ML20043F474
| ML20043F474 | |
| Person / Time | |
|---|---|
| Site: | Shoreham File:Long Island Lighting Company icon.png |
| Issue date: | 06/11/1990 |
| From: | Staffieri V LONG ISLAND LIGHTING CO. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| NUDOCS 9006150051 | |
| Download: ML20043F474 (184) | |
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LONG ISLAND LIGHTING COM AANY IKECutivE OFFICES: 175 E AST OLD COUNTRY ROAD. HICK $VILLE. NEW YORK 11001
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vtCTOft A ST AFf'IEMI OENEftAs COVNSEL o m.Ecm n u.v j
June 11, 1990 G
U.S. Nuclear Regulatory Commission Document Control Desk Washington, D.C.
20555 Attention:
Dr. Thomas E. Murley, Director Office of Nuclear Reactor Regulation Request for Determination that the Funding Method for f
Shoreham's Decommissioning Agreed to by LILCO and LIPA Provides Reasonable Assurance, or, in the Alternative, Request for an Exemption from the Decommissioning Funding Regulations Shoreham Nuclear Power Station - Unit 1 Docket No. 504B22
Dear Dr. Murley:
Long Island Lighting Company (LILCO or the company) hereby requests that the Nuclear Regulatory Commission (NRC) determine t
that availability of funds to decommission the Shoreham Nuclear Power Station (Shoreham) is reasonably assured by the funding method established by the Site Cooperation and Reimbursement Agreement between LILCO and the Long Island Power Authority (LIPA), dated January 24, 1990 (Site Agreement).
A copy of the Site Agreement, previously provided to you as Appendix D to LIPA's Decommissioning Report (tranemitted under cover of SNRC-1713 on April 16, 1990) is included as Attachment 1 to this letter.
LILCO submits for approval the funding method contained in the Site Agreement in lieu of filing the decommissioning funding report described in 10 C.F.R. $$ 50.33(k) (2) and 50.75(b).
LILCO believes that these regulations do not apply to Shoreham, t
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LONG ISLAND UGHTING COMPANY Dr. Thomas E. Murley June 11, 1990 Page 2 T e Commission held, in a decision involving the Seabrook plant,p'thatthedecommissioningrulemakingneitherconsidered nor contemplated circumstances where a licensee closes its plant prematurely, after a period of low power testing but before the facility ever operates at full power.
That decision established that the NRC's new decommissioning funding regulations do not apply to such situations.
Rather, the governing standard for them is that t' 4.
he reasonable assurance that sufficient funds will be avail. ole o n needed for safe and timely decommission-ing.
The fur ling
,chod set forth in the site Agreement provides such assurancs Under the 2989 Settlement Agreement between LILCO and New York State (pursuant to which Shoreham is to be transferred to LIPA to be decommissioned once all pertinent NRC approvals have been obtained), LILCO is responsible for providing all of the funds required for the plant's maintenance and decommissioning.
The funding mechanism contained in the Sito Agreement has recent-ly been approved by the New York State Public Service Commission (PSC), and such approval makes clear that the company will be allowed to recover the costs of decommissioning directly from its ratepayers.
Part I below describes the decommissioning funding arrange-ment set forth in the Site Agreement.
Part II discusses the Commission's Seabrook decision.
Part III elaborates on the inapplicability of the new decommissioning funding regulations to Shoreham, describing why the step-by-step process contemplated by the regulations cannot be made to apply.
Part IV assesses, in the alternative, LILCo's request for approval of the Site Agree-ment's funding arrangement against the standards for a regulatory exemption under 10 C.F.R.
S 50.12, in the event the NRC deter-mines (contrary to LILCO's view) that the decommissioning funding regulations do in fact apply to Shoreham and that such an exemp-tion is necessary.
I. The Funding Arrangement Established by LILCO and LIPA Provides Reasonable Assurance that Sufficient Funds will be Available when Needed to Cover the Costs of Decek (ggioning The LILCO-LIPA funding agreement is implemented b/ SS 3.1-3.16 of the Site Agreement, as described in LIPA's Decommission-ing Report, S 8.2.
Under this arrangement, each month.aILCO is to place into LIPA-controlled accounts those funds that LIPA Il Public Service Co. of New Hampshire (Seabrook Station, Units 1 and 2), CLI-88-10, 28 NRC 573 (1988), Detitions for recon-sideration c'enied, CLI-89-3, 29 NRC 234 (1989); CLI-89-7, 29 NRC 395 (1989).
l l
LONG esLAND WGHMNO COMO%NY Dr. Thomas E. Murley June 11, 1990 Page 3 projects it will need for " Costs Attributable to Shc. wham,"
plant.gng,specifically,costsforthedecommissionio;ofthe includ J
After initial funding on January 24, 1990 (L ed below),
the payments that LILCO makes each month will be for the expenses that LIPA is expected to incur in the third following month, resulting in an average balance in the LIPA-controlled accounts of three months' expenses.
In this way, the accounts will at all times have a cushion of money beyond any immediately anticipated cash requirements.
LILCO's monthly payments to LIPA for deposit i
in the accounts will be based upon LIPA's projections of an-l ticipated cash requirements.
Under the Site Agreement, LIPA may at any time submit revised monthly cash flow projections to LILCO, and LILCO is obligated to provide money for the LIPA-controlled accounts in accordance with the most recently provided l
cash flow projection.
The Site Agreement also provides that i
LILCO will advance LIPA an additional amount of operating or other funds if so required by any regulatory authority.
l The funding mechanism is now in place and operating.
On January 24, 1990, LILCO remitted to LIPA $4,817,777 for deposit in the LIPA-controlled accounts.
These monies were to reimburse LIPA and the New York Power Authority (NYPA), LIPA's principal technical consultant, for Shoreham-related costs incurred
' to January 1, 1990, and to pay for costs estimated to be incurred by LIPA and NYPA during the first three months of 1990.
In each subsequent month, LILCO has provided to LIPA -- and will continue to provide -- all funds that LIPA projects it will need in the third following month.
The funding mechanism set forth in the Site Agreement implements the financial arrangements established in more general terms by the Amended and Restated Asset Transfer Agreement between LILCO and LIPA, dated April 14, 1989.
A copy of the Asset Transfer Agreement, previously provided to you as Appendix l
B to LIPA's Decommissioning Report, is included as Attachment 2 to this letter.
The Asset Transfer Agreement was approved by the New York PSC on April 13, 1989.
On May 23, 1990, the PSC ap-l proved the Site Agreement, thus making clear that LILCO will be permitted to recover directly from its ratepayers the costs of decommissioning.
[
l l
" Costs Attributable to Sherchth" is defined in S 1.12 of the l
Site Agreement.
Lomo setANo uoHT1NG COMP %NY Dr. Thomas E. Murley June 11, 1990 Page 4 II. The Commission's Seabrook Ruling Indicates that the Decommissionina Fundino Reculations Do Not Acolv to Shoreham in a decision involving the Seabrook Station, owned by, among others, Public Service Company of New Hampshire (PSNH), the Commission ruled that the NRC's decommissioning funding require-ments were not intended to apply to a situation where a licensee closes its plant prematurely, after a period of low power testing but before the facility has ever operated at full power.
Public Service Co. of New Hamoshire (Seabrook Station, Units 1 and ?),
CLI-88-10, 28 NRC 573 (1988), Detitions for reconsideration denied, CLI-89-3, 29 NRC 234 (1989); CLI-89-7, 29 NRC 395 (1989).
The Commission's reasoning in reaching its decision is directly applicable here.I' The Seabrook ruling stemmed from an effort by intervenors to litigate certain issues related to PSNH's financial qualifica-tions, given its bankruptcy, to conduct low power operations.
When the NRC's new decommissioning regulations took effect on July 27, 1988, as part of its consideration of the financial qualifications issue at Seabrook the Commission announced that PSNH would have to provide reasonable assurance that adequate funds will be available so that safe decommissioning will be reasonably assured in the evont that low-power operation has occurred and a full-power license is not granted for Seabrook Unit 1.
CLI-88-10, 28 NRC at 581, cuotina CLI-88-7, 28 NRC 271, 273 (1988).
Specifically, the Commission required PSNH to provide
" adequate documentation of (its decommissioning) funding plan and appropriate' commitments under that plan to support" a reasonable assurance finding, should Seabrook undergo low power testing but then be closed prior to full power operation -- a situation that theCommissionreferredtoinitsdecisiop'asthe" hypothesized circumstances." CLI-88-10, 28 NRC at 581.
i PSNH filed a funding plan as required.
After PSNH filed, several of the Seabrook intervenors moved for reopening and l'
Part II's discussion of the inapplicability of the decommis-p sioning rule to Shoreham is confined to the rule's funding l
aspects.
l il The Commission also offered the parties to the low power L
proceeding an opportunity to move for reopening the record and to submit new contentions on the funding plan.
28 NRC at 581.
1 L.oNo esLANo unemMO COMPANY Dr. Thomas E. Murley June 11, 1990 Page 5 admission of contentions related to decommissioning. 28 NRC at 582.
Significantly, intervenors argued that the NRC's new decom-missioning regulations were applicable to the " hypothesized circumstances" and that PSNH's plan was inadequate because it failed to conform with those regulations. Idt at 584.
In re-sponse, PSNH contended that the decommissioning rule was ap-plicableonlytodeegmmissioninginthecontextofroutinefull power operation. 142 In CLI-88-10, the Commission indicated that it " agree [d]
L with (PSNH) and Staff that the decommissioning rule does not apply here," but said that it did so "for somewhat different reasons." 28 NRC at 584.
The Commission stated that the decommissioning rule was issued to ensure I
that at the conclusion of the lengthy period in which reactors would be in commercial operation there would be funds available for safe and timely decommissioning.
The hypo-i thesized circumstances addressed in CLI-88-7
-- low-power testing not followed by commer-cial operation -- were not eqDaidored or qqntemolated in the decommissionina rule-makina.
Thus the rule does not directly apply to the Commission's requirements in CLI-88-7.
Id2 (emphasis added).
The Commission went on to note that "an examination of the rule reveals that it does not ' fit' the hypo-thesized circumstances," idt at 585, for several reasons, all of j
which are directly pertinent to the situation that now exists at Shoreham.
First, the Commission stated, the rule contemplated a step-by-step decommissioning i
funding assurance process over a long period of time with an initial certification of funding, periodic updates, a preliminary decommissioning plan at or about 5 years before projected end of operations, and a The NRC Staff's view was that, since PSNH was already the holder of an NRC license (albeit only a license to load fuel), it was not required to file anything under the rule until July 26, 1990.
Therefore, the Staff argued, the Commission could not have intended PSNH to meet the requirements of the rule before that time.
28 NRC at 584.
I uomo soLANo uoHT1No COMpWWY Dr. Thomas E. Murley June 11, 1990 Page 6 decommissioning plan submitted as part of the application for licensing termination.
l 28 NRC at 585.
By contrast, the commission pointed out, the i
" hypothesized circumstances primarily present only a short-term problem, where the end of plant life is hypothesized to be only months after the initiation of operations." Idx This is as true at Shoreham as it was at Seabrook in 1988.
Second, the Commission noted that the funding certification formula which establishes the minimum sum to be rea-sonably assured before operation includes an adjustment factor for reactor power level that is based on a substantial ceriod of operation at full oower.
28 NRC at 585 (emphasis added).
This minimum certification formula, the Commission said, "has no technical relevance to a very limited low-power testing" at the Seabrook plant. 14.
Again, the commission's rationale is as true at Shoreham as at Seabrook in 1988.
Shoreham has never operated at above 5% rated power, and LILCo's calculations show that Shoreham has an operat-ing history equivalent to approximately two effective days of full power operation.
Given this limited history, a cer-tification amount for Shoreham derived from the generic formula in S 50.75(c) would likely not be meaningful.
Finally, the Commission found that it was "also significant that the rule permits accumulation of the required minimum sum over a lengthy period." 28 NRC at 585.
That provision, the Commission pointed out, "has no relevance" to Seabrook, idt, stating that (c)1early, the greatest assurance that funds would be available would be for Applicants to provide the total amount, prior to low-power testing, by one of the means authorized by the decommissioning rule (prepayment, exter-nal sinking fund, surety, (insurance), or other guarantee -- 123 10 C.F.R. S 50.75 (e) (1)).
This would obviate all of Intervenors' concerns since the money would be required to be prepaid or guaranteed by third parties.
However, the Commission be-lieves that it would be undulv onerous to reauire, for example, a totally crepaid ex-ternal account bevond Acolicant's control at this staae for so larae a sum.
Indeed, no I
LONO ISLAND WOHT1NG COMf%NY Dr. Thomas E. Murley June 11, 1990 Page 7 similar requirement has been placed on any other reactor licensee, and there are other means to provide reasonable assurance in the unique circumstances of this case.
Idx at 591 (emphasis added).F Similarly, requiring LILCO to obtain the entire amount of decommissioning funds at one time, or to obtain a line of credit or other form of surety, would be unnecessary and " unduly onerous."
The Commission in Seabrogh concluded that "the (decommis-sioning) rule cannot reasonably be construed to apply to the hypothesized circumstances here." 28 NRC at 585.
The same con-clusion applies to Shoreham:
the decommissioning rule, designed to take advantage of the long lead times generally available to commercially operating plants in order to accumulate the substan-tial decommissioning costs anticipated for them, simply does not fit the present short-notice, clean-plant circumstances.
III. The Step-by-Step Process Contemplated by the NRC's Decommissionina Fundina Reaulations Cannot be Followed at Shoreham A brief review of the NRC's new funding rules confirms the soundness of the Commission's reasoning in the Seabrook case.
Indeed, if anything, the specifics of LILCO's present situation make even more clear the correctness of the Commission's con-clusion that the new decommissioning funding rules have no prac-tical applicability to circumstances such as Shoreham's.
The "other means to provide reasonable assurance" actually adopted by the Commission included a requirement that the Sea-brook owners, including the bankrupt PSNH, fund a " separate and segregated account in the amount of $72.1 million."
28 NRC at 591.
The Commission derived the $72.1 million figure by adding together (1) the estimated cost to decommission the Seabrook plant after the expected period of low power testing, (2) the costs associated with the storage and disposal of the plant's spent fuel, and (3) a 25% contingency factor.
Id2 at 589-90.
The requirement that the Sc4hrook owners establish this external fund, the Commission stated, " removes the relevancy of any uncertainty regarding what the bankruptcy court will permit or what claims against (the plant's principal owners) might take priority as a legal matter or in time over decommissioning costs." IdA at 591.
Such considerations are, of course, not at issue at Shoreham, where the company's financial condition is sound and where the New York PSC has authorized LILCO to recover decommissioning costs from its ratepayers.
i LoNo esLAND WOHDNG COMf%NY Dr. Thomas E. Murlcy l
June 11, 1990 t
l page 8 The regulations create what is essentially a three-step t
process, the NRC's goal being that licensees obtain funds suffi-cient to complete decommissioning by the time operation of the plant is terminated.
- Egg, e.g.,
5 50.75(e) (1) (ii); 53 Fed. Reg.
24030-31 (June 27, 1988) ("(c]ombination of these (funding] steps
. will provide reasonable assurance that the Commission's objective is met, namely that at the time of permanent end of operations sufficient funds are available to decommission the facility").
The first step in the process must be taken by July 26, 1990, when, pursuant to S 50.33(k), the licensee is to submit to the NRC a report in which the licensee must indicate how reasonable assurance will be provided that funds will be avail-able to decommission the plant, using one of the funding mechan-isms specified in S 50.75(e) (1) (i)-(iii) (i.e., prepayment; peri-odic payments into an external sinking fund; or letter of credit, insurance, or other form of surety).
In this funding report, the licensee must also " certify" that funds will be available in a j
specified amount, based on a formula set forth in S 50.75(c)(1),
that takes into account such factors as plant type and size.
After submitting its funding report, the licensee must then either begin to accumulate funds to meet the certification amount or obtain a line of credit or other surety in that amount.
The second step in the process, as contemplated by the regulations, is to be taken "at or about five years prior to the l
projected end of operation" at the plant, when, under S 50.75(f),
the licensee must submit to the NRC a " preliminary decommis-sioning plan."
This plan must contain an up-to-date cost es-timate for decommissioning and, if necessary, plans for adjusting the level of funds to make up any shortfalls to ensuro that sufficient funds will be available when the plant shuts down.
The third and final step comes at the time the licensee submits an application pursuant to S 50.82 to terminate its license and decommission the facility.
At that thne the licensee must submit a final decommissioning plan, including an updated decommissioning cost estimate and, if needed, a plan to make up any funding shortfall, i
It is clear that the step-by-step process sketched above cannot be followed at Shoreham.
By the literal terms of the l
regulations, LILCO, as the holder of a full power license for l
Shoreham, would be required to submit a decommissioning funding l
report -- including certification -- by July 26, 1990.
Yet, at the same time, with the Settlement Agreement having become effec-tive on June 28, 1989, LILCO could be viewed as being within the period "at or about 5 years prior to the end of operation" speci-fled in S 50.75(f), and, therefore, required to have already submitted a preliminary decommissioning plan containing a cost estimate.
Moreover, with the Settlement Agreement to shut down
LONG DSLAND UGHT1NG COMP %NY Dr. Thomas E. Murley June 11, 1990 Page 9 Shoreham now in effect, the plant's operation is arguably at an and and, thus, under the regulations LILCO should have already obtained all of the funds necessary for decommissioning.
In short, Shoreham's situation cannot be made to fit into the three step funding sequence established by the NRC's new regulations.
Thus, the process contemplated by those regulations does not apply.
In particular, requiring LILCO to acquire funds all at once would not be in keeping with the intent of the regu-lations, which, as was noted in Seabrook, allow utilities in the typical situation the option of funding decommissioning over the entire normal commercial life of the facility.
Moreover, as was described above, LILCO and LIPA have devised -- and the New York PSC has approved -- a suitable alternative to the step-by-step funding method contemplated by the new regulations, creating in the Site Agreement a method for funding Shoreham's decommission-ing that provides reasonable assurance that adequate funds will be available when needed.
Finally, the mere fact that LILCO holds a full power operat-ing license neither undercuts the applicability of Seabrook to Shoreham nor indicates that the decommissioning rules can be followed here.
The Company's binding contractual obligation under the Settlement Agreement never to operate the plant renders the full power authorization in the license moot.
Shoreham, of course, has never been operated above 5% of its rated power.
In all significant respects, therefore, Shoreham's factual situation is indistinguishable from the " hypothesized circumstances" in positive.I'and the Commission's ruling should be considered dis-
- Seabrook, I'
The Commission in Seabrook characterized the " hypothesized circumstances" as involving " low-power testing not followed by commercial operatiort" 28 NRC at 584 (emphasis added).
In addition, the Commif4sion stated that "before full Dower commer-cial operation, (PS1H is] expected to comply with applicable provisions of the [3ecommissioning funding) rule." Ist at 585 (emphasis added).
Thus, the Commission indicated that PSNH would be required to satiafy the decommissioning regulations only at the time Seabrook went into full power commercial operation.
Similarly, the Commission's analysis in Seabrook of the funding regulations' inapplicability to the " hypothesized circumstances" clearly fecused on the practical and technical considerations involved,.ather than on the particular procedural or licensing posture in which the Seabrook plant happened to be resting at the time. IQx t
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LONO ISLAND WOHTING COW %NY Dr. Thomas E. Murley June 11, 1990 Page 10 IV. If an Exemption from the Decommissioning Funding Regulations l
Is Recuired. LILCO Has Satisfied the Standards for an Exemotion l
LILCO does not believe that it must obtain an exemption from the decommissioning funding regulations under 10 C.F.R.
S 50.12 l
before the NRC may approve the funding mechanism contained in the Site Agreement.
An exemption is necessary only in those situa-tions where a regulation in fact applies, but where special circumstances indicate that relief is justified.
In contrast, here the decommissioning funding requirements do not acolv at all to the situation that now exists at Shoreham, given the Commis-sion's reasoning in the Seabrook case.I' I'
It is true that in the case of the Fort St. Vrain nuclear plant, the NRC Staff recently stated that a exemption van neces-sary in order for Public Service Company of Colorado (PSCol), the plant's licensee, to " extend the period of decommissioning funding beyond the date of plant shutdown."
See Letter from Peter B. Erickson, NRC Project Manager, Non-Power Reactor Decom-missioning and Environmental Project Directorate, to A. Clegg Crawford, Vice President-Nuclear Operations, Public Service Company of Colorado, and attached " Request for Additional Infor-l.
mation" (Oct.
4, 1989) ("NRC Request") at 3.
Fort St. Vrain's l
situation, however, is distinguishable from Shoreham's.
Fort St.
Vrain is to be decommissioned pursuant to the SAFSTOR method, l
under which ultimate dismantlement of the plant will not begin L
until 2043.
PScol's initial proposal to fund decommissioning of I
the prematurely closed Fort St. Vrain reactor over the entire 53 year SAFSTOR period was rejected by the NRC as "not consistent with the letter and intent of the Commission's regulations."
Idz Noting, however, that "[i]t does not appear.
. that the l
Commission meant to force those licensees who cease operation I
prematurely to raise the entire amount of required decommission-ing funds at the time of shutdown," the NRC Staff did allow PSCol "some leeway in the time permitted to collect" such funds by permitting the utility to accumulate the funds over the remaining term (18 years) of Fort St. Vrain's operating license.
141 j
Nevertheless, because of the " explicit requirements of S i
50.82 (c) (1)," the Staff required PScol to file for an exemption under S 50.12..By contrast, LIPA has already indicated to the NRC that, based upon currently available data, it appears that the DECON method may be the most appropriate decommissioning alternative for Shoreham.
See Decommissioning Report, S 3.1.
Thus, S 50.82 (c) (1) -- which by its own terms applies only to
"[d]ecommissioning plans which propose an alternative that delays completion of decommissioning by including a period of storage or long-term surveillance" -- is not likely to come into play here.
l LoNG esLAND UGHMNO COM5%NY i
Dr. Thomas E. Murley June 11, 1990 Page 11 i
Nevertheless, should the NRC determine that an exemption is required before it may approve the LILCO-LIPA decommissioning funding mechanism, LILCO respectfully requests that the NRC consider this letter to be, in the alternative, an application for an exemption from the funding requirements of SS 50.33(k) and 50.75.
Specifically, LILCO requests an exemption from those provisions of the funding regulations that (1) require the lican-L see to have obtained at the time of termination of operation eitherallofthefundsneedep'fordeconmissioningorsomemethod i
of insurance or other surety; (2) specify that if funds are accumulated over time that they be maintained in an external fund segregated from licen ministrativecontrol;geeassetsandoutsidethelicensee' sad-(3) require the licensee to provide by July 26, 1990, a " decommissioning report" containing "certifi-cation" that decommissioning funds will be provided in an amount derived from the S 50.75(c)'s " table of minimum amounts;"U' and (4) require the licensee "at or about 5 years prior to the pro-jected end of operation" to submit a preliminary dec plan containing a cost estimate fer decommissioning.lpmmissioning' LILCO does not seek an exemption from the recordkeeping requirements of S i
50.75(g) and will meet those requirements pending Shoreham's transfer to LIPA.
As shown below, LILCO's request satisfies the standards for a regulatory exemption.
A. The Request Is Authorized by Law, Will Not Present an Undue Risk to the Public Health and Safety, and Is Consistent with the Common Defense and Security Applying the criteria of S 50.12(a)(1), it is evident that LILCO's request is authorized by law, will not present an undue risk to the public health and safety, and is consistent with the I
common defense and security.
(1) The ProDosed Exemotion Is Authorized by Law The request is plainly authorized by law.
Nothing in the Atomic Energy Act, 42 U.S.C.
SS 2011 31 seq., or any other sta-tute specifies the exact method by which a licensee is to provide reasonable assurance that adequate funds will be available to 2/
Sag 10 C.F.R.
S 50.75 (e) (1), (3).
E' Sag 10 C.F.R. S 50.75 (e) (1) (ii).
E' Sag 10 C.F.R.
SS 50. 33 (k) (2), 50.75(b).
E' Sag 10 C.F.R. S 50.75(f).
1
l LoNo esLANo uoHnNo cow,smNy Dr. Thomas E. Murley June 11, 1990 Page 12 decommission a nuclear faciJity.
The NRC is, of course, charged l
by the Atomic Energy Act wii.h protecting the public health and safety from radiological harards, including hazards that might be associated with inadequate er untimely decommissioning.
But nothing in the statute preclades the NRC from exercising flexibi-lity in determining whether a licensee's plans for funding decom-missioning are in fact adequate.
(2) The Proposed Exemotion Presents No Undue Risk LILCO's request will not present an undue risk to the public health and safety.
The potential " risk" at issue here is that I
funds will not be made available to decommission Shoreham in an
)
adequate or timely manner, and that any delays in decommissioning the plant resulting from this unavailability of funds will pre-sent a radiological hazard.
In no respect would the requested exemption present any such risk.
First, there are no health and safety considerations at Shoreham compelling adherence to the requirement that, at the time of termination of operation, all of the funds necessary for decommissioning (or a surety instrument) must be in place.
As has been explained, LILCO is obliged to pay all costs of decom-missioning and the New York PSC has already agreed that LILCO may recover the costs of decommissioning directly from its rate-payers.
Thus, there will not be any funding shortfall -- or any attendant delays or inadequacies in decommissioning -- at Shore-ham.
Second, the requirement that decommissioning funds be main-tained in a segregated " external" fund is simply not applicable to the present circumstances.
Rather than being accumulated over an extended period of time (as this requirement contemplates),
the monies that LILCO provides LIPA for deposit in LIPA-con-trolled 3ccounts will be continuously spent by LIPA ts it under-takes Shoreham's decommissioning.
Thus, the ultimate health and safety concern underlying the NRC's external funding requirement
-- that adequate funds will be available when needed te undertake and complete decommissioning -- will be met.
Third, as has already been noted, providing " certification" of an amount derived from the generic formula of S 50.75(c)(1) would serve no practical purpose, since such an amount may bear l
little relation to the true cost of decommissioning Shoreham, given the plant's uniquely limited operating history.
Site-specific cost estimates are permitted under the regulation, and LIPA has indicated thLt it intends to provide such an estimate in the future.
Decommissioning Report, S 8.1.
In the interim, the absence of a gen.oric " certification" will not pose an undue risk,
LONG ISLAND UGHTING COMPANY Dr. Thomas E. Murley June 11, 1990 Page 13 particularly given that LIPA is already receiving monthly in-fusiens of cash from LILCO.
Fourth, there is no need for LILCO to provide a separate
" preliminary decommissioning plan." Under the Settlement Agree-ment with New York State, LIPA is ultimately responsible for planning and carrying out Shoreham's decommissioning.
Through its Decommissioning Report, LIPA has already submitted " inform-ation consistent with the scope of a preliminary decommissioning plan, as described in 10 C.F.R.
