Document:

exv10w64

 

EXHIBIT 10.64

UNITED STATES

ENVIRONMENTAL PROTECTION AGENCY

REGION 4

	 	 	 
	IN THE MATTER OF:

STARMET CMI

Barnwell, Barnwell County, South Carolina	 	
ADMINISTRATIVE ORDER ON

CONSENT FOR REMOVAL ACTION
	 	 	 
	United States Enrichment Corporation	 	
U.S. EPA Region 4

CERCLA Docket No.
	 	 	 
	Respondent	 	 
	 	 	 
	United States Department of Energy and

United States Department of the Army

Settling
Federal Agencies	 	
Proceeding Under Sections 104, 106(a), 107 and 122 of the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, 42 U.S.C. §§9604,
9606(a), 9607 and 9622

 

 

	 	 	 	 	 	 	 
	I.  	 	
JURISDICTION AND GENERAL PROVISIONS
	 	

	4

	

	 
	II.  	 	
PARTIES BOUND
	 	

	4	
	 
	III.  	 	
DEFINITIONS
	 	

	5

	

	 
	IV.  	 	
FINDINGS OF FACT
	 	

	7

	

	 
	V.  	 	
CONCLUSIONS OF LAW AND DETERMINATIONS
	 	

	9

	

	 
	VI.  	 	
ORDER
	 	

	9

	

	 
	VII.  	 	
DESIGNATION OF CONTRACTOR, PROJECT COORDINATOR, AND ON-SCENE COORDINATOR
	 	

	9

	

	 
	VIII.  	 	
WORK TO BE PERFORMED
	 	

	10

	

	 
	IX.  	 	
SITE ACCESS
	 	

	15

	

	 
	X.  	 	
ACCESS TO INFORMATION
	 	

	15

	

	 
	XI.  	 	
RECORD RETENTION
	 	

	16

	

	 
	XII.  	 	
COMPLIANCE WITH OTHER LAWS
	 	

	17

	

	 
	XIII.  	 	
EMERGENCY RESPONSE AND NOTIFICATION OF RELEASES
	 	

	17

	

	 
	XIV.  	 	
AUTHORITY OF ON-SCENE COORDINATOR
	 	

	18

	

	 
	XV.  	 	
PAYMENT OF AOC OVERSIGHT COSTS BY RESPONDENT
	 	

	18

	

	 
	XVI.  	 	
DISPUTE RESOLUTION
	 	

	19

	
	 
	XVII. 	 	FORCE MAJEURE	 		20

	
	 
	XVIII.	 	STIPULATED PENALTIES	 		21	
	 
	XIX.  	 	
PAYMENT OF EPA’s REMOVAL ACTION COSTS BY SETTLING FEDERAL AGENCIES
	 	

	23

	

	 
	XX.  	 	
COVENANTS NOT TO SUE BY THE UNITED STATES
	 	

	24

	

	 
	XXI.  	 	
RESERVATIONS OF RIGHTS BY THE UNITED STATES
	 	

	25

	

2

 

	 	 	 	 	 	 	 
	XXII. 	 	
COVENANT NOT TO SUE BY RESPONDENT
	 	

	26

	
	 
	XXIII. 	 	
COVENANT NOT TO SEEK REIMBURSEMENT BY SETTLING FEDERAL AGENCIES
	 	

	28

	
	 
	XXIV. 	 	
OTHER CLAIMS
	 	

	28

	
	 
	XXV.  	 	
CONTRIBUTION PROTECTION
	 	

	28

	
	 
	XXVI. 	 	
INDEMNIFICATION
	 	

	29

	
	 
	XXVII. 	 	
INSURANCE
	 	

	29

	
	 
	XXVIII. 	 	
FINANCIAL ASSURANCE
	 	

	30

	
	 
	XXIX. 	 	
MODIFICATIONS
	 	

	31

	
	 
	XXX.  	 	
NOTICE OF COMPLETION OF WORK
	 	

	31

	
	 
	XXXI. 	 	
ATTORNEY GENERAL APPROVAL
	 	

	31

	
	 
	XXXII. 	 	
SEVERABILITY/INTEGRATION/APPENDICES
	 	

	32

	
	 
	XXXIII. 	 	
EFFECTIVE DATE
	 	

	32

	

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I. JURISDICTION AND GENERAL PROVISIONS

     1. This Administrative Order on Consent (“Order”) is entered into
voluntarily by the United States Environmental Protection Agency (“EPA”), the
United States Enrichment Corporation (“USEC” or “Respondent”), and the United
States Department of Energy and Department of the Army (“Settling Federal
Agencies”). This Order provides for the performance of a removal action by the
Respondent, the payment by the Settling Federal Agencies for a removal action
to be performed by EPA, and the reimbursement by Respondent of costs to be
incurred by the United States from the actions taken pursuant to the sections
of this Order which apply to the Respondent, at or in connection with the
property located at the Starmet CMI facility located at 365 Metal Drive, in
Barnwell, Barnwell County, South Carolina (“Site”). This Order also
constitutes a settlement agreement between the United States and USEC to
resolve USEC’s contribution claims against the Settling Federal Agencies. This
Order requires Respondent to conduct the removal action described herein and
requires the Settling Federal Agencies to fund a removal action to be performed
by EPA to abate what EPA believes to be an imminent and substantial
endangerment to the public health, welfare or the environment that may be
presented by the actual or threatened release of hazardous substances,
pollutants, or contaminants at or from the Site.

     2. This Order is issued under the authority vested in the President of
the United States by Sections 104, 106(a), 107 and 122 of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§
9604, 9606(a), 9607 and 9622, as amended (“CERCLA”). The settlement agreement
between USEC and the United States with regard to the Settling Federal Agencies
is entered into pursuant to the Attorney General’s authority to settle matters
in anticipation of litigation.

     3. EPA has notified the State of South Carolina, (the “State”) of this
action pursuant to Section 106(a) of CERCLA, 42 U.S.C. § 9606(a).

     4. The actions undertaken by Respondent and the Settling Federal Agencies
in accordance with this Order do not constitute an admission of any liability.
The Respondent and the Settling Federal Agencies do not admit, and retain the
right to controvert in any subsequent proceedings other than proceedings to
implement or enforce this Order, the validity or accuracy of the findings of
facts, conclusions of law, and determinations in Sections IV and V of this
Order. The Respondent and the Settling Federal Agencies agree to comply with
and be bound by the terms of this Order and further agree that they will not
contest the basis or validity of this Order or its terms.

II. PARTIES BOUND

     5. This Order applies to and is binding upon EPA, the
Respondent, the Respondent’s agents, successors and assigns, and the Settling
Federal Agencies. Any change in ownership or corporate status of the
Respondent including, but not limited to, any transfer of assets or real or
personal property shall not alter the Respondent’s responsibilities under this
Order.

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     6. The Respondent shall ensure that its contractors, subcontractors, and
representatives performing work under this Order receive a copy of this Order
and comply with this Order. Respondent shall be responsible for any
noncompliance by Respondent, its contractors or representatives with this
Order.

III. DEFINITIONS

     7. Unless otherwise expressly provided herein, terms used in this Order
which are defined in CERCLA or in regulations promulgated under CERCLA shall
have the meaning assigned to them in CERCLA or in such regulations. Whenever
terms listed below are used in this Order or in the appendices attached hereto
and incorporated hereunder, the following definitions shall apply:

a. “Action Memoranda” shall mean the EPA Action Memoranda relating to
the Site signed on July 23, 2002, August 16, 2002, September 24, 2002,
January 3, 2003, June 25, 2003, by the Regional Administrator, EPA Region
4, or his delegate, and all attachments thereto.

b. “AOC Oversight Costs” shall mean all costs, including but not limited
to, direct and indirect costs, that the United States incurs in reviewing
or developing plans, reports or other items pursuant to the USEC-Lead
Work portions of this Order, verifying the USEC-Lead Work, or otherwise
implementing, overseeing, or enforcing the portions of the Order relevant
to USEC-Lead Work, including but not limited to, payroll costs,
contractor costs, travel costs, laboratory costs, the costs incurred
pursuant to Section IX (Site Access), Section XIII (Emergency Response)
and Paragraph 72 (Work Takeover).

c. “CERCLA” shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601,
et seq.

d. “Day” shall mean a calendar day. In computing any period of time
under this Order, where the last day would fall on a Saturday, Sunday, or
Federal holiday, the period shall run until the close of business of the
next working day.

e. “Effective Date” shall be the effective date of this Order as
provided in Section XXXIII.

f. “EPA” shall mean the United States Environmental Protection Agency
and any successor departments or agencies of the United States.

g. “EPA’s Removal Action Costs” shall mean all costs not inconsistent
with the NCP incurred by EPA in conducting the EPA-Lead Work at or around
the Depleted Uranium Center and Reduction Building at the Site.

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h. “EPA-Lead Work” shall mean all work conducted by EPA and its
contractors and subcontractors, in planning, implementing and overseeing the
removal and disposal of the Waste Materials that are stored in and around the
Reduction Building and the Depleted Uranium Building, except for work required
of Respondent in Respondent’s Statement of Work (Appendix A of this Order).

i. “Interest” shall mean interest at the rate specified for interest on
investments of the EPA Hazardous Substance Superfund established by 26
U.S.C. § 9507, compounded annually on October 1 of each year, in
accordance with 42 U.S.C. § 9607(a). The applicable rate of interest
shall be the rate in effect at the time the interest accrues. The rate
of interest is subject to change on October 1 of each year.

j. “National Contingency Plan” or “NCP” shall mean the National Oil and
Hazardous Substances Pollution Contingency Plan promulgated pursuant to
Section 105 of CERCLA, 42 U.S.C. § 9605, codified at 40 C.F.R. Part 300,
and any amendments thereto.

k. “Order” shall mean this Administrative Order on Consent and all
appendices attached hereto (listed in Section XXXII). In the event of
conflict between this Order and any appendix, this Order shall control.

l. “Paragraph” shall mean a portion of this Order identified by an
Arabic numeral.

m. “Parties” shall mean EPA, Settling Federal Agencies, and Respondent.

n. “Past Response Costs” shall mean all costs, including, but not
limited to, direct and indirect costs, that the United States paid at or
in connection with the Site through the Effective Date of this Order.

o. “RCRA” shall mean the Solid Waste Disposal Act, as amended, 42 U.S.C.
§§ 6901, et seq. (also known as the Resource Conservation and Recovery
Act).

p. “Respondent” or “USEC” shall mean the United States Enrichment
Corporation including any of its parents, subsidiaries or affiliates, or
any of officers, employees, or directors.

q. “Respondent’s Statement of Work” or “SOW” shall mean the statement of
work for implementation of the USEC-Lead Work, as set forth in Appendix A
to this Order, and any modifications made thereto in accordance with this
Order.

