Cost
Guidance in accordance with Paragraph 2.2. and Appendix C-1, Settling Defendants shall
pay stipulated penalties per each day on which the National Creditable Cost Guidance is
overdue or submitted not in accordance with the requirements set forth in Paragraph 2.2.
or Appendix C-1:
Duration of compliance failure Stipulated penalty
1st through 14th Day $1,000
15th through 30th Day $5,000
31st Day and beyond $20,000
2.12.4. If the Settling Defendants fail to submit the National ZEV Outreach Plan
in accordance with Paragraph 2.3., Settling Defendants shall pay stipulated penalties per
each day on which the National ZEV Outreach Plan is overdue or submitted not in
accordance with requirements set forth in Paragraph 2.3.:
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Duration of compliance failure Stipulated penalty
1st through 14th Day $1,000
15th through 30th Day $2,500
31st Day and beyond $10,000
2.12.5. If the Settling Defendants fail to implement the EPA-approved National
ZEV Outreach Plan in accordance with Paragraph 2.3., Settling Defendants shall pay
stipulated penalties per each day on which the National ZEV Outreach Plan is not
implemented in accordance with the EPA-approved timelines as provided in Paragraph
2.3.3. and other requirements of the EPA-approved National ZEV Outreach Plan:
Duration of compliance failure Stipulated penalty
1st through 14th Day $1,000
15th through 30th Day $5,000
31st Day and beyond $10,000
2.12.6. If the Settling Defendants fail to submit the Draft National ZEV
Investment Plan in accordance with Paragraph 2.4., Settling Defendants shall pay
stipulated penalties per each day on which the Draft National ZEV Investment Plan is
overdue:
Duration of compliance failure Stipulated penalty
1st through 14th Day $1,000
15th through 30th Day $5,000
31st Day and beyond $10,000
2.12.7. If the Settling Defendants fail to submit the first National ZEV Investment
Plan in accordance with Paragraph 2.5., Settling Defendants shall pay stipulated penalties
per each day on which the first National ZEV Investment Plan is overdue or submitted
not in accordance with the requirements of Paragraph 2.5., including without limitation
each requirement set forth in Paragraph 2.5.1. through Paragraph 2.5.8.:
Duration of compliance failure Stipulated penalty
1st through 14th Day $2,000
15th through 30th Day $10,000
31st Day and beyond $50,000
2.12.8. If the Settling Defendants fail to submit the remaining three National ZEV
Investment Plans: (i) in accordance with the deadlines set forth in Paragraph 2.1., (ii)
containing all the required elements set forth in Paragraph 2.5. and, if applicable,
expenditures of remaining costs under Paragraph 2.10., and (iii) having undergone all
other procedures applicable to the preparation of National ZEV Investment Plans set forth
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in Section II, including without limitation Paragraphs 2.2., 2.3., 2.4. and 2.5., Settling
Defendants shall pay stipulated penalties per each day on which each National ZEV
Investment Plan is overdue or submitted not in accordance with the above-listed
requirements:
Duration of compliance failure Stipulated penalty
1st through 14th Day $2,000
15th through 30th Day $10,000
31st Day and beyond $50,000
2.12.9. If the Settling Defendants fail to maintain or provide for maintenance of
installed ZEV charging infrastructure as required by Paragraph 2.6. and the maintenance
plan of their approved National ZEV Investment Plan, Settling Defendants shall pay
stipulated penalties per each day for each failure to implement the approved maintenance
plan:
Duration of compliance failure Stipulated penalty
1st through 14th Day $2,000
15th through 30th Day $10,000
31st Day and beyond $50,000
2.12.10. If the Settling Defendants fail to submit a list of candidates for the
Third-Party Reviewer in accordance with Paragraph 2.7.1., and if applicable Paragraphs
2.7.2. and 2.7.3., Settling Defendants shall pay stipulated penalties per each day on which
the list of candidates is overdue or submitted not in accordance with the requirements set
forth in Paragraph 2.7.1.:
Duration of compliance failure Stipulated penalty
1st through 14th Day $1,000
15th through 30th Day $5,000
31st Day and beyond $10,000
2.12.11. If the Settling Defendants fail to submit Annual National ZEV
Investment Reports in accordance with Paragraph 2.9., Settling Defendants shall pay
stipulated penalties per each day on which the Annual National ZEV Investment Reports
are overdue or submitted not in accordance with the requirements set forth in Paragraph
2.9.:
Duration of compliance failure Stipulated penalty
1st through 14th Day $2,000
15th through 30th Day $10,000
31st Day and beyond $50,000
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2.13. Modifications: This Section II of Appendix C may be modified in accordance
with Section XVI (Modification) of the Consent Decree. The following modifications shall be
considered non-material for the purpose of Paragraph 91 of the Consent Decree:
(a) modifications of any schedules established under this Section II by less than one year;
(b) modification of a requirement that the Settling Defendants spend $300 million dollars in each
30-month investment cycle of the National ZEV Investment Plan; and (c) modifications,
revisions, or amendments to the Appendix C-1 to this Appendix C and/or National Creditable
Cost Guidance.
2.14. Enforcement: EPA, represented by the U.S. Department of Justice, is
responsible for the enforcement of any requirements under this Section II.
