PERMANENT EASEMENT AGREEMENT
After Recording Return To: Calderwood & Harkness LLP 999 Second Avenue, Suite 4200 Seattle, WA 98104
Attn: Grace Nakamura
This PERMANENT EASEMENT AGREEMENT (this "Agreement") is entered into as of the date last executed by the parties below (the "Effective Date"), by and between Dunlap Creek Ranch Inc., a Washington corporation ("Grantor"), and the Cascadia State Infrastructure Authority, a Washington State governmental instrumentality ("Grantee" or "CSIA").
RECITALS
A. Identification of Grantor. Dunlap Creek Ranch Inc. is a Washington corporation organized as an S-corporation under the Internal Revenue Code, with its registered agent address at 18500 Guide Meridian Road, Lynden, WA 98264. Garrett Dunlap serves as President and Sole Director of Grantor, and Maureen Dunlap serves as Secretary/Treasurer. Grantor is the fee simple owner of approximately ninety-four (94) acres of dairy farmland located along Hannegan Road, Whatcom County, Washington, identified by Whatcom County Assessor's Parcel No. 380220-108400 (the "Grantor's Property").
B. Identification of Grantee. The Cascadia State Infrastructure Authority is a Washington State governmental instrumentality created and existing pursuant to Chapter 43.99N of the Revised Code of Washington (RCW). CSIA maintains its headquarters at 1100 Jefferson Avenue SE, Suite 400, Olympia, WA 98501. Martin R. Calloway serves as Executive Director of CSIA, and Priya Shankar-Wells serves as General Counsel of CSIA.
C. Project Description. CSIA is developing and constructing the Regional Flood Resilience and Stormwater Management Program — Lower Nooksack Pump Station Network (the "Project"), which consists of four (4) pump stations and approximately 6.2 miles of twenty-four-inch (24-inch) and thirty-six-inch (36-inch) high-density polyethylene ("HDPE") force-main pipeline along the Lower Nooksack River corridor in Whatcom County, Washington. The total estimated value of the Project is Forty-Eight Million Dollars ($48,000,000), funded through a Washington State Capital Appropriation pursuant to Senate Bill 5140 (2025 Session) in the amount of Thirty-One Million Two Hundred Thousand Dollars ($31,200,000), together with CSIA Series 2025A Revenue Bonds in the amount of Sixteen Million Eight Hundred Thousand Dollars ($16,800,000), underwritten by Harborstone Capital Markets LLC. The CSIA Capital Project Number assigned to the Project is CP-2025-NPS-004.
D. Purpose of Easement. Grantee requires a permanent easement on a portion of Grantor's Property for the construction, operation, maintenance, repair, replacement, and access of Pump Station No. 3 ("PS-3") as part of the Project. The easement area encompasses approximately 2.1 acres located on Parcel No. 380220-108400 at Hannegan Road at the Nooksack River crossing, Whatcom County, Washington, as more particularly described in Exhibits A and B attached hereto and incorporated herein by this reference (the "Easement Area").
E. Appraised Value and Consideration. The easement interest has been appraised at Three Hundred Fifteen Thousand Dollars ($315,000) by Northwind Valuation Group LLC. The appraisal was prepared by Jocelyn Trueblood, MAI, dated March 14, 2025, in accordance with the Uniform Standards of Professional Appraisal Practice ("USPAP") and Yellow Book methodology as required for federally assisted and public-agency real property acquisitions. Grantor acknowledges receipt of a good-faith offer letter from CSIA, delivered pursuant to RCW 8.25, setting forth the basis for the offer of compensation and attaching a summary of the appraisal upon which the offer was based.
F. Authority. CSIA possesses condemnation authority under Chapter 43.99N RCW with respect to real property interests necessary for its authorized projects. Notwithstanding such authority, the parties have negotiated and agreed to this easement voluntarily and without the initiation of eminent domain proceedings. Grantor's board of directors (consisting of sole director Garrett Dunlap) has duly authorized the execution and delivery of this Agreement, as evidenced by the corporate resolution attached hereto as Exhibit C.