r. “Section” shall mean a portion of this Order identified by a Roman
numeral.

s. “Settling Federal Agencies” shall mean the United States Department
of Energy and United States Department of the Army, which are resolving
any claims that have been or

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could have been asserted against them with respect to the payment or
incurrence of response and oversight costs required by this Order.

t. “Site” shall mean the Starmet Superfund Site, located at 365 Metal
Drive, in Barnwell, Barnwell County, South Carolina, and depicted
generally on the map attached as Appendix B.

u. “Starmet” shall mean Starmet CMI, Starmet Corporation and any and
all of their current or former subsidiaries, parents, affiliates,
predecessors, or successors.

v. “State” shall mean the State of South Carolina.

w. “United States” shall mean the United States of America, including
all of its departments, agencies, and instrumentalities which includes
without limitation EPA, the Settling Federal Agencies, and any Federal
Natural Resources Trustee.

x. “USEC” shall mean the United States Enrichment Corporation, a
Delaware corporation, and does not include the United States Enrichment
Corporation, defined below as “USEC Federal,” which was a government
corporation, and does not include any federal agency.

y. “USEC Federal” shall mean the United States Enrichment Corporation, a
wholly owned government corporation and an agency and instrumentality of
the United States.

z. “USEC-Lead Work” shall mean all activities that Respondent is
required to perform under this Order, as described in the Respondent’s
Statement of Work and Section VIII, Work To Be Performed.

aa. “Waste Material” shall mean 1) any “hazardous substance” under
Section 101(14) of CERCLA, 42 U.S.C. § 9601(14); 2) any pollutant or
contaminant under Section 101(33) of CERCLA, 42 U.S.C. § 9601(33); 3) any
“solid waste” under Section 1004(27) of RCRA, 42 U.S.C. § 6903(27).

bb. “Work” shall mean all activities required under this order. It is
the combination of EPA-Lead Work and USEC-Lead Work.

IV. FINDINGS OF FACT

     EPA finds as follows:

     8. From June, 1985 until August, 1993, approximately 17,079,177 pounds of
depleted uranium hexafluoride (“UF6”) was shipped by the U.S. Department of
Energy (“DOE”) from DOE’s uranium enrichment facility in Paducah KY, at the
request of the Department of Defense (“DOD”) to the Starmet facility in
Barnwell. Starmet performed work under DOD Contracts to

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convert the UF6 to
uranium tetrafluoride (“UF4”) at Starmet. This process generated calcium
fluoride, dry active waste (“DAW”), process wastewater, and other materials and
waste products.

     9. Prior to 1993, much of the UF4 was further processed into uranium
metal (i.e., “derbies”). This process generated magnesium fluoride, DAW,
process wastewater, pyrophoric uranium scrap, and other materials as waste
products. The metal was used to produce counter weights for high performance
aircraft, and DU munitions at the Starmet facility in Concord, Massachusetts.
Approximately 281 off-spec derbies remain on site.

     10. The Energy Policy Act of 1992 Pub. L. 102-486 created the United
States Enrichment Corporation, a wholly owned government corporation and an
agency and instrumentality of the United States (“USEC Federal”) as an interim
measure towards the privatization of DOE’s uranium enrichment enterprise. On
July 1, 1993, DOE’s uranium enrichment enterprise was transferred to USEC
Federal and portions of DOE’s uranium enrichment plants in Paducah Kentucky and
Portsmouth Ohio were leased to USEC Federal. Pursuant to the USEC
Privatization Act, Pub. L. 104-134, the assets of USEC Federal were transferred
to USEC and USEC was privatized on July 28, 1998. USEC Federal ceased to exist
following this transfer.

     11. From August 1998 until September 2001, USEC shipped 12,758,824 lbs of
UF6 to the Starmet facility in Barnwell, to be converted into UF4. Of this
amount, 88,178 pounds were returned to USEC.

     12. Starmet also acquired UF4 (“lump cake” and “yellow cake”) from DOE.
Much of this material was unsuitable for any use due to its physical
properties, and an estimated 6028 drums of this material remains stored at the
Site. A portion of these drums are deteriorating. Starmet also acquired de
minimis quantities of materials from a number of other companies.

     13. In total, an estimated 11,800 drums of UF4 are stored at the Site.
In addition, approximately 4,175 drums of calcium fluoride and 116 drums of
magnesium fluoride are stored at the Site. There are 79 B25 boxes which
contain scrap metal with UF4 residual. Additionally, there are 9 SeaLand
containers on at the Site which contain, among other things, spent parts from
Derby manufacturing. These parts are embedded with uranium contamination.

     14. A significant number of the steel drums used for the storage of the
UF4 are visibly deteriorating, and many of the drums are leaking.

     15. Uranium metal scraps from machining operations were abandoned at the
Site, and are generating explosive Hydrogen gas.

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V. CONCLUSIONS OF LAW AND DETERMINATIONS

     16. Based on the Findings of Fact set forth above, and the Administrative
Record supporting this removal action, EPA has determined that:

a. The Starmet Site is a “facility” as defined by Section 101(9) of
CERCLA, 42 U.S.C. § 9601(9).

b. The contamination found at the Site, as identified in the Findings of
Fact above, includes “hazardous substances” as defined by Section 101(14)
of CERCLA, 42 U.S.C. § 9601(14).

c. Respondent and Settling Federal Agencies are “persons” as defined by
Section 101(21) of CERCLA, 42 U.S.C. § 9601(21).

d. Respondent and Settling Federal Agencies are liable parties under
Section 107(a) of CERCLA, 42 U.S.C. § 9607(a), and potentially
responsible parties under Section 122(d)(3) of CERCLA, 42 U.S.C. §
9622(d)(3).

e. The conditions described in the Findings of Fact above constitute an
actual or threatened “release” of a hazardous substance from the facility
as defined by Section 101(22) of CERCLA, 42 U.S.C.§ 9601(22).

f. The removal action required by this Order is necessary to protect the
public health, welfare, or the environment and, if carried out in
compliance with the terms of this Order and the SOW and any modifications
thereto, will be considered consistent with the NCP, as provided in
Section 300.700(c)(3)(ii) of the NCP.

VI. ORDER

     Based upon the foregoing Findings of Fact, Conclusions of Law,
Determinations, and the Administrative Record for this Site, it is hereby
Ordered and Agreed that Respondent and the Settling
Federal Agencies shall comply with all provisions of this Order, including, but
not limited to, all appendices to this Order, the SOW, and all documents
incorporated by reference into this Order.

VII. DESIGNATION OF CONTRACTOR, PROJECT COORDINATOR,AND ON-SCENE COORDINATOR

     17. Respondent shall retain one or more contractors to perform all or any
portion of the Respondent’s Statement of Work and shall notify EPA of the names
and qualifications of such contractors within thirty (30) days of the Effective
Date. Respondent shall also notify EPA of the names and qualifications of any
other contractors or subcontractors retained to perform the Respondent’s
Statement of Work at least ten (10) days prior to commencement of such work.

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EPA retains the right to disapprove of any or all of the contractors and/or
subcontractors retained by Respondent. If EPA disapproves of a selected
contractor, Respondent shall retain a different contractor and shall notify EPA
of that contractor’s name and qualifications within thirty (30) days following
EPA’s disapproval. EPA shall notify Respondent within five (5) days after
receiving notice of the designated contractor, but retains right to disapprove
at any time.

     18. Within fifteen (15) days after the Effective Date, Respondent shall
designate a Project Coordinator who shall be responsible for administration of
all actions by Respondent required by this Order and shall submit to EPA the
designated Project Coordinator’s name, address, telephone number, and
qualifications. To the greatest extent possible, the Project Coordinator shall
be present on Site or readily available during implementation of USEC-Lead Work
on site. EPA retains the right to disapprove of the designated Project
Coordinator. If EPA disapproves of the designated Project Coordinator, and
Respondent shall retain a different Project Coordinator and shall notify EPA of
that person’s name, address, telephone number, and qualifications within
fifteen (15) days following EPA’s disapproval. Receipt by Respondent’s Project
Coordinator of any notice or communication from EPA relating to this Order
shall constitute receipt by Respondent. EPA shall notify Respondent within
five (5) days after receiving notice of the designated Project Coordinator but
retains right to disapprove at any time.

     19. EPA has designated David Dorian of the Emergency Response and Removal
Branch, Region 4, as its On-Scene Coordinator (“OSC”). Except as otherwise
provided in this Order, Respondent shall direct all submissions required by
this Order to the OSC at:

US EPA

Waste Division

61 Forsyth St, S.W.

Atlanta, GA 30303

     20. EPA and Respondent shall have the right, subject to Paragraph 18, to
change their respective designated OSC or Project Coordinator. Respondent
shall notify EPA five (5) days before such a change is made. The initial
notification may be made orally, but shall be promptly followed by a written
notice.

VIII. WORK TO BE PERFORMED

     21. This Order and the Work it requires provides for the removal of
Waste Materials on the Site. Respondent shall, as described in the
Respondent’s Statement of Work (Appendix A), perform all USEC-Lead Work
required to remove all Waste Materials associated with chemical conversion of
UF6 (to UF4) originating from USEC. EPA shall, with the funds provided by the
Settling Federal Agencies, remove the remaining Waste Materials in and around
the Reduction Building and the Depleted Uranium Center.

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     22. Work Plan and Implementation.

a. Within ninety (90) days after the Effective Date, Respondent shall
submit to EPA for approval a draft Work Plan for performing the
Respondent’s Statement of Work. (Hereinafter “Work Plan”). The draft
Work Plan shall provide a description of, and an expeditious schedule
for, the actions required by this Order.

b.
EPA may approve, disapprove, require revisions to, or modify the
draft Work Plan in whole or in part. If EPA requires revisions,
Respondent shall submit a revised draft Work Plan within fourteen (14)
days of receipt of EPA’s notification of the required revisions.
Respondent shall implement the Work Plan as approved in writing by EPA in
accordance with the schedule approved by EPA. Once approved, or approved
with modifications, the Work Plan, the schedule, and any subsequent
modifications shall be incorporated into and become fully enforceable
under this Order.

c.
Unless otherwise agreed to by the OSC, Respondent shall not commence
implementation of the Work Plan developed hereunder until receiving
written EPA approval pursuant to Paragraph 22(b).