III. CALIFORNIA ZEV INVESTMENT PLAN
3.1. California ZEV Investments: Settling Defendants shall spend $800 million in
Creditable Costs within 10 years of the Effective Date on ZEV Investments to be implemented in
the State of California (“California ZEV Investments”). Unless otherwise approved by CARB in
writing, Settling Defendants shall spend $200 million in Creditable Costs on ZEV Investments in
California during each 30-month period covered by each California ZEV Investment Plan.
3.2. California Creditable Cost Guidance: Within 30 Days after the Effective Date,
Settling Defendants shall submit to CARB for review and approval in accordance with Section V
(Approval of Submissions and EPA/CARB Decisions) of the Consent Decree a proposed
California Creditable Cost Guidance developed in accordance with the requirements set forth in
Appendix C-1. CARB and the Settling Defendants shall meet and confer as soon as practicable
after that submission to discuss the proposed California Creditable Cost Guidance. The final
California Creditable Cost Guidance shall be developed by the Settling Defendants in accordance
with the requirements set forth in Appendix C-1, taking into account feedback received from
CARB during the meet-and-confer session. Unless otherwise agreed in writing with CARB,
Settling Defendants shall submit the final California Creditable Cost Guidance within 60 days
after the Effective Date. In addition to costs specifically excluded in Appendix C-1, Settling
Defendants agree not to propose, as California Creditable Costs, costs incurred in connection
with ZEV charging infrastructure installed at or adjacent to Settling Defendants’ dealerships.
3.3. California ZEV Investment Plan Submission and Approval Process.
3.3.1. California ZEV Investment Plans Submission Timing. Within 120 Days
of the Effective Date, Settling Defendants shall submit to CARB, for CARB’s review and
approval, the first $200 million California ZEV Investment Plan covering a period not to
exceed 30 months that is consistent with the terms of this Appendix C. Settling
Defendants shall submit subsequent California ZEV Investment Plans 29 months after
submission of the then-current plan. Settling Defendants shall prepare a public version of
each Draft and Approved 30-month California ZEV Investment Plan, that includes all
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16 APPENDIX C TO
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key elements of the Plan; each version will be posted by the Settling Defendants on a
website established by the Settling Defendants in accordance with Paragraph 32 of the
Consent Decree. Unless otherwise authorized by CARB in writing, each 30-month
California ZEV Investment Plan must include the elements listed in Paragraph 3.3.2.
3.3.2. Draft California ZEV Investment Plan Contents and Draft Submittal
Process. At least 20 days before submitting any Draft California ZEV Investment Plan
for approval, Settling Defendants shall meet and confer with CARB to determine what
additional information, other than listed below, to include in the California ZEV
Investment Plan submission. As part of this process, CARB may provide the Settling
Defendants with information regarding ZEV Investment opportunities that are consistent
with the objectives and criteria set forth in Appendix C. Unless otherwise authorized by
CARB in writing, this Draft California ZEV Investment Plan must be consistent with this
Appendix C and must include, at a minimum, all of the following:
3.3.2.1. A description of all California ZEV Investments that the Settling
Defendants will make, including infrastructure, access, and education, as well as
including measures to increase access in underserved areas, though each California
ZEV Investment need not contain all four components;
3.3.2.2. An explanation of how each California ZEV Investment makes
progress toward and/or meets one or more of the goals identified;
3.3.2.3. An estimated schedule for implementing each California ZEV
Investment and milestones in 6-month intervals applicable to each specific
California ZEV Investment;
3.3.2.4. A projection of anticipated Creditable Costs associated with each
California ZEV Investment, on an itemized basis, with items of cost broken down
into at least the following categories: (1) personnel costs (including salaries and
fringe benefits); (2) travel expenses; (3) office rent; (4) company vehicles; (5) office
fixtures and equipment; (6) insurance; (7) office supplies; (8) taxes and
governmental fees (excluding corporate income taxes); (9) information technology
expenses (including infrastructure, hardware, and software); (10) utilities;
(11) services -- such as accounting, human resources, legal, and procurement --
obtained from affiliated companies pursuant to service level agreements; and
(12) goods and services obtained via contracts with third parties. Settling
Defendants shall not obtain services from affiliated companies pursuant to service
level agreements if services of equal quality that meet Settling Defendants’
specifications and requirements are available from a third party at a materially
lower cost. The approval of any California ZEV Investment Plan by CARB does
not constitute approval of any anticipated costs set forth therein and a good faith
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failure of Settling Defendants to include a cost does not preclude such cost from
qualifying as a Creditable Cost;
3.3.2.5. For infrastructure, an estimation of the following, to the extent
possible: the geographic regions and type(s) (e.g., Level 2 AC charging or DC fast
charging) of any infrastructure that Settling Defendants will construct, or cause to
be constructed under a California ZEV Investment Plan, which must include a
variety of cities, metro areas, types of locations (workplace, multi-family, etc.); the
quantities of sites that will be constructed, chargers or ZEV fueling stations per site,
costs per site, and the type and number of connectors per charger or site; specific or
estimated dates of completion of such construction; operating model and utilization
statistics to be collected; a plan to provide for maintenance of ZEV charging
infrastructure for a period of not less than 10 years after the Effective Date, which
includes a requirement of periodic maintenance and provides that the charging
equipment be marked with a toll-free number for maintenance issues that will be