S 50.75." Decommissioning Report, S 1.2.
LIPA has further indicated that it will be furnishing a j
decommissioning cost estimate.
Decommissioning Report, S 8.1.
(3) The Proposed Exemption Is Consistent with the Common Defense and Security The exemption request is consistent with the common defense and security.
The phrase " common defense and security," as used in S 50.12(a), refers principally to "the safeguarding of special nuclear material; the absence of foreign control over the ap-plicant; the protection of Restricted Data; and the availability of special nuclear material for defense needs." Egg Florida Power
& Licht Co. (Turkey Point Nuclear Generating Station, Units 3 and 4), 4 AEC 9, 12 (1967).
Such considerations are not at issue here.
B.
Special Circumstances Are Present that Further Suncort LILCO's Recuest Applying the criteria of $ 50.12(a) (2), at least three special circumstances are present that further support LILCO's request.
First, application of the specific requirements of the NRC's decommissioning funding regulations in Shoreham's cir-cumstances is not necessary to achieve the underlying purpose of those regulations.
Een 10 C.F.R. S 50.12 (a) (2) (ii).
In promul-gating its new decommissioning requirements, the NRC stated that its funding requirements have the narrow focus of protecting public health and safety by having in place basic minimum stan-dards for funding methods which provide rea-sonable assurance of funding for decommis-sioning in a safe and timely manner.
53 Fed. Reg. 24018, 24038 (June 27, 1988).
As already explained above, the funding mechanism developed by LILCO and LIPA and approved by the New York PSC is, given Shoreham's situation, an adequate alternative funding method that more than meets the
" basic minimum standards" of the decommissioning regulations and provides reasonable assurance.
l l
LONG soLANID UGHTING COMPANY Dr. Thomas E. Murley June 11, 1990 Paga 14 1
Second, requiring LILCO to obtain all at once the funds necessary for decommissioning would result in undue hardship and other costs to the Company that are significantly in excess of those contemplated when the decommissioning funding regulations were adopted.
Egg 10 C.F.R. S 50.12 (a) (2) (iii).
As already noted, LILCO cannot follow the step-by-step sequence established by the funding regulations, which contemplate that a licensee will have many years in which to accumulate sufficient funds for decommissioning.
Forcing LILCO to meet, without the years of lead time contemplated, the particuler provisions of the regula-tions that require a licensee to have sufficient funds on hand for decommissioning at the time plant operations are terminated could impose on the company an obligation either to obtain at one time a large sum of money or to establish a lino of credit, insurance, or other form of surety.
The costs associated with raising so much money all at once or obtaining some form of surety would be a significant burden on the Company and its ratepayers.
Sinct the New York State PSC's approval of the Site Agreement establishes the availability of such funds when needed, meeting this requirement would have no corresponding benefits.
In Eeabrook, the Cormission found that imposing such a require-ment would be " unduly onerous."
28 NRC at 591.
It would be so here as well.
Third, there are present material circumstances, not con-sidered when the funding regulations were adopted, for which it would be in the public interest to grant the exemption.
Egg 10 C.F.R. S 50.12 (a) (2) (vi).
While, in promulgating the new decom-missioning funding regulations, the NRC did take into account facilities that had perman ationsbecomingeffective,gntlyshutdownpriortothenewregul-
' the NRC apparently did not consider i
circumstances such as Shoreham's, where a plant is shut down after the effective date of the regulations but before ever operating at full power.
Indeed, the Seabrook decision, dis-cussed above, indicates the regulations were not designed to accommodate such situations.
Given this, an exemption is ap-propriate, since it would allow LILCO and LIPA to implement their contractual arrangements for the funding of Shoreham's decommis-sioning.
Again, this funding mechanism been approved by the New York State PSC, the agency ultimately responsible for determining that those arrangements are in the best interests of Long Island ratepayers.
E' See 53 Fed. Reg. 24027 (June 27, 1988), in which the NRC noted that, for such plants, "(d]etails concerning financial assurance, primarily the time period for accumulating funds not set aside during operation, would be decided on a case-by-case basis."
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LONo esLANo uonnNo coMswNy Dr. Thomas E. Murloy June 11, 1990 Page 15 In the circumstances described above, an exemption is fully justified.
If the NRC determines that an exemption is necessary, one should be granted.
V.
Conclusion LILCO respectfully requests that the NRC approve the decom-missioning funding method set forth in the site Agreement.
If an exemption from the decommissioning funding regulations is neces-sary before approval is given, such an exemption is appropriate for the reasons given above.
Should you have any questions or require further informa-tion, plesse do not hesitate to contact me.
Ve y truly yours, 91/M
/II
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Vic or taffieri General nsel Long Island Lighting company Of Counsel:
Hunton & Williams 707 East Main Street P.O.
Box 1535 Richmond, Virginia 23212 cc:
S.
Brown T. T. Martin L. Doerflein
ATTACRMENT 1 i
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SITE COOPF. RATION AND REIMBURSDENT AGREDGMT BY AND BETWEEN r
LONG ISLAND LIGHTING COMPANY i
AND LONG ISLAND POWER AUTHORITY DATED AS OF JANUARY 24, 1990 s
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t TABLE OF CONTENTS EAS.t ARTICLE I DEFINITIONS....................................
5 j
i ARTICLE II
- GENERAL PRINCIPLES.............................
15 2.1 Genera 1...............................
15 2.2 Pre-Closing...........................
15 2.3 Post-Closing..........................
17 2.4 Payment of Costs......................
19 2.5 Further Assurances.....................
20 ARTICLE III - BUDGETING AND ACCOUNTING.......................
21 3.1 Budgets..............................
21 3.2 Cash Flow Projections................
22 3.3 Cost Reimbursement Fund...............
23 3.4 LIPA Reimbursement Fund...............
26 3.5 Monthly Statements.....................
28 3.6 Fund Earnings and Disposition.........
29 3.7 Decommissioning Plan...................
30 3.8 Total Cost Estimate....................
30 3.9 LIPA Costs.............................
31 3.10 NYPA Costs.............................
34 3.11 LILCO Costs.......;...................
37 3.12 Payment of LILCO Costs................
39 3.13 Progress Reports.......................
39 3.14 Salvage and Sale of Assets............
40 3.15 Audit..................................
41 1
3,16 Additional Advances...................
41 i
ARTICLE IV
--PERSONNEL......................................
43 4.1 Pre-Closing Staffing..................
43 4.2 Post-Closing Staffing..................
43 4.3 Availability of LILCO Employees...........................
44 4.4 Supervision of Shoreham Employees...........................
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ARTICLE V
- PROPERTY, MAINTENANCE AND SERVICES.............
46
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5.1 Records...............................
46 5.2 Spare Parts...........................
46 5.3 Conveyances, Easements and Licenses to LIPA..............................
47 5.4 Easements and Licenses to LILCO........
51 5.5 Maintenance and Operation by LILCO and LIPA.......................
54 5.6 Provision of Services by LIPA to LILCO.............................
58 5.7 Provision of Services by LILCO to LIPA..............................
60 5.8 Other Services........................
60 5.9 Service Quality and Interruptions.....
61 5.10 The Fence..............................
62 5.11 Disposition of Other Property by LILCO................................
63 5.12 Additional Costs......................
63 ARTICLE VI
- REPRESENTATIONS AND WARRANTIES OF LILCO AND LIPA.....................................
64 6.1 Representations and Warranties of LILCO................................
64 6.2 Representations and Warranties of LIPA.................................
64 ARTICLE VII - TERMINATION AND PUBLIC SERVICE COMMISSION APPROVAL.....................................
66 7.1 Termination...........................
66 7.2 Public Service Commission Approva1.............................
66 (ii)
EL2t ARTICLE VIII - RECORD AND SITE ACCESS........................
67 8.1 Genera 1...............................
67 8.2 Site Representatives..................
67 8.3 Consultation..........................
67 8.4 Records...............................
68 ARTICLE IX INDEMNITICATION...............................
69 9.1 Indemnification.......................
69 9.2 Indemnification Procedures............
69 9.3 Litigation Costs......................
70 ARTICLE X HISCELLANEOUS..................................
72 10.1 Headings..............................
72 10.2 Assignment.............................
72 10.3 Waiver................................
72 10.4 Entire Agreement; Amendment............
73 10.5 Mutual Cooperation...................
73 10.6 Force Majeure..........................
73 10.7 Exclusion of Duty to Inspect...........
74 10.8 Notices...............................
75 10.9 Specific Enforcement; Aemedies Not Exclusive.......................
76 10.10 Counterparts..........................
77-10.11 Governing Law..........................
77 10.12 Severability..........................
77 10.13 Remedies..............................
77 10.14 Third-party Beneficiary...............
78 10.15 Disputes..............................
78 10.16 Confidentiality.......................
79 10.17 Insurance.............................
81 10.1B LIPA Authority........................
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EXHIBIT A Map 1
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(iii) 1
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'l S?TE COOPERATION AND REIMBURSEMENT AGREEMENT THIS SITE COOPERATION AND REIMBURSEMENT AGREEMENT dated as of January 24, 1990, by and between Long Island Lighting Company, a New York corporation with its principal office located at 175 East Old Country Road, Hicksville, New York 11801, and Long Island Power Authority, a corporate municipal instrumental-1 ity and political subdivision of the State of New York, created pursuant to Chapter 517 of the 1986 Laws of New York, with its
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principal office located at 114 Old Country Road, Mineola, New l
York 11501.
WITNESSETH:
WHEREAS, LILCO and the State of New York have entered into a Settlement Agreement dated February 28, 1989 that provides for, among other things, the resolution of the controversy over the 809 MW Shoreham Nuclear Power Station located in Wading River, New York, and the transfer of the Assets to LIPA, which Settlement Agreement became effective June 28, 1989; and WHEREAS, the Power Authorities are contemporaneous 1y herewith executing a Management Services Agreement whereunder LIPA has retained NYPA (i) to assist LIPA in connection with the License Transfer and (ii) to provide technical and management I
services to Maintain and Decommission Shoreham; and WHEREAS, LIPA and LILCO have entered into the Asset Transfer Agreement that reflects the Settlement Agreement and provides that, among other things, LILCO and LIPA vill execute this mutually acceptable Site Cooperation and Reimbursement
Agre:mont which will provido, cmong other mattero, (i) tho terms and conditions on which (a) the Power Authorities will be provid-ed access to facilities, records and properties of LILCO neces-sary to the Shoreham-related activities of the Power Authorities, and (b) LILCO vill be provided access to such of the Assets and the Shoreham-related records and properties of the Power Authori-ties necessary to the Shoreham-related activities of LILCO, (ii) the terms and conditions on which LILCO employees assigned to Shoreham vill be made available to the Power Authorities, (iii) the specific provisions for accounting of, billing for and au-diting of, Costs A:irib.utable to Shoreham and (iv) the serv' ices LILCO, NYPA and LIPA vill be required to provide to each other to ensure a cost-efficient use of Shoreham; and l
WHEREAS, in the Asset Transfer Agreement LILCO agreed to transfer to LIPA certain designated real and personal proper-ty, contracts and Licenses at and pertaining to Shoreham which are referred to as the Assets in the Asset Transfer Agreement and this Agreement; and WHEREAS, the parties to the Asset Transfer Agreement contemplate a Closing at which time LILCO vill transfer the As-l sets, including the Licenses, to LIPA; and i
WHEREAS, consistent with the Settlement, LILCO and the Power Authorities wish to cooperate in obtaining any regula-l tory approvals required to effectuate the Settlement Agreement and the transactions that it contemplates, including the transfer 2
i of Shoreham to LIPA, tho Decommiscioning of Shorehcm os promptly as practicable and, pending such Decommissioning, the Maintenance of Shoreham; and WHEREAS, under the terms of the Settlement Agreement and the Asset Transfer Agreement, LILCO vill not operate Shoreham pursuant to any authorization to operate it that may be or has been granted by the NRC; and WHEREAS, under the terms of the Asset Transfer Agree-ment, LILCO agreed, among other things, promptly after the Set-tiement Effective Date:
to remove the fuel from Shoreham's reac-ter and deposit it in the Shoreham spent fuel pool; to apply to the NRC for a " possession only" license for Shoreham and/or other license amendments as are necessary to facilitate the License Transter; to cooperate with representatives of the Power Authori-ties on transition and personnel planning and to report to the Power Authorities matters of significance concerning the status of Shoreham; and to request, jointly with LIPA, that the NRC transfer the NRC Licenses to LIPA; and WHEREAS, on August 9, 1989, LILCO completed the transfer of Shoreham's fuel from the reactor to the spent fuel pool; and WHEREAS, LIPA has determined that it shall remove Shoreham irrevocably from service as a nuclear power generating facility and shall Decommission Shoreham; and s
WHEREAS, LIPA and LILCO havo no intention to mothbS11 Shoreham; NOW, THEREFORE, in order to carry out the transac-tions contemplated by the settlement Agreement, the Asset Trans-fer Agreement and this Agreement, and in consideration of the representations, covenants and mutual agreements herein, LILCO and LIPA agree as follows:
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t ART 3CLE !
DEFINITIONS 1.1 Acreement.
This Site Cooperation and'Reim-bursement Agreement dated as of January 24, 1990, between LILCO and LIPA.
1.2 Asset Transfer.
The transfer of the Assets to LIPA from LILCO under the terms and conditions of the Asset Transfer Agreement.
1.3 Asset Transfer Acreement.
The Amended and Restated Asset Transfer Agreement between LILCO and LIPA dated as of June 16, 1988 and amended and restated as of April 14, 1989.
1.4 Assets.
The Assets as that term is defined in the Asset Transfer Agreement.
1.5 Budoet.
The calendar year cash requirements budget for Shoreham as described in Section 3.1 hereof.
1.6 Buildino.
A building or structure noted on the Hap.
1.7 Closino.
The closing of the Asset Transfer con-templated by the Asset Transfer Agreement, at which all deliver-les-w!11 be made and' title to the Assets will be transferred.
1.8 Closina Date.
The date on which the Closing oc-curs and the Asset Transfer becomes effective.
The Closing Date vill also be the effective date of the License Transfer, i
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I 1.9 Colt Diesels.
Tho Colt Industries diesel genor-ators and related auxiliary equipment located in Building 41, l
1.10 Cost Reimbursement Fund.
The fund established, owned and managed by LIPA (and funded by LILCO) to pay all (i) j NYPA Costs and (ii) Third-party Supplier Costs; crovided, however, that LIPA Costs vill be paid not from this fund, but J
from the LIPA Reimbursement Fund.
1.11 Costs.
All costs, expenses (including fuel and plant disposal costs and expenses), losses, claims, damages, lia-bilities, interest, judgments and amounts paid in settlement, whether direct or indirect.
1.12 Costs Attributable to Shoreham.
(a) All Costs incurred by LIPA or NYPA that are attributable to the ownership, operation, possession or Maintenance of Shoreham by LILCO prior to the Closing Date, (b) all Costs incurred by LIPA or NYPA from June 16, 1988 to the Closing Date in connection with the Asset Transfer or the License Transfer, (c) all Costs incurred by LIPA or NYPA after the closing Date attributable to LIPA's or NYPA's ownership, possession, Maintenance, Decommissioning or disman-tling of Shoreham and (d) all Costs for the taxes or in-lieu-of payments on the Assets and Other Property incurred in accordance with the statutory obligations of LIPA or the Settlement Agree-ment (it being understood that LILCO has agreed to pay such Costs); provided, however, that (x) in no event vill LILCO pay any of LIPA's administrative and general Costs that are not di-rectly related to Shoreham and (y) Costs Attributable to Shoreham e
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vill not includo (A) Costs rosulting from the villful miseenduct or gross negligence of the Power Authorities as determined by a final non-appealable order or judgment of a court of competent jurisdiction or (B) Costs relating to any breach by LIPA of a
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representation, warranty or agreement under the Asset Transfer Agreement.
The categories contained in Sections 3.9 and 3.10 hereof are examples of categories of Costs Attributable to Shoreham.
In addition, other examples of Costs Attributable to Shoreham includes (a) all Costs incurred by LIPA or NYPA in con-nection with any action or contract involving the closure, Main-tenance or Decommissioning of Shoreham; (b),all costs incurred by LIPA or NYPA in connection with damages to third porties result-ing from any action of LIPA or NYPA in connection with any action or contract involving the closure, Maintenance or Decommissioning of Shoreham; and (c) all damages incurred by LIPA or NYPA in con-nection with any action or contract involving the closure, Main-tenance or Decommissioning of Shoreham; orovided, however, that, in the instance of Costs or damages incurred by NYPA, such Costs or-damages did not result from the gross negligence or villful misconduct of NYPA as determined by a final non-appealable order or judgment of a court of competent jurisdiction and provided, l
further, that, in the instance of Costs or damages incurred by i
LIPA, such Costs or damages did not result from the gross negli-gence or villful misconduct of LIPA as determined by a final non-appealable order or judgment of a court of competent juris-diction.
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l-J 1.13 Decommission. Decommissioned or Decommissionino.
The permanent closure and removal of Shoreham (as a nuclear power generating facility) safely from service and the reduction of residual radioactivity at Shoreham to a level that permits release of the Shoreham site for unrestricted use and-termination of the NRC Licenses.
Decommission, Decommis-sioned or Decommissioning includes the disposition of radioactive structurer, systems, components and material including the spent fuel, and any dismantling of the Assets that LIPA may decide to undertake.
1.14 Decommissionina Plan.
A plan prepared and filed with the NRC which will describe in detail how Shoreham vill be Decommissioned in accordance with NRC regulations, in-cluding the projected Costs and timetable.
1.15 Effective Date.
The date of execution of this Agreement.
1.16 EMD Diesels.
The Electro-Motive Division of General Motors Corporation diesel generators and related auxilia-ry equipment located in area 19 on the Map.
1.17 Fence.
The fence to be located as shown on Schedule C-1 to Exhibit C of the Asset Transfer Agreement and on the Map.
1.18 License (s).
All licenses, permits and other borrevals relating exclusively to Shoreham, to the extent trans-ferable, including those set forth in Exhibit E to the Asset Transfer Agreement. ul u y
i 1.19 License Transfer.
The transfor of Shortham's l
NRC_ Licenses from LILCO to LIPA after approval by the NRC.
The 1
. effective date of the transfer will be the Closing Date for the~
transfer of the Assets pursuant to the Asset Transfer Agreement.
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l 1.20 LILCo.
Long Island Lighting Company, a New York corporation, and, where the context permits, its directors, i
officers, employees and agents.
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1.21 LILCO Costs.
LILCO Costs are as defined in Section 3.11 hereof.
3 1.22 LIPA.
Long Island Power Authority, a corporate i
w municipal instrumentality and political subdivision of the State of New York, which was created pursuant to Chapter 517 of the i
1986 Laws of New York, and, where the context permits, its trus-tees, officers, employees and agents, but not including NYPA, un-q less explicitly identified.
1.23 LIPA Consultants.
All consultants retained by LIPA,_ including without limitation, all technical, nuclear, engi-neering,-architectural, accounting, financ'ial,. legal, administra-tive or management consultants, in connection with the Settle-ment, the Asset Transfer, the License Transfer and LIPA's ownership, possession, Maintenance or Decommissioning of Shoreham.
This term will not include NYPA, LILCO or Third-party Suppliers.
1.24 LIPA Costs.
LIPA Costs are as defined in Sec-tion 3.9 hereof.
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1.25 LIPA Reimbursement Fund.. Th3 fund OstCblishGd, owned and managed by LIPA (and funded by LILCO) to pay all LIPA Costs.
l 1.26 Maintenance, Maintain Maintained or Maintainina.
All actions to be taken by LILCO prior to the Clos-ing Date, and by the Power Authorities after the Closing Date and until the completion of Decommissioning, in order to maintain Shoreham in a safe condition pending completion of Decommis-sioning, including actions necessary to comply with regulatory requirements, 1.27 Manaaement Services Acreement.
An agreement between LIPA and NYPA dated as of January 24, 1990, under which LIPA has retained NYPA to provide technical.and management ser-t
-vices to LIPA in connection with the License Transfer, Mainte-nance and Decommissioning c. Shoreham.
1.28 Mao.
A map of Shoreham identifying the loca-tions of the Fence and Buildings, as-well as certain easements and licenses for ingress and egress by the Parties and NYPA, which Map is attached as Exhibit A hereto.
1.29 NRC.
Nuclear Regulatory Commission, including the NRC staff and any NRC adjudicatory boards or any successor j
agency thereto.
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1.30 NYPA.
Power Authority of the State of New York, doing business as the New York Power Authority, a corporate municipal instrumentality and political subdivision of the State l
of Nov York, organized and oporating pursuant-to Artic10 5, Title 1 of the New York Public Authorities Law, and, where the context permits, its trustees,' officers, employees and agents, but not including LIPA, unless explicitly identified.
1.31 NYPA Costg.
NYPA Costs are as defined in Sec-tion 3.10 hereof.
1.32 150-root Met Tower.
The ISO-foot meteorologi-cal tower located in area 303 on the Map.
l.33 Other-Property.
That property at Shoreham listed ad Other Property in Exhibit C to the Asset Transfer Agreement, as such list of property may be amended to the Closing Date, and any causes of action by LILCO against contractors and suppliers for Shoreham relating to the period before the Closing Date, title to which-vill not transfer from LILCO to LIPA.-
1.34 Partv.
LILCO or LIPA, as the case may be.
1.35 Parties.
LILCO and LIPA, collectively.
1.36 Power Authorities.
LIPA and NYPA, collective-ly.
1.37 Prime Rate.
The prime commercial lending rate of The Chase Manhattan Bank, N.A.,
or its successor, as such rate may from time to time be amended.
1.38 PES.
The Public Service Commission of the State of New York, the Department of Public Service, or an l
ind;pandent consultant roteinGd by the Public Servico Commission-or the Department of Public Service.
1.39 Security Buffer.
Those areas extending outside the exterior security fence and on either side of New Beach-Road sufficient to comply with NRC regulatory requirements.
1.40 settlement.
The resolution of outstanding is-sues relating to LILCO and the State of New York that contem-plates, among other things, the Asset Transfer.
1.41 Settlement Acreement.
Settlement Agreement LILCO Issues, dated February 28, 1989 between LILCO and the State of New York.
j 1,42 Settlement Effective Date.
June 28, 1989, the date vhen the last of the approvals required for the Settlement Agreement to become effective was Sbtained.
1,43 Shoreham.
The 809 MW Shoreham Nuclear Power Station located at Wading River, New York, which consists of (a) o the Assets, (b) the Other Property, (c) any intangible property relating to the property described in (a) or (b), and (d) any use and service rights to property of LILCO tra.1sferred or granted to LIPA under the Asset Transfer Agreement and/or'this Agreement.
1.44 Shoreham Documents.
All books and records that are reasonably necessary for the ownership, operation, posses-sion, Maintenance or Decommissioning of Shoreham, including, but not limited to, the books and records transferred at closing as described in Exhibit K of the Asset Transfer Agreement.. -
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1.45 Shoreham Emoloyees.
Tho Cmployeos of LILCO lo-cated at Shoreham assigned to the Maintenance or. Decommissioning activities.of LIPA and NYPA on and after the Closing Date.
1 1.46 Shoreham Procrams.
Computer-software programs operating on LILCO's main frame computer that are used for the operation and Maintenance of Shoreham.
1.47 Stations.
The environmental-monitoring sta-tions and the associated equipment located around Shoreham, which are required by the radiological environmental monitoring plan.
1.48 TDI Diesels.
The Transamerica Delaval, Inc, diesel generators and related auxiliary equipment located-in Building 8.
1.49 Termination Date.
The date on which this Agreement terminates' pursuant to Article VII hereof.
1.50 Third-oarty Sucolier.
Any vendor of goods or services who contracts with LIPA under NYPA's procurement manage-ment, as described.in the Management Services Agreement.
1.51 Third-carty Sucolier Costs.
The Costs Attrib-utable to Shoreham of Third-party Suppliers incurred by LIPA.
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1.52 33-Foot Het Tower.
The 33-foot meteorological tower located in area 122 on the Map.
1.53 Total Cost Estimate.
The estimate of the total cost for Maintenance and Decommissioning of Shoreham, as _
k
- doscribod'in Section'3.8 horoof, which ostimate will-identify in detail LILCO Costs and Costs Attributable to Shoreham.
1.54 I,gs.
That area, including the area within the Fence, that is included within'the exterior security fence shown on the Map.
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F-l ARTICLE II GENERAL PRINCIPLES l
2.1 General.
In recognition of the multiple trans-actions and interrelationships contemplated by the Settlement, the substantial role to be played by NYPA in the Maintenance and Decommissioning of Shoreham and the need for governmental approv-als of certain matters, including NRC approvals, LIPA and LILCO
+
agree to general principles to ensure that the transactions con-1 templated hereby are accomplished as promptly, efficiently and safely as possible, consistent with the need to comply with all governmental requirements, including those of the NRC.
2.2 Pre-Closino.
Prior to the Closing Date, LILCO-will be solely responsible for ensuring compliance with all re-quirements of the Licenses.
The Power Authorities and LILCO will work cooperatively on all matters designed to effectuate the Asset Transfer and License Transfer, including the preparation of any documents, applications and/or testimony that are to be sub-mitted to the NRC or other governmental bodies in connection therewith.
Such cooperation will include, but not be limited to, the following:
(a)
LILCO will keep the-Power Authorities apprised of all material matters related to Shoreham, including matters such as any administrative, court, political or other extrajudi-cial efforts to oppose the License Transfer or to oppose efforts by LILCO undertaken in contemplation of the License Transfer, any LILCO plans prior to License Transfer to seek relief from, or any
,a chango to, any~Licenso roquirGmsnts, any LILCO plans to reduce staffing, Maintenance or testing at Shoreham and any communica-tions or meetings 'with the NRC; (b)
To the extent permitted by the Licenses and NRC requirements and consistent with Section 4.1 hereof, LILCO will use reasonable efforts-to reduce its Costs associated with the Maintenance of Shoreham and to take actions which will reduce future Costs of the Power Authorities and LILCO related to post-Closing Maintenance and Decommissioning of Shoreham; i
(c)
The Power Authorities and LILCO will plan for the expeditious transition of ownership of Shoreham to LIPA, in-cluding, without limitation, certain arrangements regarding con-l l
tinuity of personnel as provided in Article IV hereof.
The Power Authorities and _ILCO also will designate representatives to coo-perate on transition issues occasioned by the Asset Transfer and License Transfer and personnel planning issues concerning LILCO i
employees at Shoreham; (d)
If any proceedings are convened by the NRC or L
any other governmental entity, or before any court, in connection with the Asset Transfer, the License Transfer or any License l
l amendments preceding the License Transfer, including any proceed-L ing convened by the NRC pursuant to 10 C.F.R. 552.200 - 2.206, the Power Authorities and LILCO will cooperate to ensure that, to the extent feasible, their presentation (s) will be coordinated and there is no delay in the consummation of the transactions contemplated by this Agreement and the Asset Transfer Agreement;.