     23. Health and Safety Plan. Within ninety (90) days after the Effective
Date, Respondent shall submit for EPA review and comment a plan that ensures
the protection of the public health and safety during performance of on-Site
work under this Order. This plan shall be prepared in accordance with EPA’s
Standard Operating Safety Guide (PUB 9285.1-03, PB 92-963414, June 1992)
(“Guide”). In addition, the plan shall comply with all currently applicable
Occupational Safety and Health Administration (“OSHA”) regulations found at 29
C.F.R. Part 1910. If EPA determines that it is appropriate, the plan shall
also include contingency planning. Respondent shall incorporate all changes to
the plan recommended by EPA and shall implement the plan during the pendency of
the removal action.

     24. Radiation Protection Plan. Within ninety (90) days after the
Effective Date, Respondent shall submit for EPA review and comment a Radiation
Protection Plan. This plan shall comply with the State of South Carolina
Department of Health and Environmental Control Regulation 61-63 Radioactive
Materials and applicable OSHA regulations found in 10 C.F.R. Part 20.

     25. EPA Approval of Plans and Other Submissions.

a. After review of any plan, report or other item which is required to
be submitted for approval pursuant to this Order, EPA shall, consistent
with the SOW, the Guide and ARARs
(as that term is defined in Paragraph 40): (i) approve, in whole or in
part, the submission; (ii) approve the submission upon specified
conditions; (iii) modify the submission to cure the deficiencies; (iv)
disapprove, in whole or in part, the submission, directing that the
Respondent modify the submission; or (v) any combination of the above.
However, EPA shall not modify a submission without first providing
Respondent

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at least one notice of deficiency and an opportunity to cure
within twenty (20) days (unless the EPA and Respondent agree to a longer
time period), except where to do so would cause serious disruption to the
work or where previous submissions have been disapproved due to material
defects and the deficiencies in the submission under consideration
indicate a bad faith lack of effort to submit an acceptable deliverable.

b. In the event of approval, approval upon conditions, or modification
by EPA, pursuant to subparagraphs (i), (ii) or (iii), Respondent shall
proceed to take any action required by the plan, report, or other item,
as approved or modified by EPA, subject only to their right to invoke the
Dispute Resolution procedures set forth in Section XVI (Dispute
Resolution) with respect to the modifications or conditions made by EPA.
In the event that EPA modifies the submission to cure the deficiencies
pursuant to subparagraph (iii) and the submission has a material defect,
EPA retains its right to seek stipulated penalties, as provided in
Section XVIII (Stipulated Penalties).

26. Resubmission of Plans

a. Upon receipt of a notice of disapproval pursuant to subparagraph
(iv), Respondent shall, within twenty (20) days or such longer time as
specified by EPA in such notice, correct the deficiencies and resubmit
the plan, report, or other item for approval. Any stipulated penalties
applicable to the submission, as provided in Section XVIII, shall accrue
during the 20-day period or otherwise specified period but shall not be
payable unless the resubmission is disapproved or modified due to a
material defect as provided in Paragraph 26d.

b. Notwithstanding the receipt of a notice of disapproval pursuant to
subparagraph (iv), Respondent shall proceed, at the direction of EPA, to
take any action required by any non-deficient portion of the submission.
Implementation of any non-deficient portion of a submission shall not
relieve Respondent of any liability for stipulated penalties under
Section XVIII (Stipulated Penalties).

c. In the event that a resubmitted plan, report or other item, or
portion thereof, is disapproved by EPA, EPA may again require the
Respondent to correct the deficiencies, in accordance with the preceding
Paragraphs. EPA also retains the right to modify or develop the plan,
report or other item. Respondent shall implement any such plan, report,
or item as modified or developed by EPA, subject only to their right to
invoke the procedures set forth in Section XVI (Dispute Resolution).

d. If upon resubmission, a plan, report, or item is disapproved or
modified by EPA due to a material defect, Respondent shall be deemed to
have failed to submit such plan, report, or item timely and adequately
unless the Respondent invokes the dispute resolution procedures set forth
in Section XVI (Dispute Resolution) and EPA’s action is overturned
pursuant to that Section. The provisions of Section XVI(Dispute
Resolution) and Section XVIII (Stipulated Penalties) shall govern the
implementation of the work and accrual and

12

 

payment of any stipulated
penalties during Dispute Resolution. If EPA’s disapproval or
modification is
upheld, stipulated penalties shall accrue for such violation from the
date on which the initial submission was originally required, as provided
in Section XVIII.

e. All plans, reports, and other items required to be submitted to EPA
under this Order shall, upon approval or modification by EPA, be
enforceable under this Order. In the event EPA approves or modifies a
portion of a plan, report, or other item required to be submitted to EPA
under this Order, the approved or modified portion shall be enforceable
under this Order.

27. Quality Assurance and Sampling.

a. All sampling and analyses performed pursuant to this Order shall
conform to EPA direction, approval, and guidance regarding sampling,
quality assurance/quality control (“QA/QC”), data validation, and chain
of custody procedures. Respondent shall ensure that the laboratory used
to perform the analyses participates in a QA/QC program that complies
with the appropriate EPA guidance. Respondent shall follow, as
appropriate, “Guidance for the Data Quality Objectives Process”
(EPA/600/R-96/055) and “EPA Guidance for Quality Assurance Project Plans”
(EPA/600/R-98/018). Respondent shall only use laboratories that have a
documented Quality System that complies with ANSI/ASQC E-4 1994,
“Specifications and Guidelines for Quality Systems for Environmental Data
Collection and Environmental Technology Programs” (American National
Standard, January 5, 1995), and “EPA Requirements for Quality Management
Plans (QA/R-2) (EPA/240/B-01/002, March 2001),” or equivalent
documentation as determined by EPA. EPA may consider laboratories
accredited under the National Environmental Laboratory Accreditation
Program (“NELAP”) as meeting the Quality System requirements.

b. Upon request by EPA, Respondent shall have such a laboratory analyze
samples submitted by EPA for QA monitoring. Respondent shall provide to
EPA the QA/QC procedures followed by all sampling teams and laboratories
performing data collection and/or analysis.

c. Upon request by EPA, Respondent shall allow EPA or its authorized
representatives to take split and/or duplicate samples. Respondent shall
notify EPA not less than seven (7) days in advance of any sample
collection activity, unless shorter notice is agreed to by EPA. EPA
shall have the right to take any additional samples that EPA deems
necessary. Upon request, EPA shall allow Respondent to take split or
duplicate samples of any samples it takes as part of its oversight of
USEC-Lead Work.

28. Reporting.

a. Respondent shall submit a written progress report to EPA concerning
actions undertaken pursuant to this Order on a monthly basis, with the
first report to be issued

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within ten (10) days following the month of
EPA’s approval of the Work Plan until termination of this Order, unless
otherwise directed in writing by the OSC. These reports shall describe
all significant developments during the preceding period, including the
actions performed and
any problems encountered, analytical data received during the reporting
period, and the developments anticipated during the next reporting
period, including a schedule of actions to be performed, anticipated
problems, and planned resolutions of past or anticipated problems. The
monthly reports shall also include a listing of the quantities and types
of materials sent offsite and the ultimate destination of such materials.

b. Respondent shall submit three (3) copies of all plans, reports or
other submissions required by this Order, the Respondent’s Statement of
Work, or any approved work plan. Upon request by EPA, Respondent shall
submit such documents in electronic form.

     29. Final Report. Within ninety (90) days after completion of all
USEC-Lead Work required by this Order, Respondent shall submit for EPA review a
final report summarizing the actions taken to comply with this Order. The
final report shall conform, at a minimum, with the requirements set forth in
Section 300.165 of the NCP entitled “OSC Reports.” The final report shall
include a good faith estimate of total costs or a statement of actual costs
incurred in complying with the Order, a listing of quantities and types of
materials removed off-Site or handled on-Site, a discussion of removal and
disposal options that it considered for those materials, a listing of the
ultimate destination of those materials, a presentation of the analytical
results of all sampling and analyses performed, and accompanying appendices
containing all relevant documentation generated during the removal action
(e.g., manifests, invoices, bills, contracts, and permits). The final report
shall also include the following certification signed by a person who
supervised or directed the preparation of that report:

     “I certify under penalty of law that this document and all attachments
were prepared under my direction or supervision in accordance with a system
designed to assure that qualified personnel properly gather and evaluate the
information submitted. Based on my inquiry of the person or persons directly
responsible for gathering the information, the information submitted is, to the
best of my knowledge and belief, true, accurate, and complete. I am aware that
there are significant penalties for submitting false information, including the
possibility of fine and imprisonment for knowing violations.”

     30. Off-Site Shipments.

a. Respondent shall, prior to any off-Site shipment of a hazardous
substance from the Site to an out-of-state waste management facility,
provide written notification of such shipment of a hazardous substance to
the appropriate state environmental official in the receiving facility’s
state and to the On-Scene Coordinator. However, this notification
requirement shall not apply to any off-Site shipments when both the total
volume of all such shipments will not exceed 10 cubic yards and the
activity of such material neither exceeds 30 pCi/gram nor presents a dose
of 10 mRem at the surface of the material.

14

 

Respondent shall include in the written notification the following
information: 1) the name and location of the facility to which the hazardous
substance is to be shipped; 2) the type and quantity of the hazardous substance
to be shipped; 3) the expected schedule for the shipment of the hazardous
substance; and 4) the method of transportation. Respondent shall notify the
state in which the planned receiving facility is located of major changes in
the shipment plan, such as a decision to ship the hazardous substance to
another facility within the same state, or to a facility in another state.

b. Before shipping any hazardous substances, pollutants, or contaminants
from the Site to an off-site location other than as provided in the SOW,
Respondent shall obtain EPA’s certification that the proposed receiving
facility is operating in compliance with the requirements of CERCLA
Section 121(d)(3), 42 U.S.C. § 9621(d)(3), and 40 C.F.R. § 300.440.
Respondent shall only send hazardous substances, pollutants, or
contaminants from the Site to an off-site facility that complies with the
requirements of the statutory provision and regulation cited in the
preceding sentence.

IX. SITE ACCESS

     31. The Respondent and its contractors will be granted access to the Site
to implement this Order pursuant to an EPA Administrative Order, Docket Number
04-2003-3750, (Attachment A) which also provides EPA, the State, and their
representatives, including contractors, with access at all reasonable times to
the Site for the purpose of conducting any activity related to this Order.
USEC, including its representatives and contractors, is designated as EPA’s
representative pursuant to 40 CFR §300.400(d)(3).

     32. Notwithstanding any provision of this Order, EPA retains all of its
access authorities and rights including enforcement authorities related
thereto, under CERCLA, RCRA, and any other applicable statutes or regulations

X. ACCESS TO INFORMATION

     33. Respondent shall provide to EPA, upon request, copies of all
documents and information within their possession or control or that of their
contractors or agents relating to activities at the Site under this Order, or
to the implementation of this Order, including, but not limited to, sampling,
analysis, chain of custody records, manifests, trucking logs, receipts,
reports, sample traffic routing, correspondence, or other documents or
information related to the Work. Respondent shall also make available to EPA,
for purposes of investigation, information gathering, or testimony, their
employees, agents, or representatives with knowledge of relevant facts
concerning the performance of the Work under this Order.