answered by a live operator who is subject to Settling Defendants’ control; and an
explanation of how such infrastructure meets a reasonable need and advances the
use of ZEVs. Any charging infrastructure proposed by the Settling Defendants
shall have the ability to service all plug-in ZEVs using non-proprietary connectors
as the field evolves by: (i) if necessary, using multiple connectors; and/or (ii) using
charging protocols and approaches that anticipate and address the evolving field of
vehicle charging. Settling Defendants are free to support evolving standards in the
field of non-proprietary connectors, and are not obligated to provide equal support
for different types of non-proprietary connectors. Settling Defendants shall
maintain or provide for maintenance of any ZEV charging infrastructure for a
period of not less than ten (10) years from the Effective Date;
3.3.2.6. For any brand-neutral media activities the Settling Defendants will
initiate in California, in addition to the requirements set forth in this Section III,
Settling Defendants must address the requirements in the National ZEV Investment
Plan in Paragraph 2.5.6., except for the spending requirements, and describe how
the proposed National and California activities are related and/or differ;
3.3.2.7. A certification, in accordance with Paragraph 33 of the Consent
Decree, that none of the proposed projects or activities: (1) was approved by the
Board of Management of any Settling Defendant prior to September 18, 2015, was
required by a contract entered into by the Settling Defendants before the date of
lodging of the Consent Decree, or is part of a joint effort by Settling Defendants and
other automobile manufacturers to create ZEV infrastructure; or (2) is one that the
Settling Defendants either are required to perform by any federal, state, or local
law, or anticipate will be required to perform during the planned 30-month period;
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3.3.2.8. An explanation that all the ZEV Investments are not concentrated
in one area of California;
3.3.2.9. ZEV Investments do not include funding for research, such as
university research or inductive wireless charging research;
3.3.2.10. A description of how Settling Defendants will monitor and
maintain each ZEV Investment; and
3.3.2.11. Any other information that CARB may reasonably request during
the meet and confer under Paragraph 3.3.2.
3.3.3. California ZEV Investment Plan Review and Determination. CARB shall
review each California ZEV Investment Plan. CARB may, in its discretion, approve or
disapprove each California ZEV Investment Plan, in whole or in part. CARB shall notify
Settling Defendants of its approval or disapproval in writing and, if not approved in
whole, of which parts were approved. Settling Defendants may begin implementing any
approved portions immediately. If CARB disapproves the California ZEV Investment
Plan, in whole or in part, CARB and Settling Defendants shall meet and confer within 10
days of Settling Defendants’ receipt of CARB’s disapproval. Settling Defendants may
resubmit a new version of the disapproved portions of the California ZEV Investment
Plan, in whole or in part, to CARB, for CARB’s approval, within 10 days of receiving
CARB’s disapproval.
3.4. Independent Third-Party Review.
3.4.1. Annual Third-Party Review of California Creditable Costs and
Attestation. Settling Defendants shall retain, upon approval by the United States pursuant
to Paragraph 2.7., after consultation with CARB, a person or entity to serve as the
independent Third-Party Reviewer to: (i) audit and review costs asserted by Settling
Defendants to be Creditable Costs in the Annual California ZEV Investment Reports; (ii)
perform duties as required by Paragraph 2.7.4. and Paragraph 3.4.2.; and (iii) provide an
attestation as provided in this Paragraph, Paragraph 2.9.3., and the Attestation
Requirements listed in Appendix C-1. Settling Defendants or the Third-Party Reviewer
shall develop the proposed attestation agreement consistent with the California Creditable
Cost Guidance developed pursuant to Appendix C-1 and this Appendix. CARB will
approve or disapprove the attestation agreement. The Third-Party Reviewer will have
access rights and information request rights as outlined in Paragraph 2.7.5. The Settling
Defendants shall be responsible for the compensation of the Third-Party Reviewer as
outlined in Paragraph 2.7.6.
3.4.2. Duties of the Third-Party Reviewer.
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MDL No. 2672 CRB (JSC)
3.4.2.1. The Third-Party Reviewer shall provide results of its review and a
report by April 30 of each year to CARB and Settling Defendants simultaneously,
in a format to be determined by CARB, including a determination as to whether
Settling Defendants are complying with Section III of Appendix C of the Consent
Decree, in whole or in part, in California, and, if in part, with which parts of the
Consent Decree Settling Defendants are not complying; and a recommendation as
to whether Settling Defendants’ expenditures in California qualify as Creditable
Costs; and
3.4.2.2. Perform any other duties which are reasonably necessary to ensure
compliance with Appendix C.
3.4.3. Review of Third-Party Reviewer Reports and/or Results. CARB and Settling
Defendants shall review the Third-Party Reviewer results and/or reports. If the Third-
Party Reviewer determines that Settling Defendants are not complying with the Consent
Decree, in whole or in part, Settling Defendants shall meet and confer with CARB within
10 days of receiving the Third-Party Reviewer’s results to discuss what Settling
Defendants shall do to comply.
3.5. California Creditable Costs
3.5.1. CARB Approval of California’s Creditable Costs. Settling Defendants
shall include in their Annual California ZEV Investment Reports submitted in accordance
with Paragraph 3.6. a request for a determination of Creditable Costs expended for
approved ZEV Investments during the period covered by the applicable Report. CARB
will approve or disapprove such claimed costs as Creditable Costs as soon as practicable
in accordance with the California Creditable Cost Guidance after the receipt of the
applicable Annual California ZEV Investment Report, receipt of all information listed in
Paragraph 3.6., and receipt of the Third-Party Reviewer’s Report and Attestation as
provided in Appendix C-1 and Paragraph 3.4.
