UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION No. 5:15-CR-62-H-2 No. 5:15-CR-67-H-3 No. 5:15-CR-68-H-3

That this Plea Agreement (“Agreement”) is made pursuant to Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure (“Fed. R. Crim. P.”) and that the sentence set forth herein is the appropriate disposition of this case. If the Court rejects this Agreement, it is further agreed that the Defendant may withdraw its plea and all of the parties may withdraw from this Agreement.

The parties further acknowledge that based upon the Joint Factual Statement, a copy of which is attached hereto as Exhibit A, the Court has sufficient information in the record to enable it to meaningfully exercise its sentencing authority. Accordingly, if acceptable to the Court, the parties agree to waive the presentence investigation and report pursuant to Fed. R. Crim. P. 32(c), and to request that the Defendant be sentenced at the time the guilty plea is entered.

The parties further agree and acknowledge that the Defendant’s parent corporation, Duke Energy Corporation, shall guarantee all monetary penalties (criminal fine, restitution, community service, and mitigation) imposed upon the Defendant and the funding and performance due from the Defendant in connection with the nationwide and statewide environmental compliance plans under this Agreement as more fully set forth in the Guaranty Agreement, a copy of which attached hereto at Exhibit B

Pursuant to Fed. R. Crim. P. 11(c)(1)(C), the parties agree that the following sentence is warranted in this case:

Criminal Fines: At the time of imposition of sentencing, the Defendant shall make a payment of Criminal Fines totaling $14.4 million ($14,400,000) as follows:

$3.9 million ($3,900,000) for the negligent Clean Water Act discharge in violation of the applicable NPDES permit at H.F. Lee Steam Electric Plant, a fine within the statutory penalty range of $2,500 to $25,000 per day of violation pursuant to 33 U.S.C. § 1319(c)(1)(A) and 18 U.S.C. § 3571(c) and (d).

$3.5 million ($3,500,000) for negligent Clean Water Act failure to maintain the coal ash impoundments and related appurtenances (the riser in the 1978 coal ash impoundment) as required by the applicable NPDES permit for the Cape Fear Steam Electric Plant, a fine within the statutory penalty range of $2,500 to $25,000 per day of violation pursuant to 33 U.S.C. § 1319(c) (1) (A) and 18 U.S.C. § 3571(c) and (d).

$3.5 million ($3,500,000) for negligent Clean Water Act failure to maintain the coal ash impoundments and related appurtenances (the riser in the 1985 coal ash impoundment) as required by the applicable NPDES permit for the Cape Fear Steam Electric Plant, a fine within the statutory penalty range of $2,500 to $25,000 per day of violation pursuant to 33 U.S.C. § 1319(c) (1) (A) and 18 U.S.C. § 3571(c) and (d).

$3.5 million ($3,500,000) for the negligent Clean Water Act discharge in violation of the applicable NPDES permit at Asheville Steam Electric Generating Plant, a fine within the statutory penalty range of $2,500

Probation: A statutory-maximum term of five (5) years of probation is warranted. 18 U.S.C.

Compliance with the Law: The Defendant shall not commit another federal, state, or local crime during the term of probation.

Cooperation with Probation Office: The Defendant shall fully cooperate with the United States Probation Office. The Defendant shall answer truthfully all inquiries by the Probation Officer; shall provide full access to any of the Defendant’s operating locations; shall give ten (10) days’ prior notice of any intended change in principal business or mail address; and shall provide notice of any material change in the Defendant’s economic circumstances that might affect the Defendant’s ability to pay the fines and other financial obligations set forth herein.

Nationwide Environmental Compliance Plan: Under the terms of its plea agreement, co-defendant Duke Energy Business Services LLC (“DEBS”) is required to develop, adopt, implement, and fund a comprehensive nationwide environmental compliance plan (“NECP”) during its term of probation, consistent with sentencing policies set forth in USSG §8D1.4 and which incorporates all of the agreed-upon obligations set forth in Paragraph 3(u)(v) of this Agreement. The Defendant shall take all steps necessary or required to assist DEBS in meeting this obligation.

Statewide Environmental Compliance Plan:

Notice to Employees and Shareholders: Upon approval by the Court of the NECP and ECP-NC, the Defendant shall notify its employees of its criminal behavior, the NECP, and the ECP-NC. In addition, the Defendant shall cause a notice containing the same information to be sent to the shareholders of Duke Energy Corporation. Such notice shall be in a form prescribed by the Court-Appointed Monitor (“CAM”) and at a time designated by the CAM.

Community Service Payment: Pursuant to USSG §8B1.3 and in furtherance of the sentencing principles provided for under 18 U.S.C.

Mitigation: In order to compensate for impacts to wetlands and other jurisdictional waters of the United States impacted as a result of the Defendant’s conduct, including temporal and secondary effects, at its facilities in North Carolina with coal ash impoundments, the Defendant shall provide $5 million ($5,000,000) to an authorized wetlands mitigation bank or conservation trust, approved by the Court, for the purchase of riparian wetland and/or riparian land and/or restoration equivalent located in the Broad River Basin, French Broad River Basin, Cape Fear River Basin, Catawba River Basin, Dan River Basin, Yadkin-Pee Dee River Basin, Neuse River Basin, Lumber River Basin, and Roanoke River Basin as set forth in more detail in Paragraph 3(bb) of this Agreement.

Payment Liability/Financial Assurances: The Defendant shall be liable for and pay all fines, restitution, community service, and mitigation payments and shall fund the NECP and ECP-NC, all as set forth herein. The Defendant shall further be liable for any additional restitution payments as determined by the CAM.