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4 A
(0)
The Pow 3r AuthoritiGs and LILCO vill cooperate in the preparation of the Decommissioning Plan.
LILCO, to the extent feasible, vill provide the Power Authorities with data and resources to support the preparation of the Decommissioning Plan; and (f)
LILCO vill permit the Power Authorities rea--
sonable access to shoreham and to such other facilities, prop-erties, records and equipment of LILCO as may be necessary to en-able them to be adequately familiarized with all aspects of.
Shoreham.
LILCO vill make office space and facilities aval,lable at Shoreham for the Power Authorities' use to support this tran-sition process.
2.3 Post-C1csina.
After the Closing Date, the Power Authorities and LILCO vill cooperate to ensure that Shoreham is y
Maintained safely and that Decommissioning proceeds as promptly as practicable.
These efforts vill include, but not be limited u
to, the following:
l (a)
LILCO vill provide support to the Power Au-thorities in the Maintenance and Decommissiening of Shoreham, in-L cluding, but not limited to, providing support in preparing and obtaining approval of the Decommissioning Plan (such as by making
[
knowledgeable persons available to provide information or data l
to, or to testify before, the NRC or any other government agency) and by providing personnel knowledgeable about Shoreham to work 1
on the Maintenance and Decommissioning of Shoreham, consistent l
vith the provisions of Article IV hereof; l 9*
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(b) _ LILCO cnd th3 Pow 3r_ Auderities will coop 3rato at-the Shoreham site to' ensure _that their respective activities proceed with the.1' east interference with each others' activities.
It is recognized, however, that-an overriding requirement at all i
times will be that sufficient property and resources be.available to the Power Authorities to carry out safely, economically and expeditiously the Maintenance-and Decommissioning of Shoreham, and this Agreement will be construed and, if necessary, amended accordingly; i
t (c)
LILCO agrees-that on and after the Closing Date it will allow LIPA's authorized representatives, including t
representatives of-NYPA,'during normal business-hours to have ac-I cess to, and examine and make copies of, all books and records (as they then exist,.not requiring additional work) of LILCO relating to Shoreham which are not a part of the Assets (includ-ing, but not limited to, correspondence, memoranda, engineering drawings and calculations, procurement records, books of account l
and payroll records); this will not, however, interfere in any substantial way.with'the ongoing conduct of LILCO's businest.
i All books and records relating to Shoreham which-are not deliv-
.ered to LIPA hereunder or under the Asset Transfer Agreement will be preserved by LILCO in accordance with such prudent utility practice as LILCO would have observed had the Assets not been transferred, but, in any event, will be preserved by LILCO'at least until the completion of Decommissioning unless the Power Authorities consent in writing to the earlier destruction of any such books and records; (d)
Consistont with its own noods and objectives and with the need to assure compliance with NRC requirements and considering such f' actors as it deems relevant, LIPA will give due regard to minimizing Costs Attributable to Shoreham in the per-fettance of the activities contemplated by the Settlement: Agree-ment; (e)
In the case of any contracts or licenses which cannot be effectively assigned or transferred to LIPA pursuant to the Asset Transfer Agreement, LILCO vill enter into an appropri-ate arrangement with LIPA providing LIPA vith the benefits ~of such non-assignable contracts or non-transferrable licenses.
The l
Parties will cooperate in obtaining for LIPA benefits of such non-assignable contracts or non-transferracle licenses on terms that will reasonably minimize Losts Attributable to Shoreham; and (f)
LILCO vill inforn LIPA of any third-party in-terest in, or offer to purchase, any of the Assets or Other Prop-erty, including the nuclear fuel at Shoreham (including any such interest or offer occuring prior to the Closing Date).
l-l 2.4 Payment of Costs.
LILCO's obligation to pay all Costs Attributable to Shoreham and LILCO Costs is unconditional and not contingent on any PSC action.
All Costs Attributable to l
Shoreham vill be funded by LILCO pursuant to the provisions of Article III hereof, unless and until this Agreement terminates pursuant to Article VII hereof.
L L
l L l
' ~
n
-l!
2.5 Further Assurances.
(a) The Parties agroo to take all actions necessary and~ proper under the terms and condi-tions of this Agreement and the Asset Transfer Agreement, and 10 under applicable law or regulation, to allow each Party to make effective use of its property at Shoreham.
In case at any time before or after the Closing Date any further action is necessary and proper to carry out the purposes of this Agreement or the Asset Transfer Agreement, LILCO and LIPA vill jointly take such action, and LIPA vill use reasonable efforts to cause NYPA to so act.
LILCO vill provide LIPA and NYPA reasonable access to LILCO's offsite training facility, the use of which will not be inconsistent with LILCO's use of the facility.
(b)
Notwithstanding any provision contained here-L in, upon the Closing Dcte and until the completion of Decommis-
'sioning, LIPA vill have the right to perform any and all acts on LILCO's Shoreham property required by any order of the NRC af-facting Shoreham or to comply with the terms of the Licenses, L
with prior notice to, but without the prior approval of, LILCo.
L 1
1 1
ART 3CLE I3I l
BUDGETING AND ACCOUNTING 3.1 Budoets.
(a) _ Within 90 days after the Effec-
=
tive Date, LIPA vill provide LILCO and the PSC with a draft Bud-get for Costs Attributable to Shoreham and LILCO Costs for the 1990 calendar year, as well as any associated documents rea-sonably necessary to permit LILCO and the PSC to evaluate the draft Budget promptly.
On or before each October 1 during the term hereof, LIPA will provide LILCO and the PSC with an annual draft Budget for Costs Attributable to Shoreham and LILCO Costs for the-forthcoming calendar year, as well as any associated doc-uments reasonably necessary to permit LILCO and the PSC to evalu-ate the draft Budget promptly.
Each Budget will project monthly cash flow requirements of (i) Costs Attributable to Shoreham and (ii) LILCO Costs, and will include a schedule of planned activi-ties with a breakdown in reasonable detail of estimated' Costs as-sociated with each activity.
Prior to the Closing Date, the Bud-t get will not include a schedule of LILCO-planned activities and' LILCO will not provide to LIPA any associated documents relating to LILCO Costs.
(b)
LILCO will cooperate with LIPA and NYPA in providing data on anticipated LILCO Costs for inclusion in each draft Budget prior to its issuance and by providing monthly data on payments of LILCO Costs.
(c)
At any time a draft Budget is prepared, it vill be submitted by LIPA to LILCO and the PSC, which will have L
l -
f i
1 tho opportunity to roviow and comment uion tho droit Budget'.
LILCO and the PSC may notify LIPA and NYPA, in writing, of any questions or comments within 30 days afts, receipt of each draft Budget.
Such LILCO_ or PSC comments will be cor.sidered in good faith by the Power Authorities.
Within 30 drys of receipt of such LILCO or PSC comments, if any, LIPA, after consultation with NYPA, will adopt a final Budget and will provide that final Bud-get'to LILCO and the PSC.
The Budget will in no way limit or circumscribe LILCO's obligation to pay for all Costs Attributable to Shoreham and LILCO Costs.
(d)
At any time the Budget is amended after the adoption of the Total Cost Estimate, LIPA vill provide written notice to LILCO and the PSC that the Total Cost Estimate has not changed in excess of 20% or, alternatively, provide to LILCO and the PSC a revised Total Cost Estimate with an explanation for such revisions.
(e)
All Budgets prepared pursuant to this Agree-ment will separate (i) LILCO Costs, (ii) NYPA Costs, (iii) Third-party Supplier Costs and (iv) LIPA Costs.
3.2 Cash Flow Proiections.
(a) If for any of the three, six or nine month periods beginning January 1 and.ending March 31, June 30 or September 30, respectively, in any year, the sum of Costs Attributable to Shoreham and LILCO Costs paid in such period exceeds the cash flow projection in the Budget for that period by 20%, LIPA vill provide LILCO with a revised month-ly cash flow projection for the entire year within 45 days after
= l-the and of the applicable period.
If the revisod cash flow pro-jection for the year exceeds the cash flow projection for'such year contained in 'the adopted Budget by 20% or more, LIPA vill provide LILCO and the PSC with a draft amended Budget for the 7
current year at the time the revised cash flow projection is pro-vided.
Nothing herein shall preclude LIPA from providing revised cash flow projections to LILCO at any time.
(b)
LILCO shall remit to LIPA for deposit into the Cost Reimbursement Fund and the LIPA Reimbursement Fund pursuant to Sections 3.3 and 3.4 hereof the amount set forth in the month-ly statement provided to LILCO by LIPA pursuant to Section 3.5 hereof.
The cash flow projection for any month as set forth in such statement shall be taken from the monthly cash flow projec-tion of Costs Attributable to Shoreham most recently provided to LILCO by LIPA, including any such projection. (i) provided prior to the adoption of the 1990 Budget; (ii) contained in a draft Budget or an adopted Budget; or (iii) comprising a revised month-ly cash flow projection for a year which in the aggregate does not exceed by 20% the cash flow projection in the adopted Budget.
3.3 Cost Reimbursement Fund.
(a)
LIPA vill estab-lish the Cost Reimbursement Fund in a financial institution which is a member of the New York Clearinghouse.
Except for funds nec-essary to meet cash requirements, LIPA vill invest the funds in the Cost Reimbursement Fund in direct obligations of, or obliga-tions guaranteed by, the United States Treasury in accordance with its investment guidelines.
LIPA vill have the exclusive right to make all withdrawals from the Cost Reimbursement Fund. _.........
(b) on tho Effoctivo Date, LILCO vill romit to
-LIPA $1,831,819.08 for deposit into the Cost Reimbursement Fund i
to cover the immediate cash requirements for the payment of NYPA Costs and Third-party Supplier Costs.
Such cash requirements will include amounts sufficient for (i) payment of actual and es-timated NYPA Costs and Third-party Supplier Costs incurred to December 31, 1989, including Costs Attributable to Shoreham in-curred prior to June 16, 1988 and (ii) the projected cash flow requirements for NYPA Costs and Third-party Supplier Costs for 4
the-first three months of 1990.
As provided in Section 3.5 hereof, beginning with January 1990, LILCO will remit to LIPA for deposit in the Cost Reimbursement Fund the amount stated in the monthly statement.
The amount of remittance will be the cash flow projection for the month ending three months after the date the monthly statement is due, adjusted for the difference (wheth-er positive or negative) between (A) the sum of (1) the aggregate amounts remitted by LILCO to LIPA for deposit in the Cost Reim-bursement Fund for the period commencing with the date of first incurrence of NYPA Costs and Third-party. Supplier Costs and ending on the last day of the month prior to the date the monthly statement is due, (2) Cost Reimbursement Fund investment earnings credited for such period pursuant to Section 3.6 hereof and (3) amounts paid or credited to the Cost Reimbursement Fund for such period pursuant to Section 3.14 hereof and (B) the aggregate of disbursements from the Cost Reimbursement Fund during such pe-riod, and adjusted further for the effect of any errors, includ-ing adjustments pursuant to Section 3.15 hereof, or any dif f eronco batvaan disburscments f or the propaymont of NYPA Costs and the actual NYPA Costs noted on a monthly statement provided i
to LILCO pursuant to Section 3.5 hereof.
If a cash flow projec-tion is revised for any month for which LILCO has remitted funds to LIPA for deposit in the Cost Reimbursement Fund, the amount of-such remittance shall be adjusted to reflect the revised projec-tion.
(c)
Disbursements by LIPA from the Cost Reim-bursement Fund will be made for the sole purpose of paying for all NYPA Costs and all Third-party Supplier Costs, as provided in this Section.
Such disbursements vill be made on the authoriza-tion of a designated LIPA employee or authorized representative.
Disbursements from the Cost Reimbursement Fund will not be made for the purpose of prepaying NYPA for NYPA Costs in excess of one month.
(d)
In the event the Cost Reimbursement Fuhd'is at any time. insufficient to meet current obligations for NYPA Costs and Third-party Supplier Costs, LILCO vill, as soon as possible, remit additional monies to LIPA for deposit in the Cost Reim-bursement Fund sufficient to pay such outstanding Costs.
(e)
LILCO acknowledges that all NYPA Costs in-curred prior to June 16, 1988 as to which payment is made by LILCO on the Effective Date pursuant to Section 3.3(b)(i) hereof are Costs Attributable to Shoreham.
i 3o4 L?PA Reimbursement Fundo.
( a )-
LIPA vill OsBab-lish the LIPA Reimbursement Fund in a financial institution which is a member of the New York Clearinghouse.
Except for funds nec-essary to meet cash requirements, LIPA vill invest the funds in the LIPA Reimbursement Fund in direct obligations of, or obliga-tions guaranteed by, the United States Treasury in accordance with its inve:tment guidelines.
LIPA vill have the exclusive right to make-all withdrawals from the LIPA Reimbursement Fund.
(b)
On the Effective Date, LILCO will remit to LIPA $2,985,958.25 for deposit into the LIPA Reimbursement Fund to cover the immediate cash requirements for the payment of LIPA t
. Costs.
Such cash requirements will include amounir sufficient for (i) payment of actual and estimated LIPA Costs incurred to December 31, 1989, including Costs Attributable to Shoreham in-curred prior to June 16, 1988, and (ii) the projected cash flow
- requirements for LIPA Costs for the first three months of 1990.
As provided in Section 3.5 hereof, beginning with January 1990, LILCO will remit to LIPA for deposit in the LIPA Reimbursement Fund the amount stated in the monthly statement.
The amount of remittance will be the cash flow projection for the month ending three months after the date the monthly statement is due,'ad-justed for the difference (whether positive or negative) between (A) the sum of (1) the aggregate amounts remitted by LILCO tr
- LIPA for deposit in the LIPA Reimbursement Fund for the per.-d commencing with the date of first incurrence of LIPA Costs and i
ending on the last day of the month prior to the date the monthly statement is due and (2) LIPA Reimbursement Fund investment.
e
oornings croditod for such poriod pursusnt to Section 3.6 horoof
-and (B) the aggregate of disbursements from the LIPA Reim-bursement Fund during such period, and adjusted further for the effect of any errors, including adjustments pursuant to Section'3.15 hereof, noted on a monthly statement provided to LILCO pursuant to Section 3.5 hereof.
If a cash flow projection j
is revised for any month for which LILCO has remitted funds to LIPA for deposit in the LIPA Reimbursement Fund, the amount of such remittance shall be adjusted to reflect the revised projec-tion.
(c)
Disbursements by LIPA from the LIPA Reim-bursement Fund will be made for the sole purpose of paying all LIPA Costs, as provided in this Section.
Such disbursements will l
be made on the authorization of a designated LIPA employee or au-thorized representative.
Disbursements from the LIPA Reim-bursement Fund will not be made for the purpose of prepaying LIPA for LIPA Costs.
(d)
In the event the LIPA Reimbursement Fund-is at any time insufficient to meet current obligations for LIPA Costs, LILCO vill, as soon as possible, deposit additional monies in the-LIPA Reimbursement Fund sufficient to pay for such outstanding Costs.
(e)
LILCO acknowledges that all LIPA Costs in-curred prior to June 16, 1988 as to which payment is made by LILCO on the Effective Date pursuant to Section 3.4(b)(i) hereof are Costs Attributable to Shoreham. 1 l
l~
3.5 Monthly Statements..(a) on or b3 fore the 25th day of each month (the " current month"), LIPA vill submit to LILCO a composite statement (separately stating amounts relating to the Cost Reimbursement Fund and the LIPA Reimbursement Fund) reporting (i) the cash flow projection for the month ending three months after the current month, (ii) the total amount of dis-bursements from the Cost Reimbursement Fund and the LIPA Reim-bursement Fund made during the month preceding the current month, (iii) any amounts paid or credited to the Cost Reimbursement Fund during the month preceding the current month pursuant to Section 3.14 hereof, (iv) any earnings credited to the Cost Reim-bursement Fund-and the LIPA Reimbursement Fund during the month preceding the current month pursuant to Section 3.6 hereof, (v) any difference between disbursements for prepayments of NYPA Costs and the actual NYPA Costs, (vi) any errors in prior monthly statements submitted by LIPA to LILCO, including any adjustments pursuant to Section 3.15 hereof, and (vii) the balance in both the Cost Reimbursement Fund and the LIPA Reimbursement Fund on the last day of the month preceding the current' month.
In accor-dance'with the provisions of Sections 3.3(b) and 3.4(b) hereof, the monthly statement will instruct LILCO as to the precise amounts to be remitted to LIPA for deposit in the Cost Reim-bursement Fund and the LIPA Reimbursement Fund.
The monthly statement will indicate categories of services, materials and equipment involved and will be accompanied by supporting documen-tation.
LIPA shall cause NYPA to certify such statements re-garding payments made from the Cost Reimbursement Fund as to i
l occuracy and coiformity to this Agroomont and the Ascet Transfor Agreement'and LIPA shall make such a certification regarding' pay-ments from the LIPA Reimbursement Fund.
i (b)
Within five days after_ receipt of each monthly _
statement or on the last-business day of the current month, whichever is later,-LILCO will remit to LIPA monies for deposit in the Cost Reimbursement Fund and the LIPA Reimbursement Fund in the amounts stated in the monthly statement.
3.6 Fund Earnincs and Disposition.
(a) Earnings e
generated by investment of amounts in the Cost Reimbursement Fund and the LIPA Reimbursement Fund will be a credit against the Cost Reimbursement Fund and the LIPA Reimbursement Fund remittance and deposit obligations, as the case may be.
LIPA will provide LILCO with a report of such earnings in the monthly statement provided L
pursuant to Section 3.5 hereof.
(b)
Upon termination of this Agreement by mutual consent of the Parties pursuant.to Section 7.1 hereof, the Par-ties will agree as to the disbursement of-any amounts remaining L
in the Cost Reimbursement Fund and the LIPA Reimbursement Fund.
L (c)
Upon termination of this Agreement pursuant to Section 7.2 hereof, any amounts remaining in the Cost Reim-1 bursement Fund and the LIPA Reimbursement Fund will be trans-ferred to LILCO when the Parties agree that all Costs incurred or relating to the period prior to the Termination Date and payable through the Cost Reimbursement Fund or the LIPA Reimbursement
' Fund have been paid.
1-(0)
Prior to suomitting 3.7 Decommissionino Plan o
.a Decommissioning Plan to the NRC, LIPA vill provide LILCO and the PSC with a draft Decommissioning Plan.
LILCO and the PSC will have 45 days to submit their comments to LIPA.
The Power
. Authorities will consider in good faith all comments submitted by.
LILCO and the PSC.
LIPA will provide LILCO'and'the PSC with the Decommissioning Plan to be submitted to the NRC.
(b)
Within 60 days of approval by the NRC, LIPA will provide LILCO and the PSC with copies of the approved Decom-missioning Plan.
(c)
L!PA vill keep LJ.LCO and the PSC informed of any amendments to the Decommissioning Plan.
In the event any amendment would result in the need to amend the Budget or.any'ex-isting Total Cost Estimate, LIPA vill provide LILCO and the PSC an opportunity to comment thereon in advance of-filing the draft amendment with the NRC in accordance with the procedures set forth in Section 3.7(a) hereof.
3.8 Total Cost Estimate.
(a) On the later of the Closing Date or the date that a Decommissioning Plan is submitted to the NRC, LIPA will provide LILCO and the PSC with a draft Total-Cost Estimate.
LILCO and the PSC will have 45 days to sub-mit their comments, if any, on the draft Total Cost Estimate to LIPA.
The Power Authorities will consider all such comments in good faith.
Within 45 days of receipt of such comments, LIPA will provide an adopted Total Cost Estimate to LILCO and the PSC.
'b)
On or before each October 1 after the - --
submission of an cdoptod Total Cost Estimato to LILCO, LIPA will provide written notice to LILCO and the PSC that the Tota 1 Cost
~
Estimate has not changed in excess of 20% or, if the Total Cost n
Estimate has changed in excess of 20%, LIPA will provide LILCO u
and the-PSC with a draft-updated Total Cost Estimate.
LILCO and L
the PSC will;have 45 days to submit their comments, if any, on the draft updated Total Cost Estimate to LIPA.
The Power Author-ities will' consider all such comments in good faith.
Within 45 i
days of receipt of such comments, LIPA will provide an adopted Total' Cost Estimate to LILCO and the PSC.
4 (c)
If at any time the Total Cost Estimate changes in excess of 20%, LIPA vill provide a draft updated Total Cost Estimate to LILCO and the PSC for their comments under the proce-dures set forth in Section 3.l(c) hereof.
At the time the Total Cost Estimate is revised, LIPA will provide written notice to LILCO and the PSC that the calendar year Budget has not changed in excess of 20% or, alternatively, will provide a draft Budget to LILCO and the PSC for their comments under the procedures set forth in Section 3.l(c) hereof.
3.9 LIPA Costs.
LIPA Costs are defined as all Costs l
Attributable to Shoreham (other than NYPA Costs or Third-party L
Supplier Costs) included in, but not limited to, the following categories, whether incurred before or after the Effective Date:
l" (a)
Salary and wage compensation, including over-time work, pay for vacation, excused time and travel time for l
LIPA employees, it being understood that LIPA and LILCO will.
agree to allocato onnually, as LIPA Costs, the cost of Gmployoos
-who work less than full-time on the Shoreham-related activities contemplated by the Asset Transfer Agreement or by-this Agreement j
based on a good-faith estimate of the percentage of such employ-ees' time that relates to such Shoreham-related activities; (b)
Pension and healt.. insurance Costs, life in-surance Costs, short and long terni disability and workers' com-pensation Costs, payroll taxes and all other payroll related ben-efits, including employer contributions to deferred compensation plans, applicable to salary and wage compensation in Sectio.n 3.9(a) hereof; (c)
Costs for LIPA Consultants; (d)
Costs for travel and subsistence, communica-tiens, data processing services, printing and reproduction;
~(e)
Rent and rent-related Costs associated with any office or other space rented or used by LIPA; (f)
Costs of insurance or self-insurance not in-cluded elsewhere (including, without limitation, any premiums, required contributions or other payments made pursuant to the Price-Anderson Act);
(g)
Costs of security serv ces; (h)
Costs of storage services; __-_-____-__-__.
i e-(i). Costs of quality assurance inspections and procedures; (j)
Personnel training Costs; (k)
Damages or Costs incurred by LIPA as a result of any claim, settlement or judgment; (1)
Costs of any materials or equipment used by l
LIPA (this Section 3.9(1) is intended to include purchased or leased materials or equipment, the replacement cost of LIPA mate-rials orfequipment, and a carrying or usage charge for any LIPA-owned materials or equipment);
(m)
All Costs incurred by LIPA that are attribut-able to the ownership, possession or Maintenance of Shoreham by LILCO prior to the Closing Date; (n)
LIPA's administrative and general Costs that are directly related to Shoreham, it being understood that LIPA and.LILCO will agree to allocate annually, as LIPA Costs, an amount to cover LIPA's administrative and. general Costs (i.e.,.
rent, supplies, overhead, etc.) based on a good-faith estimate of such Costs that directly relate to the Shoreham-related activi-ties contemplated by this Agreement and the Asset Transfer Agree-ment; (o)
Any license fees, user fees or application fees; -,
(p)
Costs incurred in connection with the storage
}
and disposal of all radioactive material, including spent ~ fuel; (q)
Costs associated with services LIPA'will pro-vide as set forth in' Article V hereof; and (r)
Any other Costs incurred by LIPA, including any interest payments required to be made to NYPA under the Man-agement Services Agreenent and any interest at.the Prime Rate on unreimbursed expenses to the date payment is made, and any pay-ments required to be made by LIPA under the New York Prompt Pay.
ment Law or otherwise, u
3.10 NYPA Costs.
NYPA Costs are defined as all
^
Costs Attributable to Shoreham that are incurred by NYPA, includ-ed in, but not limited to, the following categories, whether in-curred before or after the Effective Date:
r-(a)
Salary and wage compensation, including over-
"i time work, pay for vacation, excused time and travel time for nS NYPA employees.
Such charges will be consistent with NYPA prac-tices for other employees in comparable positions and wil2 in-clude the payroll Costs of all NYPA employees assigned full '.ime and a proportionate share of charges for those NYPA employees as-signed less than full-time but who spend more than 10% of their time on Shoreham-related activities contemplated by the Asset Transfer Agreement or by this Agreement, based on a 35 hour4.050926e-4 days <br />0.00972 hours <br />5.787037e-5 weeks <br />1.33175e-5 months <br /> work week, during a bi-weekly pay period.
(The Costs for those NYPA employees who spend less than 10% of their time on
---en---m----um-m
l 1
Shoroham-relatGd activitios contcmplatGd by the Asset Transfer Agreement or by this Agreement will be recovered in the overall overhead cost char'ge as provided in Section 3.10(s) hereof, in lieu of charging time directly);
i (b)
Pension and health insurance Costs, life in-surance Costs, short and long term disability'and workers' com-pensation Costs, payroll taxes and all other payroll related ben-efits, including employer contributions to deferred compensation plans, applicable to salary and wage compensation in Sections 3.10(a) and (c) hereof.
(c)
Salary and wage compensation, including over-time work, pay for vacation, excused time and travel time for any temporary replacement personnel hired or retained by NYPA-to per-form the work of those NYPA employees who are assigned to work on the Shoreham-related activities contemplated by the Asset Trans-
'fer Agreement or by this Agreement to the extent such replacement Costs exceed the Costs of such NYPA employees and NYPA shall, to i
the maximum ev/.ent practicable, hire or retain comparably quali-fied and comparably compenceted persons to replace the NYPA em-ployees assigned as identified in this Section 3.10(c) hereof; (d)
Costs of all consultants retained by NYPA to provide technical, nuclear, engineering, legal, financial, ac-counting, architectural, administra ive or other services; (e)
Costs of any materials or equipment used by NYPA (this Section 3.10(e) is intended to include purchased or.
"e I
leosod materials or oquipment, the replacement cost of NYPA mato-rials or equipment, and a carrying or usage charge for any i
NYPA-owned materials or equipment);
(f)
Rent and rent-related Costs associated with any office or other space rented or used by NYPA; (g)
Costs for travel and subsistence, communica-i tions, dets processing services, printing and reproduction; (h)
Costs of insurance or self-insurance not in-cluded elsewhere (including, without limitation, any premiums, required contributions or other payments made pursuant to the Price-Anderson Act);
(1)
Costs of security services; (j)
Costs of storage services; (k)
Costs of quality assurance inspections and procedures; (1)
Personnel training Costs; e
(m)
Damages or Costs incurred by NYPA as a result of any claim, settlement or judgment; (n)
Any license fees, user fees or application fees; (o)
Costs incurred in connection with the storage and disposal of all radioactive material, including spent fuel;.