     34. Respondent may assert business confidentiality claims covering part
or all of the documents or information submitted to EPA under this Order to the
extent permitted by and in accordance with Section 104(e)(7) of CERCLA, 42
U.S.C. § 9604(e)(7), and 40 C.F.R.

15

 

§ 2.203(b). Documents or information
determined to be confidential by EPA will be afforded the protection specified
in 40 C.F.R. Part 2, Subpart B. If no claim of confidentiality accompanies
documents or information when they are submitted to EPA, or if EPA has notified
Respondent that the documents or information are not confidential under the
standards of Section 104(e)(7) of CERCLA or 40 C.F.R. Part 2, Subpart B, the
public may be given access to such documents or information without further
notice to Respondent.

     35. Respondent may assert that certain documents, records and other
information are privileged under the attorney-client privilege or any other
privilege recognized by federal law. If the Respondent assert such a privilege
in lieu of providing documents, they shall provide EPA with the following: 1)
the title of the document, record, or information; 2) the date of the document,
record, or information; 3) the name and title of the author of the document,
record, or information; 4) the name and title of each addressee and recipient;
5) a description of the subject of the document, record, or information; and 6)
the privilege asserted by Respondent. However, no documents, reports
or other information created or generated pursuant to the requirements of this
Order shall be withheld on the grounds that they are privileged.

     36. No claim of confidentiality shall be made with respect to any data,
concerning the conditions at or around the Site, including, but not limited to,
all sampling, analytical, monitoring, hydrogeologic, scientific, chemical, or
engineering data, or any other documents or information evidencing conditions
at or around the Site.

XI. RECORD RETENTION

     37. Until five (5) years after Respondent’s receipt of EPA’s notification
pursuant to Section XXX (Notice of Completion of Work), Respondent shall
preserve and retain all non-identical copies of records and documents
(including records or documents in electronic form) now in its possession or
control or which come into its possession or control that relate in any manner
to the performance of the Work or the liability of any person under CERCLA with
respect to the Site, regardless of any corporate retention policy to the
contrary. Until five (5) years after Respondent’s receipt of EPA’s
notification pursuant to Section XXX (Notice of Completion of Work), Respondent
shall also instruct their contractors and agents to preserve all documents,
records, and information of whatever kind, nature or description relating to
performance of the Work.

     38. At the conclusion of this document retention period, Respondent shall
notify EPA at least ninety (90) days prior to the destruction of any such
records or documents, and, upon request by EPA, Respondent shall deliver any
such records or documents to EPA. Respondent may assert that certain
documents, records and other information are privileged under the
attorney-client privilege or any other privilege recognized by federal law. If
Respondent asserts such a privilege, they shall provide EPA with the following:
1) the title of the document, record, or information; 2) the date of the
document, record, or information; 3) the name and title of the author of the
document, record, or information; 4) the name and title of each addressee and
recipient; 5) a description of the subject of the document, record, or
information; and 6) the

16

 

privilege asserted by Respondent. However, no
documents, reports or other information created or generated pursuant to the
requirements of this Order shall be withheld on the grounds that they are
privileged.

     39. Respondent hereby certifies that to the best of its knowledge and
belief, after reasonable inquiry, it has not altered, mutilated, discarded,
destroyed or otherwise disposed of any records, documents or other information
(other than identical copies, drafts or documents received from or provided to
EPA) relating to its potential liability regarding the Site since notification
of potential liability by EPA or the State or the filing of suit against it
regarding the Site and that it has fully complied with any and all EPA requests
for information pursuant to Sections 104(e) and 122(e) of CERCLA, 42 U.S.C. §§
9604(e) and 9622(e), and Section 3007 of RCRA, 42 U.S.C. § 6927.

XII. COMPLIANCE WITH OTHER LAWS

     40. Respondent shall perform all actions required pursuant to this Order
in accordance with all applicable local, state, and federal laws and
regulations except as provided in Section 121(e) of CERCLA, 42 U.S.C. §
6921(e), and 40 C.F.R. §§ 300.400(e) and 300.415(j). In accordance with 40
C.F.R. § 300.415(j), all on-Site actions required pursuant to this Order shall,
to the extent practicable, as determined by EPA, considering the exigencies of
the situation, attain applicable or relevant and
appropriate requirements (“ARARs”) under federal environmental or state
environmental or facility siting laws.

XIII. EMERGENCY RESPONSE AND NOTIFICATION OF RELEASES

     41. In the event of any action or occurrence during performance of the
USEC-Lead Work which causes or threatens a release of Waste Material from the
Site that constitutes an emergency situation or may present an immediate threat
to public health or welfare or the environment, Respondent shall immediately
take all appropriate action. Respondent shall take these actions in accordance
with all applicable provisions of this Order, including, but not limited to,
the Health and Safety Plan, in order to prevent, abate or minimize such release
or endangerment caused or threatened by the release. Respondent shall also
immediately notify the OSC or, in the event of his/her unavailability, the
Regional Duty Officer Region 4, EERB at 404-562-8700 of the incident or Site
conditions. In the event that Respondent fails to take appropriate response
action as required by this Paragraph, and EPA takes such action instead,
Respondent shall reimburse EPA all costs of the response action not
inconsistent with the NCP pursuant to Section XV (Payment of AOC Oversight
Costs by Respondent.)

     42. In addition, in the event of any release of a hazardous substance
from the Site to an off-Site location in the course of implementing USEC-Lead
Work, Respondent shall immediately notify the OSC at (404)-562-8700 and the
National Response Center at (800) 424-8802. Respondent shall submit a written
report to EPA within seven (7) days after each release, setting forth the
events that occurred and the measures taken or to be taken to mitigate any
release or endangerment caused or threatened by the release and to prevent the
reoccurrence of such a

17

 

release. This reporting requirement is in addition to,
and not in lieu of, reporting under Section 103(c) of CERCLA, 42 U.S.C. §
9603(c), and Section 304 of the Emergency Planning and Community Right-To-Know
Act of 1986, 42 U.S.C. § 11004, et seq.

XIV. AUTHORITY OF ON-SCENE COORDINATOR

     43. The OSC shall be responsible for overseeing Respondent’s
implementation of this Order. The OSC shall have the authority vested in an
OSC by the NCP, including the authority to halt, conduct, or direct any Work
required by this Order. Absence of the OSC from the Site shall not be cause
for stoppage of work unless specifically directed by the OSC.

XV. PAYMENT OF AOC OVERSIGHT COSTS BY RESPONDENT

44. Payments for AOC Oversight Costs.

a. Respondent shall reimburse EPA for Respondent’s share of AOC
Oversight Costs that were incurred not inconsistent with the NCP.
Respondent’s share of EPA’s AOC Oversight Costs includes (1) all costs
that are attributable to oversight of Respondent’s activities under this
Order, (2) one-half of the cost of services shared by Respondent and EPA,
such as site security and utilities that cannot be separately metered,
and that have been paid or incurred by EPA, (3) Respondent’s proportional
cost of services, such as wastewater treatment, where it is practicable
to apply a unit rate to Respondent’s usage, and (4) EPA’s indirect costs
associated with 1-3 above.

b. On a periodic basis, EPA will send Respondent a bill that identifies
and requires payment of Respondent’s share of AOC Oversight Costs. The
bill shall include a SCORPIOS report. Respondent shall make all payments
within thirty (30) days of receipt of each bill requiring payment, except
as otherwise provided in Paragraph 46 of this Order.

c. Respondent shall make all payments required by this Paragraph by a
certified or cashier’s check or checks made payable to “EPA Hazardous
Substance Superfund,” referencing the name and address of the parties
making payment and EPA Site/Spill ID number A48Q. Respondent shall send
the checks to:

US EPA Region 4

Superfund Accounting

PO Box 100142

Atlanta, GA 30384

d. At the time of payment, Respondent shall send notice that payment has
been made to:

18

 

	 	 	 
	Paula Batchelor
	 	
Kevin Beswick, Esq.

	U.S. EPA Region 4
	 	
U.S. EPA Region 4

	4WD-PSB/11th floor	 	
Environmental Accountability Division

	61 Forsyth Street, S.W.
	 	
61 Forsyth Street, S.W.

	Atlanta, GA 30303-8960	 	
Atlanta, GA 30303-8960

e. The total amount to be paid by Respondent pursuant to Paragraph 44(a)
shall be deposited in the Starmet Special Account within the EPA
Hazardous Substance Superfund to be retained and used to conduct or
finance response actions at or in connection with the Site, or to be
transferred by EPA to the EPA Hazardous Substance Superfund.

     45. In the event that the payment for AOC Oversight Costs are not made
within thirty (30) days of Respondent’s receipt of a bill, Respondent shall pay
Interest on the unpaid balance. The Interest on AOC Oversight Costs shall
begin to accrue on the due date of the bill and shall continue to accrue until
the date of payment. Payments of Interest made under this Paragraph shall be
in addition to such other remedies or sanctions available to the United States
by virtue of Respondent’s failure to make timely payments under this Section,
including but not limited to, payment of stipulated penalties pursuant to
Section XVIII.

     46. Respondent may dispute all or part of a bill for AOC Oversight Costs
submitted under this Order, if Respondent alleges that EPA has made an
accounting error, or if Respondent alleges that a cost item is inconsistent
with the NCP. If any dispute over costs is resolved before payment is due, the
amount due will be adjusted as necessary. If the dispute is not resolved
before payment is due, Respondent shall pay the full amount of the uncontested
costs to EPA as specified in Paragraph 44 on or before the due date. Within
the same time period, Respondent shall pay the full amount of the contested
costs into an interest-bearing escrow account. Respondent shall simultaneously
transmit a copy of both checks to the persons listed in Paragraph 44(d) above.
Respondent shall ensure that the prevailing party or parties in the dispute
shall receive the amount upon which they prevailed from the escrow funds plus
interest within fifteen (15) days after the dispute is resolved.

XVI. DISPUTE RESOLUTION

     47. Unless otherwise expressly provided for in this Order, the dispute
resolution procedures of this Section shall be the exclusive mechanism for
resolving disputes arising under this Order. The Parties shall attempt to
resolve any disagreements concerning this Order expeditiously and informally.

     48. If Respondent objects to any EPA action taken pursuant to this Order,
including billings for AOC Oversight Costs, they shall notify EPA in writing of
their objections within fifteen (15) days of such action, unless the objections
has/have been resolved informally. EPA and Respondent shall have thirty (30)
days from EPA’s receipt of Respondent’s written

19

 

objections to resolve the
dispute through formal negotiations (the “Negotiation Period”). The
Negotiation Period may be extended at the sole discretion of EPA.