G. Survey and Legal Description. The Easement Area has been surveyed and legally described by Ironclad Surveying & Land Services LLC, through Karen Whitfield, Professional Land Surveyor (PLS), whose offices are located at 4850 Cordata Parkway, Suite 110, Bellingham, WA 98226. The legal description and easement plat prepared by Ironclad Surveying & Land Services LLC are attached hereto as Exhibits A and B, respectively, and are incorporated herein by this reference.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the payment of Three Hundred Fifteen Thousand Dollars ($315,000) by Grantee to Grantor, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1 — DEFINITIONS
Section 1.1 — Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the Recitals, which are incorporated into and made a part of this Agreement.
(a) "Agreement" means this Permanent Easement Agreement, including all exhibits and attachments hereto, as the same may be amended, modified, or supplemented from time to time in accordance with the terms hereof.
(b) "Easement Area" means the approximately 2.1-acre area situated on Parcel No. 380220-108400 as depicted on the Easement Plat attached hereto as Exhibit A and more particularly described in the metes-and-bounds legal description attached hereto as Exhibit B.
(c) "Grantor" means Dunlap Creek Ranch Inc., a Washington corporation (S-corporation), and its successors, heirs, and assigns.
(d) "Grantee" means the Cascadia State Infrastructure Authority, a Washington State governmental instrumentality created pursuant to Chapter 43.99N RCW, and its successors and assigns.
(e) "Grantor's Property" means the approximately ninety-four (94) acre parcel of real property described by Whatcom County Assessor's Parcel No. 380220-108400, located along Hannegan Road, Whatcom County, Washington, of which the Easement Area is a part.
(f) "Improvements" means, collectively, all pump station structures, mechanical and electrical equipment, wet wells, dry wells, emergency generators, control panels, foundations, fencing, paving, signage, stormwater management features, utility connections, access roads, and any other structures, facilities, or appurtenances constructed, installed, or placed by Grantee within the Easement Area as part of PS-3 or in furtherance of the Project.
(g) "Project" means the Regional Flood Resilience and Stormwater Management Program — Lower Nooksack Pump Station Network, assigned CSIA Capital Project Number CP-2025-NPS-004.
(h) "PS-3" or "Pump Station No. 3" means the pump station facility to be designed, constructed, and operated by Grantee within the Easement Area as one component of the Project.
(i) "Permitted Uses" means those uses and activities described in Article 3 of this Agreement.
ARTICLE 2 — GRANT OF EASEMENT
Section 2.1 — Easement Grant. For and in consideration of the sum of Three Hundred Fifteen Thousand Dollars ($315,000), payable as set forth in Article 5, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby grants, conveys, and warrants to Grantee a permanent, non-exclusive easement in, on, over, under, across, and through the Easement Area for the purposes described in this Agreement, including but not limited to the Permitted Uses set forth in Article 3. The easement granted herein is appurtenant to Grantee's governmental functions and responsibilities in connection with the Project and shall run with the land in perpetuity. This easement shall be binding upon Grantor, its successors, heirs, and assigns, and shall inure to the benefit of Grantee and its successors and assigns.
Section 2.2 — Legal Description. The Easement Area is more particularly described in the metes-and-bounds legal description attached hereto as Exhibit B and depicted on the Easement Plat attached hereto as Exhibit A, both of which were prepared by Ironclad Surveying & Land Services LLC, under the supervision of Karen Whitfield, PLS. Exhibits A and B are incorporated into this Agreement by this reference. In the event of any conflict or inconsistency between the metes-and-bounds legal description set forth in Exhibit B and the graphical depiction of the Easement Area on the Easement Plat set forth in Exhibit A, the metes-and-bounds legal description in Exhibit B shall govern and control.
Section 2.3 — Title Insurance. Grantee shall, at Grantee's sole cost and expense, obtain an owner's easement title insurance policy from Cascade Basin Title Company (title officer: Diane Ashworth), located at 119 East Magnolia Street, Bellingham, WA 98225, insuring Grantee's easement interest in the Easement Area. The title insurance policy shall be in an amount not less than the easement compensation of Three Hundred Fifteen Thousand Dollars ($315,000). Grantor shall reasonably cooperate with Grantee and Cascade Basin Title Company in connection with the issuance of such policy, including providing such affidavits, documentation, and certifications as may be reasonably required by the title company to close the transaction and issue the policy.