Reservation of Funds by Defendant: The Defendant further shall record appropriate reserves on financial statements for the purpose of recognizing the projected obligation to retire its coal ash impoundments in North Carolina. This obligation is currently estimated at a total of $1.4 billion ($1,400,000,000) on the Defendant’s balance sheet. Each year during the term of probation, beginning on the date that the Agreement is accepted by the Court and occurring by March 31 of each year thereafter, the Defendant shall cause the Chief Financial Officer of Duke Energy Corporation, as further directed under the Guaranty Agreement attached hereto, to certify to the United States and the CAM that the Defendant and Duke Energy Corporation have sufficient assets reserved to meet the obligations imposed by law or regulation or as may otherwise be necessary to fulfill the Defendant’s obligations with respect to its coal ash impoundments within the State of North Carolina. If the CAM has any concerns regarding the assets available to meet obligations imposed by the Judgment

Reservation of Funds by Parent Company: The Defendant further shall cause its parent holding company, Duke Energy Corporation, to record appropriate reserves on its consolidated financial statements for the purpose of recognizing the projected obligation to retire all coal ash impoundments, including those in North Carolina. This obligation is currently estimated at a total of $3.4 billion ($3,400,000,000) on Duke Energy Corporation’s balance sheet for all coal ash impoundments (including those owned by the Defendant and co-defendant DEC). Each year during the term of probation, beginning on the date that the Agreement is accepted by the Court and occurring by March 31 of each year thereafter, the Defendant shall cause the Chief Financial Officer of Duke Energy Corporation, as further directed under the Guaranty Agreement attached hereto, to certify to the United States and the CAM that the Defendant and Duke Energy Corporation have sufficient assets reserved to meet the obligations imposed by law or regulation or as may otherwise be necessary to fulfill the Defendant’s obligations with respect to its coal ash impoundments within the State of North Carolina. If the CAM has any concerns regarding the assets available to meet obligations imposed by the Judgment in this case, the CAM shall immediately notify the Court and the parties.

Security: Through the entire term of probation, the Defendant shall further maintain unused borrowing capacity in the amount of $250 million ($250,000,000) under the Master Credit Facility as security to meet its obligations under this Agreement for the closing and remediation of coal ash impoundments, as more fully set forth in Paragraph 3(k) of this Agreement. The Defendant shall certify this set aside to

Restitution for Counts of Conviction: Pursuant

Restitution for Relevant Conduct to Be Paid During Term of Probation: Pursuant to 18 U.S.C. § 3663, the Defendant shall pay restitution as directed by the CAM through the claims process set forth in Paragraphs 3(x)(iii)-(vi) of this Agreement. Said restitution shall also include payment to the Cape Fear Public Utility Authority for all costs, whenever incurred, associated with the extension of the Flemington water line, which was necessary to ensure that the community had clean drinking water.

Special Assessment: The Defendant shall pay special assessments, totaling $500.00, before or at the time of sentencing, and shall provide a receipt from the Clerk of Court for the Eastern District of North Carolina to the United States as proof of payment.

Public Apology: Consistent with USSG §8D1.4(a), the Defendant and co-defendants DEBS and DEC shall place a full-page public apology in at least two national newspapers and three major North Carolina newspapers (one in Raleigh, one in Greensboro, and one in Charlotte) and on its publicly accessible company website.

Consent to Transfer: To consent to Rule 20 transfers for purposes of the entry of guilty pleas to the charges in the following matters:

United States v. Duke Energy Business Services LLC, Duke Energy Carolinas, LLC, and Duke Energy Progress, Inc., No. 1:15-CR-51-1 (MDNC); and

United States v. Duke Energy Business Services LLC, Duke Energy Carolinas, LLC, and Duke Energy Progress, Inc., No. 3:15-CR-43-FDW(WDNC).

Restitution for Counts of Conviction: Pursuant to 18 U.S.C. §§ 3663, 3663A, and 3562(b)(2), to make restitution in any amount as ordered by the Court and as set forth in this Agreement. Said restitution shall be due and payable immediately.

Restitution for Relevant Conduct to Be Paid During Term of Probation: In addition to any order of restitution in connection with the counts of conviction, to make restitution to the following entities, as determined and directed by the CAM during the term of probation and pursuant to the agreed-upon claims process set forth in Paragraphs 3(x)(iii)-(vi):

Local Governments with drinking water treatment systems impacted by bromide discharges from other facilities owned by the Defendant:

For all costs, whenever incurred, associated with water treatment system upgrades resulting from the increase of trihalomethanes including, but not limited to, maintenance costs.

All costs associated with investigating and responding to increased discharges of bromide and/or the increase of trihalomethanes.

Crime Victims’ Rights Act: Except as provided herein, at the time of the execution of this

Appeal Waiver: To waive knowingly and expressly the right to appeal the conviction and whatever sentence is imposed on any ground, including any appeal pursuant to 18 U.S.C. § 3742, and further to waive any right to contest the conviction or the sentence in any post-conviction proceeding, including any proceeding under 28 U.S.C. § 2255, excepting an appeal or motion based upon grounds of ineffective assistance of counsel or prosecutorial misconduct not known to the Defendant at the time of the Defendant’s guilty plea. The foregoing appeal waiver does not constitute or trigger a waiver by the United States of any of its rights to appeal provided by law.

Waiver of Rights to Records: To waive all rights, whether asserted directly or through a representative, to request or receive from the United States any records pertaining to the investigation or prosecution of this matter, except as provided in the Fed. R. Crim. P. This waiver includes, but is not limited to, rights conferred by the Freedom of Information Act and the Privacy Act of 1974.

Special Assessment: To pay a special assessment of $125.00 for each misdemeanor count pursuant to the provisions of 18 U.S.C. § 3013. The assessment shall be paid by the Defendant at sentencing. The Defendant or Defendant’s counsel shall provide a check in payment of the said assessment directly to the Clerk of Court, U.S. District Court-EDNC.

Financial Statement: To complete and submit a financial statement under oath to the United States no later than two weeks prior to the entry of the guilty plea. The Defendant can satisfy this condition by submitting its most recent financial statement filed with the Securities and Exchange Commission.

Reservation of Funds by Defendant: To record appropriate reserves on financial statements for the purpose of recognizing the projected obligation to retire its coal ash impoundments in North Carolina, and, during each year during the term of probation, to certify that it has sufficient assets reserved to meet the obligations imposed by law and regulation as more fully set forth in Paragraph 2(d)(iii)(1) above. This obligation is currently estimated at a total of $1.4 billion ($1,400,000,000) on the Defendant’s balance sheet.