     49. Any agreement reached by the parties pursuant to this Section shall
be in writing and shall, upon signature by both parties, be incorporated into
and become an enforceable part of this Order. If the Parties are unable to
reach an agreement within the Negotiation Period, an EPA management official at
the Division Director level or higher will issue a written decision on the
dispute to Respondent. EPA’s decision shall be incorporated into and become an
enforceable part of this Order. Respondent’s obligations under this Order
shall not be tolled by submission of any objection for dispute resolution under
this Section. Following resolution of the dispute, as provided by this
Section, Respondent shall fulfill the requirement that was the subject of the
dispute in accordance with the agreement reached or with EPA’s decision,
whichever occurs.

XVII. FORCE MAJEURE

     50. Respondent agrees to perform all requirements of this Order within
the time limits established under this Order, unless the performance is delayed
by a force majeure. For purposes of this Order, a force majeure is defined as
any event arising from causes beyond the control of Respondent, or of any
entity controlled by Respondent, including but not limited to their contractors
and subcontractors, which delays or prevents performance of any obligation
under this Order despite Respondent’s best efforts to fulfill the obligation.
Force majeure does not include financial inability to complete the USEC-Lead
Work or increased cost of performance.

     51. If any event occurs or has occurred that may delay the performance of
any obligation under this Order, whether or not caused by a force majeure
event, Respondent shall notify EPA orally within forty-eight (48) hours of when
Respondent first knew that the event might cause a delay. Within five (5) days
thereafter, Respondent shall provide to EPA in writing an explanation and
description of the reasons for the delay; the anticipated duration of the
delay; all actions taken or to be taken to prevent or minimize the delay; a
schedule for implementation of any measures to be taken to prevent or mitigate
the delay or the effect of the delay; Respondent’s rationale for attributing
such delay to a force majeure event if they intend to assert such a claim; and
a statement as to whether, in the opinion of Respondent, such event may cause
or contribute to an endangerment to public health, welfare or the environment.
Failure to comply with the above requirements shall preclude Respondent from
asserting any claim of force majeure for that event for the period of time of
such failure to comply and for any additional delay caused by such failure.

     52. If EPA agrees that the delay or anticipated delay is attributable to
a force majeure event, the time for performance of the obligations under this
Order that are affected by the force majeure event will be extended by EPA for
such time as is necessary to complete those obligations. An extension of the
time for performance of the obligations affected by the force majeure event
shall not, of itself, extend the time for performance of any other obligation.
If EPA does not agree that the delay or anticipated delay has been or will be
caused by a force majeure event, EPA will notify Respondent in writing of its
decision. If EPA agrees that the

20

 

delay is attributable to a force majeure
event, EPA will notify Respondent in writing of the length of the extension, if
any, for performance of the obligations affected by the force majeure event.
In either case, EPA shall endeavor to provide its response to Respondent within
ten (10) days of receiving Respondent’s written notification provided to EPA in
accordance with Paragraph 51.

XVIII. STIPULATED PENALTIES

     53. Respondent shall be liable to EPA for stipulated penalties in the
amounts set forth in Paragraphs 54 and 55 for failure to comply with the
requirements of this Order specified below, unless excused under Section XVII
(Force Majeure). “Compliance” by Respondent shall include completion of the
Respondent’s activities required under this Order, or any USEC-Lead Work under
this Order identified below in accordance with all applicable requirements of
law, this Order, the SOW, and any plans or other documents approved by EPA
pursuant to this Order and within the specified time schedules established by
and approved under this Order.

     54. Stipulated
Penalty Amounts — Work.

a. The following stipulated penalties shall accrue per violation per day
for any noncompliance identified in Paragraph 54.b:

	 	 	 	 
	Penalty Per Violation Per Day	 	Period of Noncompliance	 
	
	 	
	 
	$100	 	
1st through 30th day	 
	$200	 	
31st through 60th day	 
	$500	 	
61st day and beyond

b. Compliance Milestones: Completion of the USEC-Lead Work described in
Respondent’s Statement of Work, on or before the date for the completion
of all work as set forth in the approved Respondent’s Work Plan, unless
(1) EPA shall have agreed to an extension of such scheduled completion
date, or (2) if excused under Section XVII (Force Majeure).

     55. Stipulated Penalty Amounts — Reports. The following stipulated
penalties shall accrue per report per day for failure to submit timely or
adequate reports or other written documents pursuant to Paragraphs 22 through
29:

	 	 	 	 
	Penalty Per Violation Per Day	 	Period of Noncompliance	 
	
	 	
	 
	$100	 	
1st through 30th day	 
	$200	 	
31st through 60th day	 
	$500	 	
61st day and beyond	 

21

 

     56. In the event that EPA assumes performance of a portion or all of the
USEC Lead Work required under this Order, pursuant to Paragraph 72, Respondent
shall be liable for a stipulated penalty in the amount of $200,000.

     57. All penalties shall begin to accrue on the day after the complete
performance is due or the day a violation occurs, and shall continue to accrue
through the final day of the correction of the noncompliance or completion of
the activity. However, stipulated penalties shall not accrue: 1) with respect
to a deficient submission under Section VIII (Work to be Performed), during the
period, if any, beginning on the 31st day after EPA’s receipt of such
submission until the date that EPA notifies Respondent of any deficiency; and
2) with respect to a decision by the EPA Management Official at the Division
Director level or higher, under Paragraph 49 of Section XVI (Dispute
Resolution), during the period, if any, beginning on the 21st day after the
Negotiation Period begins until the date that the EPA management official
issues a final decision regarding such dispute. Nothing herein shall prevent
the simultaneous accrual of separate penalties for separate violations of this
Order.

     58. Following EPA’s determination that Respondent has failed to comply
with a requirement of this Order, EPA may give Respondent written notification
of the failure and describe the noncompliance. EPA may send Respondent a
written demand for payment of the penalties. However, penalties shall accrue
as provided in the preceding Paragraph regardless of whether EPA has notified
Respondent of a violation.

     59. All penalties accruing under this Section shall be due and payable to
EPA within thirty (30) days of Respondent’s receipt from EPA of a demand for
payment of the penalties, unless Respondent invokes the dispute resolution
procedures under Section XVI (Dispute Resolution). All payments to EPA under
this Section shall be paid by certified or cashier’s checks made payable to
“EPA Hazardous Substances Superfund,” and mailed to:

US EPA Region 4

Superfund Accounting

PO Box 100142

Atlanta, GA 30384,

The check shall indicate that the payment is for stipulated penalties, and
shall reference the EPA Region and Site/Spill ID Number A48Q, the EPA Docket
Number   , and the name and address of the party making payment. Copies
of checks paid pursuant to this Section, and any accompanying transmittal
letters, shall be sent to EPA as provided in Paragraph 19, and to:

	 	 	 	 
	Paula Batchelor
	 	
Kevin Beswick, Esq.
	 
	U.S. EPA Region 4
	 	
U.S. EPA Region 4
	 
	4WD-PSB/11th floor
	 	
Environmental Accountability Division
	 
	61 Forsyth Street, S.W.
	 	
61 Forsyth Street, S.W.
	 
	Atlanta, GA 30303-8960	 	
Atlanta, GA 30303-8960	 

22

 

     60. The payment of penalties shall not alter in any way Respondent’s
obligation to complete performance of the USEC-Lead Work required under this
Order.

     61. Penalties shall continue to accrue during any dispute resolution
period, but need not be paid until fifteen (15) days after the dispute is
resolved by agreement or by receipt of EPA’s decision.

     62. If Respondent fails to pay stipulated penalties when due, EPA may
institute proceedings to collect the penalties, as well as Interest.
Respondent shall pay Interest on the unpaid balance, which shall begin to
accrue on the date of demand made pursuant to Paragraph 58. Nothing in this
Order shall be construed as prohibiting, altering, or in any way limiting the
ability of EPA to seek any other remedies or sanctions available by virtue of
Respondent’s violation of this Order or of the statutes and regulations upon
which it is based, including, but not limited to, penalties pursuant to
Sections 106(b) and 122(l) of CERCLA, 42 U.S.C. §§ 9606(b) and 9622(l), and
punitive damages pursuant to Section 107(c)(3) of CERCLA, 42 U.S.C. §
9607(c)(3). Provided, however, that EPA shall not seek civil penalties
pursuant to Section 106(b) or 122(l) of CERCLA or punitive damages pursuant to
Section 107(c)(3) of CERCLA for any violation for which a stipulated penalty is
provided herein, except in the case of a willful violation of this Order, or in
the event that EPA assumes performance of a portion or all of the Work pursuant
to Section XXI, Paragraph 72. Notwithstanding any other provision of this
Section, EPA may, in its unreviewable discretion, waive any portion of
stipulated penalties that have accrued pursuant to this Order.

XIX. PAYMENT OF EPA’s REMOVAL ACTION COSTS BY SETTLING FEDERAL AGENCIES

     63. Settling Federal Agencies shall pay EPA for EPA’s Removal Action
Costs. Payment to EPA of EPA’s Removal Action Costs shall be made by Settling
Federal Agencies in installments as provided below.

     (a) Initial Installment. As soon as reasonably practicable after the
execution of this agreement, the United States, on behalf of the Settling
Federal Agencies, shall pay to the EPA Hazardous Substance Superfund
$15,000,000.00 by Electronic Funds Transfer. EPA shall deposit this money paid
pursuant to this AOC into the EPA Hazardous Substance Superfund, Starmet
Special Account. This payment amount is based on the total currently-estimated
cost to perform the EPA-Lead Work in this Order.

     (b) Contingent Second Installment. If, at any time, but no earlier than
six (6) months after the Effective Date hereof, EPA determines that the cost to
perform the EPA-Lead Work will exceed $15 million, and thus the amount of money
in the Starmet Special Account is less than the amount projected by the OSC to
be needed to complete the EPA-Lead Work, the Parties shall execute an amendment
to this AOC which shall provide for an additional payment by the United States,
on behalf of the Settling Federal Agencies, into the EPA Hazardous Substance
Superfund, Starmet Special Account, of a sum equal to the newly-estimated cost
of completing the EPA-

23

 

Lead Work. The Parties’ agreement concerning the payment
of any such second installment shall be memorialized in writing and made an
enforceable part of this Order, which may be amended only by mutual consent of
the Parties.

     (c). Contingent Final Payment — In the event that the second installment
payment is not sufficient to pay for all costs of EPA-Lead Work, then upon
completion of the Work, EPA shall submit to Settling Federal Agencies a bill
requiring payment of such unreimbursed EPA-Lead Work Costs. Such bill shall
include a SCORPIOS report. Settling Federal Agencies shall make payment to EPA
as soon as reasonably practical.