3.5.2. Remaining Costs. If CARB concludes, based on the review of
information submitted in the Annual California ZEV Investment Reports pursuant to
Paragraph 3.6., California Creditable Cost Guidance, or Third-Party Reviewer
information, that Settling Defendants did not spend $200 million in Creditable Costs on
ZEV Investments during any 30-month phase of the California ZEV Investment Plan, any
remaining money shall be invested in the implementation of the next 30-month
investment cycle of the California ZEV Investment Plan. CARB and the Settling
Defendants shall meet and confer in the event that the Settling Defendants do not spend
or anticipate not spending $800 million at the end of the final, fourth 30-month phase of
the California ZEV Investment Plan.
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3.6. California ZEV Investment Plan Reports and Meetings
3.6.1. Semi-annual Meetings. An official of Settling Defendants shall meet with
a California official no later than May 1 and November 1 of each year to provide
information on the approved California ZEV Investment Plan and its implementation.
Settling Defendants shall also designate an official who will serve as the point of contact
for California related to any matter concerning the California ZEV Investments.
3.6.2. Annual and Final Reporting Dates. No later than April 30 of each year
following CARB’s approval of the California ZEV Investment Plan, Settling Defendants
shall submit an annual report regarding the status of each ZEV Investment included in the
approved California ZEV Investment Plan. No later than 120 days after 10 years from
the Effective Date, Settling Defendants shall submit a final report to CARB regarding the
status of each ZEV Investment included in the approved California ZEV Investment Plan.
Settling Defendants shall make each Annual California ZEV Investment Report and the
final report available on a website established by the Settling Defendants in accordance
with Paragraph 32 of the Consent Decree. To the extent that any annual or final report
for the California ZEV Investment Plans contains confidential business information,
Settling Defendants shall submit to CARB for its review and approval a version that can
be made publicly available. Reports under this Section shall be in addition to any other
reporting obligations under the Decree, or any other federal, California, or local law,
regulation, permit, or other requirement.
3.6.3. Report Contents. Each annual report and the final report shall include, at a
minimum:
3.6.3.1. The status of each ZEV Investment identified in the California
ZEV Investment Plan, including a description of project activities/actions and
completed activities/projects, and a comparison of the completed activities/projects
with the activities/projects described in the approved California ZEV Investment
Plan;
3.6.3.2. Utilization rates of the new ZEV infrastructure, including the
percentage of time that each connector is attached to a vehicle, energy dispensed
per charger per day, and any other metrics that indicate the maximum, minimum,
and average utilization of a charging station, including trends in usage over time;
3.6.3.3. Descriptions of any issues or problems encountered in
implementing the projects, including issues with maintenance of infrastructure,
working with project partners, acquiring necessary property or equipment, and
technical aspects of projects;
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3.6.3.4. Any other information pertaining to the California ZEV Investment
Plan that CARB reasonably requests at least 30 days prior to the due date of any
report;
3.6.3.5. A certification in accordance with Paragraph 33 of the Consent
Decree;
3.6.3.6. For the costs incurred for activities completed in the period
covered by the applicable Report that the Settling Defendants claim as Creditable
Costs: (i) a description of actual costs incurred in connection with implementation
of a specific completed action identified in an approved California ZEV Investment
Plan; (ii) supporting documentation required by and listed in the approved
California Creditable Costs Guidance; and (iii) an attestation report by the Third-
Party Reviewer that contains an attestation that the costs claimed to be Creditable
Costs are consistent with the requirements of this Appendix C, Appendix C-1, and
the California Creditable Cost Guidance. The supporting documentation shall
include a list of completed activities or projects, locations, and descriptions of any
charging elements placed into service, copies of advertisements or other materials
disseminated as a part of the activities, a description of any programs or actions to
increase public access and exposure to ZEVs, supporting documentation for all
programs or actions encompassed in the “Green City” initiative, as well as any
other documentation requested by CARB at least 10 days prior to the due date of
any report.
3.6.4. Reporting Costs. Settling Defendants shall bear the expense of all
reporting, and said expenses shall not be included in the calculation of Settling
Defendants’ eight hundred million dollar ($800,000,000) commitment.
3.7. Dispute Resolution: Any dispute regarding obligations established in this
Section III of Appendix C shall be resolved in accordance with Dispute Resolution provisions set
forth in Section IX of the Consent Decree. Any dispute arising under Paragraph 3.3. of
Appendix C regarding CARB’s approval of the California ZEV Investment Plan and brought
pursuant to Paragraph 63 of the Consent Decree shall be subject to the standard of review set
forth in Paragraph 65.a of the Consent Decree. Any other dispute arising under Section III of
Appendix C and brought pursuant to Paragraph 63 of the Consent Decree shall be subject to the
standard of review set forth in Paragraph 65.b of the Consent Decree.
3.8. Stipulated Penalties: The following stipulated penalties shall apply to failures to
comply with the requirements of Section III of this Appendix C. All stipulated penalties listed
below shall be payable to CARB and deposited in the Air Pollution Control Fund in accordance
with Section VII (Stipulated Penalties and Other Mitigation Trust Payments) of the Consent
Decree.
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3.8.1. If the Settling Defendants fail to invest a total of $400 million in CARB-
approved Creditable Costs during the first two 30-month investment cycles as provided in
Paragraph 3.1. of Appendix C, as reported in the first five Annual California ZEV
Investment Reports submitted under Paragraph 3.6., the Settling Defendants shall pay a
stipulated penalty amounting to the difference between $400 million and the cumulative
total amount that CARB approved as California Creditable Costs after reviewing the first
five Annual California ZEV Investment Reports. The Settling Defendants shall pay this
stipulated penalty in addition to investing any amounts of money that were unspent or
remaining from one 30-month cycle during the next 30-month investment cycle as
required by Paragraph 3.5.2.