Reservation of Funds by Parent Company: To cause its parent holding company, Duke Energy Corporation, to record appropriate reserves on its consolidated financial statements for the purpose of recognizing the projected obligation to retire all coal ash impoundments, including those in North Carolina, and during each year during the term of probation, to cause its parent holding company to certify that it has sufficient assets reserved to meet the obligations imposed by law and regulation as more fully set forth in Paragraph 2(d)(iii)(2) above. This obligation is currently estimated at a total of $3.4 billion ($3,400,000,000) on Duke Energy Corporation’s balance sheet for all coal ash impoundments (including those owned by the Defendant and co-defendant DEC).

Security: Through the entire term of probation, to maintain unused borrowing capacity in the amount of $250 million ($250,000,000) under the Master Credit Facility as security to meet its obligations under this Agreement for the closing and remediation of coal ash impoundments, as more fully set forth in Paragraph 2(iii) (3) of this Agreement. A copy of the certification for 2015 shall be filed with the Court at the time of entry of this Agreement.

Cooperation: The Defendant shall continue to cooperate fully with the United States, and with all other authorities and agencies designated by the United States, and shall truthfully disclose all information with respect to the activities of the Defendant and its present and former directors, officers, employees, agents, consultants, contractors, and subcontractors thereof, regarding the conduct underlying the Criminal Informations about which the Defendant has any knowledge or about which the United States shall inquire. This obligation of truthful disclosure includes the obligation of the Defendant to provide to the United States, upon request, any document, record, or other tangible evidence regarding the conduct underlying the Criminal Informations about which the United States shall inquire of the Defendant. Compliance with such cooperation requirements shall not be construed as requiring or effecting a waiver of the attorney-client privilege or work product protections.

Such cooperation set forth in Paragraph (1) above shall include but not be limited to: (a) promptly disclosing any and all related criminal or potentially criminal conduct of which the Defendant is currently aware; (b) promptly producing all documents requested by the federal government or by grand jury subpoena; (c) promptly making employees available to the investigation team upon request for interview or for testimony in any proceeding, subject to those employees’ own legal rights; and (d) making reasonable efforts to ensure its employees provide full and truthful information.

If the Defendant, through its employees acting within the scope of their employment, provides false, incomplete, or misleading information or testimony, or fails to abide by any term of cooperation set forth in Paragraphs (1) and (m) above, this would constitute a material breach of this Agreement by the Defendant, and the Defendant shall be subject to prosecution for any federal criminal violation not barred by the applicable statute of limitations (or as waived pursuant to Paragraph 3(hh)) or other legal prohibition. Any information provided by the Defendant may be used against the Defendant in that prosecution.

Additionally, the Defendant agrees that in the event of the Defendant’s material breach of this Agreement, the following are admissible against the Defendant in any prosecution or action against the Defendant: (i) any statements made by the Defendant, under oath, at the guilty plea hearing (before either a Magistrate Judge or a District Judge); (ii) the Joint Factual Statement supporting this Agreement; and (iii) any evidence derived from such statements. This includes the prosecution of the charges that are the subject of this Agreement or any charges that the United States agreed to dismiss or not file as part of this Agreement, but later pursues because of a material breach by the Defendant. Additionally, the Defendant knowingly and voluntarily waives any argument under the United States Constitution, any statute, Rule 410 of the Federal Rules of Evidence, Fed. R. Crim. P. 11(f), and/or any other federal rule, that the statements or any evidence derived from any statements should be suppressed or are inadmissible.

Compliance with the Law: Except as provided otherwise herein and in Paragraph (q) below, the Defendant agrees that it shall commit no new violations of federal, state, or local law, including those laws and regulations for which primary enforcement has been delegated to state authorities, and shall conduct its operations in accordance with the environmental laws of the United States and the State of North Carolina. If the Defendant learns of any such violations committed by its agents or employees during the term of probation, the Defendant shall notify the United States of the violations in accordance with the terms of the environmental compliance plans.

The Defendant understands that the Government shall not consider there to be a violation of the conditions of probation if the Defendant complies with federal environmental laws when there is a direct conflict between the state and federal environmental laws.

The Defendant shall comply with all federal, state, and other regulations relating to coal ash, and will have no new notices of violation, notices of deficiency, or other criminal, civil, or administrative enforcement actions based on conduct (including the failure to act) occurring after entry of the guilty plea.

The Defendant understands that it shall be considered a violation of the conditions of

It shall not be considered a violation of probation if the enforcement action is based upon information disclosed by the Defendant in its 2014 Topographic Map and Discharge Assessment Plan(s) and/or its 2014 NDPES permit renewal application(s) for its facilities in North Carolina.

The Defendant shall comply with all legislative and regulatory mandates concerning closure of the coal ash impoundments which it operates, and shall complete full excavation and closure of all of the coal ash impoundments at its Sutton and Asheville facilities in accordance with federal and state laws, including the United States Environmental Protection Agency’s (“EPA”) 2014 final rule governing the disposal of coal combustion residuals from electric utilities (“CCR Rule”) and North Carolina’s Coal Ash Management Act of 2014, by the dates dictated in those laws, currently the calendar year 2019. In so doing, the Defendant shall act diligently and in good faith to meet projected critical milestones in its closure plans for each site as set forth in the following documents: Duke Energy’s L.V. Sutton Electric Plant Coal Ash Excavation Plan dated November 13, 2014; and Duke Energy’s Asheville Steam Electric Generating Plant Coal Ash Excavation Plan dated November 13, 2014 (collectively referred to as “Excavation Plans”), as may be amended with the approval of the North Carolina Department of Environment and Natural Resources (“DENR”).

With respect to excavated coal ash, the removed ash shall be stored in a lined CCR landfill space or lined impoundment meeting all requirements established by applicable statute, law, and regulation, including but not limited to 40 CFR Part 258 (Subtitle D of RCRA). Nothing in this Paragraph shall prohibit the Defendant from the disposition of ash through beneficial reuse as contemplated by the CCR Rule.

Every six months, or on a more frequent basis as determined by the CAM, the Defendant shall provide the CAM with a detailed description of its efforts to excavate coal ash and close all of the coal ash impoundments at Sutton and Asheville and whether it has met the critical milestones set forth in the Excavation Plans in the time period since the last report. The Defendant shall also include the status of all permits and permit applications with any regulatory body, including but not limited to DENR. The Defendant shall also make such reports publicly available on its website.