.s
(p)
All Costs incurred by NYPA that are attribut-able to the ownership, possession or Maintenance of Shorehe.m by LILCO prior to the cloaing Date; (q)
Costs associated with services NYPA vill pro-vide as set forth in Article V hereof; and (r)
Any other Costs incurred by NYPA, including any interest at the Prime Rate on unreimbursed expenses to the date payment is made; (s)
There vill.,be included in NYPA Costs hereunder v
on-siteandoff-sitegeneNfh,..administrativecN'rheadequalto e
three and one-half percent of all NYPA Costs, other than NYPA Costs listed in Sections 3.10(c) and 3.10(d) herein.
3.11 LILCO Costs.
LILCO Costs are all Costs in-curred by LILCO in connection with the Shoreham-related activi-ties contemplatet cr the Asset Transfer Agreement or this Agree-ment, but not including any Costs incurred by LILCO in providing funds for the Cost Reimbursement Fund and the LIPA Reimbursement Fund, and vill include, but not be limited to, the followingt (a)
Any Costs required to be paid by 1,ILCO as a condition of the Closing, including any prepayments required by the NRC to ensure prompt payment of LILCO Costs indurred citer the Closing; (b)
Salary and wage compensation, ineluding over-time work, pay for vacation, excused time and travel time;.
r (c)
Pension and h3alth insuranco Ccsts, life in-surance Costs, short and long term disability and workers' com-pensation Costs, payroll taxes and all other payroll related ben-efits, including employer contributions to deferred compensation plans, applicable to salary and wage compensation in Section 3.11(b) hereof; (d)
Costs for travel and subsistence, communica-tions, data processing services, printing and reproduction; (e)
Costs of insurance paid for directly by LILCO or self-insurance; (f)
Costs of security services; (g)
Costs of storage services; (h)
Costs of quality assurance inspections and procedures; (i)
Personnel training Costs; (j)
Costs of all consultants paid for directly by LILCO to provide technical, legal, accounting, architectural, ad-ministrative or other services; (k)
Costs of any materials and equipment used or provided by LILCO (this Section 3.11(k) is intended to include purchased or leased materials or equipment, the replacement cost of LILCO materials or equipment, and a carrying or usage charge for any LILCO-owned materials or equipment);,
L (1)
Any license fees, user fees or opplication fees; (m)
Costs associated with the services LILCO vill provide as set forth in Article V hereof; (n)
Costs to maintain the contracts and licenses described in section 2.3(e) hereof; (o)
LILCO's administrative and genovel costs that are directly related to services provided in connection with the Shoreham-related activities contemplated by the Asset Transfer Agreement or this Agreement; and (p)
Any other Costs (including carrying charges) incurred by LILCo.
3.12 Pavrent of LILCO Costs.
LILCO agrees to pay all LILCO Costs promptly and fully.
If required by any regula-tion or any government entity, including the NRC, LILCO vill pro-vide assurance (either by cash prepayment, letter of credit,.
surety bond or other method acceptable to the NRC or other gov-ernment entity) that sufficient funds vill be or are available to fund payment of LILCO Costs in connection with the Shoreham-related activities contemplated by the Asset Transfer Agreement or this Agreement.
3.13 Proaress Reports.
LIPA vill be responsible for all related cost control, record-keeping and disbursement fune-tions and will provide monthly reports of its activities at l
I Sh0reham.
Monthly r0 porting by LIPA to LILCO ond tho PSC will reflect actual expenditure / variance reporting to explain the ac-tivities' progress'and status in a mutually agreed form suffi-cient to allow an asses: ment of the degree of progress.
These reports vill be provided by LIPA not later than 30 days after the end of the month for which the reports apply.
The report of ex-
[
penditures vill be in sufficient detail to allow a comparison of actual expenditures with the Budget then in effect.
3.14 Salvace and Sale of Assets.
(a)
LIPA vill re-port to LILCO en a monthly basis (i) any revenues derived from the salvage and sale of any portion of the Assets removed from Shoreham and sold, (ii) the fair market value of any of the As-sets removed from Shoreham and used elsewhere and (iii) the pro-ceeds from any claim against a third party made by LIPA or NYPA relating to Shoreham after the License Transfer.
Any estimate of fair market value vill be made by an independent engineer or other_ qualified independent individual familiar with the value of nuclear utility property.
LIPA vill deposit any funds derived under (i) or (iii) in the Cost Reimbursement Fund where they (as well as the fair market value of any of the Assets removed from Shoreham and used elsewhere) vill be a credit against the Cost Reimbursement Fund funding obligations of LILCO.
(b)
LIPA vill review periodically its need for, and the usefulness of, the Assets for its activities.
LIPA vill be solely responsible for determining its need for or the useful-ness of the Assets for its activities.
LIPA vill use reasonable -- -
t offerts to maximize tho not roturn on any partions of the Assots that are no longer needed or useful for such activities and that LIPA decides to sell.
3.15 Audit.
LILCO, NYPA and LIPA vill each be sub-ject to audit by a nationally recognized accounting firm or an-other firm mutually agreed to by LILCO and the Power Authorities, during normal business hours and subject to conditions that are consistent with the conduct by NYPA, LIPA and LILCO of their reg-ular business affairs and responsibilities, upon reasonable ad-vance notice, provided that such audits vill occur no more fre-quently than yearly, and provided further that the scope of such audits will be such as to ensure that Costs incurred and/or billed, and monies paid, are, in fact, Costs Attributable to Shoreham or LILCO Costs, as the case may be, in accordance with the terms of this Agreement.
Any adjustment for errors or omis-siens disclosed by any audit permitted by this Section vill be applied to future payments to, or withdrawals from, the Cost Re-imbursement Fund or LIPA Reimbursement Fund, as the case may be, or appropriate LILCO adjustments, l
3.16 Additional Advances.
(a)
In addition to LILCO's obligations to fund the Cost Reimbursement Fund and the LIPA Reimbursement Fund, LILCO vill advance LIPA an amount of op-erating or other funds if such funds are required to be advanced by any regulatory authority having jurisdiction over Shoreham or if LILCO and LIPA agree that such funds should be advanced.
I
! 1 e
.,---_m
1 (b)
LILCO and LIPA recognito that, in order to t
gain NRC approval of the License Transfer and the Decommissioning Plan, LIPA must demonstrate its financial qualifications and the adequacy and timeliness of funding for the Maintenance and Decom-missioning of Shoreham.
If at any time further assurances beyond those set forth in this Agreement are reasonably necessary with respect to LIPA's financial qualifiestions or the method or timing of payment by LILCO of Costs Attributable to Shoreham 1
and/or LILCO Costs in order to obtain prompt NRC approval of the License Transfer or the Decommissioning Plan, LILCO and LIPA vill negotiate in good feith'as to how such further assurances v111 be provided by LILCO (such as by prepayments beyond the amounts de-scribed in this Article Ill, letters of credit, or other means).
l ARTICLE IV PERSONNEL
+
4.1 Pre-Closinc Staffino.
Prior to the Closing Date. LILCO vill be responsible for determining the staffing re-
{
quirements for Shoreham.
Consistent with the requirements of the Licenses, LILCO vill use its best efforts to maintain such number of employees at Shoreham as to allow Shoreham to be Maintained in a safe and economical manner and, to the extent consistent with the foregoing and LIPA's and NYPA's staffing requirements for the Haintenance and Decommissioning of Shoreham, LILCO vill use rea-sonable efforts to reduce the number of Shoreham staff.
4.2 Post-Closino Staffinc.
(a)
On and after the Closing Date, LIPA, in consultation with NYPA, vill have the re-sponsibility for determining the itaffing requirements for Shoreham and, except as provided !; Section 4.2(b) hereof, for obtaining personnel to meet such staffing needs.
Upon request from LIPA, LILCO vill use its best efforts, consistent with its own needs and objectives giving due regard to minimizing Costs Attributable to Shoreham, to make available its employees to sat-isfy the staffing needs of LIPA at Shoreham.
Shoreham Employees will be treated by LILCO on an equal basis with all other LILCO Jmployees.
(b)
LIPA vill attempt to satisfy Shoreham's staffing requirements through the use of LILCO employees prior to retaining other personnel, except to the extent that LIPA Consul-tants, LIPA employees or NYPA employees are assigned to Shoreham.
1 _ _.
I Th0 P0ver Authoritios, h;vever, may occ0pt or r0 ject assignment of LILCO employees as Shoreham Employees in their sole discre-tion.
4.3 Availability of LILCO Employees.
(a)
At least 60 days prior to the Closing Date, LILCo will identify to the Power Authorities each person employed by LILCO vho is then as-i signed to work at Shoreham.
LILCO vill identify and describe the Shoreham-related job (s) held by each such person.
LILCO vill l
also make available for review by the Power Authorities, on the same schedule, the resume of each such individual.
(b)
Prior to the Closing Date, LIPA vill cause NYPA to establish a staffing plan for Maintaining and Decommis-sioning Shoreham.
LILCO employees then assigned to Shoreham vill be allowed, during normal business hours, to discuss with NYPA continued employment at Shoreham.
LIPA vill cause NYPA to indi-cate to LILCO which of LILCO's employees then assigned to i
Shoreham are necessary for the Maintenance and Decommissioning of Shoreham and to request that those employees be assigned to work I
as Shoreham Employees.
LILCO vill consider NYPA's request in good faith, t
(c)
On and after the Closing Date, LILCO vill use its best efforts to make available those of its employees whom NYPA selects for its activities at Shorehamt provided, however, that LILCO may assign or transfer certain of such employees else-where in its system, consistent with its own needs and objectives giving due regard to minimizing Costs Attributable to Shoreham.
(d)
LIPA vill cause NYPA to notify LILCO at least 90 days prior to any significant reduction in staffing levels of Shoreham Employees.
4.4 Suoervision of Shoreham Emploveel.
Shoreham Em-ployees vill be under the supervision of NYPA, but vill remain employees of LILCO which vill be responsible for all their direct and indirect Costs and expenses such as wages, salaries and bene-fits.
LILCO vill have sole responsibility for labor relations with respect to Shoreham Employees.
l t
l l l l
ART 2CLE V PROPERTY, MAINTENANCE AND SERVICES 5.1 Records.
(a) At the Closing, LILCO vill provide to LIPA copies of the !horeham Documents.
LILCO vill provide to LIPA the listing of the Shoreham Documents as it is then main-tained by LILCO.
Where avullable, LILCO vill provide LIPA with sepias of full size drawings.
Where LILCO provides LIPA with original Shoreham Documents, LIPA vill provide reasonable access to such documents to LILCO.
LIPA vill be responsible for updating records and documents on and after the Closing Date.
(b)
Prior to and after the Closing Date, LILCO, to assist LIPA in connection with the License Transfer and the Main-tenance and Decommissioning of Shoreham, vill use its best ef-forts, consistent with the provisions of Article IV hereof, to make its employees and/or representatives knowledgeable about the Shoreham Documents available during normal business hours and at other reasonable times, to explain the contents and organization of the Shoreham Documents.
5.2 Soare Parts.
LILCO agrees that on and after the Closing Date, it will provide the Power Authorities with spare parts (and available related documentation) on an as-needed and if-available basis for use in the Maintenance or Decommissioning of Shoreham.
On the Closing Date, and at reasonable intervals thereafter, LILCO vill provide the Power Authorities with a cata-logue of LILCO's spare parts, as such catalogue is maintained by LILCO in the normal course of its business. '
5.3 Conveyances. Easements and Licenses to LIPA.
LILCO agrees that on and after the Closing Date it will convey to LIPA, for the benefit of LIPA and NYPA:
(a)
New Beach Road.
LILCO vill grant to LIPA an easement along New Beach Road for access to Shoreham and an ease-ment for the use of the North parking lot for parking and for ac-cess to, and use of, structures and equipment within the North parking lot.
(b)
Well Water Pumo Houses.
LILCO vill grant to LIPA a license for ingress and egress across LILCO property to and from the well water pump nouses (Buildings 302) and for ac-cess to the well water pump houses across LILCO property for electric supply end pipes; 1
(c)
Switchyard "E"
Field.
For so long as the 138 kv switchyard "E" field (intruder detection system) is a part of the Shoreham security plan filed with the NRC, LILCO will grant to LIPA a 'icense for ingress and egress across LILCO property to and from the 138 kv switchyard to test and maintain the switch-yard "E" field; (d) 33-Ecot Met Tower.
LILCO vill grant to LIPA a license for the use of the 33-Foot Met Tower.
LILCO vill grant L
LIPA a license for' ingress and egress across LILCO property to and from the 33-Foot Met Tower and for access to the 33-Foot Met L
Tower across LILCO property for power and signal cables; -.
(0)
Yard Lichtino.
LILCO vill grant to LIPA a li-cense for ingress and egress across LILCO property to the Yard lighting system fo'r maintenance of the Yard lighting system; (f)
ISO-Foot Met Tower.
LILCO vill grant to LIPA a license for the use of the 150-Foot Het Tower.
LILCO vill grant LIPA a license for ingress and egress across LILCO property to and from the ISO-Foot Met Tower and for access to the 150-Foot Met-Tower across LILCO property for power and signal cables; (g)
Boat Ramo.
LILCO vill grant to LIPA a license for ingress and egress across LILCO property to and from the boat ramp (Building 133) and for use of the boat ramp for environ-mental monitoring and other uses consistent with this Agreement; (h)
Diesel Oil Till Station.
LILCO vill convey to LIPA the oil pipe running from the diesel oil tanks fill station (Building 34) in a direct line to the diesel oil tanks (Building 25).
LILCO vill grant to LIPA an easement for such pipe on LILCO's property.
LILCO vill grant to LIPA a license for ingress and egress to and from the diesel fuel oil tanks fill station.
Oil delivery trucks vill use roadways located on the vest side of the Fence; (i)
Fish Retention Pool Return Ling.
LILCO vill convey.to LIPA the fish retention pool return line (coordinate L3 on the Map).
LILCO vill grant to LIPA an easement across LILCO's property for the return line at its present location and a 11-cense for ingress and egress to and from the line over LILCO's property to operate and maintain the line; - -.
(j)
Storm Drain Sys9em.
L2LCO vill convoy to LfPA the storm drain system.
LILCO vill grant to LIPA an easement across LILCO's pro'perty for the storm drain system at its present location and a license for ingress and egress to and from the storm drain system over LILCO's property to maintain the storm drain system; (k)
Outflev Pice.
LILCO vill convey to LIPA the outflow pipe and the outflow pipe valve house (Building 141).
LILCO vill grant to LIPA an easement across LILCO's property for the outflow pipe at its present location; (1)
Monuments.
LILCO vill grant to LIPA a license for ingress and egress over LILCO's property to and from the sur-vey and settlement monuments to examine these monuments; (m)
Environmental Monitorina Stations.
LILCO vill convey to LIPA the Stations owned by LILCO.
For Stations owned by third parties, upon request, LILCO vill assign all assignable rights to LIPA or vill assist LIPA in obtaining rights to such l
Stations.
LILCO vill grant to LIPA an easement on LILCO's prop-erty for the owned Stations and a license for ingress and egress to and from such Stations across LILCO property to operate and maintain such Stations.
Any Stations located within LILCO's substations will, upon request by LILCO, be removed and relocated by a cooperative effort of LILCO and the Power Authorities and in a manner consistent with NRC requirements; 1..
(n)
Ex1ernal Telephone Sys9em.
L3LCO vi31 grant LIPA a license for unrestricted use of the external telephone system as is necessary for the Maintenance and Decommissioning of Shoreham; (o)
LILCO Not to Revrke.
The conveyances, 11-censes and easements granted to LIPA by LILCO under this Article are intended to support LIPA's Maintenance and Decommissioning of Shoreham.
Without the prior written approval of LIPA, LILCO will not revoke or otherwise take any action that would impede, re-strict or terminate the rights of access or use granted by such conveyances, licenses and easements until the Parties agree that the activity or activities supported by the respective convoy-ance, license or easement has or have been concluded; (p)
Additional Temocrary Access or Use.
The Main-tenance and Decommissioning of Shoreh3m may require additional temporary a' ss to, or the temporary placement of equipment, structures and materials on, LILCO's property at Shoreham that is not transferred to LIPA.
Under such circumstances, LIPA will re-quest LILCO to grant appropriate licenses and easements to meet LIPA's Maintenance and Decommissioning requirements, approval of which will not be unreasonably withheld by LILCO; and (q)
Additional Conveyances, Easements or Licenses.
LILCO will grant additional conveyances, easements or licenses for ingress and egress to the Assets over the Other Property as are necessary for LIPA's or NYPA's ownership, possession, Mainte-nance or Decommissioning of Shoreham.
Such access will be --
ccnsistent with the purposes of this Agrocmont Ond the Asset Transfer Agreement and exercised in a manner that fairly balances i
the respective business objectives of LILCO and LIPA.
5.4 Easements and Licenses to LILCO.
LIPA agrees that on and after the Closing Date it will convey to LILCO:
I (a)
Reserve Station Suceiv Transformer (69kv).
LILCO vill own the reserve station supply transformer.
LIPA vill grant to LILCO an easement for the reserve station supply trans-former (Building 18) at its present location within the Fence.
LIPA vill grant to LILCO a license across LIPA property for in-gress and egress to and from the reserve station supply trans-former for maintenance of such transformer; (b) 13B KV Facilit es.
The 138 kv (overhead) fa-i cilities will be owned as follows:
(i) LIPA vill own the 138 kv j
facilities from the plant up to, but not including, the manual disconnect 1339 (coordinate M5 on the Map); and (ii) LILCO vill own the remainder of the 138 kv facilities, including the manual disconnect 1339.
LIPA vill grant to LILCO an easement for the 138 ks facilities owned by LILCO within the Fence at their pres-ent location.
LIPA vill grant to LILCO a license for ingress and egress to and from the 138 kv facilities owned by LILCO and lo-cated within the Fence for maintenance of such 139 kv facilities; (c)
Telephone System.
LILCO vill own the entire external telephone system.
LIPA vill grant to LILCO an easement for the external telephone system at its present location on LIPA t,
prcp]rty.
LIPA vill grCnt to LILCO a liconso for 'ngrGss and egress across LIPA property to and from the external telephone system for repair and maintenance of the external telephone sys-i temt (d)
Other Property.
LIPA vill grant to LILCO an easement for LILCO's Other Property at its present location with-in the Fence or such other location within the rence, as approved by LIPA.
LIPA vill grant to LILCO a license for ingress and egress to and from this Other Property for maintenance of the Other Property so long as such maintenance does not unreasonably interfere 'rith the activities of the Power Authorities.
LILCO vill neit).er remove nor otherwise af f ect OthMr Property (i) ex-cept afte consulting with the Power Authoritics and giving due considera : ion to minimizing Costs Attributable to Shoreha;a or (ii) if inconsistent with an NRC-approved Decommissioning Plan.
LILCO-will not move any Other Property to another location within the Fence without the prior approval of LIPA, which approval vill not be unreasonably withheld.
Notvithstanding the foregoing, if LIPA determines that any of the Other Property within the Fence should be moved in order to proceed efficiently with the Mainte-nance or Decommissioning of Shoreham, LIPA shall provide written notification to LILCO that such Other Property must be relocated.
LILCO, as soon as practicable thereafter, vill initiate efforts to move such Other Property to a lecttion within the Fence agreed to by LIPA or to a location outside the Fence.
In the event LILCO fails to initiate such efforts in a timely manner or fails to make reasonable progress in the relocation of such Other -
Prcperty, LIPA may rcmovo such Othor Prop 3rty to another location inside the Fence or to a location outside the Fence agreed to by LILCO; (e)
Access to Office and Service Buildina.
LIPA vill grant to LILCO a permanent easement providing LILCO access through the Security Building (Building 4) and over the Assets fer access to the Office and Service Building Annex (Building 6);
(f)
Movement or Removal of Other Property.
In such cases where Other Property is to be moved or removed, LIPA vill grant to LILCO a license to use the overhead crane, lifting rigs, elevators and such other equipment within the Fence useful for the movement of people and property, for the purpose of mov-ing or removing Other Property, so long as LILCO's use of such equipment does not unreasonably interfere with the activities of the Power Authorities.
Such use of equipment and movement of Other Property will be conducted with due regard for safety.
l After moving or removing the Other Property, LILCO vill leave LIPA's property in a safe and orderly condition; and l
(g)
LIPA Not to Revoke.
'.he conveyances, licenses l
I and easements granted to LILCO by LIPA under this Article are in-i tended to support LILCO's activities at Shoreham.
Without the prior written approval of LILCO, LIPA vill not revoke or other-vise take any action that would impede, restrict or terminate the licenses and rights of access or use granted by such conveyances, easements until the Parties agree that the activity or activities supported by the respective conveyance, license or easement has or have been concluded.
1 1
a 5.5 Maintenance and operation by Litco and L2 pao (a)
Separately-Ovned Property.
Each Party will maintain and operate their respective separately-owned property, except that LIPA vill (i) maintain and operate Yard lighting (subject to the provisions of section 5.8(a)) and (ii) maintain the North parking lot and maintain and operate the lighting, other equipment and facilities that run through that parking lot; (b)
Jointiv-ovned or Used Systems.
With respect to systems owned jointly or used jointly by LILCO and LIPA, the Parties agree as follows:
(i)
Fire Protection.
The plant fire pro-tection system, including hydrants, is located inside and outside the Fence.
Each Party will maintain that portion of the system within its property to a level that allows water to be delivered to any part of the system at current volumes and pressure.
Each Party will notify the other Party, as far in advance as is rea-sonable under the circumstances, if maintenance is scheduled or damage to the system occurs that would prevent water from being delivered to the other Party as required above.
Existing system branch feeds vill be maintained by the respective Party until such time as the Parties agree otherwise; (ii)
Internal Lichtino.
The internal lighting system (i.e.,
lighting within Buildings) is located in-side and outside the Fence.
LIPA vill maintain and operate all internal lighting within the Fence.
Internal lighting outside. - -.
th3 Fenco vill be mSintain3d by LlLCO.
E3ch Party will givo no-tice to the other Party, as far in advance as is reasonable under the circumstances, when such maintenance would interrupt or im-pair internal lighting of the other Party; (iii)
Communications.
The intra-plant com-munication system (Gaitronics R-51) vill be used jointly by the Parties.
Each Party will maintain that portion of the system lo-cated within its respective property.
The system vill be main-tained operable at all times; any shutdown for maintenance con-templated by a Party must be approved by the other Party at least 48-hours in advance of the shutdown; (iv)
Computer Hardware and Software.
The Shoreham Programs were prepared for use with, and operate on, LILCo's main frame computer.
Since the Shoreham Programs are not compatible for use directly with other computer tystems:
(A)
LILCO vill retain ownership of all software, documentation, job control language, procedures, data and load modules associated with the Shoreham Programs; (B)
LILCO vill provide the Power Au-thorities with five computer terminals for access to the Shoreham Programs and vill permit the Power Authorities to utilize the Shoreham Programs for the Maintenance and Decommissioning of Shoreham.
Access to the Shoreham Programs will be given the same priority as applied at the Effective Date; l
~.
(C)
LILCO may transfor to magnotic cartridge such software, documentation, job control language, procedures, data and load modules for those Shoreham Programs (i) that the Power Authorities have not actually used for a peri-od of 30 days or (ii) if LILCO needs to create additional on-line storage to accommodate other LILCO programs necessary to support LILCO's business objectives.
LILCO will give the Power Authori-ties 30 days prior notice of such transfer.
Subsequent to such transfer, LILCO will cease maintaining such Shoreham Programs.
LIPA may request that such Shoreham Programs not be transferred or, if transferred, be reloaded, if necessary for the Maintenance and Decommissioning of Shoreham.
LILCO will consider such re-quests in good faith, consistent with its own needs and objec-tives giving due regard to minimizing costs Attributable to Shoreham; (D)
The Power Authorities may request modifications or revisions to exi!
'o Shoreham Programs or the creation of new Shoreham Programs to u ort the Maintenance and Decommissioning of Shoreham.
LILCO will consider such requests in good faith, consistent with its own needs and objectives giv-ing due regard to minimizing Costs Attributable to Shoreham; (E)
Upon request of the Power Author-ities, LILCO vill use its best ef forts to provide the Power Au-thorities with reasonable access to any available computer software relating to the Maintenance, Decommissioning or op-eration of Shoreham capable of being driven on computer hardware other than LILCO's mainframe computer; and (v)
Telechones.
The oxtornc1 telephono system vill be used jointly by the. Parties.
LILCO vill maintain and repair all portions of the external telephone system whether located within or outside the Fence.
The external telephone sys-tem will be maintained in an operable condition at all times.
If LILCO contemplates a shutdown for maintenance, it will coordinate the timing and duration of such shutdown with LIPA.
If rea-sonably necessary to the conduct of their operations at Shoreham, either Party may add its own external telephone system and access for such system vill be provided across the property of the other Party so as to minimize the cost of such additional external telephone system.
LILCO vill make reasonable routine modifica-tions for LIPA, as necessary, at LIPA's request.
The Parties will develop procedures for the joint use of the external tele-phone system which will include such appropriate enforcement pro-cedures so as to curb abusive practices; (c)
The Parties vill conduct their maintenance and operation obligations under this Article V in accordance with NRC regulations, to the extent such regulations are applicable.
To the extent that such regulations are not, or cease to be, appli-cable, the Parties will conduct their maintenance and operation obligations in accordance with customary industry practice and in a mutually agreeable manner; and (d)
To the extent required by NRC regulations, the Parties vill cooperate to develop procedures describing their re-spective responsibilities concerning the maintenance and operation of jointly-owned or used systems or facilities.
l' 5.6 Provision of Services by LIPA to L2LCoo (a) Wel) Water.
LIPA vill provide LILCO with well water from the well-water pump houses (Buildings 302) at present volumes and pressures until such time as an alternative supply of water is established by LILCO.
This vill include an adequate supply of water for the fire protection systems and water to and sever ser-vices from the Office and Service Building Annex (Building 6),
the existing construction buildings, the maintenance shop (Build-ing 29), the secondary Access Building (Building 32), the ware-houses (Buildings 101-107) and to such other Buildings or loca-tions as are related to LILCO's use of its property; (b)
Coolino Water.
LIPA vill provide LILCO with cooling water inflow and outflow to the Colt siesels (Building
- 41) in sufficient quantities for the normal operation of such diesel generators; (c)
Sever Services.
LIPA vill maintain the sever and sanitary disposal facilities as presently exist within the Fence and provide LILCO vith sever and sanitary disposal through such facilities as is required by LILCO.