3.8.2. If the Settling Defendants fail to invest a total of $800 million in CARB-
approved Creditable Costs within 10 years of the Effective Date as provided in Paragraph
3.1. of Appendix C, Settling Defendants shall pay a stipulated penalty amounting to the
difference between $800 million and the cumulative total amount that CARB approved as
Creditable Costs after reviewing the Settling Defendants’ final Annual and Final
California ZEV Investment Reports.
3.8.3. If the Settling Defendants fail to submit the California Creditable Cost
Guidance in accordance with Paragraph 3.2. and Appendix C-1, Settling Defendants
shall pay stipulated penalties per each day on which the California Creditable Cost
Guidance is overdue or submitted not in accordance with the requirements set forth in
Paragraph 3.2. or Appendix C-1:
Duration of compliance failure Stipulated penalty
1st through 14th Day $1,000
15th through 30th Day $5,000
31st Day and beyond $20,000
3.8.4. If the Settling Defendants fail to submit any of the four California ZEV
Investment Plans in accordance with Paragraph 3.3.1. or Paragraph 3.3.2., Settling
Defendants shall pay stipulated penalties per each day on which any of the California
ZEV Investment Plans is overdue or submitted not in accordance with the requirements
of Paragraph 3.3.1. or Paragraph 3.3.2., including without limitation each requirement set
forth in Paragraph 3.3.2.1 through Paragraph 3.3.2.11.:
Duration of compliance failure Stipulated penalty
1st through 14th Day $2,000
15th through 30th Day $10,000
31st Day and beyond $50,000
3.8.5. If the Settling Defendants fail to submit a list of candidates for the Third-
Party Reviewer in accordance with Paragraph 3.4.1., Paragraph 2.7.1, and if applicable
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23 APPENDIX C TO
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Paragraphs 2.7.2. and 2.7.3., Settling Defendants shall pay stipulated penalties per each
day on which the list of candidates is overdue or submitted not in accordance with the
requirements set forth in Paragraph 2.7.1.:
Duration of compliance failure Stipulated penalty
1st through 14th Day $1,000
15th through 30th Day $5,000
31st Day and beyond $10,000
3.8.6. If the Settling Defendants fail to attend any of the meetings or fail to
submit any of the Annual California ZEV Investment Reports in accordance with
Paragraph 3.3.3, Paragraph 3.4.3., Paragraph 3.5. or Paragraph 3.6., Settling Defendants
shall pay stipulated penalties per each day on which the meetings or Annual California
ZEV Investment Reports are overdue or submitted not in accordance with the
requirements set forth in Paragraph 3.3.3, Paragraph 3.4.3., Paragraph 3.5. or Paragraph
3.6.:
Duration of compliance failure Stipulated penalty
1st through 14th Day $2,000
15th through 30th Day $10,000
31st Day and beyond $50,000
3.8.7. If the Settling Defendants fail to maintain or provide for maintenance of
installed ZEV charging infrastructure as required by Paragraph 3.3.2.5. and the
maintenance plan of their approved California ZEV Investment Plan, Settling Defendants
shall pay stipulated penalties per each day for each failure to implement the approved
maintenance plan:
Duration of compliance failure Stipulated penalty
1st through 14th Day $2,000
15th through 30th Day $10,000
31st Day and beyond $50,000
3.8.8. Aggregation of Penalties. Each penalty in each subparagraph in this
Paragraph 3.8. shall be in addition to any other penalty in any other Paragraph in this or
any other portion of the Consent Decree.
3.9. Modifications: This Section III of Appendix C may be modified in accordance
with Section XVI (Modification) of the Consent Decree. The following modifications shall be
considered non-material for the purpose of Paragraph 91 of the Consent Decree:
(a) modifications of any schedules established under this Section III by less than one year;
(b) modification of a requirement that the Settling Defendants spend $200 million dollars in each
30-month investment cycle of the California ZEV Investment Plan; and (c) modifications,
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revisions, or amendments to the Appendix C-1 to this Appendix C and/or the California
Creditable Cost Guidance.
3.10. Enforcement: The California Air Resources Board and California Office of the
Attorney General may enforce the requirements of Section III.
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APPENDIX C-1 TO
PARTIAL CONSENT DECREE
MDL No. 2672 CRB (JSC)
APPENDIX C-1
Creditable Cost Guidance and Attestation Requirements for
the National and California ZEV Investment Plan Commitments
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APPENDIX C-1
CREDITABLE COST GUIDANCE
AND ATTESTATION REQUIREMENTS FOR
THE NATIONAL AND CALIFORNIA ZEV INVESTMENT PLAN COMMITMENTS
This Appendix C-1 further elaborates on the requirements for the National Creditable
Cost Guidance (“NCCG”) and the California Creditable Cost Guidance (“CCCG”) (collectively,
the Creditable Cost Guidances (“CCG”)), and Attestation Requirements pursuant to Appendix C
of the Consent Decree, and sets forth the requirements for costs incurred by Settling Defendants
to qualify as Creditable Costs in connection with the National and California ZEV Investment
Plans. The requirements for Creditable Costs are organized and presented in three sections, as
follows:
Section I - Statement of Objectives, Definitions, and Limitations.