     64. If any payment to the EPA Hazardous Substances Superfund required by
this section is not made as soon as reasonably practicable, the appropriate EPA
Regional Branch Chief may raise any issues relating to payment to the
appropriate DOJ Assistant Section Chief for the Environmental Defense Section.
In any event, if this payment is not made within one hundred twenty (120) days
after the effective date of this Agreement, EPA and DOJ have agreed to resolve
the issue within thirty (30) days in accordance with procedures set forth in
the letter agreement entitled “Agreement On Procedures To Address Consent
Decree Payments By Federal PRPs to the Superfund”, dated December 28, 1998.

     65. In the event that payment by the Settling Federal Agencies is not
made within ninety (90) days of the effective date of this Agreement, interest
on the unpaid balance shall be paid at the rate established pursuant to Section
107(a) of CERCLA, 42 U.S.C. § 9607(a), commencing on the effective date of this
Agreement and accruing through the date of the payment.

     66. The parties to this Order recognize and acknowledge that the payment
obligations of the Settling Federal Agencies under Paragraphs 63 (a) (b) and
(c) of this Order can only be paid from appropriated funds legally available
for such purpose. Nothing in this Order shall be interpreted or construed as a
commitment or requirement that the Settling Federal Agencies obligate or pay
funds in contravention of the Anti-Deficiency Act, 31 U.S.C. § 1341, or any
other applicable provision of law.

     67. Following completion of the EPA-Lead Work, any money remaining in the
Starmet Special Account shall only be applied to credit the further liability
of the United States in contribution for additional response costs at the Site.
Such money shall be retained and used to conduct or finance response actions
at or in connection with the Site.

XX. COVENANTS NOT TO SUE BY THE UNITED STATES

     68. In consideration of the actions that will be performed and the
payments that will be made by Respondent under the terms of this Order, and
except as otherwise specifically provided in this Order, the United States
covenants not to sue or to take administrative action against Respondent
pursuant to Sections 106 and 107(a) of CERCLA, 42 U.S.C. §§ 9606 and 9607(a),
for performance of the Work, for recovery of the costs of the Work or AOC
Oversight Costs, and for EPA’s Removal Action Costs. These covenants not to
sue or take administrative action shall

24

 

take effect upon the Effective Date and
are conditioned upon the complete and satisfactory performance of all
obligations under this Order, including, but not limited to, payment of AOC
Oversight Costs by Respondent pursuant to Section XV and payment of EPA’s
Removal Action Costs by the Settling Federal Agencies pursuant to Section XIX.
These covenants extends only to Respondent and do not extend to any other
person.

     69. Except as otherwise specifically provided in this Order, in
consideration of the payments that will be made by the United States on behalf
of the Settling Federal Agencies under the terms of this Order, including
payment of all of EPA’s Removal Action Costs, EPA covenants not to take
administrative action against the Settling Federal Agencies pursuant to Section
107(a) of CERCLA, 42 U.S.C. § 9607(a), for the Work, for recovery of the costs
of the Work or AOC Oversight Costs, and for EPA’s Removal Action Costs under
this Order. EPA’s covenant shall take effect upon receipt of the payment
required under Paragraph 63. This covenant is conditioned upon the
satisfactory performance by the Settling Federal Agencies of their obligations
under this Order. This covenant extends only to the Settling Federal Agencies
and does not extend to any other person.

XXI. RESERVATIONS OF RIGHTS BY THE UNITED STATES

     70. Except as specifically provided in this Order, nothing herein shall
limit the power and authority of EPA or the United States to take, direct, or
order all actions necessary to protect public health, welfare, or the
environment or to prevent, abate, or minimize an actual or threatened release
of hazardous substances, pollutants or contaminants, or hazardous or solid
waste on, at, or from the Site. Further, nothing herein shall prevent EPA from
seeking legal or equitable relief to enforce the terms of this Order, from
taking other legal or equitable action as it deems appropriate and necessary,
or from requiring Respondent or Settling Federal Agencies in the future to
perform additional activities pursuant to CERCLA or any other applicable law.

     71. The covenants set forth in Section XX above do not pertain to any
matters other than those expressly identified therein. EPA reserves the right
to bring an action against the Respondent, and to take administrative action
against the Settling Federal Agencies, with respect to all other matters,
including, but not limited to:

a. claims based on a failure by Respondent or a Settling Federal Agency
to meet a requirement of this Order;

b. liability for costs not included within the definition of AOC
Oversight Costs or EPA’s Removal Action Costs;

c. liability for performance of response action other than the Work;

d. criminal liability;

25

 

e. liability for damages for injury to, destruction of, or loss of
natural resources, and for the costs of any natural resource damage
assessments;

f. liability arising from the past, present, or future disposal, release
or threat of release of hazardous substances outside of the Site; and

g. liability for costs incurred or to be incurred by the Agency for
Toxic Substances and Disease Registry related to the Site.

     72. USEC-Lead Work Takeover. In the event EPA determines that Respondent
has ceased implementation of any portion of the USEC-Lead Work, is seriously or
repeatedly deficient or late in their performance of that work, or is
implementing that work in a manner which may cause an endangerment to human
health or the environment, EPA may assume the performance of all or any portion
of that work as EPA determines necessary. Except when EPA determines it is
necessary to prevent endangerment to human health or the environment, prior to
assuming performance of all or any portion of the USEC-Lead Work, EPA shall
provide Respondent with notice of the deficiencies and at least thirty (30)
days to cure any deficiencies identified in the notice. Respondent may invoke
the procedures set forth in Section XVI (Dispute Resolution) to dispute EPA’s
determination that takeover of the USEC-Lead Work is warranted under this
Paragraph. Costs incurred by the United
States in performing the USEC-Lead Work pursuant to this Paragraph shall be
considered AOC Oversight Costs that Respondent shall pay pursuant to Section XV
(Payment of AOC Oversight Costs by Respondent). Notwithstanding any other
provision of this Order, EPA retains all authority and reserves all rights to
take any and all response actions authorized by law.

XXII. COVENANT NOT TO SUE BY RESPONDENT

     73. Respondent covenants not to sue and agrees not to assert any claims
or causes of action against the United States, or its contractors or employees,
with respect to the Work or the costs of the Work, for AOC Oversight Costs, for
EPA’s Removal Action Costs, or for any other costs incurred pursuant to this
Order, including, but not limited to:

a. any direct or indirect claim for reimbursement from the Hazardous
Substance Superfund established by 26 U.S.C. § 9507, based on Sections
106(b)(2), 107, 111, 112, or 113 of CERCLA, 42 U.S.C. §§ 9606(b)(2),
9607, 9611, 9612, or 9613, or any other provision of law;

b. any claim arising out of response actions, oversight or response
activities, or approval of plans for such activities at or in connection
with the Site, including any claim under the United States Constitution,
the South Carolina State Constitution, the Tucker Act, 28 U.S.C. § 1491,
the Equal Access to Justice Act, 28 U.S.C. § 2412, as amended, or at
common law; or

26

 

c. any claim against the United States pursuant to Sections 107 and 113
of CERCLA, 42 U.S.C. §§ 9607 and 9613, relating to the Work, AOC
Oversight Costs, EPA’s Removal Action Costs, or any other costs incurred
under this Order.

     74. Except as provided in Paragraph 76 (Waiver of Claims), these
covenants not to sue shall not apply (i) in the event the United States brings
a cause of action or issues an order pursuant to the reservations set forth in
Paragraphs 71(b), (c), and (e) — (g), but only to the extent that Respondent’s
claims arise from the same response action, response costs, or damages that the
United States is seeking pursuant to the applicable reservation; or (ii) in the
event the Settling Federal Agencies fail to meet their responsibilities to pay
EPA’s Removal Action Costs or the costs of performing the work that is part of
the EPA-Lead Work, as provided in paragraphs 63 through 66 above, and
Respondent is required to incur such costs or perform such work, then
Respondent shall retain the right to bring an action to recover any such EPA
Removal Action Costs paid by Respondent, or to recover any costs incurred by
Respondent in performing any portion of the work that is part of the EPA-Lead
Work.

     75. Nothing in this Agreement shall be deemed to constitute approval or
preauthorization of a claim within the meaning of Section 111 of CERCLA, 42
U.S.C. § 9611, or 40 C.F.R. § 300.700(d).

     76. Respondent agrees not to assert any claims and to waive all claims or
causes of action that they may have for all matters relating to the Site,
including for contribution, against any person where the person’s liability to
Respondent with respect to the Site is based solely on having arranged for
disposal or treatment, or for transport for disposal or treatment, of hazardous
substances at the Site, or having accepted for transport for disposal or
treatment of hazardous substances at the Site, if

a. the materials contributed by such person to the Site containing
hazardous substances did not exceed the greater of i) 0.002% of the total
volume of waste at the Site, or ii) 110 gallons of liquid materials or
200 pounds of solid materials.

b. This waiver shall not apply to any claim or cause of action against
any person meeting the above criteria if EPA has determined that the
materials contributed to the Site by such person contributed or could
contribute significantly to the costs of response at the Site. This
waiver also shall not apply with respect to any defense, claim, or cause
of action that a Respondent may have against any person if such person
asserts a claim or cause of action relating to the Site against such
Respondent.

     77. Respondent agrees not to assert any claims and to waive all claims or
causes of action that they may have for all matters relating to the Site,
including for contribution, against any person that has entered into a final de
minimis settlement under Section 122(g) of CERCLA, 42 U.S.C. § 9622(g), with
EPA with respect to the Site as of the Effective Date. This waiver shall not
apply with respect to any defense, claim, or cause of action that a Respondent
may have

27

 

against any person if such person asserts a claim or cause of action
relating to the Site against such Respondent.

XXIII. COVENANT NOT TO SEEK REIMBURSEMENT BY SETTLING FEDERAL AGENCIES

     78. The Settling Federal Agencies hereby agree not to assert any direct
or indirect claim for reimbursement from the Hazardous Substance Superfund
(established pursuant to the Internal Revenue Code, 26 U.S.C. § 9507) through
CERCLA §§ 106(b)(2), 107, 111, 112, 113, 42 U.S.C. §§ 9606(b)(2), 9607, 9611,
9612, 9613, or any other provision of law with respect to EPA’s Future Response
Costs at the Site, or USEC-Lead Work.

XXIV. OTHER CLAIMS

     79. By issuance of this Order, the United States and EPA assume no
liability for injuries or damages to persons or property resulting from any
acts or omissions of Respondent. The United States or EPA shall not be deemed a
party to any contract entered into by Respondent or their directors, officers,
employees, agents, successors, representatives, assigns, contractors, or
consultants in carrying out actions pursuant to this Order.