These services will in-clude sever and sanitary disposal from the Office and Service Building Annex (Building 6), the maintenance shop (Building 29),
the Secondary Access Building (Building 32) and from such other Buildings or locations as are related to LILCO's use of its prop-erty consistent with the sever and sanitary disposal facilities' designed capacity;,
(d)
Electricity.
LIPA vill p3rmit the flov of
]
electricity (AC) for LILCo's needs through existing power' cables owned by LIPA, in'the following Buildings and areas:
(i) the Of-fice and Service Building Annex (Building 6); (ii) the mainte-nance shop (Building 29); (iii) the Secondary Access Building (Building 32); (iv) the varehouses (Buildings 101 to 107);
(v) the Colt. Diesels Building (and DC electricity for signal pur-poses); (vi) the Yard; and (vii) to such other Buildings or loca-tions identified by LILCO to LIPA as are related to LILCO's use of its property; (e)
Auxiliary Pover.
LIPA vill permit the flow of auxiliary power through existing power cables owned by LIPA for the following equipment:
(i) the four 24 MW EMD Diesels; (ii) the main generator step-up transformers; (iii) the reserve sta-tion supply transformer; and (iv) the 50 MW gas turbine (4 kv Bus No. II, breaker 11-1A);
(f)
Heatine, Ventilation, Air Conditioninc and Compressed Air.
LIPA vill provide LILCO with heating, ventila-tion, air conditioning and compressed air to the Office and Ser-vice Building Annex in such amounts as woul+ be considered normal under the circumstances to the extent permitted by the existing l
design of the systems; and (g)
Switchina.
LIPA vill perform switching of the l
138 kv (overhead) facilities in accordance with LILCO's operating practices, at the request and direction of the LILCO system oper-ator. l
i 5.7 Provision of Services by LILCO to LIPA.
(a) Water.
LILCO vill provide LIPA with sea water through the intake canal in such quantities as are necessary for
.LIPA's compliance with the License.
To that end, LIPA may re-quest, and LILCO will provide, dredging of the intake canal in accordance with prudent utility practice, or to comply with an NRC order or the terms of the License; (b)
E ). e c t r i c i t y.
LILCO will provide LIPA with electric power over existing transmission, distribution and asso-ciated facilities necessary for the Maintenance and Decommis-sioning of Shoreham; and (c)
Telechone Service.
LILCO will provide LIPA with external telephone service for the Maintenance and Decommis-sioning of Shoreham, consistent with the provisions of Section 5.5(b)(v) hereof.
5.8 Other Services.
(a)
Lichting.
(i)
The Power Authorities may periodically, at reasonable intervals, survey the l
Yard area outside the Fence to determine if the Yard lighting is in compliance with then-existing NRC regulations.
Upon request by LILCO, LIPA will give LILCO a schedule of su:h surveys so that LILCO representatives may participate.
If any lighting problems are found to exist outside the Fence, the Power Authorities will notify LILCO of the problem and of the recommended change or rem-edy.
LILCO vill correct the lighting problem within 48 hours5.555556e-4 days <br />0.0133 hours <br />7.936508e-5 weeks <br />1.8264e-5 months <br />, or at LILCO's request, the Power Authorities will take such action l..
as the Power Authoritios beliove, in their rocsoncblo judgment, vill correct the problem.
Unless done pursuant to an NRC order or in accordance v'ith the preceding sentence, no change to the existing lighting system vill be undertaken without the prior consent of both Parties; and (ii)
LIPA vill maintain all lighting in the North parking lot and along New Beach Road; (b)
Securitv.
Any security stations located along the outside security fence vill be manned by LILCO, and LILCO vill determine if such security stations should continue to be manned, except that LIPA vill make such de'.erminations to the ex-tent of NRC requirements.
Security stations located along or in-side the Fence vill be manned by LIPA; (c)
Security Buffer.
LIPA vill maintain (includ-ing cutting the grass and maintaining security systems in good working condition) the Security Buffer in compliance with then existing NRC regulations until such regulations are no longer ap-plicable; and (d)
Electrical Connections.
The electrical con-nections between the plant (normal 4 kv switchgear) and the EMD Diesels will be maintained by LILCO.
5.9 Service Ouality and Interruptions.
(a)
The Parties will use their best efforts to assure that services pro-vided by one Party to the other Party pursuant to Sections 5.6, 5.7 or 5.8 hereof vill be available at all reasonable times and.
m
in quantitics et 1 cast.ns grcat cs spacificd horoin.
The providing Party will notify and obtain the approval of the other Party of any sched~uled suspension of services for periodic main-tenance at least seven days in advance of such suspensior., except that in the case of a suspensi;n of auxiliary power such notice vill be given at least 30 days in advance of such suspension.
Such notification to the Party receiving the service to be sus-pended vill include the estimated duration of such suspension.
In the event of any unplanned or forced suspension of services to be provided pursuant to sections 5.6, 5.7 or 5.8 hereof, the providing Party vill provide immediate notice of such suspension to the other Party.
The providing Party will use reasonable ef-forts to minimize the duration of such suspension.
(b)
In the event that either Party':s planned ac-tivities at Shoreham vill result in permar.ent suspension in the provision of any of the services provided pur1mant to this Article V, such Party vill give the other adequate notice before any such services may be suspended, taking into consideration the time necessary to obtain replacement services and the need to l
complete the Decommissioning of Shoreham promptly.
(
5.10 The Fence.
Prior to LILCO's construction of the Fence, taking into consideration NRC requirements and with due regard to minimizing Costs Attributable to Shoreham, LILCO vill consult with the Power Authorities regarding the location of gates or other appropriate openings within the Fence.
LILCO's approval of the Power Authorities' recommendations concerning I
~..
such gatos or other appropriote oponings will not ba unr6asonably withheld, and LILCO vill construct the Fence accordingly.
In the event that the Fence, or a portion thereof, impedes or hinders the Maintenance or Decommissioning of Shoreham, LIPA vill request LILCO to remove or move, as appropriate, the Fence or portions thereof, which removal or movenent shall be consistent with NRC j
regulations and with due regard to minimizing Costs Attributable to Shoreham.
LILCO's approval of such removal or movement vill not be unreasonably withheld.
5.11 Disposition of other Property by LILCO.
LILCO agrees that for nine months from the Effective Date, it will not sell or otherwise dispose o! any of the Other Property to any third party without the prior written consent of LIPA.
If such consent is not given by LIPA, the reasons therefor will be stated with particularity.
Thereafter, sales or other dispositions of any of the Other Property will only be made by LILCO after con-sulting with LIPA and giving good faith consideration to any com-ments made by LIPA.
5.12 Additional Costs.
In the event that LIPA or NYPA incur any Costs in providing any of the services under this Article V, or incur any Costs in maintaining and/or operating any equipment, systems or structures which LIPA has agreed to main-tain or operate under this Article V, such Costs shall be deemed Costs attributable to the ownership and possession of Shoreham.
All services to be provided by LILCO under this Article V, and all maintenance and operation obligations of LILCO under this Article V, shall be free of any charge to the Power Authorities.
1,
i e
1 l
ART 3CLE V8 REPRESENTATIONS AND WARRANTIES OF LILCO AND LIPA 6.1 Representations and Warranties of LILCO.
LILCO l
represents and warrants to LIPA as follows:
(a)
Orcanization.
LILCO is a corporation duly or-ganized, vclidly existing and in good standing under the laws of the. State of New York and LILCO has the requisite corporate power and authority to carry on its business as now being conducted; (b)
Authority Relative to this Aareement.
LILCO has the requisite power and authority to execute and deliver this h
Agreement and to ccrry out the actions required of it by this Agreement.
The execution and delivery of this Agreement and the u
actions it contemplates have been duly and validly authorized.
The Agreement has been duly and validly executed and delivered by ir LILCO and constitutes a valid and binding agreement of LILCO; and (c)
Reculatory Acoroval.
LILCO has obtained any snd all approvals of, and given any notice to, any public author-ity that are required for LILCO to execute and deliver this Agreement.
6.2 Representations and Warranties of LIPA.
LIPA
^
represents and warrants to LILCO as follows:
(a)
Orcanization.
LIPA is a corporate municipt1 g
instrumentality and political subdivision of the State of New
{
York and was created by legislation of the State of New York
- =
(Chapter 517 of tho 1986 Laws of Nov York) and has the rGquisito corporate power and authority to carry on its business as now being conducted; s
(b)
Authority Relative to this Acreement.
l.I P A has the requisite power and authority to execute and delivar this Agreement and to carry out the actions required of it by ',his Agreement.
The execution and delivery of this Agreement and the actions it contemplates have been duly and validly authorized.
This Agreement has been duly and validly executed and delivered-by LIPA and constitutes a valid and binding agreement of LIPA; and (c)
Reculatory Approval.
LIPA has obtained any and all approvals of, and given any notice to, any public author-ity that are required for LIPA to execute and deliver this Agrae-ment.
I i
i f
1 ARTICLE VII TERMINATION AND PUBLIC SERVICE COMMISSION APPROVAL 7.1 Termination.
This Agreement may be terminated upon mutual agreement of LILCO and LIPA consistent with NRC re-quirements.
7.2 Public Service Com,9ission ADDroval.
Within five business days after the Effective Date, LILCO vill seek a ruling from the Public Service Commission confirming that LILCO's pay-ment of LILCO Costs and Costs Attributable to Shoreham as the specified herein is consistent with the Settlement Agreement, Asset Transfer Agreement, and PSC Opinion 89-8 and reimbursable If the Public Service Commission does'not pro-from ratepayers.
l' vide such confirmation in form and substance satisfactory to LILCO within 120 days of the Effective Date, this Agreement will l
l automatically terminate 150 days after the Effective Date, unless LIPA and LILCO have agreed to a mutually satisfactory revision of this Agreement prior to 150 days after the Effective Date.
In the event that the Public Service Commission does not provide l
such confirmation, LIPA and LILCO agree to negotiate in good l
faith to attempt to agree upon such a mutually satisfactory revi-sion of this Agreement.
l
~~1 ART 8CLE V281 l
RECORD AND SITE ACCESS l
8.1 General.
LILCO and the PSC will be granted ac-cess to Shoreham and to such other Shoreham-related facilities, properties and records of LIPA and NYPA as may be necessary to enable LILCO and the PSC to monitor the activities in connection with the Maintenance and Decommissioning of Shoreham or to make any copies of records to which access is provided pursuant to this Article VIII.
Such access vill be provided upon reasonable notice, during normal business hours and in a manner so as not to substantially interfere with the ongoing Maintenance or Decommis-sioning of Shoreham.
8.2 Site Representatives.
LILCO and the PSC may designate site representative (s) to observe the activities under-taken at Shoreham.
The site representative (s) vill have access to Shoreham, subject to applicable legal, licensing and security requirements.
The site representative (s) vill minimize interfer-ence with the Maintenance and Decommissioning of Shoreham and comply with all regulations of any governmental agency and those which LIPA implements for the Maintenance and Decommissioning of Shoreham.
By reasonable notice at the office of the site repre-sentative(s), LIPA vill keep the site representative (s) informed of important meetings, proceedings or other activities of LIPA or NYPA related to Shoreham.
8.3 Consultation.
After the Closing Date and during the term of this Agreement, the senior LIPA personnel responsible l
t for tho-Maintenanco and Dacommissioning of Shorchem and thd ap-propriate NYPA personnel will meet with LILCO and the PSC' quar-terly, or more frequently,- if requested by LILCO and the PSC.
At such meetings, LIPA (a) will report on the status of the Mainte-nance and/or Decommissioning of Shoreham, (b) will discuss the status of any proceeding concerning Shoreham and (c) will address all issues or questions dealing with Shoreham put forth by LILCO or the PSC.
These meetings will be designed to keep LILCO and the PSC fully informed as to the schedule and status of the Power Authorities' work related to the Maintenance and Decommissioning of Shoreham, including, without limitation, the scope and nature of the Maintenance and Decommissioning activities, compliance with regulatory requirements and the occurrence of any circum-stances which the Power Authorities believe may give rise to the need for modification of this Agreement.
LIPA will be, and will cause NYPA to be, available at all reasonable times to communi-cate with LILCO about conditions at Shoreham.
B.4 Records.
LIPA will keep and maintain the finan-cial records of LIPA Costs, the Cost Reimbursement Fund and the LIPA Reimbursement Fund, and LIPA wil2 cause NYPA to maintain fi-nancial records regarding NYPA Costs and Third-party Supplier Costs, all in accordance with accounting practices and procedures that each of the respective Power Authorities follows.
LILCO will keep and maintain financial records related to LILCO Costs, as well as financial records related to LILCO's funding of the Cost Reimbursement Fund and the LIPA Reimbursement Fund, all in accordance with accounting practices and procedures followed by LILCO. -
ART 3CLE IX
+
INDEMNIFICATION 9.1 Indemnification.
Notwithstanding any other pro-vision of this Agreement, LILCO shall at all times during the term of this Agreement and after the Termination Date indemnify NYPA for all NYPA Costs incurred prior to the Termination Date and/or for all NYPA Costs arising from or related to-any claim, cause vf action or liability which arises out of or relates to any act, failure to act, or event occurring or alleged to have occurred prior to the Termination Date.
9.2 Indemnification Procedures.
If NYPA receives notice of a third party claim with respect to which NYPA is enti-tied to indemnification, NYPA vill give LILCO prompt notice thereof after becoming aware of such third party claim.
Such no-tice vill describe the third party claim in reasonable detail,-
and will indicate the amount (estimated if necessary) of the third party claim that has been or may be sustained by NYPA.
Such notice vill be a condition precedent to any liability of LILCO under the provisions for indemnification contained in this Agreement; provided, however, that the failure to deliver such notice vill not affect the indemnification provided hereunder ex-cept to the extent that LILCO vill have been actually and materi-ally prejudiced as a result of such failure.
LILCO may elect to compromise or defend, except as provided below, by LILCO's own counsel, any third party claim; crovided, however, that such third party claim does not include allegations of NYPA's gross t.
n3gligence or willful-misconduct.
If LILCO olocts to'compromiso or defend such third party claim, it will within 20 days of re-ceipt of notice of'the third party claim (or sooner, if the na-ture of the third party claim so: requires) notify NYPA of its in-tent to_do so, and NYPA will cooperate in the compromise of, or defense against, such third party claim.
If LILCO elects not to compromise or defend against the third party claim, or fails within such 20 days (or sooner if the nature of the claim so re-quires) to notify NYPA, or such third party claim includes alle-gations of NYPA's gross negligence or willful misconduct, then i
NYPA may pay, compromise or defend such third party claim.
Not-withstanding the foregoing, neither NYPA nor LILCO may settle or L
compromise any claim without the consent of the other except L
(a) where LILCO has elected not to defend NYPA from such third party claim or (b) where such third party claim doer. not include allegations of NYPA's gross negligence or willful misconduct; provided, however, that consent to settlement or compromise will not be unreasonably withheld.
In any event, NYPA and LILCO may 1
each participate in the defense of such' third party claim unless such third party claim includes a] legations of NYPA's gross neg-l ligence or willful misconduct, in which event LILCO may not par-ticipate in the defense of such claim.
If LILCO chooses to de-fend any claim, NYPA will make available to LILCO any personnel or any books, records or documents within its control that are necessary or appropriate for such defense.
1 1.
L 9.3 Litication costs.
LILCO vill pay all litigation l'
1 Costs, including reasonable attorney's fees, incurred by LILCO,
=
ond NYPA pursuant to the procoduros for indsmnification cot forth-i in section 9.2;-orovided, however,.that'such Costs-did not result from the villful' misconduct or gross negligence of NYPA as deter-
-mined by a-final non-appealable order or judgment of-a court of Ecompetent jurisdiction.
In the event-that there is'such.a final order or judgment, NYPA vill pay the litigation Costs attribut-able to such gross negligence or villful misconduct, including reasonable attorney fees, incurred by LILCO and NYPA.
I i
6 1
1 l-ARTICLE X MISCELLANEOUS 10.1 Headinos.
The descriptive headings of the sev-eral Articles and Sections of this Agreement are inserted for convenience only and do not affect-the meaning or interpretation of this Agreement.
10.2 Assianment.
No transfer or assignment of this Agreement, or the rights or obligations of either LILCO or LIPA f
hereunder, will be made without the prior written approval of the other Party.
Any successor or assignee of either LILCO or LIPA will be subject to all the terms and conditions of this Agreement to the same extent as though such successor or assignee were an original Party hereto.
No assignment or transfer of rights or obligations under this Agreement vill relieve the transferor or assignor from full liability and financial responsibility for the performance after any such transfer or assignment unless and until the transferee or assignee will agree in writing to assume such-obligations and duties and the other Party has consented in writing to such assumption.
10.3 Waiver.
Failure of either Party hereto to in-sist upon performance of any of the terms and conditions hereof, or failure or delay to enforce any rights or remedies provided herein or to properly notify the other in the event of any breach will not release the other Party hereto from any of the obliga-tions of this Agreement and such failure vill not be deemed a vaiver of any right to insist upon performance hereunder or to pursue any rights or remedies hereunder.
10.4 Entire Aareement; Amendment.
This AgrGCmant, and the Settlement together with-the Asset Transfer Agreement constitute the entire understanding between LILCO and
~
Agreement, LIPA, and supersede any and all previous understandings, oral or written, which pertain to the subject matter contained herein or s
Neither LILCO nor LIPA has relied or will rely upon any therein.
oral or other written representation made or provided to one Party by the other Party or by any representative of the other Party or anyone on its behalf.
This Agreement may not be amended or modified, except in a writing signed by the Parties.
10.5 Mutual Cooperetion.
The Parties agree that, given the proximity of the property of LILCO and LIPA, each Party will provide reasonable access to the other Party as may be re-quired with respect to (a) repairing, maintaining and operating their respective fixtures, equipment and machinery located at Shoreham, (b) maximizing operations' sfficiencies and (c) promoting safety within.and outside he Fence.
10.6 Force Maieure.
Notwithstanding anything in this Agreement to the contrary, but subject to the last sentence of this Section, neither LILCO nor LIPA vill be liable or respon-sible to the other for its failure to carry out any of its obli-gations under this Agreement caused by force majeure; provided, however, that this provision vill not apply to delay, affect or limit in any way the obligation of LILCO to provide funds for all Costs Attributable to Shoreham in accordance with this Agreement.
The term " force majeure" as used herein, means any cause beyond -
I-ths control of tho Party af fectod, which by the oxorciso of ros-sonable diligence that Party is unable to overcome, including without limitation', the.following:
acts of God; fire, flood, landslide, lightning, earthquake, hurricane, tornado, storm, freeze or drought; blight, famine, epidemic or quarantine; strike, lockout or other labor difficulty; act or failure to act of any regulatory agency or other governmental authority; delays caused by bidding requirements; theft; casualty; accident; equip-ment breakdown; failure or shortage of, or inability to obtain from-usual sources, goods, labor, equipment, information, draw-ings, machinery, supplies, energy, fuel or materials; embar'go or injunction; shortage of rolling stock; arrest; var, civil distur-bance or explosion; or sabotage.
If either LILCO or LIPA is ren-dered unable to fulfill any obligation under this Agreement by reason of force majeure, that Party will make reasonable efforts i
to overcome such inability within a reasonable time and all per-formance obligations hereunder, except LILCO's obligations under Section 2.4 and Article III hereof, will be extended by a period equal to the term of the resultant delay.
10.7 Exclusion of Duty to Inspect.
Except as spe-cifically provided herein, nothing in this Agreement will create any duty or obligation on the part of either Party to inspect, maintain or repair any equipment, fixtures, Buildings, struc-tures, fences or security devices, or other facilities, or to no-tify the other Party or anyone else of any defect, deterioration, fault, breakage, dangerous condition, or wear and tear on any such item, I
(.
1 10.8 Notices.
(a)
At or prior to the Closing Date, each Party will indicate to the'other Party, by notice, t'he ap-propriate person d'uring each eight-hour work shift-to contact in tne event of an emergency, a scheduled or forced interruption or reduction in services to be provided by one Party to the other Party.
The notice last received by a Party will be effective until modified in writing by the other Party.
(b)
All notices, requests, claims, demands and other communications hereunder will be in writing and will be given (and will be deemed to have been duly given if so given) by hand delivery, cable, telecopy (confirmed in writing) or telex, or by mail (registered or certified, postage prepaid, return re-ceipt requested) to the respective parties as follows:
Lono Island Lichtina Company Long Island Lighting Company 175 East Old Country Road' Micksville, New York 11801 Attention:
Victor A.
Staffieri, Esquire General Counsel and Corporate Secretary Hunton & Williams Box 1535 707 East Main Street Richmond, Virginia 23212 Attention:
W. Tsylor Reveley, III, Esquire Lena Island Power Authority Long Island Power Authority 114 Old Country Road Suite 204 Mineola, New York 11501 Attention:
Stanley B. Klimberg, Esquire Skadden, Arps, Slate, Meagher & Flom 919 Third Avenue i
New York, New York 10022 Attention:
Edmund C. Duffy, Esquire
. j 1
Kirkpatrick & Lockhart South Lobby - 9th Floor 1800 M Street, N.W.
Washington, DC 20036-5891 Attent' ion:
Lawrence C.
Lanpher, Esquire New York Power Authority New York Power Authority 123 Main Street White Plains, New York 10601 Attention:
John-C. Brons New York Power Authority 1633 Broadway New York, New York 10019 Attention:
Charles M.
Pratt, Esquire Lane & Mittendorf 99 Park Avenue New York, New York 10016 Attention:
David Orlin, Esquire
' Bishop, Cook, Purcell & Reynolds 1400 L Street, N.W.
Washington, DC 20005-3502 Attention:
Nicholas S. Reynolds, Esquire Public Service Commission of the State of New York Public Service Commission of the. State of New York 3 Empire State Plaza Albany, New York 12223 Attention:
William J. Cowan, Esquire l
or such other address as is furnished in writing by such Party, NYPA or the PSC, and any such notice or communication will be deemed to have been given as of the date so mailed, t
I 10.9 Soecific Enforcement; Remedies Not Exclusive.
LIPA and LILCO-acknowledge that the other will not have an ade-quate remedy at law for money damages in the event that the terms L
and provisions of Sections 5.3 through 5.8 of this Agreement are not performed and, therefore, agree that the Parties will be en-titled to specific enforcement of those Sections in addition to any other remedy to which they may be entitled.
1.
10.10 counterparts.
Thio'Agrocment may ba oxecutad in two or more counterparts, all of which will be considered one and the same agreement and each of which will be deemed an origi-nal.
10.11 Governino Law.
This Agreement will be gov-erned by and construed in accordance with the laws of the State of New York, without giving effect to the conflict of law princi-ples thereof.
Any action arising out of or concerning this Agreement may be brought in the courts located in the State of o
LILCO and LIPA hereby consent to the jurisdiction of the State of New York for the purpose of hearing and determining g
l any such action.
10.12 Severability.
In the event that any of the provisions of this Agreement are held to be unenforceable ur invalid by any court of ccmpetent jurisdiction, LILCO and LIPA vill, to the extent possible, negotiate an equitable adjustment i
to the provisions of this Agreement, with a view toward effecting the purpose of this Agreement, and the validity and en-forceability of the remaining provisions hereof will not be af-fected thereby.
10.13 Remedies.
In the event that LILCO, for any reason, fails to make any payment provided for in this Agreement or to maintain the funding of the Cost Reimbursement Fund or the h
LIPA Reimbursement Fund, LIPA or NYPA vill give LILCO written no-l tice to cure such default within 30 days.
If LILCO fails to cure such default within 30 days of such notice, LIPA and NYPA may 1 l
- ic take any other appropricto action to rsduce the risk to LIPA or NYPA of non-payment.
In any action by LIPA or NYPA against LILCO, or by;LILCO'against LIPA or NYPA, the trustees, directors, officers, employees and agents of.LIPA, NYPA and LILCO will~not
'ae named parties nor will they bear any individual liability.
10.14 Third-party Beneficiary.
LILCO and LIPA ac-knowledge that NYPA has rights as a third party beneficiary under this Agreement and, as such, may take whatever action it deems appropriate to ensure that it receives all payments and benefits
,due it, either directly or indirectly, under this Agreement.
In the event LILCO defaults or materially breaches any of its con-tractual obligations under this Agreement or under any other agreement through which NYPA is to receive benefits, either di-rectly or indirectly, and LIPA fails to pursue appropriate reme-L dies to enf orce its and/or NYPA's rights, the Parties agree that NYPA, as a third party beneficiary hereunder, may take whatever action is necessary to enforce this Agreement.
10.15 Disputes.
Neither LILCO nor LIPA vill have the right to seek arbitration of any dispute that might arise with respect to this Agreement.
Any di: agreement between LILCO and LIPA as to their rights or obligations under this Agreement will first be addressed by consultation between LILCO and LIPA.
In the event that representatives of LILCO and LIPA are unable, in good faith, to resolve satisfactorily their disagreement, they will refer tht matter to their respective senior management.
No l
dispute whatsoever as to any provision of this Agreement or l 1
Otherwise vill permit LILCO-to_ delay pcyment in full as rcquired herein by-the date required.-
10.16 Con f ide ttj ali t y.
(a) LIPA vill hold, and will cause NYPA to hold, in confidence, unless compelled to disclose by judicial or administrative process or other provisions of law, all documents and information concerning Shoreham furnished by LILCO to LIPA or NYPA in connection with the transactions contem-plated by this Agreement (except to the extent that such informa-tion or documents (i) were generally available to the public-other than as a result of a disclosure by LIPA or NYPA, (ii.)
available to LIPA or NYPA on a non-confidential basis prior to disclosure to them by LILCO or (iii) available to LIPA or NYPA on a non-confidential basis from a source other than LILCO, provided that such source is not known, and by reasonable effort could not be known, by LIPA or NYPA to be bound by a cont'dentiality agree-with LILCO or otherwise prohibited from transmitting the in-ment formation to LIPA or NYPA by a contractual, legal or fiduciary obligation) and LIPA or NYPA vill not release or disclose such information to any other person, except its advisors in cor.nec-l tion with this Agreement who will have first been advised of the confidentiality provisions of this Section 10.16(4) and have agreed to comply with such provisions.
If the transactions con-templated by the Asset Transfer Agreement or this Agreement are-not consummated, (1) such confidence vill be maintained except to the extent the information comes into the public domain through no fault of LIPA or NYPA, and, (2) if requested by LILCO, LIPA l
vill, and vill cause NYPA, to return to LILCO or destroy all '
u ccpios of written information.furnishad by LILCO to LIPA or NYPA, respectively.