If the CAM has any concerns regarding whether the Defendant acted diligently or in good faith to meet its obligations under this provision, including the critical milestones set forth in the Excavation Plans, the CAM shall immediately notify the Court and the parties.

The Defendant shall contemporaneously provide an executive summary of the report in subparagraph (ii) above to the United States Attorneys’ Offices for the Eastern, Middle, and Western Districts of North Carolina; the Department of Justice - Environmental Crimes Section; the United States Environmental Protection Agency -Criminal Investigation Division; and the United States Environmental Protection Agency – Legal Counsel Division. Upon request, the Defendant shall provide the full report for inspection and review by any of the governmental parties.

If the Government has any concerns regarding whether the Defendant acted diligently or in good faith to meet its obligation under this provision, including the critical milestones set forth in the Excavation Plans, the Government may elect to notify either the

Six months prior to the end of the term of probation, the Defendant shall provide the Court, the CAM, and the Government with a full report of its efforts to excavate coal ash and to close all of the coal ash impoundments at Sutton and Asheville and the anticipated completion date.

The Government may seek additional fines and penalties should the Defendant fail to comply with such legislative or regulatory mandates and closure requirements under this Paragraph unless the compliance is delayed by a “force majeure” as that term is defined herein. The parties recognize that a change in law making performance impossible may be raised under the “force majeure” clause herein, but final determination shall be made by the Court.

The Defendant understands that the Government shall not consider there to be a violation of the conditions of probation if the Defendant complies with federal environmental laws when there is a direct conflict between the state and federal environmental laws. The Defendant, however, shall immediately notify the Court, the CAM, and the Government of the conflict of laws and the impact on any excavation and closure plans.

Criminal Fine: The Defendant shall pay a total criminal fine in the amount of $14.4 million ($14,400,000), allocated as set forth in Paragraph 2(d)(i) above.

Stipulated Factual Basis for Fine: The Defendant stipulates that there is a factual basis for the imposition of a criminal fine in the amount of $14.4 million ($14,400,000) pursuant to 33 U.S.C.

Environmental Compliance Plans: As a special condition of probation, the Defendant shall cause, assist, and otherwise take all steps necessary to effectuate the obligation of co-defendant DEBS to develop, adopt, implement, and fund the NECP designed to ensure compliance with applicable environmental laws and regulations at all of the coal ash impoundments owned and operated (whether active or inactive) by any wholly-owned subsidiary of Duke Energy Corporation. In addition to requirements to be applied nationwide, the Defendant, along with co-defendants DEBS and DEC, shall develop, implement, and enforce the ECP-NC that also incorporates all of the requirements of the NECP. Both the NECP and the ECP-NC shall be filed with the Court as separate documents. Components of the NECP and the ECP-NC include, but are not limited to, the following:

Timing for Submission of NECP and ECP-NC: Defendant DUKE ENERGY PROGRESS, along with its co-defendants DEBS and DEC, shall develop and adopt the NECP and ECP-NC within seventy (70) days of the selection of the CAM. The final NECP and ECP-NC shall be submitted to the Court with copies to the United States Probation Office; the United States Attorneys’ Offices for the Eastern, Middle, and Western Districts; the Department of Justice - Environmental Crimes Section; the Environmental Protection Agency - Criminal Investigation Division; and the United States Environmental Protection Agency - Legal Counsel Division. The Court must approve both the NECP and ECP-NC.

The United States acknowledges that two (2) wholly-owned subsidiaries of Duke Energy Corporation, Duke Energy Commercial Enterprises, Inc. (an indirect wholly-owned subsidiary) and Duke Energy SAM, LLC (a

If the sale above has not been closed at the time of the submission of the NECP to the Court for approval, it is expressly

Best Efforts: Defendant DUKE ENERGY PROGRESS, along with its co-defendants DEBS and DEC, shall use best efforts to comply with each and all of the obligations under both the NECP and ECP-NC.

The requirement that the Defendant exercise “best efforts” to fulfill the obligation includes using commercially reasonable efforts to anticipate any potential “force majeure” event (as defined herein at Paragraph 3(y)) and to address the effects of any potential “force majeure” event: (a) as it is occurring, and (b) following the potential “force majeure” event, such that the delay is minimized to the greatest extent possible.

If the CAM believes that the Defendant has not used “best efforts” to fulfill its obligations, the CAM shall provide written notice immediately to the Court and the parties.

The final determination of whether the Defendant used “best efforts” shall be made by the Court with the advice of and recommendations from the CAM.

If the Court concludes that the Defendant failed to exercise “best efforts” to fulfill an obligation of this Agreement, the Court may impose and the Government will be entitled to seek additional monetary penalties.

Selection and Funding of CAM:

Funding: As part of the NECP and the ECP- NC, Defendant DUKE ENERGY PROGRESS, along with its co-defendants DEBS and DEC, shall pay for a CAM who will be appointed by and report to the Court during the full period of probation.

Qualifications: The object of the selection process for the CAM is to select the most qualified candidate to oversee implementation of the NECP, the ECP-NC, and the bromide claims process. Therefore, the CAM must have staff, or be able to retain staff, with the following experience: (a) expertise and competence in the regulatory programs under the United States and State of North Carolina environmental laws; (b) sufficient expertise and competence to assess whether the Defendant, DEBS, and DEC have adequate management systems in place to ensure regulatory compliance, document such noncompliance, and prevent future noncompliance; and (c) sufficient expertise and competence to review claims for reimbursement under the process for identifying, verifying, and providing restitution for claims relating to bromide discharges described herein.

Nomination and Veto by Government: Within thirty (30) days of the entry of the Judgment, Defendant DUKE ENERGY PROGRESS, along with its co-defendants DEBS and DEC, shall submit a list of three qualified candidates for the position of CAM from which the Court will select and appoint one of the candidates. Any nomination will include a detailed curriculum vitae or similar documentation setting forth the qualifications of the candidate. The Government shall have fifteen (15) days from the receipt of the nominations to file any

Court Selection: Upon receipt of a final list of candidates, the Court shall select one candidate as CAM by written order. In the event that the Court does not find any of the candidates satisfactory or if, during any point in the term of probation, the Court does not find the work of the selected CAM satisfactory, the Court may request Defendant DUKE ENERGY PROGRESS, along with its co-defendants DEBS and DEC, to nominate additional candidates. The Court may adjust the time frame for the nominations of the CAM as necessary to ensure that the best possible candidates are nominated.