Section II - Accounting procedures for the accounting for, substantiation, and reporting of
Creditable Costs.
Section III - Attestation Requirements to establish whether an expenditure is a Creditable
Cost.
I. STATEMENT OF OBJECTIVES, DEFINITIONS, AND LIMITATIONS
Objectives - The objectives of the CCG are to ensure that the costs Settling Defendants
submit as Creditable Costs are not specifically excluded below and are otherwise (a) reasonable,
(b) necessary, and either (c) directly connected or directly allocable to eligible ZEV Investment
projects or activities in the National and California ZEV Investment Plans approved by EPA or
CARB, as applicable, pursuant to procedures set out in Appendix C of the Consent Decree. The
definitions and limitations below will guide the determination of whether a cost meets this
objective.
Definitions and Limitations - In order to qualify as Creditable Costs, costs must be:
(1) “reasonable,” “necessary,” and either “directly connected” or “directly allocable,” as defined
in Paragraph 1 (Requirements) below; (2) not expressly excluded as a Creditable Cost in the cost
categories set out in Paragraph 2 (Excluded Categories of Costs) below; and (3) within the
limitations set forth in Paragraph 4 (Specific Limitations on Certain Cost Categories) and
Paragraph 5 (General Limitations on All Personnel, Overhead, and Service Level Agreement
Costs) below.
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1. Requirements
For the purposes of the CCG and Attestation Requirements, the following definitions in
Paragraphs 1.1 through 1.4 shall apply.
1.1. Reasonable - A cost is reasonable if, in its nature and amount, it does not
exceed that which would be incurred by a prudent person in the conduct of competitive
business. What is reasonable depends upon a variety of considerations and
circumstances, including: (1) whether the cost is the type of cost generally recognized as
ordinary and necessary for implementation of ZEV Investment projects or activities in the
Settling Defendants’ approved National or California ZEV Investment Plan; (2) generally
accepted sound business practices (consistent with Settling Defendants’ existing
procurement policies), arm’s-length bargaining, and Federal, State, and local laws and
regulations; (3) any significant deviations from the Settling Defendants’ established
practices; and (4) comparison to the costs of similar projects or project components of the
same size, in the same industry, or in the same geographic area at or near the time that the
expenditure was made.
1.2. Necessary - A cost is necessary if the ZEV Investment projects or
activities approved as part of the National or California ZEV Investment Plan could not
have been accomplished without incurrence of the cost.
1.3. Directly Connected - A cost is directly connected if it is incurred for the
sole purpose of implementing approved ZEV Investment projects or activities as part of
the National or California ZEV Investment Plan.
1.4. Directly Allocable - A cost is allocable if it is either directly connected or
if some portion of the cost can be directly attributed to implementation of the ZEV
Investment projects or activities in the Settling Defendants’ approved National or
California ZEV Investment Plan on an equitable basis that takes into account the
causal/beneficial relationship of the attributed cost to the activities to which it is
attributed.
2. Excluded Categories of Costs
Costs that are excluded from Creditable Costs in this Paragraph 2 shall not qualify as
Creditable Costs under any other cost principle.
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2.1. Disallowed Overhead - A cost incurred by any entity or distinct business
group created by Settling Defendants to carry out a National or California ZEV
Investment Plan, which is neither Directly Connected nor Directly Allocable to an
approved ZEV Investment project or activity included in that National or California ZEV
Investment Plan, is not a Creditable Cost.
2.2. Electricity Costs - Unless otherwise agreed to in writing by EPA or
CARB, as applicable, the costs for electricity for charging ZEVs are not Creditable Costs.
2.3. Entertainment Expenses - Costs of amusement, diversion, social activities,
and any directly associated costs such as tickets to shows or sports events, meals,
lodging, rentals, transportation, and gratuities are not Creditable Costs. Costs of
membership in social, dining, or country clubs or other organizations having the same
purposes are not Creditable Costs, regardless of whether the cost is reported as taxable
income to the employees.
2.4. Fines and Penalties - Costs of fines and penalties resulting from violations
of, or failure of the Settling Defendants to comply with, Federal, State, local, or foreign
laws and regulations, are not Creditable Costs.
2.5. General and Administrative Costs - General and Administrative costs are
costs incurred by the parent of the entity or distinct business group created to implement
the projects or activities in the Settling Defendants’ approved National or California ZEV
Investment Plan for the support of the parent’s overall organization. General and
Administrative costs are not Creditable Costs.
2.6. Income Taxes - All income taxes, with the exception of payroll taxes, are
not Creditable Costs.
2.7. Interest and Other Financial Costs - Interest on borrowings (however
represented), bond discounts, and costs of financing and refinancing capital (net worth
plus long-term liabilities), are not Creditable Costs.
2.8. Legal Costs - Costs for legal services related to issues of Settling
Defendants’ compliance with the requirements of Appendix C or the Consent Decree are
not Creditable Costs.
2.9. Pass-through Costs - Discrete items of cost -- such as surcharges imposed
by electric utilities or fees imposed by local governments -- that are imposed by a third
party and passed through or transferred by Settling Defendants to an end user, customer
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or other third party on a clearly-stated, one-for-one basis -- or are otherwise borne by the
end user, customer or other third party -- are not Creditable Costs.
2.10. Trademark - Costs incurred in connection with the establishment and
defense of any trademark or other intellectual property are not Creditable Costs.