(b)
LILCO agrees to hold in confidence, unless compelled to disclose by judir.ial or administrative process or other provisions _of law, all documents and information concerning Shoreham furnished by LIPA or NYPA to LILCO in connection with the transactions contemplated by this Agreement (except to the extent that such information or documents (i) were gererally available to the public other than as a result of a uisclosure by LILCO, (ii) available to LILCO on a non-confident 2a1 basis prior to disclosure to LILCO by LIPA or NYPA or (iii) available to LILCO on a non-confidential basis from a source other than LIPA
-or NYPA, provided that such source is not known, and by reason-able effort could not be known, by LILCO to be bound by a confi-dentiality agreement with the Power Authorities or otherwise pro-hibited from transmitting the information to LILCO by a contractual, legal or fiduciary obligation) and LILCO vill not release or disclose such information to any other person, except its advisors in connection with this Agreement who will have first been advised of the confidentiality provisions of this Sec-tion 10.16(b) and have agreed to comply with such provisions.
If the. transactions contemplated by the Asset Transfer Agreement or this Agreement are not consummated, (1) such confidence vill be maintained except to the extent the information comes into the public domain through no fault of LILCO, and, (2) if requested by LIPA, LILCO vill return to LIPA or destroy all copies of written information turnished by the Power Authorities to LILCO.
10.17 Insurance.
LILCO will maintain the insuranco list'ed-on Exhib4t H to the Asset Transfer Agreement from the date hereof.through the' Closing Date where maintaining such insurance-is consistent with prudent utility practices, NRC requirements and minimizing Costs Attributable to Shoreham.
Based on the same standard, LIPA will maintain all such insurance,-at LILCO's ex-pense, f rom the closing Date through the term of this Agreement, unless the Power Authorities determine that certain insurance is no longer required.
In the event LIPA determines that additional amounts and/or kinds of insurance are needed during the term of the Agreement, LILCO will use its best efforts to assist LIPA in obtaining such additional coverage.
(
10.18 LIPA Authority.
Notwithstanding the opportu-nity for the PSC and LILCO to review and provide comments on var-ious documents and to keep informed about the Maintenance and De-commissioning of Shoreham,.it is within LIPA's sole discretion and authority to decide whether to accept or reject any comments made by LILCO or the PSC.
-El-
V
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IN WITNESS WHEREOF, cach of the Partios to thi8
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Agreement.have executed this Agreement and had it attested or' witnessed by a duly authorized officer or representative.
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L LONG ISLAND LIGHTING COMPANY i
By A
President (j V
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...,'4 ATTACHMENT 2 j'
AMENDED-AND RESTATED ASSET TRANSFER AGREEMENT BETWEEN LONG ISLAND LIGHTING COMPANY AS TRANSFEROR t
AND LONG ISLAND POWER AUTHORITY AS TRANSFEREE DATED AS OF JUNE 16, 1988, AS AMENDED AND RESTATED AS OF APRIL 14, 1989 l
E.
l 1
6 TABLE OF CONTENTS Section Eggg 1
ARTICLE I ~
DEFINITIONS.....................................'3 1
1.1 Agreement........................................
3
- 1. 2.
- Asset Transfer.................................
3 1.3 Assets....................-......................
3 1.4
- Assignment Agreement.............................
4 1.5 Closing........................................
4
)
1.6
- Closing Date...................................
4 L
1.7
- Comparative Rate Determination..................
4 1.8 Consents........................................--4 1.9 Contracts......................................
5 1.10 Costs..........................................
5 1.11
- Costs Attributable to Shoreham..................
5 1.12 Deed............................................
6 i
1.13 DPS............................................
6 1.14 Entity.........................................
6 1.15
- Exchange Act....................................
6 1.16 Fence..........................................
6 1.17
- First Mortgage.................................
6 1.18
- General and Refunding Indenture................
7 1.19
- Indemnified Party..............................
7 Indemnifying Party.............................
7 1.20 1.21
- Legal Requirement...............................
7 L
1.22
- License Transfer...............................
7 i
l 1.23-Licenses.......................................
8 1.24 Liens...........................................
8 1.25 LILCO..........................................
8 L
1.26 LIPA...........................................
8 1.27 NRC............................................
8 1.28 NYPA...........................................
8 1.29
- Other Contracts................................
9 1.30
- Other Licenses.................................
9
,l'1 1.31
- Other Property.................................
9 1.32 Party.........................................
10 1.33 Parties.......................................
10 1.34
- Permitted Liens...............................
10-1.35
- Personalty Transfer Agreement..................
10 1.36
- Power Authorities.............................
10 L'
1.37
- Proxy Statement................................
11 1
1.38 PSC...........................................
11 1.39
- Regulatory Approvals..........................
11 1,
l*
(i) t l
l l
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1.40 SEC...........-..................................
11 1.41 Settlement.....................................
11 1.42
- Settlement Agreement..........................-.
11 1.43
- Settlement Effective Date.....................
12 1.44
- Shareholders' Meeting.........................
Shoreham......................................
12 1.45 12 1.46
- Site Agreement.................................
12 1.47l
- Third Mortgage................................
13 1.48
- Third-Party C1 aim.............................
13 ARTICLE II
- TRANSFER OF ASSETS; CLOSING; RE-TRANSFER......
14 2.1
- Transfer of Assets............................
14 l
2.2
- Transfer Price.................................
14
-9 2.3
- Time and Place of Closing.....................
14 2.4
- Deliveries at the Closing.....................
14 2.5 Re-transfer...................................
15 ARTICLE III
- REPRESENTATIONS AND WARRANTIES OF LILCO.......,.
17 ee 3.1 Organization..................................
17 3.2
- Authority Relative to this Agreement...........
17 3.3
- Consents and A
- Licenses......pprovals........................
18 3.4 19 3.5
- Proxy Statement................................
19-3.6 Insurance.....................................
19 3.7
- Descriptions; Insurability.....................
21 3.8 Leases........................................
21 3.9
- Property Status...............................
21 i
3.10.
Disclosure....................................
21 ARTICLE IV
- REPRESENTATIONS AND WARRANTIES OF LIPA.........
23 4.1 -
Organization..................................
23 4.2
- Authority Relative to this Agreement...........
23 4.3
- Consents and Approvals........................
24 4.4
- Proxy Statement................................
25 4.5 Disclosure.....................................
25 ARTICLE.V
- AGREEMENTS OF LILCO AND LIPA...................
27 5.1
- Conduct of Business by LILCO...................
27 5.2
- Transfer of Shoreham to LIPA...................
28 5.3
- Funding, Management and Staffing of Shoreham..
29 5.4 Access........................................
30 5.5
- LILCO's Right to Electric Generation..........
32 5.6 Offsets.......................................
33 5.7
- Proxy Statement; Shareholder Approval.........
33 5.8
- Withdrawal of LIPA Proposals..................
34 (ii) 2
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5.9
- Maintononco of Crodit Rating...................._ 34 5.10
- Insurance Premiums............................
35 5.11.
- Further Assurances............................
35 5.12 Release........................................
36 ARTICLE VI
- CONDITIONS TO THE OBLIGATIONS OF LILCO.........
37.
6.1
- Truth of Representations and Warranties.......
37 6.2
.- Performance by LIPA............................
37 6.3
- Shareholder Approva1...........................-37 6.4 Litigation....................................
38 r
6.5
- Regulatory Approvals-and Consents.............
38 6,6
- Settlement. Effective..........................
38 6.7
- Other Agreements..............................
38 i
ARTICLE VII
- CONDITIONS TO THE OBLIGATIONS OF LIPA..........
39 7.1
- Truth of Representations and Warranties.......
39 l
7.2
- Performance by LILCO...........................
39 7.3
- Shareholder Approva1...........................
39 7.4 Litigation....................................
40
- 7. 5-
- Regulatory Approvals and Consents.............
40 7.6
- Comparative Rate Determination................
40 7.7
- Site Agreement.................................
40 7.8
- Opinion of Counse1............................
40 ARTICLE VIII - SURVIVAL AND INDEMNIFICATION...................
42 8.1
- Survival of Representations, Warranties, and Agreements................................
42 8.2
- Indemnification by LILCO.......................
42 8.3
- Indemnification by LIPA........................
43 8.4
- Procedure for Indemnification.................
43 8.5
- Remedies Cumulative...........................
45 8.6 Cooperation...................................
46 ARTICLE IX TERMINATION....................................
47 9.1 Termination...................................
47-ARTICLE IX MISCELLANEOUS.................................
48 10.1 Headings......................................
48 10.2
--Assignment.....................................
48 10.3
- Modifications, Amendments and Waivers.........
48 l
10.4 Notices.......................................
49 10.5
- Specific Performance; Remedies Not Exclusive..
50 i
10.6 Counterparts..................................
50 10.7
- Governing Law..................................
50 L
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10.8 Severcbility....................,,,,,,,,,,,,,,,
gn EXHIBITS EXHIBIT A Form of Deed EXHIBIT B Form of Personalty Transfer Agreement Description of Real and Personal Property EXHIBIT C EXHIBIT D Contracts Licenses EXHIBIT E Form of Assignment Agreement EXHIBIT F EXHIBIT G Consents EXHIBIT H Insurance Real Property EXHIBIT I EXHIBIT J Requests Records and Documents for Shoreham EXHIBIT K e
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AMENDED AND RESTATED ASSET TRANSFER AGREEMENT THIS AMENDED'AND RESTATED ASSET TRANSFER AGREEMENT dated as of June 16, 1988, as amended and restated as of April 14, 1989, by and between the Long Island Lighting Company (LILCO), a-New York corporation, and the Long Island Power Authority (LIPA), a corporate municipal instrumentality and political subdivision of the State of New York, which was created pursuant to Chapter 517 of-the 1986 Laws of New York which supercedes, in its-entirety, the ASSET TRANSFER AGREEMENT dated as of J ne 16, 1988 by and be-tween LILCO and LIPA.
i WITNESSETH:
WHEREAS, LILCO, the State of New York, the Staff of the De-partment of Public Service of the State of New York, the Consumer-Protection Board, the Urban Development Corporation, NYPA and LIPA entered-into a settlement agreement dated as of June 16, 1988 (the-1988 Settlement Agreement) that contemplated, among other things, the resolution of the controversy over the Shoreham Nuclear Power Station and the transfer of the Shoreham assets to LIPA; WHEREAS, the 1988 Settlement Agreement did not become effec-tive;.
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WKEREAS, LILCO and the State of New York have entered into a subsequent settlement agreement dated as of February 28, 1989 (the Settlement. Agreement) that contemplates, among other things, the resolution of the controversy over the Shoreham Nuclear Power 1
Station and the transfer of the Shoreham assets te LIPA; q.
WHEREAS, NYPA and LIPA will enter into a definitive agree-ment pursuant to which NYPA will, among other things, provide technical advice and assistance to LIPA with respect to the ra-diological health and safety and decommissioning of Shoreham; WHEREAS, LIPA and LILCO intend to enter into a Site Coo-i peration and Reimbursement Agreement prior to the Closing; WHEREAS, it is intended that all NYPA costs, including Costs, incurred from the date hereof in connection with this Agreement and the decommissioning of Shoreham will be reimbursed by LILCO; and WHEREAS, LIPA and LILCO desire to amend and restate the Asset Transfer Agreement, dated as of June 16, 1988, into an Amended and Restated Asset Transfer Agreement that reflects the Settlement Agreement and the passage of time since the execution 3
of such Asset Transfer Agreement.
NOW, THEREFORE, in order to carry out the transactions con-templated by this Agreement and in consideration of the respec-tive representations, warranties and covenants and of the mutual agreements below, LILCO and LIPA agree as follows:
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ARTICLE I DEFINITIONS i
1.1 Aareement.
This Amended and Restated Asset Transfer 1
Agreamsnt. including all its Exhibits and Schedules, dated as of June 16, 1988 and amended and restated as of April 14, 1989, be-tween LILCO and LIPA.
1.2 Asset Transfer.
The-transfer of the Assets to LIPA 1
from LILCO under the terms and conditions of this Agreement.
1.3 Asst 11 The Assets will include the following, but not include the Other Property:
(a)
The real and personal property described on Exhib-it C; (b)
The Contracts listed on Exnibit D; (c)
The Licenses listed on Exhibit E; and (d)
Copies of the books and records set forth on Ex-hibit K hereto, and any other books and records that the Parties agree will'be transferred under this Agreement.
Notwithstanding any other provision of this Agreement, Assets will include such property or interests in property as are necessary for the-decommissioning of Shoreham or as are required by the NRC to be owned by LIPA.
1.4 As s i anment,,ha reeme n t.
The agreement, in the form of Exhibit F, assignir.g LILCO's rights and obligations, to the ex-tent assignable under the respective instruments, in the Licenses and contracts.
LILCO vill use its best efforts to have the Li-censes and Contracts assigned to LIPA.
1.5 Closino.
The closing of the Asset Transfer at which all deliveries will be made and title to the Assets transferred.
1.6 Closine Date.
The date on which the Closing occurs and the Asset Transfer contemplated by t.his Agreement becomes effee-tive, which date vill be set by the Parties five business days in advance.
The Closing Date vill also be the effective date of the License Transfer.
1.7 Comparative Rate Determination.
The determination by the Board of Trustees of LIPA that the rates projected to be charged after the acquisition of Shoreham pursuant to this Agree-ment vill not be higher than the rates projected to be charged if such acouisition had not occurred.
1.8 Ccnsents.
The consents and approvals necessary for the consummation of the transactions contemplated by this Agreement i
and to be listed on Exhibit G promptly after the execution of this Agreement and revised as of the closing Date if a contract, License or lease requiring consent or approval is added to, or deleted from, Exhibit D or Exhibit E. 1
1.9 contracts.
All contracts with vendors and suppliers and other third parties providing goods and services, leases, commitments, sales orders and other agreements, including any rights to warranty providea therein for claims relating to the period after the Closing Date, relating exclusively to shoreham j
and to be listed on Exhibit D promptly after the execution of this Agreement and updated, if necessary, as of the Closing Date to add contracts executed in the ordinary course of business and delete any contract that expires by its terms.
Exhibit D will also separately list the other Contracts.
1.10 Costs.
All costs, expenses (including fuel and plant disposal costs and exper.ses), losses, claims, damages, liabili-ties, judgments and amounts paid in settlement, whether direct or indirect.
1.11 Costs Attribotable to Shoreham.
(a) All Costs in-curred by LIPA or NYPA that are attributable to the ownership, operation, possession or maintenance of Shoreham by LILCO prior to the Closing Date, (b) all Costs incurred by LIPA or NYPA from June 15, 1988 to the Closing Date in connection with the Asnet i
Transfer or the License Transfer, (c) all Costs incurred by LIPA or NYPA after the Closing Date attributable to LIPA's or NYPA's ownership, possession, maintenance, decommissioning or disman-tling of Shoreham and (d) all Costs for the taxes or in-lieu-of payments on the Assets and Other Property incurred in accordance with the statutory obligations of LIPA or the Settlement -
4 Agreement (it being understood that LILCO hks agreed to pay such costs); crevided, however, that (x) in no event will LILCO pay l
any of LIPA's administrative and general costs that are not di-rectly related to Shoreham and (y) Costs Attributable to Shoreham will not include (A) Costs resulting from the villful misconduct or gross negligence of the Jover Authorities as determined by a final non-appealable order or judgment of a court of competent jurisdiction or (B) costs relating to any bre,tch by LIPA of a representation, verranty ortagreement under this Agreement.
1 1.12 Deed.
The'instrdment, in the form of Exhibit A, by which all interests in any real property will be transferred.
1.13 DPS.
The Staff of the Department of Public Service of the State of New York.
1.14 Entity.
Any corporation, individual, partnership, joint venture or governmental authority.
1.15 Exchance Act.
The Securities Exchange Act of 1934, as amended.
l 1.16 Fence.
The Fence to be located as shown on Schedule l
C-1 to Exhibit C of this Agreement.
1.17 First Mortoace.
The Indenture of Mortgage and Deed of Trust by and between LILCO and IBJ Schroder Bank & Trust Company, as successor trustee, dated as of September 1, 1951, as amended or supplemented by indentures supplemental thereto and as the same may be further amended or supplemented. _-
1.16 General and Refundino Indenture.
The General and Re-funding Indenture by and between LILCO and United States' Trust Company of New York, as successor trustee, dated as of June 1, 1975, as amended or supplemented by indentures supplemental thereto and as the same may be further amended or supplemented.
1.19 Indemnified Party.
An Entity entitled to receive in-j demnification under this Agreement.
1.20 Indemnifyino Party.
An Entity obligated to provide indemnification under this Agreement.
1.21 Lecel_3tggiremen1 As to any Entity, the charter and by-laws or other organizationt.1 or governing documents of such Entity, and any law, rule or regulation, or order, decree, in-l junction or determination of an arbitrator or a court or other governmental authority in each case applicable to or binding upon such Entity or any of its property or to which such Entity or any of its property is subject, including, without limitation, the rules and regulations of the NRC, and any certificate of occupan-l cy, zoning ordinance, building, environmental or land use permit or occupational safety or health law, rule or regulation.
1.22 License TransitI.
The transfer of Shoreham's NRC li-censes from LILCO to LIPA after approval by the NRC.
The effec-tive date of the transfer vill be the closing Date.
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1.23 Licenser.
All licenses, permits and other approvals relating exclusively to shoreham, to the extent transferable, and to be listed on Exhibit E promptly after execution of this Agree-ment and revised, if necessary, prior to the closing Date; provided, however, that the revision vill not result in the elim-ination of any License that is material to the operation of
-Shoreham.
Exhibit E vill also separately list the Other Li-censes.
1.24 Liens.
Any mortgages, pledges, liens, security inter-ests,conditionalabdinstallmentsaleagreements, encumbrances, claims, charges or encumbrances of any kind.
1.25 LILCO.
Long Island Lighting Company, a New York cor-poration, and, where the context permits, its directors, offi-cers, employees and agents.
1.26 LIPA.
Long Island Power Authority, a corporate munic-ipal instrumentality and political subdivision of the State of New York, which was created pursuant to Chapter 517 of the 1986 Laws of New York, and, where the context permits, its trustees, officers, employees and agents, but not including NYPA, unless explicitly identified.
l 1.27 NRC.
Nuclear Regulatory Commission.
lt-L 1.28 NYPA.
New York Power Authority, and, where the con-text permits, its trustees, officers, employees and agents.
1 l
1.29 other Contracts.
All centracts with venders and sup-pliers and other third parties providing goods and services, leases, commitments, sales orders and othei' agreements relating i
to Shoreham, but not exclusively to Shoreham, and to be listed on Exhibit D promptly after the execution of this Agreement and up-dated, if necessary, as of the Closing Date to include Other Con-tracts entered into in the normal course of business and to de-lete any Other Contract relating to Shoreham that expires by its own terms.
1.30 other Licenses.
All licenses, permits and other ap-provals relating to Shoreham, but not exclusively to Shoreham, and to be listed on Exhibit E promptly after the execution of this Agreement and revised, if necessary, prior to the Closing Date.
1.31 Other Property.
Any Shoreham property listed as Other Property on Exhibit C to this Agreement and the causes of action by LILCO against suppliers and contractors for Shoreham relating to the period before the Closing Date.
Prior to the Closing Date, LILCO may wish to add to or may be required to subtract from the list of Other Property set forth l
on Schedule C-2.
Such additions or subtractions, however, will always provide LIPA with such Assets as (i) are necessary to the decommissioning of Shoreham or (ii) are required by the NRC to be owned by LIPA.
To the extent that the requested additions or re-quired subtractions may be added to or subtracted from the l
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f-catcgory ef other Prcperty to satisfy the criteria specified in the preceding sentence, the list of other Property will be ex-t panded or contracted.
Subtractions from the list of other Prop-erty will not require the approval of the Power Authorities.
The other Property that is movable vill be moved off the Shoreham site by LILCO prior to the Closing Date or as soon as practicable thereafter.
4 1.32 Part.y.' LILCO or LIPA, as the case may be.
1.33 Parties.
LILCO and LIPA, collectively.
l.34 Permitted Liens.
(a) Liens for current taxes not yet due, (b) minor imperfections of title and encumbrances, if any, that, individually or in the aggregate, are not substantial in amount, do not detract from the value of the property subject 1-thereto or impair Shoreham and have arisen only in the ordinary course of business and consistent with past practice and (c) the
{
First Mortgage, the General and Refunding Indenture and the Third Hortgage and any permitted liens thereunder.
4 1.35 Personalty Transfer Acreement.
The instrument, in the form of Exhibit B, by which all interests in any personal proper-ty constituting part of the Assets vill be transferred.
1.36 Power Authorities.
LIPA and NYPA, collectively, and where the context permits, their respective trustees, officers, employees and agents.
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i 1.37 Proxy Statement.
The definitive prcxy statcme.it to be prepared by LILCO and furnished to the shareholders of LILCO pur-suant to section 5.7 of this Agreement and to be filed with the SEC in connection with the approval of the Asset Transfer by LILCO's shareholders.
1 1.38 Eig.
Public Service Commission of the State of New York.
1.39 Reculatory Acerovals.
The approval of the transac-tions c.ontemplated by this Agreement or' the disclaimer of juris-diction over them by each regulatory body that, in the opinion of either LILCO or LIPA, governs these transactions or from which LILCO or LIPA reasonably desires to obtain a disclaimer of juris-diction, including, without limitation, the PSC and the NRC.
1.40 SEC.
Securities and Exchange Commission.
1,41 Settlement.
The resolution of outstanding issues relating to the Long Island Lighting Company, the State of New i
York, and the PSC except those matters relating to present and future electric rates.
1,42 Settlement Acreement.
A settlement agreement dated February 28, 1989 between LILCO and the State of New York that contemplates, among other things, the Settlement and the Asset Transfer. -
1,43 settlement Effective Date.
The 9ffective date of the settlement as provided in the Settlement Agreement.
1.44 Chareholders' Meetino.
The meeting of shareholders as described in Section 5.7 of this Agreement.
1.45 Shoreham.
The 809MW Shoreham Nuclear Power Station located at Shoreham, New York that consists of (a) the Assets, (b) the other Property and (c) any intangible prcperty relating to the property described in (a) or (b).
1.46 Site Aoreement.
A mutually acceptable Site Coo-peration and Reimbursement Agreement to be executed by LILCO and LIPA prior to the Closing that vill provide, among other matters, (i) the terms and conditions on which (A) LIPA and NYPA vill be provided access to facilities or properties of LILCO necessary to the Shoreham-related activities of LIPA and NYPA and (B) LILCO vill be provided access to such of the Assets necessary to the activities of lit?p, (ii) the terms and conditions, subject to subsection 5.3(b), on which LILCO employees previously assigned to Shoreham vill be made available to the Power Authorities, (iii) the specific provisions for accounting of, billing for and auditing of Costs Attributable to Shoreham consistent with Sec-tions 1.10 and 5.3(a) of this Agreement, (iv) the services LILCO and the Power Authorities vill be required to provide to each other to ensure a cost efficient use of Shoreham and (v) that such agreement vill take effect on the Closing Date and will con-tinue in effect until LIPA's and NYPA's activities at Shoreham are completed. -
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1.47 Third Nortoace.
The Martgago by ond between LILCO and
- Citisank, W.A.,
as mortgage agent, dated as of August 22, 1984, 1.48 Third Party Claim.
The assertion by a person who is not a party to this Agreement of any claim or of the commencement by any such person of any action or proceeding.
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ARTICLE II TRANSFER OF ASSETS; CLOSING; RE-TRANSFER 2.1 Transfer of Assets.
Upon the terms and subject to the conditions of this Agreement, LILCO will transfer the Assets to LIPA at the Closing. The other Property will not be transferred under this Agreement.
The Parties agree that, except to the ex-tent otherwise provided by this Agreement, the Assets will be transferred "AS IS," subject to the Permitted Liens, by the Deed, the Personalty Transfer Agreement or the Assignment Agreement as r
the case may be.
2.2 Transfer Price.
In consideration for the transfer of the Assets, LIPA vill pay LILCO S1.00 at the Closing.
The Par-ties acknowledge that LIPA is not assuming any liabilities of LILCO pursuant to this Agreement, including, without limitation, s
liabilities under the First Mortgage, the General and Refunding Indenture and the Third Mortgage.
2.3 Time and Place of Closine.
The Closing vill take place on the Closing Date, which will be as soon as practicable after the satisfaction of the conditions in Articles VI and VII below, at the offices of Hunton & Williams, 100 Park Avenue, New York, New York.
2.4 Deliveries at the Closino.
At the Closing, LILCO vill deliver to LIPA the following:.
(a) copies of the books and records included in the Assets; (b) the Deed; (c) the Personalty Transfer Agreement; (d) the Assignment Agreement; (e) a reasoned opinion of counsel if required by Sec-tion 7.8 of this Agreement; and (f) all other previously undelivered documents re-l quired to be delivered by one Party to the other at or prior to the Closing pursuant to this Agreement.
2.5 Re-transfer.
Upon the completion of the decommissioning of Shoreham, LILCO vill have the right to have any real property portion of the Assets then owned by LIPA, other i
than that real property on which improvements (generally, the j
power plant) are situated, transferred back to LILCO on terms l
hereinafter set forth.
LIPA vill convey to LILCO such real prop-erty portion of the Assets, subject only to such exceptions to title as existed on the date such real property portion of the Assets was conveyed by LILCO to LIPA.
LIPA vill give LILCO erit-ten notice of the completion of decommissioning within 30 days of its completion.
From such date of notice, LILCO must exercise its rights under this Section 2.5 within 1 year.
LIPA, or its successor, vill retain an easement for access to any real proper-ty not transferred to LILCO pursuant to this Section.
The price for any property transferred pursuant to this Section vill, if the benefit of LILCO's ownership accrues to LILCO ratepayers l' 1
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because the ro-trcnsferred roal property is used for a generating plant, be $1, plus (i) the fair market value of any improvements
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to the property made by LIPA, unless LILCO has already paid for these improvements, and (ii) any costs of the re-transfer.
If, the re-transferred real property is used for any other purpose, the price vill be fair market value and LIPA vill use the pro-ceeds to benefit LILCO ratepayers, 1
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v ARTICLE I!!
)
REPRESENTATIONS AND WARRANTIES OF LILCO LILCO represents and warrants to LIPA as follows:
3.1 Orcanization.
LILCO is a corporation duly organized, validly existing and in good standing under the laws of the State l
4 of New York and LILCO has the requisite corporate power and au-thority to carry on its business as now being conducted.
l 3.2 Authority Relative to this Acreement.
LILCO has the corporate power and authority to execute and deliver this Agree-ment and, subject to the approval of this Agreement by LILCO's shareholders as contemplated by Section 5.7 and receipt of the i
Regulatory Approvals and the Consents, to consummate the transac-tions contemplated by the Agreement.
The execution and delivery of this Agreement and the consummation of the transactions con-templated hereby have been duly and validly authorized by the Board of Directors of LILCO.
The Board of Directors of LILCO vill recommend that its shareholders approve the Agreement; and no other corporate proceedings (other than approval of the Agree-L ment by the shareholders of LILCO) on the part of LILCO are nec-essary to authorize the Agreement or to consummate.the transac-tions it contemplates.