Reporting by CAM: On an annual basis, or more often as the Court directs, the CAM shall provide reports in writing to the Court, through the United States Probation Office, demonstrating compliance with the NECP and the ECP-NC by DUKE ENERGY PROGRESS and its co-defendants, DEBS and DEC. The report shall include, among other things, a detailed description of: (1) all excavation, closure, and/or proper remediation of the coal ash impoundments located in North Carolina and addressed in the ECP-NC; and (2) all three co-defendants’ compliance with all appropriate environmental laws and regulations in connection with the management of their coal ash impoundments in North Carolina and elsewhere.

Public Access to Information: The CAM shall ensure, and the Defendant shall facilitate, the posting of copies of any environmental compliance audits, annual reports, and/or any other reports prepared pursuant to the NECP or ECP-NC on a company web page with public access.

Subject to the approval of the CAM, the Defendant may redact confidential business information or any information it reasonably believes could impair the security of its operations before such audits or reports are posted for public access.

The CAM shall inspect such proposed redactions to determine the propriety of the redactions.

Notwithstanding the foregoing, unredacted copies shall be provided to the Court. The Defendant may seek to have the filings placed under seal to protect any information that the CAM has deemed to warrant redaction.

The CAM will contemporaneously provide copies of the reports (as posted) to the United States Attorneys’ Offices for the Eastern, Middle, and Western Districts of North Carolina; the Department of Justice -Environmental Crimes Section; the United States Environmental Protection Agency -Criminal Investigation Division; and the United States Environmental Protection Agency - Legal Counsel Division. If the reports contain redactions, any of these parties may inspect the redactions and challenge the propriety of the redactions. The Court shall be the final arbiter of any challenge.

Nationwide ECP: The NECP shall include, among other things:

Organizational Funding: Co-Defendant DEBS shall maintain and fund the operation of all of the company compliance organizations created in the wake of the Dan River

Compliance Officer (“CO”): The Defendant, and its co-defendants DEBS and DEC, each shall identify or establish a position at the Vice President level or higher who will liaise directly with the CAM. The Defendant’s designated CO shall have, among other duties, the primary responsibility for ensuring compliance with applicable environmental requirements and requirements of the NECP and ECP-NC.

The COs shall submit detailed reports discussing the development, implementa-tion, and enforcement of the NECP and ECP-

Subject to the approval of the CAM, the Defendant may redact confidential business information or any information it reasonably believes could impair the security of its operations before such reports are posted for public access.

The CAM shall inspect such proposed redactions to determine the propriety of the redactions.

Notwithstanding the foregoing, unredacted copies shall be provided to the Court. The Defendant may seek to have the filings placed under seal to protect any information that the CAM has deemed to warrant redaction.

The CAM will contemporaneously provide copies of the reports (as posted) to the United States Attorneys’ Offices for the Eastern, Middle, and Western Districts of North Carolina; the Department of Justice

Environmental Audits: Within the first ninety (90) days of his or her appointment, the CAM shall establish a schedule for conducting environmental audits of each of Duke Energy Corporation’s and its affiliates’ wholly-owned or operated domestic facilities with Duke Energy Corporation or affiliate-managed or affiliate-controlled coal ash impoundments outside North Carolina on an annual basis.

Each year the Defendant can request that the CAM accept any full environmental audit prepared by ABSAT or a similar organization in that same calendar year

The CAM can reject any such request by the Defendant if the CAM concludes that the proposed environmental audit is not sufficiently comprehensive or not prepared by a competent organization.

Copies of the environmental audit reports shall be posted on the Defendant’s company webpage accessible to the public.

Subject to the approval of the CAM, the Defendant may redact confidential business information or any information it reasonably believes could impair the security of its operations before such audits or reports are posted for public access.

The CAM shall inspect such proposed redactions to determine the propriety of the redactions.

Notwithstanding the foregoing, unredacted copies shall be provided to the Court and the United States Probation Officer. The Defendant may seek to have the filings placed under seal to protect any information that the CAM has deemed to warrant redaction.

The CAM will contemporaneously provide copies of the reports (as posted) to the United States Attorneys’ Offices for the Eastern, Middle, and Western Districts of North Carolina; the Department of Justice - Environmental Crimes Section; the United States Environmental Protection Agency -Criminal Investigation Division; and the United States Environmental Protection Agency - Legal Counsel Division. If the reports contain redactions, any of these parties may inspect the redactions to determine the propriety of the redactions.

Toll-Free Hotline/Electronic Mail Inbox: The Defendant, along with co-defendants DEBS and DEC, will establish and maintain a toll-free hotline that will be answered twenty-four (24) hours a day, seven (7) days a week, through which any person may report suspected violations of applicable environmental laws or regulations, or violations of the NECP or ECP-NC. The Defendant may utilize existing toll-free hotlines subject to approval by the CAM. In addition, the Defendant, along with co-defendants DEBS and DEC, shall create an electronic mail inbox accessible from its webpages and accessible through a share link, through which any employee of Duke Energy Corporation, its subsidiaries, or its affiliates, or any other person may report suspected violations of applicable environmental laws or regulations or violations of the NECP or ECP-NC.

Co-defendant DEBS shall periodically apprise employees and the public of the availability of the toll-free hotline and electronic mail inbox by posting notices on the Internet, Intranet (known within Duke Energy Corporation as the “Portal”), by distributing notice via its electronic mail system, by providing notices in appropriate employee work areas, and by publication in community outlets.

All reports to the toll-free hotline or electronic mail inbox of suspected violations of applicable environmental requirements, the NECP, or the ECP-NC shall promptly be provided to the appropriate CO for further action, and the appropriate CO shall maintain a record of the investigation and disposition of each such matter and disclose such matters in reports to the CAM.