ARTICLE 3 — PERMITTED USES AND PURPOSE
Section 3.1 — Pump Station Construction. Grantee shall have the right to design, construct, install, and commission PS-3 and all related Improvements within the Easement Area, including without limitation the construction of foundations, wet wells, dry wells, mechanical and electrical buildings, emergency generators, control panels and supervisory control and data acquisition ("SCADA") equipment, perimeter fencing, paving, and all site grading necessary to accommodate PS-3 and its ancillary facilities. Construction activities shall be performed in accordance with the requirements of Article 7 of this Agreement.
Section 3.2 — Operation and Maintenance. Grantee shall have the right, at all times and in perpetuity, to operate, maintain, monitor, inspect, repair, replace, upgrade, modify, and reconstruct all Improvements within the Easement Area. Without limiting the generality of the foregoing, Grantee shall have the right to install, operate, and maintain utility connections within the Easement Area, including electrical service connections, telecommunications lines, fiber-optic cables, SCADA systems, and any other utility services necessary or useful for the operation and monitoring of PS-3. Grantee shall further have the right to install metering, telemetry, and remote monitoring equipment within the Easement Area as Grantee deems necessary or appropriate for the safe and efficient operation of PS-3.
Section 3.3 — Access.
(a) General Access. Grantee shall have the right of ingress and egress to and from the Easement Area over and across Grantor's Property via the most direct practicable route to the nearest public road, which is Hannegan Road, including the right to construct and maintain a gravel or paved access road within the Easement Area. Grantee shall use reasonable efforts to minimize disruption to Grantor's use and enjoyment of Grantor's Property in exercising its access rights.
(b) Emergency Access. Grantee, its agents, employees, contractors, and emergency response personnel shall have the right of emergency access to the Easement Area at all times, twenty-four (24) hours per day, seven (7) days per week, three hundred sixty-five (365) days per year, without prior notice to Grantor. For purposes of this Section, "emergency" means any condition or event that, in the reasonable judgment of Grantee, requires immediate action to prevent or mitigate damage to the Improvements, protect public health or safety, respond to flooding or equipment failure, or avoid violation of any permit, law, or regulation.
(c) Routine Access. For routine, non-emergency access, Grantee shall provide Grantor with reasonable prior notice of not less than twenty-four (24) hours before entering the Easement Area, except in the case of emergency as described in subsection (b) above. Such notice may be provided by telephone, electronic mail, or written communication to the contact information set forth in Section 15.3. Grantor shall not unreasonably restrict or impede Grantee's routine access to the Easement Area.
Section 3.4 — Pipeline Interconnection. Grantee shall have the right to connect PS-3 to the force-main pipeline network, consisting of twenty-four-inch (24-inch) and thirty-six-inch (36-inch) HDPE force-main pipelines, at the boundary of the Easement Area. The pipeline corridor easement rights and obligations beyond the boundaries of the Easement Area are addressed in a separate Pipeline Corridor Easement Agreement between the parties pertaining to Whatcom County Assessor's Parcel No. 380220-108401, which separate agreement is not modified or superseded by this Agreement. Grantee's rights under this Section include the right to construct, install, and maintain pipeline connection structures, valves, fittings, and appurtenances at the point of interconnection within the Easement Area.
Section 3.5 — Ancillary Rights. In addition to the rights specifically enumerated in Sections 3.1 through 3.4, Grantee shall have the right to install and maintain within the Easement Area all ancillary features necessary or appropriate in connection with the construction, operation, and maintenance of PS-3, including without limitation stormwater management features (including detention basins, swales, and outfall structures), erosion and sediment control measures, landscaping, informational and regulatory signage, environmental monitoring equipment, security cameras and lighting, and such other features as Grantee may reasonably determine to be necessary or beneficial for the safe and effective operation of PS-3.