The Agreement has been duly and validly L
executed and delivered by LILCO and, subject to shareholder ap-proval and assuming that it constitutes a valid and binding obli-gation of LIPA, constitutes a valid and binding agreement of 3
LILCO, enforceable against LILCO in accordance with its terms, L.
execpt that (a) such onforcemont may be subject to bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereafter in effect relating to creditors' rights, and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding may be brought.
3.3 Consents and Acorovals.
Except for the Regulatory Ap-provals and the filing of the Proxy Statement with the SEC pursu-ant to the Exchange Act, no filing or registration with, no no-tice to and no permit, authorization, consent or approval of any public authority is required for LILCO to r.xecute and deliver this Agreement and to consummate the transactions contemplated he.eby.
Assuming that all filings, approvals and other matters contemplated by the immediately preceding sentence have been duly accomplished, except for the Consents, to the best of LILCO's knowledge, neither the execution and delivery of this Agreement, the consummation of the transactions contemplated nor the conduct of LILCO's business relating to Shoreham will (a) violate, con-flict with or result in a breach of any provision of the Certifi-cate of Incorporation or By-laws of LILCO, (b) result in a viola-tion or breach of, or constitute (with or without due notice or lapse of time, or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, in-denture, license, lease, agreement or other instrument or !
obligation to which LILCO is a party, or by which LILCO or any of its properties or assets may be bound, or (c) violate any Legal Requirement applicable to LILCO or by which any of its properties or assets may be bound, excluding f rom the foregoing clauses
)
(b) and (c) defaults or violations that would not, individually or in the aggregate, have a material adverse effect on the busi-ness, properties, financial condition or results of operation of LILCo.
I 3.4 Licenses.
The Licenses include all licenses, permits and other approvals required for the operation of Shoreham sub-Utentially as it is currently operated unless the failure to have g
any license, permit or other approval, individually or in the ag-gregate, would not have a material adverse effect on the busi-l, ness, properties, financial condition or results of operations of l
LILCO or the transactions contemplated by this Agreement.
LILCO has fulfilled and performed all of its obligations with respect to the Licenses and no event has occurred that allows, or after i
notice or lapse of time vould allow, their revocation or termina-tion or result in any other material impairments of the rights of the holder of any License, and the Licenses contain no restrie-tions that are materially burdensome to LILCo.
3.5 Proxy Statement.
The information with respect to LILCO to be contained in the Proxy Statement will not, on the date the Proxy Statement is first mailed to shareholders of LILCO or on the date of the Shareholders' Meeting, as such Proxy Statement is 1 l l
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than cmondcd or cupplcmonted, centain any statcmant that, at such time, is false or misleading with respect to any material fact, or that omits to state any material fact required to make the statements ny) (sise or mislev ing or to correct any statement in any earlier til;...g with the SE sf the Proxy Statement or any amendment to it or any earlier communication to shareholders of LILCO with respect to the Asset Transfer.
If at any time prior to the Closing any event with respect to LILCO occurs that is or should be described in an amendn.ent of, or a supplement to, the Proxy Statement, the event will be so described and its presenta-i tion in the amendment or supplement will not contain any state-ment that, at the time and in light of the circumstances under which it is made, is false or misleading with respect to any ma-terial fact or omits to state any material fact required to make the statements not false or misleading or to correct any state-ments in any earlier communication to shareholders of LILCO with respect to the Asset Transfer.
The Proxy Statement will comply as to form with all applicable laws, including the provisions of the Exchange Act.
3.6 Insurance.
Shoreham is insured in a manner consistent with prudent utility practice followed by companies owning like properties, including all insurance required by the NRC; all ma-terial insurance policies are in full force and effect; all pre-miums due on them have been paid, and no notice of cancellation or termination has been received with respect to any such policy.
Promptly after the execution of this Agreement, LILCO will.
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provide.LIPA vith a list of a.11 :such-material insurcnco policies i
on Exhibit H hereto.
3.7 Descriptions; Insurability.
Promptly after the execu-tion of this Agreement, LILCO will provide LIPA with legal de-scriptions of each parcel of real property owned or leased by LILCO that constitutes the Assets on Exhibit I hereto.
Except as will te provided prior to closing on Exhibit J, there are no ma-terial outstanding requirements, recommendations or requests from any insurance et.mpany, the Board of Fire Underwriters, any mort-gagee or any governmental or quasi-governmental agency requiring or proposing any' repairs or work to be done at such property, or pertaining to the maintenance el such property, employment of labor or working conditions.
F 3.8 Leasen.
No part of the real property that constitutes the Assets is leased by LILCO.
3.9 Property Status.
The Assets will be transferred to LIPA free and clear of any and all Liens, other than Permitted Liens.
The Deed', Personalty Transfer Agreement and Assignment Agreement are in form sufficient to convey the property or prop-erty interests that they purport to convey.
LILCC now owns, or at the Closing Date will own, the Assets, i
3.10 Disclosure.
No representations or warranties by LILCO in this Agreement and no statement contained in any document fur-nished by LILCO to LIPA pursuant to the provisions of, or in.
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. connection with the transactions contemplated by, the Agreement, will contain any untrue statement of material fact or omit any j
material fact necessary, in light of the circumstances under which it was made, in order to make such statement not mislead-ing.
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ARTICLE IV REPRESERTATIONS AND WARRANTIES OF LIPA LIPA represents and warrants to LILCO as follows:
4.l~ Oroanization.
LIPA is a corporate municipal instrumen-tality and political subdivision of the State of New York and was created by legislation of the State of New York (Chapter 517 of the 1986 Laws of New York) and has the requisite corporate power and authority to carry on its business as now being conducted.
4.2 Authority Relative to this Acreement.
LIPA has full power and authority to execute and deliver this Agreement and, subject to the approsal of this Agreement by LILCO's sharehold-ers, receipt of the Regulatory Approvals and the satisfaction of the condition with respect to the Comparative Rate Determination, to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement and the consummation of the transactions it contemplates have been duly and validly i
- authorized by the Board of Trustees of LIPA: r.o other corporate proceedings on the part of LIPA are necessary to authorize this Agreement or to consummate the transactions it contemplates.
This Agreement has been duly and validly executed and delivered by LIPA and, assuming that it constitutes a valid and binding ob-ligation of LILCO, constitutes a valid and binding agreement of LIPA, enforceable against LIPA in accordance with its terms, ex-cept that (a) such enforcement may be subject to bankruptcy, in-solvency, reorganization, moratorium, or other similar laws now l 1
or horecitor in effoct relating to crcditors' rights, cnd (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding may be brought.
4.3 Lonsents and Acorovals.
Except for the filing of the Proxy statenent with the SEC pursuant to the Exchange Act, and the Regulatory Approvals, no filing or registration with, no no-tice to and no approval of any public authority is requi ed for LIPA to execute and deliver this Agreement and to consummate the transactions it contemplates.
Assuming that everything contem-plated by the immediately preceding sentence has been duly accom-plished, to the best of LIPA's knowledge, the execution and de-livery of'this Agreement and the consummation of the transactions j
contemplated will not (a) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provi-sions of any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which LIPA is a party or (b) violate any Legal Requirement applicable to LIPA or by which any of its properties or essets may be bound, excluding from the foregoing clauser, (a) and (b) defaults or violations that would not, individually or in the aggregate, have a material adverse effect on the business, properties, financial condition or re-sults of operation of LIPA. 1 l'
4.4 Proxy Statement.
The information with respect to LIPA to be contained in the Proxy Statement will not, on the date the Proxy Statement is first mailed to shareholders of LILCO or en the date of the Shareholders' Meeting, as such Proxy Statement is then amended or supplemented, contain any statement that, at such time, is false or misleading with respect to any material fact, or that omits to state any material fact required in order to make the statement not false or misleading or to correct any statements in any earlier filing with the SEC of the: Proxy State-ment or any amendment to it or any earlier communicat. ion to shareholders of LILCO with respect to the Asset Transfer.
If at any time prior to the Closing any event with respect to LIPA oc-curs that is or should be described in an amendment of, or a sup-plement to, the Proxy Statement, the event vill be so described and its presentation in the amendment or supplement will not contain any statement that, at the time and in light of the eir-cumstances under which it is made, is false or misleading with respect to any material fact or omits to state any material fact required to make the statement not false or misleading or to cor-L l
rect any statement in any earlier communication to shareholders of LILCO with respect to the Asset Transfer.
4.5 Disclosure.
No representations or warranties by LIPA in this Agreement and no statement contained in any document fur-l nished by LIPA to LILCO pursuant to the provisions of, or in con-nection with the transactions contemplated by, the Agreement, vill contain any untrue statement of material fact or omit any l.
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1 material fact necessary, in light of the circumstances under which it was made, in order to make such statement not mislead-ing.
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i ARTICLE V AGREEMENTS OF LILCO AND LIPA 5.1 Conduct of Business by LILCO.
(a)
Prior to April 15, 1989, LILCO vill (i) maintain Shoreham in compliance with all regulatory requirements and (ii) not operate Shoreham above 5%
power.
On and after April 15, 1989, if all approvals required by the Settlement Agreement, except shareholder approval, have been received, LILCO vill not operate Shoreham pursuant to any autho-rization to operate Shoreham that may or has been granted by the NRC, unless the Settlement is disapproved by LILCO's sharehold-ers.
After the Settlement Effective Date, LILCO vill not operate Shoreham pursuant to any authorization to operate it that may be or has been granted by the NRC.
(b)
Promptly after the Settlement Effective Date, LILCO vill (i), unless previously accomplished, remove the fuel from Shoreham's reactor and deposit the fuel in the Shoreham l
spent fuel pool, (ii) withdraw LILCO's pending applications to the NRC for 25% and 100% power operating licenses and cease all steps to prosecute these applications, (iii) apply to the NRC for a " possession only" license and/or other license amendments as are necessary to facilitate the License Transfer, (iv) cooperate with representatives of the Power Authorities on transition and personnel planning and report matters of significance concerning l
the status of Shoreham, and O') notify the Power Authorities of any emergency or other change in the normal status of Shoreham - - - -
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and of any regulatory or govornmental ecmplaints, investigations, hearings or proceedings (or communications indicating that the same may be contemplated) if such events would be material.
(c)
During the period commencing on June 16,1988 and continuing until the Closing or earlier termination of this Agreement, neither Party will take any action that would result y
in the representations and warranties of that Party contained in this Agreement being untrue or incorrect in any material respect as of June 16, 1988 or at any future date, s
(d)
If the Settlement becomes effective but this Agreement is terminated without the closing having occurred, LILCO vill enter into an agreement with a third party designated by LIPA pursuant to which Shoreham will be transferred to such third party on terms substantially similar to this Agreement.
(e)
Notwithstanding any other provision in this Agree-ment, LILCO vill neither remove nor otherwise affect Other Prop-erty (i) except after consulting with NYPA and giving due consid-eration to minimizing costs Attributable to Shoreham or (;i) if inconsistent with an NRC approved decommissioning plan.
5.2 Transfer of Shoreham to LIPA.
(a)
Promptly after the Settlement Effective Date, LILCO and LIPA, jointly, will (i) re-quest that the NRC transfer Shoreham's NRC licenses to LIPA and (ii) seek the other Regulatory Approvals for the Asset Transfer, except for PSC approval which will have been obtained on or.
before th3 setticmont Effective Dato.
LILCo vill mako ony fil-ings required by Article 318 of the New York State Tax Law and any filings required by the County of Suffolk, State of New York with respect to transfer taxes.
(b)
No document (other than the Proxy Statement) vill be filed with any Federal regulatory body requesting the approval of the Asset Transfer or the License Transfer unless it has been approved by both LILCO and LIPA.
LILCO and LIPA, subject to NYPA review and consent, which will not be unreasonably withheld, vill cooperateinthepreparationandfilIngofallsuchdocuments, and in the conduct of all proceedings, necessary for the License Transfer and the other Regulatory Approvals necessary to consum-mate the Asset Transfer.
5.3 Fundino, Manacement and Staffine of Shoreham.
(a)
LILCO vill pay LIPA for Costs Attributable to Shoreham.
LIPA vill cause NYPA to provide LILCO with an annual cash requirements budget showing NYPA's Shoreham cash requirements by month at least three months in advance of the beginning of the year to which the budget applies.
Within 30 days following submission of this budget, LILCO vill notify NYPA and LIPA of any questions or comments concerning the budget.
All of LILCO's comments and questions vill be considered in good faith and LIPA vill cause NYPA to promptly prepare and submit to LILCO a final revised bud-get. Bills for Costs Attributable to Shoreham vill be given to LILCO on a monthly basis in accordance with the terms of the Site _. _
Agreement.
These bills will include supporting information and will be certified as to accuracy and conformity with this Agree-ment and the Site Agreement by an appropriate NYPA officer.
LILCO intends to submit copies of the annual budget and the monthly bills to the PSC for its review and comment.
LILCO and NYPA vill be subject to audit by a nationally recognized account-ing firm or another firm mutually agreed to by the Parties to en-sure that costs incurred and billed are, in fact, Costs Attribut-able to Shoreham or Shoreham Costs incurred by LILCO, as the case may be.
LILCO will advance LIFA, a reasonable amount of operating or other funds if such funds are required to be advanced by any regulatory authority having jurisdiction over Shoreham or if LILCO and LIFA agree that such funds should be advanced.
(b)
On and after the Closing Date, LILCO vill use its best efforts to make available those of its employees previously assigned to Shoreham whom NYPA selects as needed for its activi-ties at Shoreham; provided, however, LILCO may assign or transfer certain of such employees elsewhere in its system, consistent with its own needs and objectives giving due regard to minimizing Costs Attributable to Shoreham.
L 5.4 Access.
(a)
Beginning on the Settlement Effective Date and continuing until the Closing Date or the earlier termi-nation of this Agreement, LILCO will allow LIPA's authorized rep-resentatives, including representatives of NYPA, access during normal business hours to Shoreham and any documents (as they then.
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exist, not rGquiring additional.ork) that are material to Shoreham's operations; this vill not, however, (i) create any ob-
' ligation to maintain or retain any records other than in the or-dinary course of business or (ii) interfere in any substantial way with the ongoing conduct of LILCO's business.
(b)
LILCO agrees tha*: on and after the Closing it will allow LIPA's authorized representatives, including representa-tives of NYPA, during normal business hours to have access to and examine and take copies of all books and records (as they then exist, not requiring additional work) of LILCO relating to Shoreham which are not a part of the Assets (including, but not limited to, correspondence, memoranda, books of account and pay-roll records); this will not, however, interfere in ar.y substan-tial way with the ongoing conduct of LILCO's business.
All books and records relating to Shoreham which are not delivered to LIPA hereunder will be preserved by LILCO in accordance with such pru-dent utility practice as LILCO would have observed had the Assets not been transferred.
(c)
The Power Authorities agree to hold in confidence, unless compelled to disclose by judicial or administrative pro-cess, all documents and information concerning Shoreham furnished to LIPA or NYPA in connection with the transactions contemplated t
l' by this Agreement (except to the extent that such information or documents (i) were generally available to the public other than as a result of a disclosure by LIPA or NYPA, (ii) available to -.
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LIPA or NYPA on a non-confidential basis prior to disclosure to them by LILCO or (iii) Svailable to LIPA or NYPA on a non-cot.fidential basis from a source other than LILCO, provided that such source is not known, and by reasonable effort could not be known, by LIPA or NYPA to be bound by a confidentiality agree-ment with LILCO or otherwise prohibited from transmitting the in-formation to LIPA or NYPA by a contractual, legal or fiduciary obligation) and LIPA or NYPA will not release or disclose such information to any other person, except its advisors in connec-tion with this Agreement,who will have first been advised of the confidentialityprovisionogthisSection5.4andhavesgreedto comply with such provisions.
If the transactions contemplated by this Agreement are not consummated, (1) such confidence shall be maintained except to the extent the information comes into the
. public domain througn no fault.of LIPA or NYPA, and, (2) if re-quested by LILCO, the Power Authorities will return to LILCO or:
destroy all copies of written information furnished by LILCO to LIPA or NYPA.
5.5 LILCO's Rioht to Electric Generation.
If the Shoreham site is used for electric generation, LILCO may at its option purchase.any output on the following terms: (a) if produced by non-fossil fuels, at LIPA's, or LIPA's successor's, cost of pro-duction or (b) if produced by fossil fuels, LILCO vill have the right to make the first offer to purchase such output and LIPA vill sell the output to LILCO at the price. offered unless a bona fide third party is willing to pay a higher price for such
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eutput, in which evont LILCO vill'be given on option to purchase the output at such higher. price.
As used in this Agreement, cost of production will mekn only LIPA's, or LIPA's successor's, out-of-pocket costs and does not include any return on capital.
b 5.6 offsets.
LILCO is hareby granted as a credit against obligations to LIPA or NYPA (i) any revenues derived from the salvage and sale of any portion of the Assets removed from Shoreham and sold, (ii) the fair market value of any of the As-sets removed from Shoreham and used elsewhere-(other than in the caseof'Assetsre-tIansferredpursuanttoSection2.5, in which case such Section will gcvern) or (iii) the proceeds from any
-t claim against a third party made by LIPA or NYPA relating to Shoreham after the Closing Date.
i 5.7 Proxy Statement; Shareholder Aporoval.
(a) The Parties will cooperate in the preparation and filing of a prelimi. nary l
. proxy statement with the SEC as soon as practicable after the date of this Agreement.
Each Party will respond to the comments i
of thtfSEC (if any) and furnish all information required to pre-pare the Proxy Statement.
As soon as practicable after receiving comments-from the SEC, the Proxy Statement will be mailed to LILCO's shareholders and, if necessary, amended or supplemental proxy material will be promptly circulated and proxies resolicited.
LILCO will make all necessary filings with respect to the Asset Transfer under the Exchange Act and its regulations and any applicable state blue sky or securities laws.
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(b)
LILCO agrees that (i) it will call a meeting ofl
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its shareholders for the purpose of considering the Settlement; (ii)-it will submit this Agreement and the transactions it con-templates at the meeting; and (iii) its Board of Directors will recommend in the Proxy Statement that its shareholders. approve i
this Agreement and the transactions it contemplates.
LILCO fur-ther agrees that approval of this Agreement and the transactions i
.it contemplates will require the affirmative vote of a majority of the shares of LILCO's Common Stock, $5.00 par value, and Pre-ferred Stock, $100 and $2S par value, present in person or repre-sented by proxy at the meeting, voting together as a single class with holders of Common Stock and $100 Preferred Stock having one vote per share and holders of $25 Preferred Stock having 1/4 vote per share.
5.8 Withdrawal of LIPA Proposals.
LIPA vill not submit any proposals for the acquisition of LILCO by LIPA prior to the ear-I lier of (i) the Settlement Effective Date, (ii) the termination of this Agreement pursuant to Section 9.1 hereof or (iii) breach, L
by LILCO, of the agreements contained in Section 5.7 hereof.
5.9 Maintenance of Credit Rating, LILCO will use its best efforts to maintain an investment grade rating on General and Re-funding Debt (or the senior outstanding long-term debt when there 4
are no General and Refunding Bonds or First Mortgage Bonds out-standing) throughout the period after the closing until all Costs Attributable to Shoreham are paid. 1 l
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5.10 Insurance Premiums.
If.at any time, a refund of the premium or a portion thereof, or a dividend, in paid on an insur-ance policy related to Shoreham and whose premium was paid or re-imbursed by LILCO, LILCO vill be entitled to the refund or divi-dend.
LILCO may, at its option, pay any insurance premium directly, or be designated as a named insured, if LILCO benefits-by such direct' payment or designation.
LILCO-vill pay insurance premiums directly if (i) requested by LIPA and (ii) such payment vill lower Costs Attributable to Shoreham.
5.11 hurtherAssurances.
Each of the Parties agrees to use its best efforts to take all action necessary and proper under the terms and conditions of this Agreement and under applicable law or regulation to consummate the transactions contemplated by this Agreement.
In case at any time after the Closing any fur-ther action is necessary and proper to carry out the purposes of this-Agreement, LILCO and LIPA vill so act, including providing NYPA reasonable access to LILCO's offsite training facility, whose use by NYPA vill not be inconsistent with LILCO's use of
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the facility.
In the case of any Licenses or Contracts which cannot be effectively assigned to LIPA, LILCO vill enter into an appropriate arrangement with LIPA providing LIPA with the bene-fits of such non-assignable Contracts or Licenses.
The Parties vill cooperate in obtaining for LIPA benefits of Other contracts or other Licenses on terms that will reasonably minimize Costs Attributable to Shoreham..
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"-o 5.12 Release.
If LIPA has identified a bona fide purchaser i
for all or any pertion of the Assets, LILCO vill,-upon the re-quest of LIPA, take 311 action necessary to release the liens of the First-Mortgage, th0 General and Refunding Indenture anf. +he Third Mortgage in respect of the Assets to be sold to the extent necessary to consummate the sale; provided, however, that the proceeds from such sale are made available to LILCO in an amount which equals or exceeds the present value of any increase in LILCO debt service attributable to such release; and provided, further, that any remaining proceeds shall be applied, at the di-rection of the PSC, to moderate directly LILCO's electric rates.
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i ARTICLE VI CONDITIONS TO THE OBLIGATIONS OF LILCO The obligations of LILCO under this Agreement will be sub-ject to the satisfaction at or before the Closing of each of the following conditions, each of which may be waived in writing by LILCO except as otherwise provided by law.
6.1 Truth of Representations and Warranties.
The represen-tations and warranties of LIPA contained in this Agreement will be_true and correct in all material respects as of June 16, 1988 and April-14, 1989.
They will be deemed to have been made again at and as of the Closing and will then be true and correct in all material respects except for changes specifically contemplated-by this Agreement, and, at the Closing, LIPA will deliver to LILCO a certificate to that effect signed by a duly authorized officer of LIPA.
6.2 Performance by LIPA.
Each of the obligations of LIPA i
to be performed by it on or before the Closing Date pursuant to the terms of this Agreement will have been duly performed in all material respects by the Closing Date.
At the Closing, LIPA will deliver to LILCO a certificate to that effect signed by a duly
' authorized officer of LIPA.
6.3 Shareholder Acoroval.
The approval of the shareholders of LILCO referred to in Section 5.7 vill have been obtained.
1 6.4 Litiaation.
No prolimincry or parmonont injunction or other order by any court or administrative agency that prevents the consummation of the Asset Transfer, the License Transfer or the Settlement will remain in effect-(each' party agreeing to use
'its best efforts to have_any such injunction or order lifted).
6.5 Reculatory Aporovals and Consents.
The Parties will have_ received all necessary Regulatory Approvals and Consents,_
each of which wil1 be in full force and effect as of the Closing.
6.6 Settlement Effective.
The Settlement Effective Date f
3 will have occurred.
6.7 other Acreements.
LILCO and LIPA will have entered into the Site Agreement and NYPA and LIPA will have entered into an agreement under which NYPA agrees to perform the objectives contemplated to be performed by it under this Agreement.
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ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF LIPA The obligations of LIPA under this Agreement will be subject-to the satisfaction at or before the Closing of each of the.fol-loving conditions, each of which may be waived in writing by LIPA except as provided by law.
7.1 Truth of Representations and Warranties.
The represen-tations and warranties of LILCO contained in this Agreement will be true and correct in all material respects as of June 16, 1988 and April 14, 1989.
They will be deemed to have been made again at and as of the Closing and will then be true and correct'in all material respects except for changes specifically contemplated by this Agreement, and at the Closing LILCO vill deliver to LIPA a certificate to that effect signed by a duly authorized officer of LILCO.
7.2 Performance by LILCO.
Each of the obligations of LILCO to be performed by it on or before the Closing Date pursuant to the terms of this Agreement will have been duly performed in all.
material respects by the closing Date.
At the Closing, LILCO will deliver to LIPA a certificate to that effect signed by a duly authorized officer of LILCO.
7.3 Shareholder Acoroval.
The approval of the shareholders of LILCO referred to in Section 5.7 will have been obtained. i
7,4 Litlaation.
No proliminary or p3rmansnt injunction or-other order by any-court or administrative agency that prevents the consummation of the Asset Transfer, the License Transfer or n
the Settlement will remain in ef f ect -(each Party agreeing to use L
its best efforts to have any such injunction or order' lifted).
7.5 Reculatory Accrovals and Consents.
The Parties will have received all necessary Regulatory Approvals and Consents, i
each of which will be in full force and effect as of the Closing.
7.6 Comparative Rate Determination.
Prior to the Settle-ment Effective Date, the Board of Trustees of LIPA vill make the Comparative Rate Determination.
Nothing in this Agreement should be construed as an acknowledgement by LILCO of the accuracy or validity of_the Comparative Rate Determination.
7.7 Site Acreement.
LILCO and LIPA vill have entered into the Site Agreement.
7. 'J Ooinion of Counsel.
At Closing, LILCO will provide LIPA with a reasoned opinion of counsel, in form and substance satisfactory to LIPA, that the Asset Transfer, the License Trans-I fer and the decommissioning of Shoreham will not constitute a breach of, or default under, and are not prohibited by, the First Ma~asge, the General and Refunding Indenture or the Third Mort-g et.s.
In the alternative, if such an opinion cannot be obtained or given by LILCO with respect to one or more of the First Mort-gage, the General and' Refunding Indenture or the Third Mortgage, i i
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LILCO.shall-transfor the A3sota to LIPA free of that mort 90go or-
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indenture for which such an opinion can not be obtained.
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ARTICLE VIII SURVIVAL AND INDEMNIFICATION 8.1.
Survival of Representations, Warranties and Acreements.
The representations, warranties, covenants-and agreements of LILCO and LIPA contained in this Agreement will survive the clos-ing and will expire and terminate six years after the later of the decommissioning of Shoreham or the final disposition of its nuclear fuel; provided, however, LILCO's and LIPA's obligations
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to indemnify and hold harmless will not terminate at such time-with respect to any matter as to which the Indemnified Party has previously made a claim for indemnification.
8.2 Indemnification by LILCO.
LIICO agrees to indemnify-and hold harmless the Power Authorities against any Costs in con-nection with any claim, action, suit, proceeding or investigation arising out of or relating to-(a) any breach by LILCO of a repre-sentation,_ warranty or agreement under this Agreement, (b) any failure to comply with any " bulk sales" laws applicable to the transactions contemplated by this Agreement and (c) the First Mortgage, the General and Refunding Indenture and the Third Mort-I gage.
LILCO further agrees to waive and relinquish any claim, suit or cause of action it may have against LIPA, and hereby for-ever releases and discharges LIPA from any potential liability or claim, suit or cause of action LILCO may have in the future, in connection with (a) LIPA's proposal to acquire LILCO and (b) the solicitation of proxies by LIPA or LILCO to elect nominees to -
- LILCO's Board of Directors and in connection with certain other
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matters at the 1988 Annual Meeting-of LILCO's shareholders.
j 8.3 Indemnification by LIPA.