Environmental Training Program: The Defendant, along with co-defendants DEBS and DEC, shall adopt, implement, and enforce a comprehensive training program to educate all domestic employees of Duke Energy Corporation and its wholly-owned or operated affiliates on the environmental impact of coal ash impoundment operations and to be aware of the procedures and policies that form the basis of the NECP and ECP-NC.

The goal of this training program is to ensure that every domestic employee of Duke Energy Corporation and its wholly-owned or operated affiliates understands applicable compliance policies and is able to integrate the compliance objectives in the performance of his/her job. The training shall include applicable notice and reporting requirements in the event of a release or discharge. Subject to the approval of the CAM, the Defendant may develop different training programs that are tailored to the employee’s specific job description and responsibilities as long as the overall goal of the training requirement is met.

Additionally, the Defendant and co-defendants DEBS and DEC shall provide training and written materials describing the safe and proper handling of pollutants, hazardous substances, and/or wastes.

Copies of all written materials and training curricula shall be provided to the CAM.

Statewide ECP: The ECP-NC, in addition to incorporating all of the requirements of the NECP, shall include, among other things, the following conditions:

Point of Contact (“POC”): With respect to each of its facilities with coal ash impoundments in North Carolina, the

Environmental Audits: Within the first ninety (90) days of his/her appointment, the CAM shall establish a schedule for conducting environmental audits of each of the Defendant’s facilities with coal ash impoundments in North Carolina on an annual basis.

Each year the Defendant can request that the CAM accept any full environmental audit prepared by ABSAT or a similar organization in that same calendar year for two of its facilities subject to the audits. The Defendant cannot make the request for the same facilities in consecutive years.

The CAM can reject any such request by the Defendant if the CAM concludes that the proposed environmental audit is not sufficiently comprehensive or not prepared by a competent organization.

Copies of the environmental audit reports shall be posted on the Defendant’s company webpage accessible to the public.

Subject to the approval of the CAM, the Defendant may redact confidential business information or any information it

The CAM shall inspect such proposed redactions to determine the propriety of the redactions.

Notwithstanding the foregoing, unredacted copies shall be provided to the Court and the United States Probation Officer. The Defendant may seek to have the filings placed under seal to protect any information that the CAM has deemed to warrant redaction.

The CAM will contemporaneously provide copies of the reports (as posted) to the United States Attorneys’ Offices for the Eastern, Middle, and Western Districts of North Carolina; the Department of Justice - Environmental Crimes Section; the United States Environmental Protection Agency - Criminal Investigation Division; and the United States Environmental Protection Agency - Legal Counsel Division. If the reports contain redactions, any of these parties may inspect the redactions to determine the propriety of the redactions. The Court shall be the final arbiter of any challenge.

The Defendant shall ensure that any new, expanded, or reopened coal ash or coal ash wastewater impoundment facilities are lined to ensure no unpermitted discharges of coal ash or coal ash wastewater to any water of the United States.    This includes all engineered, channelized, or naturally occurring seeps.

Recordkeeping of Coal Ash Impoundment Volumes: Every six months, the Defendant shall determine the volume of wastewater and coal ash in each of its wet-storage coal ash impoundments in North Carolina. Additional determinations shall be made following the conclusion of activities that significantly change the volumes of materials in the impoundments, including but not limited to temporary rerouting of waste streams other than sluiced coal ash to the ash impoundment, dredging, and dewatering.    Written or electronic records of the volumes shall be maintained by the Defendant in a location(s) accessible to facility staff and to any of the Defendant’s employees responsible for making environmental or emergency reports.

Bromide Remediation Claims and Costs:

Identification: Within the first year of probation, or within ninety (90) days of the installation of a new Flue Gas Desulfurization (“FGD”) scrubber system thereafter, the Defendant shall identify:

all facilities operated by it in North Carolina that utilize or will utilize FGD scrubbers that will result in an increase in bromide discharge into surface waters; and

all local governments that are downstream from such FGD scrubbers and draw water into water treatment facilities.

Notification: Within the first year of probation, or within ninety (90) days of the installation of a new FGD scrubber system thereafter, the Defendant shall: (1) notify in writing the identified local governments of the increase or potential increase in bromide discharge; and (2) cooperate in studies of whether there has been or will be an impact on these water treatment facilities. The Defendant shall further advise the local government of the claims process established by the CAM, as described below. The Defendant will further note that the local government is not obligated to submit a claim through the process, is not bound by any recommendation of the CAM, and may pursue any civil and/or administrative remedies available to it. Copies of such correspondence shall be provided to the CAM, United States Probation Officer, and each of the prosecuting districts.

Claims Process: The CAM shall establish a procedure by which local governments that are downstream of the Defendant’s facilities with FGD scrubbers and experience increases in trihalomethanes at their water treatment facilities related to increases in bromide released by those facilities may submit evidence

In these claims, the local governments bear the burden of proving by a preponderance of the evidence to the CAM that trihalomethanes have increased and that the Defendant’s facility’s discharge of bromide substantially contributed to the increase.

The Defendant shall be permitted an opportunity to respond to any evidence or material submitted by local governments in this process.

The CAM shall review proposed remediation actions and costs or anticipated costs associated with investigating, responding to, and remediating increased bromides and trihalomethanes for reasonableness in determining the correct amount of restitution. The CAM shall issue a written decision on every claim submitted. If the CAM determines that restitution to a local government in any amount is appropriate, the Defendant shall also reimburse the local government for costs associated with investigating and preparing its submission to the CAM, including reasonable attorneys’ fees.

Appeals Process: Once the written decision is issued, the Defendant or the local government may appeal the decision to the United States District Court. In such an appeal, the decision of the CAM shall be subject to a rebuttable presumption of correctness. If the Defendant unsuccessfully appeals a written decision of the CAM, the Defendant shall bear all of the costs of the appeal, including the costs of the CAM and the reasonable attorneys’ fees of the local government, with the Court making the final determination of the reasonableness of such fees. If the Defendant is successful on appeal, the Defendant shall bear the costs of the CAM and the local government shall bear the costs of its attorneys’ fees.