3. General Guidance on Costs
3.1. Federal Acquisition Regulations - In developing their proposed Creditable
Cost Guidances, Settling Defendants may draw from provisions of the Federal
Acquisition Regulations, 48 C.F.R. Chapter 1, Subchapter E, Part 31, Subpart 31.205, to
the extent appropriate and not inconsistent with the definitions and limitations set forth in
this Appendix C-1.
4. Specific Limitations on Certain Cost Categories.
4.1. Land or Facility Rental; Real Estate Acquisition - Subject to the expressed
limitations, the following costs may qualify as Creditable Costs.
4.1.1. Rental costs under operating leases, to the extent that the rates are
reasonable at the time of the lease decision, after consideration of (i) rental
costs of comparable property, if any; (ii) market conditions of the area;
(iii) the type, life expectancy, condition, and value of the property leased;
(iv) alternatives available; and (v) other provisions of the agreement, may
qualify as Creditable Costs.
4.1.2. Rental costs under a sale and leaseback arrangement may qualify
as Creditable Costs only up to the amount the Settling Defendants would
be allowed if the Settling Defendants had retained title.
4.1.3. Charges in the nature of rent for property between any divisions,
subsidiaries, or organization under common control, to the extent that they
do not exceed the normal costs of ownership, such as depreciation, taxes,
insurance, facilities capital cost of money, and maintenance (excluding
interest or other unallowable costs pursuant to Federal Acquisition
Regulations, 48 C.F.R. Chapter 1, Subchapter E, Part 31, Subpart 31.205),
provided that no part of such costs shall duplicate any other allowed cost.
Rental cost of personal property leased from any division, subsidiary, or
affiliate of the Settling Defendants under common control that has an
established practice of leasing the same or similar property to unaffiliated
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lessees may qualify as Creditable Costs in accordance with Paragraph
4.1.1. above.
4.1.4. Land and building acquisitions related to a ZEV Investment are not
Creditable Costs unless: (i) such acquisition is necessary to provide
Settling Defendants with assurance that they will have access to such land
or building for the ten-year period after the Effective Date, or (ii) such
acquisition is materially less expensive than leasing the land or building
for the ten-year period after the Effective Date.
4.2. Materials - A cost for the physical goods that are required to implement
projects or activities in the Settling Defendants’ approved National or California ZEV
Investment Plan and taxes thereon may qualify as Creditable Costs.
4.3. Marketing - Projects or activities necessary to implement brand-neutral
education or public outreach programs that are designed to build or increase public
awareness of ZEVs may qualify as Creditable Costs. Costs incurred with marketing of
Settling Defendants’ products or services are not Creditable Costs.
4.4. National or California ZEV Investment Plan Project Management - A cost
for the supervision, oversight, and management of project personnel, including Settling
Defendants’ employee and contractor or vendor personnel, which are required to
implement projects or activities in the Settling Defendants’ approved National or
California ZEV Investment Plan, may qualify as Creditable Costs.
4.5. Personnel/FTE - Subject to the expressed limitations, the following costs
may qualify as Creditable Costs.
4.5.1. Compensation for personnel includes all remuneration paid
currently or accrued, in whatever form and whether paid immediately or
deferred, for services rendered by employees to the Settling Defendants
during and for the implementation of the projects or activities in the
Settling Defendants’ approved National or California ZEV Investment
Plan. This includes salaries; wages; bonuses; employee insurance; fringe
benefits; contributions to pension plans; and allowances for off-site pay,
incentive pay, location allowances, hardship pay, severance pay, and cost
of living differential. Compensation for personnel may qualify as a
Creditable Cost subject to the following general criteria.
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4.5.1.1. Compensation for personnel must be for work performed
by the employee in the current year and must not represent a
retroactive adjustment of prior years’ salaries or wages.
4.5.1.2. The compensation in total must be reasonable and
necessary for the work performed.
4.5.1.3. The compensation must be based upon and conform to the
terms and conditions of the Settling Defendants’ established
compensation plan or practice followed so consistently as to imply, in
effect, an agreement to make the payment.
4.5.1.4. No presumption will exist that compensation is a Creditable
Cost where the Settling Defendants introduce major revisions of
existing compensation plans or new plans and the Settling Defendants
have not provided to EPA or CARB, as applicable, either before
initiating implementation or within a reasonable period after it, an
opportunity to review the creditability of the changes.
4.5.2. Reasonableness. Compensation for personnel may be considered a
Creditable Cost if the total compensation conforms generally to
compensation paid by other firms of the same size, in the same industry,
or in the same geographic area for similar services or work performed.
This does not preclude EPA or CARB, as applicable, from challenging the
reasonableness of an individual element of compensation where costs are
excessive in comparison with compensation paid by other firms of the
same size, same industry, or in the same geographic areas for similar
services.
4.5.3. Domestic and foreign differential pay.
4.5.3.1. When personal services are performed in a foreign country,
compensation may also include a differential that may properly
consider all expenses associated with foreign employment such as
housing, cost of living adjustments, transportation, bonuses, additional
Federal, State, local or foreign income taxes resulting from foreign
assignment, and other related expenses.
4.5.3.2. Although the additional taxes in Paragraph 4.5.3.1. above
may be considered in establishing foreign overseas differential, any
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increased compensation calculated directly on the basis of an
employee’s specific increase in income taxes is not a Creditable Cost.
Differential allowances for additional Federal, State, or local income
taxes resulting from domestic assignments are not Creditable Costs.