LIPA agrees to indemnify and hold harmless LILCO against any Costs in connection with any claim, action, suit, proceeding or investigation arising outfof.
or relating to any breach by LIPA of a representation, warranty or agreement under this Agreement.
LIPA further agrees to waive and relinquish any claim, suit or cause of action it have may against LILCO, and hereby forever releases and discharges LILCO from any potential liability or claims LIPA may have in the fu-ture, in connection with (a) LIPA's proposal to acquire LILCO and (b) the solicitation of proxies by LIPA or LILCO to elect nomi-neen to LILCO's Board of Directors and in connection with certain other metters at the 1988 Annual Meeting of LILCO's rhareholders.
8.4 Procedure for Indemnification.
(a)
If an Indemnified Party receives notice of a Third Party Claim with respect to which an Indemnified Party is entitled to indemnification, the Indemnified Party will give the Indemnifying Party prompt notice thereof after becoming aware of such Third Party Claim.
Such no-tice vill describe the Third Party Claim in reasonable detail, and will indicate the amount (estimated if necessary) of the Third Party Claim that has been or may be sustained by the Indem-nified Party.
Such notice will be a condition precedent to any liability of an Indemnifying Party under the provisions for in-demnification contained in this Agreement; provided, however, l l
that tho failure to doliver cuch notico will not offect tho in-demnification provided hereunder except to the extent that the 1
' Indemnifying Party will have been actually and materially preju-diced as a result of such failure.
The Indemnifying Party may elect to compromise or defend, at the Indemnifying Party's own~
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expense and by the Indemnifying Party's own counsel, any Third Party Claim.
If the Indemnifying. Party elects-to compromise or defend such Third Party claim, it-will within 30 days of receipt i
of notice of the Third Party Claim (or sooner, if the nature of the Third Party Claim so requires) notify the Indemnified Party of its intent to do so, and the Indemnified Party will' cooperate, a
at the expense of the Indemnifying Party,-in_the compromise of, or defense against, such Third Party Claim.
If the Indemnifying Party elects not to compromise or defend against the Third Party I:
Claim, or fails to notify the Indemnified Party, the Indemnified
-Party may pay, compromise or defend such Third Party Claim at the Indemnified Party's expense.
Notwithstanding the foregoing, nei-ther the Indemnified Party nor the Indemnifying Party may settle er compromise any claim over the objection of the other; j
orovided, however, that consent to settlement of compromise vill not be unreasonably withheld.
In any event, the Indemnified Party and the Indemnifying Party may each participate, at its own 1
expense, in the defense of such Third Party claim.
If the Indem-nifying Party chooses to defend any claim, the Indemnified Party will make available to the Indemnifying Party any personnel or any books, records or documents with3t its control that are necessary or appropriate for such defense. 1
(b)
Notwithstanding the foregoing, if On offer of set-I tiement.or compromise is received by the Indemnifying Party with respect to a Third Party Claim and the Indemnifying Party notifies the Indemnified Party in writing of the Indemnifying Party's willingness to settle or compromise such Third Party claim on the basis set forth in such notice and the Indemnified Party declines to accept such settlement.or compromise, the In-demnified Party may continue to contest such. Third Party Claim, free of any participation by the Indemnifying Party, at the In-demnified Party's sole expense.
The obligation of the Indemni-fying Party to the indemnified Party with respect to such Third Party Claim will be equal to the lesser of (i) the amount of the offer of settlement or compromise that.the Indemnified Party de-clined to accept plus the costs and expenses of the Indemnified Party prior to the date the Indemnifying Party notifies the In-demnified Party of the offer to settle or compromise and (ii) the amount the Indemnified Party is ultimately obligated to pay as a result of the Indemnified Party's continuing to contest such Third Party Claim, including costs and expenses with respect thereto.
B.5 Remedies Cumulative.
The remedies provided in this Ar-ticle VIII will be cumulative and will not preclude assertion by any party of any other rights or the seeking of any and all other-remedies.
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1 8.6 'cocoeration.
With rssp3ct to any claim' involving cny_
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. Party, the other Party will cooperate in all. reasonable respects with such Party'whether or not such Party has been named as a
. party to such claim.- Such cooperation vill include the retention-and (upon the other Party's request) the provision to such Party.
of records and information that are reasonably relevant.to such claim, and making employees available on a mutually convenient basis to provide additional.information and explanation of any-material provided hereunder.
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i ARTICLE IX TERMINATION h
9.1 - Termination.
This Agreement may be terminated, and the L
Asset Transfer abandoned, at any time _ prior to the Closing Dates l'
(a) by the mutual consent of the Board of Directors of LILCO and the Board of Trustees of LIPA; (b)- by either LILCO or LIPA if, without fault of the terminating party, the Asset Transfer has not bsen consummated on or before December 31, 1990; t
l-(c) by either LILCO or LIPA if any court of competent jurisdiction has issued a final decision, not subject to appeal, prohibiting the consummation of the transactions contemplated by I
this Agreement; or (d) by either LILCO or LIPA if the PSC does not ap-prove, without modification, the Settlement Agreement and this i
Agreement; or (e) by either LILCO or LIPA if LILCO's shareholders disapprove the Settlement Agreement or this Agreement.
Notwithstanding the termination of this Agreement, if the Settlement Effective Date has occurred, (a) the provisions of Ar-ticle VIII of this Agreement will continue in full force and ef-feet and (b) the convenants contained in Section 5.1 of this Agreement will survive and continue to be fully enforceable.
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ARTICLE X MISCELLANEOUS 10.'1 Headinas.
The descriptive headings of the several.Ar-ticles'and sections of this Agreement are inserted for conve-nience only and do not affect the meaning or interpretation of this Agreement.
10.2 Assianment.
This Agreement binds and inure: to the benefit of the Parties and their respective successors and per-mitted assigns, but this Agreement may not be assigned-by either Party without the prior written consent of the other Party.
Not-withstanding the foregoing, LIPA shall have the ability to trans-fer and assign any or all of its rights, interests or obligations i
hereunder.to any direct or indirect wholly-owned subsidiary of
-i LIPA.
i 10.3 Modifications, Amendments and Waivers.
At any time prior to the Closing Date (notwithstanding any shareholder ap-preval), if-authorized by their respective Board of Directors or Board of Trustees, as the case may be, and to the extent permit-ted by law, (a) the Parties may, by written agreement, modify, amend or supplement any term or provision of this Agreement and (b) any term or provision of this Agreement may be waived by the Party that is entitled to the pertinent benefits.
Any written instrument or agreement referred to in this paragraph will be validly and sufficiently authorized for the purposes of this Agreement it signed on behalf of LILCO or LIPA by a person authorized to sign this Agreement.
h 10.4-Notices.
Any r.etices or other communications required or permitted hereunder shall be sufficiently given if sent by certified or. registered mail,-postage prepaid, addressed as:fol-lows:
(a)
If to LIPA, to:
Long Island Power Authority 114 Old Country Road Suite-204 Mineola, New York 11501 Attention:
Chairman of the Bo -d of Trustees Copy to:
Stanley B. Klimberg, Esq.
Long Island Power Authority 1515 Broadway, 53rd Floor New York, New York 10036 and a copy to:
Skadden, Arps, Slate, Meagher & Flom t
919 Third Avenue New York, New York 10022 Attention:
Edmund C. Duffy, Esq.
(b)
If to LILCO, to:
Long Island Lighting Company 175 East Old Country Road Hicksville, New York 11801 Attention:
Chairman of the Board q
Copy to:
l Victor A. Staffieri, Esq.
Long Island Lighting Company l
175 East Old Country Road Hicksville, New York 11801 and a copy to:
Hunton & Williams L
707 E. Main Street Richmond, Virginia 23212 l
Attention:
W. Taylor Reveley, III, Esq.
L f
Lorsuch'ot!,st 4jAress on is furnishsd in writing by such party, and any such notice'er communication will be deemed to have been given as of the date so mailed.
10.5 Specific Performance; Remedies Not Exclusive.
LIPA and LILCO acknowledge that the other will not have an adequate remedy at law for money damages in the event that the terms and
_ provisions of this Agreement are not performed and therefore agree that the Parties will be entitled to specific enforcement in addition to any other remedy to which they may be entitled.
10.6 counterparts.
This Agreement may be executed in two I
or more counterparts all of which-will be considered one and the same agreement and each of which will be deemed an original.
10.7 Governino' Law.
This Agreement will be governed by the
'I laws of the State of New York (regardless of the laws that might be applicable under principles of conflicts of law)-as to all matters, including but not limited to matters of validity, con-Li struction, effect and performance.
1.
j 10.8 Severability.
If any aspect of this Agreement is held l
by a court of competent jurisdiction or other authority to be invalid, void, unenfcrceable or against its regulatory policy, the rest of the Agreement will remain in full force and effect and will in no way be adversely affected.
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,,IN WITNESS WHEREOF, cach of.the,Part19s to'this AgrGement, pursuantrto the approval'and authority duly given by resolutions
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adepted by its Board of Directors or Board.of~ Trustees, as the case may-be, have executed this Agreement and had it attested or witnessed by a duly authorized officer or trustee, as the' case may be.
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LONG ISLAND LIGHTING COMPANY-d By.N>
k CM k O w Cha t 'm n el thh Board t
Attest:
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By'
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'A M _{\\
Sec~retary
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LONG ISLAND PCWER AUTHORITY By Chairman of the Board of Trustees a
Witness:
Yh!M b
By_
Acting Exe/::utive Direcfor and General Counsel (
NYSC/PU:!11ccaspa2..
ASSET AGREEMENT' EXH8B8T A Page 1 of-4 EXHIBIT A to Amended and Restated.
Asset Transfer Agreement between-Long Island Lighting Company and Lono Island Power Authority FORM OF DEED f
THIS INDENTURE, made the day of
, nineteen hundred-and BETWEEN party of the first part, and party of the second part, WITNESSETH, that the party of the first part, in consideration of the premises of the Amended and Restated Asset Transfer Agree-ment,.does hereby-remise, release and quitclaim unto the party of L
the second part, the heirs or successors and assigns of the party i-i
[
of the second part forever, l.
L ALL that certain plot, piece or parcel of land, with the build-ings and improvements thereon erected, situate, lying and being in the RESERVING FROM this conveyance all of the following described i
ASSET' AGREEMENT EXHIB2T A 1
Page 2 of 4 Other Property, together with an exclusive, perpetual easement to run with said Other Property for ingress to and egress from the Other Property at.a location designated by the party of the first i
part (state the manner) across the Property:
(description)-
TOGETHER with all right, title and interest, if any, of the party of the first part in and to'any streets and roads abutting the above described premises to the center lines thereof; TOGETHER i
with the appurtenances and all the estate and rights of the party of the first part in and to said premises, except for the reser-vation described above; TO HAVE AND TO HOLD the premises herein granted unto the party of the second part, the heirs or succes-sors and assigns of the party of the st.ond part forever.
i AND the party of the first part, in compliance with Section 13 of the Lien Law, hereby covenants that the party of the first part will receive the consideration for this conveyance end will hold the right to receive such consideration as a trust fund to be ap-c plied first for the purpose of paying the cost of the improvement and will apply the same first to the payment of the cost of the improvement before using any part of the total of the same for any other purpose.
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ASSET AGREEMENT EXH8 BIT A Page13 of 4
-l The word " party' shall be construed as if it read " parties" when-ever the sense of this indenture so. requires.
IN WITNESS WHEREOF, the party of the first part has caused thic deed to be executed in its name by a duly authorized officer the day and year first above written.
LONG ISLAND LIGHTING COMPANY i
By:
Its:
IN THE PRESENCE OF:
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ASSET AGREEMENT' EXH3 BIT A Page 4 of 4-STATE OF NEW YORK
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ss:
COUNTY OF
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On'the day of 19__, before me personal-ly came to me known, who being by me duly sworn, did depose and say that she/he resides at that she/he is the of the corporation described in and which executed the foregoing in-strument; that she/he knows the seal of said corporation; that the seal affixed to said instrument is such corporate. seal; that it was so affixed by order of the board of directors of said cor-poration, and that she/he signed her/his name thereto by like order.
My commission expires Notary Public
ASSET AGREEMENT EXHIBIT B m
Page 1 of 4 EXHIBIT B to Amended and Restated
[
Asset Transfer Agreement between Long Island Lighting Company and Lono Island Power Authority FORM OF PERSONALTY TRANSFER AGREEMENT
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THIS PERSONALTY TRANSFER AGREEMENT, dated as of
, 1989, between LONG ISLAND LIGHTING COMPANY, a New York corporation (LILCO), and LONG ISLAND POWER AUTHORITY, a cor-porate municipal instrumentality and political subdivision of the State of New York created pursuant to Chapter 517 of the 1986 Laws of New York (LIPA), recites and provides:
RECITALS:
WHEREAS, LIPA and LILCO have executed and delivered an Amended and Restated Asset Transfer Agreement (the " Asset Trans-I fer Agreement"), providing for the transfer of certain assets and rights of LILCO to LIPA upon and subject to certain conditions contained therein; and WHEREAS, this Personalty Transfer Agreement is given by LILCO to LIPA pursuant to Section 2.4 of the Asset Transfer Agreement (the terms used herein shall have the same meaning as in the Asset Transfer Agreement).
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ASSET AGREEMENT EXHIBIT B Page 2 of 4 PERSONALTY TRANSFER AGREEMENT:
1 NOW, THEREFORE, for and in consideration of the premises of
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Asset Transfer Agreement and other good and valuable considera-tion, the receipt and sufficiency of which are hereby acknowl-I edged, LILCO hereby grants, bargains, assigns, transfers, sets over and delivers to LIPA all of the right, title and interest of LILCO in and to the personal property, described in Schedule B-1 attached hereto (the Personal Property).
TO HAVE AND TO HOLD, such assets and rights, with all the I
appurtenances thereto, unto LIPA, its successors and assigns, forever, free and clear of all Liens other than Permitted Liens.
To the extent that the assignment of any claim, contract, i
license, commitment or any claim or right or any benefit arising thereunder or resulting therefrom to be assigned to LIPA as pro-vided herein shall require the consent of any party thereto, this i
Personalty Transfer Agreement will not constitute an assignment of the sa-a if any attempted assignment would constitute a breach thereof, and LILCO will cooperate with LIPA to provide for LIPA the benefits under any such claims, contracts, licenses, commit-ments or any claim or right or any benefit arising thereunder or resulting therefrom, including enforcement, for the benefit of LIPA, of any and all rights of LILCO against the other parties thereto arising out of the breach or cancellation thereof by such other party or otherwise.
4
ASSET AGREEMENT
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EXHIBIT B i
Pago 3 of 4 LILCO hereby covenants and agrees to sign, execute and de-liver, or cause to be signed, executed and delivered, and to do or make or cause to be done or made, upon reasonable request of LIPA, any and all agreements, instruments, papers, deeds, acts or things, supplemental, confirmatory or otherwise, as may be rea-sonably required by LIPA for the purpose of, or in connection with, acquiring or more effectually vesting in LIPA or evidencing the vesting in LIPA of all of the right, title and interest of LILCO in and to the Personal Property.
Except as otherwise provided in the Asset Transfer Agree-ment, kI,LCO MAKES NO WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE AND THE PURCHASER ACCEPTS PERSONAL PROPERTY IN ITS CONDITION "AS IS".
IN WITNESS WHEREOF, LILCO has caused this Asset Transfer Agreement to be executed in its name by a duly authorized offi-cer.
LONG ISLAND LIGHTING COMPANY, a New York corporation By:
l Its:
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I
ASSET AGREEMENT EXHIB8T B Page 4 of 4 STATE OF of
, To-Wit The foregoing instrument was acknowledged before me this day of
- 19__,
by
, as of Long Island Lighting Company, a New York corporation, to be the act and deed of the corporation.
.i My commission expires Notary Public I
This instrument was prepared by:
(Name) i (Address)
ASSET AGREEMENT EXH7 BIT C Page 1 of 2 EXHIBIT C to Amended and Restated Asset Transfer Agreement by and between Long Island Lighting Company and Lono Island Power Authority THE ASSETS 1.
A1.1 real and personal property owned by LILCO that is situated within the Fence as shown on the site layout attached as Schedule C-1-hereto and well pump houses also shown on Schedule C-1 hereto, but excepting the property within the Fence excluded from the Assets as Other Property on this Exhibit.
2.
An easement along New Beach Road for access to the site.
3.
An easement for Parking Area No. 1 (area no. 123 on Schedule C-1 hereto).
4.
Such easements for ingress and egress to the Assets over the Other Property as are necessary for LIPA's or NYPA's ownership, possession, maintenance, decommissioning or disman-tling of Shoreham.
Such access will be consistent with the Site Agreement in a manner that fairly balances the respective busi-ness objectives of LIPA and LILCO.
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ASSET AGREEMENT EXH888T C PAGE 2 of 2 THE OTHER PROPERTY 1.
All real and personal property owned by LILCO that is situated outside the Fence.
2.
All spare parts related to Shoreham.
All spare parts will be moved outside of the Fence before the Closing Date or as soon as. practicable thereafter.
3.
The other personal property wherever located listed on 4
Schedule C-2 hereto.
4.
Such easements reserved by LILCO for ingress to and I
egress from the Other Property, including a permanent easement providing access to the Office and Service Building Annex through the Security Building and over the Assets (building no. 4 on I
Schedule C-1).
Such access will be consistent with the Site Agreement in a manner that fairly balances the respective busi-ness objectives of LIPA and LILCO.
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SCHEDULE C-2 Page 1 of 2 L OTHER PROPERTY Clean Generator Hydrogen Seal Oil System (skid mounted equipment and panels) Generetor Stator Cooling System (skid mounted equipment and panels) Turbine High Pressure Control Fluid (skid mounted equipment r.nd panels) Turbine Lube Oil and Turning Gear Lube Oil Conditioning (skid mounted equipment) Main Generator Transformers Reserve Station Supply Transformer Primary Containment Post LOCA Hydrogen and Oxygen Control (skid mounted equipment and panels) Source Range Monitoring (drawers) Intermediate Range Monitoring (drawers) Local Panel Range Monitoring (drawers) Average Power Range Monitoring (drawers) Traversing Incore Probe (TIP) (drawers) Rod Block Monitor (drawers) Power Range Reactor Recirculation Flow Units (drawers) Measuring & Testing Equipment (M&TE) Spare Parts Inventory vehicles / Boats Star Tree Computer
SCHEDULE C-2 { Page 2 of-2 Security Search Equipment I MiscellaneoVA tools Motor OperJtors (Note 1) Electrical Breakers (Note 2) Main Turbine / Generator / Exciter Contaminated Control Rod Drive (Drives, Pumps, HCU's) Feedwater. System (Turbines and Pumps) Reactor Core Isolation-Cooling (Skid mounted equipment, pump / turbine) Nuclear Boiler (Safety-Relief Valves) High Pressure Coolant Injection (skid mounted equipment, pumps / turbine) i Notes 1. Includes all motor-operators for valves in systems not re-quired for decommissioning or the license. 2. Includes all breakers for components in systems not required for decommissioning or the license. I i I I l
ASSET AGREEMENT EXHIBIT D EXHIBIT D q to Amended and Restated Asset Transfer Agreement L by and between Long Island Lighting Company and Lono Island Power Authority CONTRACTS i e The following is an inventory of all contracts, leases, com-mitments, sales orders and other agreements related exclusively to the operation of Shoreham: (To be completed promptly after the execution of this Agreement and updated as of the Closing Date.) OTHEP. CONTRACTS The follovi.ng is an inventory of all contracts, leases, com-mitments, sales orders and other agreements that relate-(but not-exclusively) to Shoreham: (To be completed promptly after the execution of this Agreement and updated as of the Closing Date.) N
ASSET AGREEMENT EXHIBIT E EXHIBIT E tc Amended and Restated Asset Transfer Agreement by and between Long Island Lighting Company and Lonc Island Power Authority LICENSES The following is an inventory of all licenses, permits and other approvals related exclusively to the operation of Shoreham: [To be completed promptly after the execution of this Agreement and updated as of the Closing Date.) OTHER LICENSES s The following is an inventory of all licenses, permits and-other approvals that relate (but not exclusively) to Shoreham: (To be completed promptly after the execution of this Agreement and updated as of the Closing Date.) 1 P
ASSET AGREEMENT EXHIBIT F Page 1 of 4 EXHIBIT F to Amended and Restated Asset Transfer Agreement between Long Island Lighting Company and Lona Island Power Authority FORM OF ASSIGNMENT AGREEMENT THIS ASSIGNMENT. AGREEMENT, dated as of , 1989, between LONG ISLAND LIGHTING COMPANY, a New York corporation (the Assignor), and LONG ISLAND POWER AUTHORITY, a corporate municipal instrumentality and political subdivision of the State of New York created pursuant to Chapter 517 of the 1986 Laws of New York (the Assignee), recites and provides: RECITALS: l WHEREAS, the Assignor and the Assignee have executed and de-livered an Amended and Restated Asset Transfer Agreement (the " Asset. Transfer Agreement"), providing for the transfer of cer-tain assets and rights of the Seller to the Purchaser upon and I subject to certain conditions contained therein; and WHEREAS, this Assignment Agreement is given by Assignor to Assignee pursuant to Section 2.4 of the Asset Transfer Agreement (the terms used herein shall have the same meaning as in the Asset Transfer Agreenent). I: ASSIGNMENT: NOW, THEREFORE, for and in consideration of the premises of the Asset Transfer Agreement and other good and valuable l
ASSET AGREEMENT EXHIBIT F Page 2 of 4 ) consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor hereby grants, assigns, conveys and sets over unto the Assignee, all of its rights, title and inter-est in and to the following described intangible personal proper-ty (the Personal Property): TO MAVE AND TO HOLD, such assets and rights, with all the appurtenances thereto, unto the Assignor, its successors and as-signs, forever, free and clear of all Liens other than Permitted Liens. To the extent that the assignment of any claim, contract, license, commitment or any claim or right or any benefit arising l thereunder or resulting therefrom to be assigned to the Assignee as provided herein shall require the consent of any party thereto, this Assignment Agreement shall not constitute an as-signment of the same if any attempted assignment would constitute a breach thereof, and the Assignor vill cooperate with the As-signee to provide for the Assignee the benefits under any such l claims, contracts, licenses, commitments or any claim or right or l any benefit arising thereunder or resulting therefrom, including enforcement, for the benefit of the Assignee, of any and all l rights of the Assignor against the other parties thereto arising out of the breach or cancellation thereof by such other party or l otherwise. 1 l 1. 1
ASSET AGREEMENT EXH2 BIT F Page 3 of 4 [ list) The Assignor hereby covenants and agrees to sign, execute and deliver, or cause to be signed, executed and delivered, and to do or make, or cause to be done or made, upon reasonable re-quest of the Assignee, any and all agreements, instruments, pa-pers, deeds, acts or things, supplemental, confirmatory or other-vise, as may be reasonably required by the Assignee for the purpose of or in connection with acquiring or more effectually vesting in the Assignee all of the right, title and interest of the Assignor in and to the Personal Property. IN WITNESS WHEREOF, the Assignor has caused this Assignment Agreement to be executed in its name by a duly authorized offi-I cer. LONG ISLAND LIGHTING COMPANY, a New York corporation By: Its: l l
ASSET AGREEMENT EXHIBIT F Page 4 of 4 STATE OF of , To-Wit: The foregoing instrument was acknowledged be, fore me this day of 1989, by , as of Long Island Lighting Company, a New York corporation, to be the act and deed of the corporation. My commission expires e Notary Public This instrument was prepared by: (Name) (Address)
ASSET AGREEMENT EXHIBIT G EXHIBIT G to Amended and Restated Asset Transfer Agreement by and between Long Island Lighting Company and Lono Island Power Authority CONSENTS The following is an inventory of all consents and approvals necessary for the consummation of the transactions contemplated by this Agreement as of the date of execution of the Agreement: [To be completed promptly after the execution of this Agreement and updated as of the Closing Date.) 9 1 l l u l.
ASSET AGREEMENT EXH3B8T H-EXHIBIT H to Amended and Restated Asset Transfer Agreement by and between Long Island Lighting Company and Lono island Power Authority INSURANCE The following is an inventory of all material insurance policies covering Shoreham and that are in full force and effect: [To be completed promptly after the execution of this Agreement and updated as of the Closing Date.) t
ASSET AGREEMENT EXHIBIT I EXHIBIT I to Amended and Restated 7 Asset Transfer Agreement by and between Long Island Lighting Company and Lono Island Power Authority REAL PROPERTY The following is an inventory of each parcel of real proper-ty owned by LILCO that constitutes Shoreham, including the legal description of each owned parcel: 4 (To be completed promptly after the execution of this Agreement.) l l l l
ASSET AGREEMENT EXHIBIT J EXHIBIT J to Amended and Restated Asset Transfer Agreement by and between Long Island Lighting Company and _Lono Island Power Authority REQUESTS t The following is a description of any material. outstanding requirements, recommendations, or requests from any insurance company, the Board of Fire Underwriters or any mortgagee or any governmental or quasi-governmental agency proposing any repairs or work to be done at Shoreham: [To be completed promptly after the execution of this Agreement and updated as of the Closing Date) o
f. ASSET AGREEMENT. EXHIBIT K P0ge 1 of 2 EXHIBIT K to Amended and Restated Asset Transfer Agreement by and between i Long Island Lighting Company L and Lona Island Power Authority RECORDS AND DOCUMENTS FOR SHOREHAM All books and records that are reasonably necessary for the ownership, operation, possession or decommissioning of Shoreham, i ' including, but not limited to, the following: 1. All records required to be maintained by ANSI l N454.2.9-1974. 2. All records required to be maintained by the plant Technical Specificat' ions. 3. All Quality Assurance and Quality Control records and documents. 4. The plant Master Equipment List (s). 5. All safety analysis documents. 6. Design basis documentation and drawings. 7. All plant procedures.
,,7 ~ ASSET AGREEMENT EXHIBIT K PAGE 2 of 2 L 8. All security, radiation protection, health physics and [ effluent records, l 9. Any other normal operating documentation such as auxil-iary operator-log books, station journals and special test reports. 10. ASME Certification Records. 11. Nuclear materials records, 1221, Parts 30, 50 & 70 li-censes. l But including the following only to the extent required to meet NRC requirements: 1. 'All correspondence between LILCO and nuclear insurance companies, regulatory agencies, nuclear steam supply system supplier, architect engineers, vendors and other contractors providing any services relating to the Shoreham plant. d 2. All correspondence related to various industry owners groups such as INPO, EPRI, PIMS and BWROG. [ l ,}}