Payment of Claims: Once the CAM has issued its written opinion, the Defendant shall pay the approved costs to the claimant within thirty (30) days of the opinion, unless it files an appeal to the United States District Court as provided above. If, after appeal, the Court concurs with the CAM’s opinion approving such costs, the Defendant shall pay the approved costs to the claimant and submit proof of payment to the Court within thirty (30) days of the Court’s opinion. Nothing in this subparagraph will bar the CAM or the Court from ordering a different payment schedule as appropriate.

Deadline for Filing Claims: Local governments shall have until sixty (60) days prior to the end of the five-year probationary term to submit a claim.

Force Majeure. For purposes of this Agreement, a ”force majeure” is defined as any event arising from causes beyond the reasonable control of the Defendant, any entity controlled by the Defendant, or its contractors that delays or prevents performance of any obligation despite the best efforts to fulfill the obligation and includes but is not limited to war, terrorism, civil unrest, labor dispute, act of God, change in law making performance impossible, or act of a governmental or regulatory body delaying performance or making performance impossible, including, without limitation, any appeal or decision remanding, overturning, modifying, or otherwise acting (or failing to act) on a permit or similar permission or action that prevents or delays an action needed for the performance of any work such that it prevents or substantially interferes with the Defendant’s ability to perform. Force majeure does not include financial inability to complete the work, increased cost of performance, or changes in business or economic circumstances.

If the Defendant seeks to rely on “force majeure” to excuse performance or timely performance with any term of this Agreement, the Defendant must apply to the CAM with copies of such application

The final determination of “force majeure” shall be made by the Court with the advice and recommendation from the CAM.

If the Court concludes that the Defendant’s failure to fulfill an obligation of this

Funding of NECP and ECP-NC: A failure to fund or implement the NECP or ECP-NC during its term of probation would constitute a breach of this Agreement by the Defendant, and the Defendant shall be subject to prosecution for any federal criminal violation not barred by the applicable statute of limitations (or

Community Service Payment: In addition to the community service payment made by co-defendant DEC, the Defendant, as guaranteed by Duke Energy Corporation and set forth in the Guaranty attached to this Agreement, shall pay $10.5 million ($10,500,000) to the National Fish and Wildlife Foundation (“NFWF”), a nonprofit organization established pursuant to 16 U.S.C. §§ 3701-3710, as community service by an organization. With respect to the work described in this Paragraph below, the Defendant shall assume no responsibilities or obligations other than making the payments described in Paragraph 3(aa)(i) below. The Defendant shall not seek any reduction in its tax obligations as a result of these community service payments nor shall the Defendant characterize, publicize, or refer to these payments as voluntary donations or contributions. Additionally, the Defendant shall not seek or take credit for any project performed using funds disbursed by NFWF pursuant to this Agreement in any related civil or administrative proceeding, including but not limited to, the Natural Resources Damages Assessment process.

Eastern District of North Carolina: $3.5 million ($3,500,000);

Middle District of North Carolina: $3.5

Western District of North Carolina: $3.5 million ($3,500,000).

The projects and initiatives considered by NFWF should be focused on the following river basins

Broad River, Cape Fear River, Catawba River, Dan River, French Broad River, Lumber River, Roanoke River, Neuse River, and Yadkin River. NFWF shall make every effort to

NFWF shall consult with appropriate state

Projects shall be identified and funding

Mitigation:    Within ninety (90) days of sentencing, in order to mitigate impacts to wetlands and other jurisdictional waters of the United States impacted as a result of the Defendant’s operation of coal ash impoundments and any relevant criminal conduct, including temporal and secondary effects, at its facilities in North Carolina with coal ash impoundments, and in addition to the mitigation payment made by its co-defendant DEC, the Defendant shall provide $5 million ($5,000,000), which represents its share after apportionment of a total $10 million ($10,000,000) payment, to an authorized wetlands mitigation bank for the purchase of wetland and/or riparian land and/or restoration equivalent located in the Broad River Basin, French Broad River Basin, Cape Fear River Basin, Catawba River Basin, Dan River Basin, Yadkin-Pee Dee River Basin, Neuse River Basin, Lumber River Basin, and Roanoke River Basin.    This mitigation payment is in addition. to, and does not replace, Duke Energy Corporation’s public commitment to fund its $10 million ($10,000,000) Water Resources Fund for environmental and other philanthropic projects along lakes and rivers in the Southeast.

Such wetland restoration shall be made through an authorized wetlands mitigation bank with no affiliation to any current or former employee of the North Carolina Department of Environment and Natural Resources in that employee’s individual capacity.

The Defendant, along with its co-defendants DEBS and DEC, shall provide a list of three (3) proposed mitigation banks from which the Court will select the mitigation bank to receive the funds. If the Defendant is unable after

Such property shall be held by and titled in the name of a third-party (with no affiliation to the Defendant or any of the Defendant’s sister or parent corporations).

Such property shall be held in permanent conservation status for the benefit of the citizens of North Carolina.

The Defendant shall ensure that the selected authorized wetlands mitigation bank or conservation trust provides a full accounting of all mitigation property purchased to the Court

No Credit in Civil or Administrative Proceedings:

(1) it shall not capitalize into inventory or basis or take as a tax deduction, in the United States or elsewhere, any portion of the monetary payments (fine, restitution, community service, mitigation, or funding of the environmental compliance plans) made pursuant to this Agreement. Provided, however, that nothing in this Agreement shall bar or prevent the Defendant from appropriately capitalizing or seeking an appropriate tax deduction for restitution in connection with the remediation of bromide claims set forth in this Agreement or for costs which would have been incurred by the Defendant irrespective of the environmental compliance plans. Costs that would have been incurred irrespective of the environmental compliance plans include, by way of example only, costs for staffing and operating Central Engineering Services, ABSAT, Coal Combustion Products, or other similar organizations.

No Rate Increase Based Upon Monetary Penalties: The Defendant shall not reference the burden of, or the cost associated with, compliance with the criminal fines, the restitution related to counts of conviction, the community service payments, the mitigation obligation, the costs of the clean-up in response to the February 2, 2014, release at Dan River Steam Station, and/or the funding of the environmental compliance plans in any request or application for a rate increase on customers. Provided, however, that nothing in this Agreement shall bar or prevent the Defendant from seeking appropriate recovery for restitution in connection with the remediation of bromide claims set forth in this Agreement or for costs which would have been incurred by the Defendant irrespective of the environmental compliance plans. Costs that would

That the Defendant has had the assistance of an attorney in connection with the charges against it. That the attorney has carefully reviewed this Agreement with those persons designated by law and its bylaws to act on behalf of the Defendant (hereinafter referred to as “Designated Corporate Representative”) and that this Agreement has been signed by a person authorized by law and the bylaws of the Defendant to execute agreements on behalf of the Defendant.