5. General Limitation on All Personnel, Overhead, and Service Level
Agreement Costs
5.1. In addition to having to meet all of the requirements set forth above, all
costs incurred by Settling Defendants and any entity or distinct business group created by
Settling Defendants to carry out a National or California ZEV Investment Plan for:
(i) personnel, (ii) service-level agreements, and (iii) office space and services (direct or
indirect overhead) for employees of Settling Defendants or a newly created entity, shall
be limited to no more than fourteen (14) percent of the Creditable Costs incurred during
the period covered by the first two Annual National ZEV Investment Reports required
pursuant to Paragraph 2.9 of Appendix C, or the first two Annual California ZEV
Investment Reports required pursuant to Paragraph 3.6 of Appendix C, as applicable, and
shall be limited to ten (10) percent thereafter unless otherwise agreed to in writing by
EPA or CARB, as applicable, in advance of such cost being incurred. As used herein, a
service-level agreement cost is a cost for goods or services provided by an entity that is
related to or controlled by Settling Defendants, their parents or subsidiaries (i.e., not a
third-party vendor).
II. ACCOUNTING PROCEDURES FOR THE ACCOUNTING FOR,
SUBSTANTIATION, AND REPORTING OF CREDITABLE COSTS
In accordance with Paragraphs 2.2 and 3.2 of Appendix C of the Consent Decree, Settling
Defendants shall, within thirty (30) days of the Effective Date, concurrently submit to EPA and
CARB for review and approval a proposed separate Creditable Cost Guidance to assist in the
determination of Creditable Costs under the National and California ZEV Investment Plans,
respectively. The Creditable Cost Guidances shall provide the accounting procedures for the
accounting, substantiation, and reporting of Creditable Costs under the respective ZEV
Investment Plans. The Creditable Cost Guidances shall specify how Settling Defendants will
segregate, describe, report, and substantiate costs in a manner that will allow for an independent
certified public accountant firm (“Third-Party Reviewer”) retained by the Settling Defendants to
attest that costs claimed by Settling Defendant as Creditable Costs satisfy all requirements set
forth in the Consent Decree, Appendix C, and any approved Creditable Cost Guidances.
In the Creditable Cost Guidances, Settling Defendants shall (a) specify any and all unique
accounting cost centers and accounts to record and report Creditable Costs, and (b) identify the
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level and type of documentation that are appropriate to substantiate the incurrence of any cost
and to demonstrate that such cost meets the standards articulated in Appendix C (and this
Appendix C-1) for qualification of costs as Creditable Costs. The level of detail and support
required shall be sufficient to meet the requirements of a Compliance Attestation performed in
accordance with the Statement on Standards for Attestation Engagements (“Attestation
Standards” or “AT”), as issued by the American Institute of Certified Public Accountants. (See
AT Sections 101.201 and 601.) In order to satisfy the objectives set forth in Section I above, the
procedures performed by the Third-Party Reviewer retained by Settling Defendants shall be
agreed upon by the Settling Defendants, EPA, and CARB prior to the Compliance Attestation
engagement and shall also be sufficient to meet the requirements of the Attestation Standards.
Notwithstanding the preceding, nothing shall preclude the Third-Party Reviewer charged with
providing the attestation described in Section III below from utilizing additional records or
information to support the attestation.
III. ATTESTATION REQUIREMENTS
In connection with Settling Defendants’ reporting obligations under the Consent Decree,
Settling Defendants will retain a Third-Party Reviewer to perform a Compliance Attestation.
The Compliance Attestation shall be performed in compliance with the Statements on Standards
for Attestation Engagements, as issued by the American Institute of Certified Public
Accountants.
The Attestation Report shall be submitted to EPA and CARB in connection with Settling
Defendants’ Annual National and California ZEV Investment Reports. The Attestation Report
shall be in a format similar to the following illustration:
Third-Party Reviewer’s Attestation Report
[Appropriate Addressee]
We have examined Settling Defendants’ management’s assertion that [identify the
assertion, which includes the subject matter and the criteria; for example, the
accompanying schedule of ZEV Investments and Operations of Settling Defendants
for the year ended December 31, 20XX, presents the Creditable Costs of Settling
Defendants for the year ended December 31, 20XX, based on criteria set forth in
Appendix C and any approved Creditable Cost Guidance]. Settling Defendants’
management is responsible for its assertion. Our responsibility is to express an
opinion based on our examination.
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Our examination was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants. Those
standards require that we plan and perform the examination to obtain reasonable
assurance about whether [identify the subject matter] is in conformity with the
criteria referenced above.
An examination includes performing procedures to obtain evidence about whether
[identify the subject matter] is in conformity with the criteria referenced above. The
nature, timing, and extent of the procedures selected depend on our professional
judgment, including an assessment of the risks of material misstatement, whether
due to fraud or error, and involve examining evidence about [identify the subject
matter]. We believe that the evidence we obtained is sufficient and appropriate to
provide a reasonable basis for our opinion.
[Include a description of significant inherent limitations, if any, associated with the
measurement or evaluation of the subject matter against the criteria.]
[Additional paragraph(s) may be added to emphasize certain matters relating to the
attestation engagement or the subject matter.]
In our opinion, the schedule referred to above presents, fairly, in all material
respects, an identification of costs that meet the requirements for Creditable Costs
as that term is defined by Appendix C to the Consent Decree and the applicable
Creditable Cost Guidance for the year ended December 31, 20XX.
[Practitioner’s signature]
[Practitioner’s city and state]
[Date of practitioner’s report]
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