     80. Except as expressly provided in Paragraph 77, De Minimis Waivers, and
Section XX (COVENANTS NOT TO SUE BY THE UNITED STATES), nothing in this Order
constitutes a satisfaction of or release from any claim or cause of action
against Respondent, Settling Federal Agencies, or any person not a party to
this Order, for any liability such person may have under CERCLA, other
statutes, or common law, including but not limited to any claims of the United
States for costs, damages and interest under Sections 106 and 107 of CERCLA, 42
U.S.C. §§ 9606 and 9607.

     81. No action or decision by EPA pursuant to this Order shall give rise
to any right to judicial review, except as set forth in Section 113(h) of
CERCLA, 42 U.S.C. § 9613(h).

XXV. CONTRIBUTION PROTECTION

     82. The Parties agree that Respondent and the Settling Federal Agencies
are entitled, as of the Effective Date, to protection from contribution actions
or claims as provided by Sections 113(f)(2) and 122(h)(4) of CERCLA, 42 U.S.C.
§§ 9613(f)(2) and 9622(h)(4), for “matters addressed” in this Order. The
“matters addressed” in this Order are the Work, EPA’s Removal Action Costs, and
AOC Oversight Costs. Except as provided in Paragraph 77, of this Order (De
Minimis Waivers), nothing in this Order precludes the United States or
Respondent from asserting any claims, causes of action, or demands against any
persons not parties to this Order for indemnification, contribution, or cost
recovery. Provided that if the Settling Federal Agencies fail to meet their
responsibilities to pay the EPA’s Removal Action Costs and the costs of
performing the work that is part of the EPA-Lead Work, as provided in
paragraphs 63-67 above, and respondent is required to incur such costs or
perform such work, nothing in this Order shall

28

 

preclude Respondent from
recovering any costs incurred or paid by Respondent for the EPA’s Removal
Action Costs and any such costs incurred or paid to perform any portion of the
work that is part of the EPA-Lead Work.

XXVI. INDEMNIFICATION

     83. Respondent shall indemnify, save and hold harmless the United States,
its officials, agents, contractors, subcontractors, employees and
representatives from any and all claims or causes of action arising from, or on
account of, negligent or other wrongful acts or omissions of Respondent, its
officers, directors, employees, agents, contractors, or subcontractors, in
carrying out actions pursuant to USEC-Lead Work required by this Order,
provided that Respondent shall not indemnify the United States for any work
performed by EPA or others in the event that EPA assumes performance of the
Work pursuant to Paragraph 72 (Work Takeover). In addition, Respondent agrees
to pay the United States all costs incurred by the United States, including but
not limited to attorneys fees and other expenses of litigation and settlement,
arising from or on account of claims made against the United States based on
negligent or other wrongful acts or omissions of Respondent, its officers,
directors, employees, agents, contractors, subcontractors and any persons
acting on their behalf or under their control, in carrying out activities
pursuant to USEC-Lead Work required under this Order. The United States shall
not be held out as a party to any contract entered into by or on behalf of
Respondent in carrying out activities pursuant to USEC-Lead Work required under
this Order. Neither Respondent nor any such contractor shall be considered an
agent of the United States.

     84. The United States shall give Respondent notice of any claim for which
the United States plans to seek indemnification pursuant to this Section and
shall consult with Respondent prior to settling such claim.

     85. Except as provided in Section XXII (Covenant Not to Sue by
Respondent), Respondent waives all claims against the United States for damages
or reimbursement or for set-off of any payments made or to be made to the
United States, arising from or on account of any contract, agreement, or
arrangement between Respondent and any person for performance of Work on or
relating to the Site, including, but not limited to, claims on account of
construction delays. In addition, Respondent shall indemnify and hold harmless
the United States with respect to any and all claims for damages or
reimbursement arising from or on account of any contract, agreement, or
arrangement between Respondent and any person for performance of Work on or
relating to the Site, including, but not limited to, claims on account of
construction delays.

XXVII. INSURANCE

     86. At least seven (7) days prior to commencing any on-Site work under
this Order, Respondent shall secure, and shall maintain for the duration of
this Order, comprehensive general liability insurance and automobile insurance
with limits of five (5) million dollars, combined single limit. Within the
same time period, Respondent shall provide EPA with certificates of such
insurance. At EPA’s request, Respondent shall provide a copy of each insurance
policy. In

29

 

addition, for the duration of the Order, Respondent shall satisfy,
or shall ensure that their contractors or subcontractors satisfy, all
applicable laws and regulations regarding the provision of worker’s
compensation insurance for all persons performing the Work on behalf of
Respondent in furtherance of this Order. If Respondent demonstrates by
evidence satisfactory to EPA that any contractor or subcontractor maintains
insurance equivalent to that described above, or insurance covering some or all
of the same risks but in an equal or lesser amount, then Respondent need
provide only that portion of the insurance described above which is not
maintained by such contractor or subcontractor.

XXVIII. FINANCIAL ASSURANCE

     87. Within thirty (30) days of the Effective Date, Respondent shall
establish and maintain financial security in the amount of $7,850,000 in one or
more of the following forms:

a. A surety bond guaranteeing performance of the Work;

b. One or more irrevocable letters of credit equaling the total
estimated cost of the Work;

c. A trust fund;

d. A guarantee to perform the Work by one or more parent corporations or
subsidiaries, or by one or more unrelated corporations that have a
substantial business relationship with Respondent; or

e. A demonstration that one or more of the Respondent satisfy the
requirements of 40 C.F.R. Part 264.143(f).

     88. If Respondent seeks to demonstrate the ability to complete the
USEC-Lead Work through a guarantee by a third party pursuant to Paragraph 87(a)
of this Section, Respondent shall
demonstrate that the guarantor satisfies the requirements of 40 C.F.R. Part
264.143(f). If Respondent seeks to demonstrate their ability to complete the
Work by means of the financial test or the corporate guarantee pursuant to
Paragraph 87(d) or (e) of this Section, they shall resubmit sworn statements
conveying the information required by 40 C.F.R. Part 264.143(f) annually, on
the anniversary of the Effective Date. In the event that EPA determines at any
time that the financial assurances provided pursuant to this Section are
inadequate, Respondent shall, within thirty (30) days of receipt of notice of
EPA’s determination, obtain and present to EPA for approval one of the other
forms of financial assurance listed in Paragraph 87 of this Section.
Respondent’s inability to demonstrate financial ability to complete the Work
shall not excuse performance of any activities required under this Order.

     89. If, after the Effective Date, Respondent can show that the estimated
cost to complete the remaining USEC-Lead Work has diminished below the amount
set forth in Paragraph 87 of this Section, Respondent may, on any anniversary
date of the Effective Date, or at any other time agreed to by the Parties,
reduce the amount of the financial security provided under this Section

30

 

to the
estimated cost of the remaining work to be performed. Respondent shall submit
a proposal for such reduction to EPA, in accordance with the requirements of
this Section, and may reduce the amount of the security upon approval by EPA.
In the event of a dispute, Respondent may reduce the amount of the security in
accordance with the written decision resolving the dispute.

     90. Respondent may change the form of financial assurance provided under
this Section at any time, upon notice to and approval by EPA, provided that the
new form of assurance meets the requirements of this Section. In the event of
a dispute, Respondent may change the form of the financial assurance only in
accordance with the written decision resolving the dispute.

XXIX. MODIFICATIONS

     91. The OSC may make modifications to any plan or schedule in writing or
by oral direction. Any oral modification will be memorialized in writing by
EPA promptly, but shall have as its effective date the date of the OSC’s oral
direction. Any other requirements of this Order may be modified in writing by
mutual agreement of the parties.

     92. If Respondent seeks permission to deviate from any approved work plan
or schedule or Respondent’s Statement of Work, Respondent’s Project Coordinator
shall submit a written request to EPA for approval outlining the proposed
modification and its basis. Respondent may not proceed with the requested
deviation until receiving oral or written approval from the OSC pursuant to
Paragraph 22.

     93. No informal advice, guidance, suggestion, or comment by the OSC or
other EPA representatives regarding reports, plans, specifications, schedules,
or any other writing submitted by Respondent shall relieve Respondent of its
obligation to obtain any formal approval required by this Order, or to comply
with all requirements of this Order, unless it is formally modified.

XXX. NOTICE OF COMPLETION OF WORK

     94. When EPA determines, after EPA’s review of the Final Report, that all
USEC-Lead Work has been fully performed in accordance with this Order, with the
exception of any continuing obligations required by this Order, including
payment of AOC Oversight Costs, or record retention,
EPA will provide written notice to Respondent. If EPA determines that any such
USEC-Lead Work has not been completed in accordance with this Order, EPA will
notify Respondent, provide a list of the deficiencies, and require that
Respondent modify the Work Plan if appropriate in order to correct such
deficiencies. Respondent shall implement the modified and approved Work Plan
and shall submit a modified Final Report in accordance with the EPA notice.
Failure by Respondent to implement the approved modified Work Plan shall be a
violation of this Order.

XXXI. ATTORNEY GENERAL APPROVAL

     95. The Attorney General or his designee has approved the settlement
embodied in this Consent Order in accordance with Section 122(h)(1) of CERCLA,
42 U.S.C. § 9622(h)(1).

31

 

XXXII. SEVERABILITY/INTEGRATION/APPENDICES

     96. If a court issues an order that invalidates any provision of this
Order or finds that Respondent has sufficient cause not to comply with one or
more provisions of this Order, Respondent shall remain bound to comply with all
provisions of this Order not invalidated or determined to be subject to a
sufficient cause defense by the court’s order.

     97. This Order and its appendices constitute the final, complete and
exclusive agreement and understanding among the Parties with respect to the
settlement embodied in this Order. The parties acknowledge that there are no
representations, agreements or understandings relating to the settlement other
than those expressly contained in this Order. The following appendices are
attached to and incorporated into this Order: Respondent’s Statement of Work,
Appendix A. Site Map, Appendix B.

XXXIII. EFFECTIVE DATE

     98. This Order shall be effective seven (7) days after the Order is
signed by the Regional Administrator or his delegate.

The undersigned representative of Respondent certifies that he or she is fully
authorized to enter into the terms and conditions of this Order and to bind the
party he or she represents to this document.