That its Designated Corporate Representative has reviewed and discussed the Criminal Informations filed in each of the federal districts involved in this matter with the Defendant’s attorney and that the attorney has explained the Government’s evidence to that Designated Corporate Representative.

That as a corporation, it is vicariously liable for the criminal acts of its employees acting within the scope of their employment for the benefit of the corporation.

That it understands that this Agreement does not provide or promise any waiver of any civil or administrative actions, sanctions, or penalties that may apply, including but not limited to: fines; penalties; claims for damages to natural resources; suspension, debarment, listing to restrict rights and opportunities of the Defendant to contract with or receive assistance, loans, and benefits from United States agencies; licensing; injunctive relief; or remedial action to comply with any applicable

Guaranty:    That it has sought and obtained a guarantee of its obligations under this Agreement from its parent holding company, Duke Energy Corporation, a copy of which is attached hereto as Exhibit B and incorporated herein by reference. Duke Energy Corporation further consents to the jurisdiction of the United States District Court for the Eastern District of North Carolina for the purpose of enforcing the Guaranty Agreement.

Resolution:    That it has filed with the Court prior to entry of this-Agreement the original resolution from the board of directors (or equivalent written authorization as recognized by law) that gives the authority described in Paragraph 4(a) above to the Designated Corporate Representative and that authorizes such employee to execute this Agreement on behalf of the Defendant. A copy of the Resolution, attached hereto as Exhibit D, provides as follows:

The Defendant is a legally viable entity, authorized to plead guilty to the charges set forth in the Criminal Informations;

The Defendant shall be bound by the specific

Any legal successor or assignee of Duke Energy Corporation shall remain liable, as the case may be, for the guarantee of the Defendant’s payment obligations and the funding and performance of both the NECP and ECP-NC hereunder, and an agreement to so remain liable shall be included

That as to each Count of the Criminal Informations to which the Defendant is pleading guilty, the charge, code section, elements, and applicable penalties are as follows:

Clean Water Act violation for the unpermitted discharge from a drainage ditch at the coal ash impoundment at the H.F. Lee Steam Electric Plant

Code Sections

Offense date: No later than October 1, 2010, through December 30, 2014

Elements of the Offense:

The Defendant did discharge a pollutant,

from a point source;

into a water of the United States;

the Defendant did so in violation of a permit;

the Defendant acted negligently in so

the Defendant aided and abetted another

Maximum term of probation for a corporation:

Minimum term of probation for a corporation:

Maximum fine: Pursuant to 18 U.S.C. § 3571(c)

Restitution pursuant to 18 U.S.C. § 3663, 3663A,

Special assessment: $ 125.00

Other penalties: Public Notice of Violation; Development of a Compliance Program; Community Service; and Remediation

Clean Water Act violation for the failure to

Offense date:    No later than January 1, 2012,

through January 24, 2014

Elements of the Offense:

The Defendant did violate a condition of

the Defendant acted negligently in so

the Defendant aided and abetted another

Maximum term of probation for a corporation:

Minimum term of probation for a corporation:

Maximum fine: Pursuant to 18 U.S.C. § 3571(c)

Restitution pursuant to 18 U.S.C. §§ 3663, 3663A,

Special assessment: $ 125.00

Other penalties: Public Notice of Violation; Development of a Compliance Program; Community Service; and Remediation

Clean Water Act violation for the failure to

Offense date:    No later than January 1,    2012,

through January 24,    2014

The Defendant did violate a condition of

the Defendant acted negligently in so

the Defendant aided and abetted another in so doing.

Maximum term of probation for a corporation:

Minimum term of probation for a corporation:

Maximum fine: Pursuant to 18 U.S.C. § 3571(c)

Restitution pursuant to 18 U.S.C. §§ 3663, 3663A,

Special assessment: $ 125.00

Other penalties: Public Notice of Violation; Development of a Compliance Program; Community Service; and Remediation

Clean Water Act violation for the unpermitted discharge from a toe drain at the coal ash

Offense date:    No later than May 31, 2011,

through December 30, 2014

Elements of the Offense:

The Defendant did discharge a pollutant,

from a point source;

into a water of the United States;

the Defendant did so in violation of a permit;

the Defendant acted negligently in so

the Defendant aided and abetted another

Maximum term of probation for a corporation:

Minimum term of probation for a corporation:

Maximum fine: Pursuant to 18 U.S.C. § 3571(c)

Restitution pursuant to 18 U.S.C. §§ 3663, 3663A,

Special assessment: $ 125.00

Other penalties: Public Notice of Violation; Development of a Compliance Program; Community Service; and Remediation

That pursuant to Fed. R. Crim. P. 11(c)(1)(C), the sentence set forth in Paragraph 2 above is warranted.

That it reserves the right at sentencing to present any evidence and information pursuant to 18 U.S.C. § 3661, to offer argument or rebuttal, to recommend imposition of restitution, and to respond to any motions or objections filed by the Defendant.

That, subject to the reservations within this Agreement, the United States shall not further prosecute the Defendant, including all predecessors, successors, and assignees of the Defendant, for conduct constituting the basis for the Criminal Informations covered by this Agreement as set forth

That it will make known to the Court at sentencing the full extent of the Defendant’s cooperation.

Pursuant to USSG §1B1.8, that self-incriminating information provided by the Defendant pursuant to

Notwithstanding the foregoing, the United States Attorneys’ Offices for the Eastern, Middle, and Western Districts of North Carolina and the

The Permittee shall take all reasonable steps to minimize or prevent any discharge or sludge use or disposal in violation of this permit with a reasonable likelihood of adversely affecting human health or the environment. Standard Conditions, Section B(2) (“General Conditions”).

The Permittee shall at all times properly operate and maintain all facilities and systems of treatment and control (and related appurtenances) which are