	 	 	 	 	 
	Agreed this  12th day of
 January, 2004 
	 	 	 	 	 
	For Respondent USEC
	 	 	 	 	 
	By	/s/ Phillip G. Sewell	 	 	 
	 	
	 	 	 
	Title	Senior Vice President	 	 	 
	 	
	 	 	 

32

 

	 	 	 

	Agreed this  5th day of
 February, 2004
	 	 	 
	For settling Federal Agency United States Department of Energy
	 	 	 
	By	/s/ Jacqueline R. Little	 
	 	
	 
	 	 	 
	Title	LTC, JA, Chief Environmental Law Division	 
	 	
	 

33

 

	 	 	 

	Agreed this  5th day of
 February, 2004
	 	 	 
	For settling Federal Agency United States Department of the Army
	 	 	 
	By	/s/ Gerald Boyd	 
	 	
	 
	 	 	 
	Title	Manager	 
	 	
	 
	 	U.S. Department of Energy	 
	 	
	 
	 	Oak Ridge Operations	 
	 	
	 

34

 

	 	 	 	 	 	 
	It is so ORDERED and Agreed
this  6th day of  February, 2004
	 
	BY:	  /s/ Shane Hitchcock	 	DATE:	6-Feb-04	 
	 	
	 	 	
	 
	Name
	Shane Hitchcock
	Region 4
	U.S. Environmental Protection Agency

	 	 	 
	EFFECTIVE DATE:	13-Feb-04	 
	 	
	 

35exv10w65

 

EXHIBIT 10.65

SETTLEMENT AGREEMENT

     This Settlement (the “ Settlement Agreement”) is entered into as of the
9th of February, 2004 (the “Settlement Date”), by and between United States
Enrichment Corporation, a Delaware Corporation with offices at 6903 Rockledge
Drive, Bethesda, Maryland 20817 (“USEC”) and the United States of America,
acting by and through the Secretary of Energy, the statutory head of the
Department of Energy (“DOE”), each of which is sometimes referred to herein as
a “Party” and collectively as the “Parties”.

Recitals

     A. Pursuant to Section 1403 of the Energy Policy Act of 1992, 42 USC
§2297c-2, on July 1, 1993, USEC’s predecessor, the United States Enrichment
Corporation, a wholly-owned U.S. Government corporation (“USEC-Federal”), and
DOE entered into a lease agreement (the “Lease Agreement”) pursuant to which
USEC-Federal leased portions of the Gaseous Diffusion Plants located at
Paducah, Kentucky and Portsmouth, Ohio (the “GDPs”).

     B. The Memorandum of Agreement for Electric Power between the United
States of America, represented by the Secretary of Energy, and USEC-Federal,
Exhibit E to the Lease Agreement (the “Power MOA”) establishes the working
relationships and responsibility for liabilities incident to the supply of
electric power to operate the GDPs.

     C. Article III.3 of the Power MOA provided, among other things, that
USEC-Federal would be responsible for providing the budgetary resources for any
and all costs associated with the “Power Purchase Agreements” (as that term is
defined in the Power MOA) except (a) prior service years post-retirement
benefit obligations pursuant to Section 6.04 of the Power Agreement between the
Ohio Valley Electric Corporation (“OVEC”) and the United States of America,
Contract No. DE-AC05-76OR01530 (the “OVEC Power Purchase Agreement”), and (b) a
share of DOE’s liability pursuant to Section 6.09 of the OVEC Power Purchase
Agreement calculated in accordance with a formula set forth in Article III.3.c
of the Power MOA.

     D. On July 28, 1998, USEC-Federal was privatized and the Lease Agreement
and Power MOA were transferred to USEC pursuant to Sections 3107 and 3108 of
the USEC Privatization Act, 42 USC §2297h-5 and 6.

     E. Pursuant to the Memorandum of Agreement between the Office of
Management and Budget and the United States Enrichment Corporation Relating to
Post-Privatization Liabilities, dated April 6, 1998 (the “OMB MOA”), upon
privatization, USEC continues to be responsible for the liabilities associated
with its pro rata share of post-retirement health benefits for employees
working at the OVEC power plants and shutdown and demolition costs for the OVEC
power plants attributable to the Pre-privatization Period (as that term is
defined in the OMB MOA).

     F. By letter dated September 29, 2000, DOE, based on USEC’s request and
with USEC’s consent, notified OVEC of its election to terminate the OVEC Power
Purchase Agreement, and as a result, the OVEC Power Purchase Agreement
terminated in accordance with its terms on April 30, 2003 and DOE was relieved
of its obligation and responsibility to provide electric power to the
Leased Premises at the Portsmouth Gaseous Diffusion Plant under Section 6.1 of
the Lease Agreement.

     G. On or about February 10, 2004, DOE, with USEC’s consent, expects to
enter into a Settlement Agreement which provides for a lump sum final payment
of one hundred and seven million dollars ($107,000,000.00) as a settlement, but
not an admission of liability, of amounts due to OVEC under Sections 6.04 and
6.09 of the OVEC Power Purchase Agreement (“Settlement Agreement between DOE
and OVEC”).

     H. By this Settlement Agreement, DOE and USEC agree on the portion of DOE’s
liability under Sections 6.04 and 6.09 of the OVEC Power Purchase Agreement for
which USEC is obliged to provide the budgetary resources under Article III of
the Power MOA; and DOE releases USEC and USEC releases DOE from any costs
associated with their respective pro rata shares of post-retirement benefit

 

 

obligations pursuant to Section 6.04 of the OVEC Power Purchase Agreement and
decommissioning, shutdown, demolition and closing costs pursuant to Section
6.09 of the OVEC Power Purchase Agreement.

Agreement

     In consideration of the payment to be made hereunder and the mutual
covenants and promises contained herein, said covenants and promises
constituting good and valuable consideration, the Parties intending to be
legally bound, enter into this Settlement Agreement as follows:

	1.	 	Within one business day after the Settlement Date, USEC will pay DOE the
amount of thirty-three million, two hundred thousand dollars ($33,200,000)
by electronic funds transfer in immediately available funds to an account
identified by DOE. Said monies shall by used to fund DOE’s obligations
under the Settlement Agreement between DOE and OVEC.

	2.	 	Subject to paragraphs 10 and 11 below, upon receipt by DOE of the payment
required under Paragraph 1 above, DOE releases USEC, its officers, board
members, shareholders, agents, and employees, from all liabilities,
obligations and claims arising from or relating to USEC’s obligation to
provide the budgetary resources for costs under Article III of the Power
MOA for its pro rata share of post-retirement benefit obligations under
Section 6.04 of the OVEC Power Purchase Agreement and decommissioning,
shutdown, demolition and closing costs pursuant to Section 6.09 of the
OVEC Power Purchase Agreement.

	3.	 	Upon receipt by OVEC of the payment required under the Settlement
Agreement between DOE and OVEC, USEC releases DOE, its contractors,
employees, and agents, from all liabilities, obligations and claims
arising from or relating to DOE’s obligation for costs associated with
Articles III.3.b. and c. of the Power MOA.

	4.	 	DOE and USEC each represent and warrant to the other Party that:

	 	a.	 	All requisite corporate or governmental power and authority
to execute, deliver and perform its obligations hereunder has been
obtained;

	 	b.	 	The execution, delivery and performance by it of its
obligations hereunder have been duly authorized by all necessary
corporate or governmental action;

	 	c.	 	This Settlement Agreement has been duly executed by an
authorized representative and so delivered and constitutes a legal,
valid and binding obligation, enforceable in accordance with its
terms;

	 	d.	 	The execution, delivery and performance of its obligations
hereunder does not require any consent or approval of any person or
entity (including any governmental body or agency) which has not
been obtained and each such consent or approval that has been
obtained has not been modified and is in full force and effect; and

	 	e.	 	The execution, delivery and performance of its obligations
hereunder do not conflict with, result in a breach of or constitute
a default under any applicable law, any provision of its
constituting documents or governmental rules or regulations, or any
other agreement, lease or instrument to which it is a party.

	5.	 	DOE shall cooperate with USEC and USEC with DOE (including taking all
action reasonably requested by USEC or DOE) in making filings with any
regulatory or other governmental authority that may be required to
implement any term or condition of this Settlement Agreement, as well as
executing any documents necessary to confirm the rights and obligations of
the Parties under this Settlement Agreement.

 

 

	6.	 	This Settlement Agreement may be executed in counterparts. Each shall be
deemed an original, but together shall constitute one and the same
instrument.

	7.	 	This Settlement Agreement is the sole and entire agreement between the
Parties regarding the portion of DOE’s liability under Sections 6.04 and
6.09 of the OVEC Power Purchase Agreement for which USEC is obliged to
provide the budgetary resources under the Power MOA. This Settlement
Agreement may not be modified, altered or amended in any way except in
writing signed by duly authorized representatives of the Parties. The
only parties to this Settlement Agreement are DOE and USEC. This
Settlement Agreement is not enforceable by, or for the benefit of, and
shall create no obligation to, any person or entity other than the
Parties.

	8.	 	Except as expressly set forth herein, this Settlement Agreement shall not
in any way extend, amend, supplement, waive or otherwise modify the Power
MOA in any manner.

	9.	 	This Agreement pertains exclusively to the portion of DOE’s liability
under Sections 6.04 and 6.09 of the OVEC Power Purchase Agreement for
which USEC is obliged to provide the budgetary resources under the Power
MOA. The Parties expressly reserve all rights, remedies and causes of
action that the Parties may have as to matters unrelated to that issue.

	10.	 	DOE and USEC believe and anticipate that the Settlement Agreement between
DOE and OVEC settles DOE’s liability under Sections 6.04 and 6.09 of the
OVEC Power Purchase Agreement for all time. If, however, the Settlement
Agreement between DOE and OVEC is challenged by any person or entity for
any reason, the Parties agree that they will cooperate with and assist
each other in addressing any such challenge and will allocate and
apportion any alteration of DOE’s liability under Section 6.04 or Section
6.09 in accordance with the terms of the Power MOA. Except for DOE costs
associated with the administration of the Electric Power MOA pursuant to
Section 8.1 of the Lease Agreement, and subject to Sections 5.2 and 5.3 of
the Lease Agreement, each Party will bear its own costs in addressing any
such challenge.

	11.	 	In the event that OVEC terminates the Settlement Agreement between DOE
and OVEC pursuant to paragraph 10 of said Agreement, DOE and USEC agree to
terminate this Settlement Agreement and DOE agrees to return to USEC
within three business days the amount transferred by USEC to DOE under
this Agreement, the sum of thirty-three million, two hundred thousand
dollars ($33,200,000).

     IN WITNESS WHEREOF, the Parties hereto have caused this Settlement
Agreement to be duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	 	UNITED STATES DEPARTMENT

OF ENERGY
	 	 	 	 	 
	 	 	
By:
	 	/s/ J. Dale Jackson

Name: J. Dale Jackson

Title: Lease Administrator
	 	 	 	 	 
	 	 	UNITED STATES ENRICHMENT CORPORATION
	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael T. Woo

Name: Michael T. Woo

Title: Vice President, Strategic Development

3

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