ARTICLE 4 — RESERVATION OF GRANTOR'S RIGHTS
Section 4.1 — Retained Use of Grantor's Property. Grantor retains full right to use and enjoy all portions of Grantor's Property that are located outside the Easement Area for all lawful purposes, including without limitation the continuation of Grantor's dairy farming operations, grazing, cultivation, and all other agricultural uses. Nothing in this Agreement shall be construed to restrict Grantor's use of those portions of Grantor's Property that are not encumbered by the easement granted herein, provided that Grantor shall not undertake any activity on Grantor's Property that materially interferes with Grantee's Permitted Uses, access rights, or Improvements within the Easement Area.
Section 4.2 — Agricultural Use Within Easement Area. Following completion of initial construction of PS-3, Grantor may graze livestock or conduct agricultural activities, including mowing and forage harvest, within those portions of the Easement Area that are not occupied by Improvements, provided that such use does not interfere with, obstruct, or impair Grantee's operations, access, maintenance activities, or Improvements. Grantor shall exercise reasonable care to prevent livestock from damaging Improvements, including fencing, equipment, and utility connections. Grantor shall not, without Grantee's prior written consent, erect any structures, plant trees or deep-rooted vegetation, excavate, alter grading, or install any subsurface improvements within the Easement Area. Grantee shall not unreasonably withhold, condition, or delay consent to activities that do not materially affect the integrity or operation of PS-3.
Section 4.3 — No Encumbrance. Grantor shall not grant any easement, license, right-of-way, lien, mortgage, deed of trust, or other encumbrance upon the Easement Area that would interfere with or be inconsistent with Grantee's rights under this Agreement without Grantee's prior written consent. Any encumbrance granted by Grantor upon the Easement Area in violation of this Section shall be subordinate to the easement granted herein.
ARTICLE 5 — COMPENSATION AND PAYMENT
Section 5.1 — Easement Compensation. The total compensation payable by Grantee to Grantor for the permanent easement interest granted herein is Three Hundred Fifteen Thousand Dollars ($315,000). This amount represents the full appraised fair market value of the permanent easement interest as determined by Northwind Valuation Group LLC (Jocelyn Trueblood, MAI) in an appraisal report dated March 14, 2025, prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and Yellow Book methodology.
Section 5.2 — Payment Terms. Payment of the easement compensation shall be made by wire transfer of immediately available funds or by cashier's check payable to Grantor, or as otherwise directed by Grantor in a written payment instruction delivered to Grantee not less than five (5) business days prior to the anticipated recording date. Payment shall be made upon the recording of this Agreement with the Whatcom County Auditor. Grantee's obligation to make payment is contingent upon delivery of clear, insurable title to the easement interest, as evidenced by the title insurance policy described in Section 2.3 or a pro forma policy acceptable to Grantee. If a title defect is identified that prevents the issuance of the title insurance policy, Grantor shall use commercially reasonable efforts to cure such defect prior to recording, and the payment obligation shall be suspended until such defect is cured or waived by Grantee.
Section 5.3 — Tax Responsibility. Grantor shall be solely responsible for any federal, state, or local income tax consequences arising from or related to the compensation received by Grantor under this Agreement. Grantor's federal Employer Identification Number (EIN) is 91-2198403. Grantee's federal Employer Identification Number (EIN) is 91-2034781. Grantee shall issue IRS Form 1099-S or such other tax reporting forms as may be required by applicable law in connection with the compensation paid to Grantor hereunder. Nothing in this Agreement constitutes tax advice, and Grantor is advised to consult its own tax advisor regarding the tax treatment of the compensation received.
Section 5.4 — No Additional Compensation. The compensation set forth in this Article constitutes full, complete, and final payment for the permanent easement interest granted herein, including compensation for the value of the easement interest, any diminution in value of the remainder of Grantor's Property resulting from the easement, and all other elements of just compensation. Notwithstanding the foregoing, nothing in this Section shall limit or affect (a) Grantor's rights under Article 8 of this Agreement with respect to restoration and crop or property damage claims, or (b) any compensation payable to Grantor under any separate Temporary Construction Easement Agreement between the parties pertaining to Grantor's Property.
ARTICLE 6 — TERM AND TERMINATION
Section 6.1 — Term. The easement granted herein is permanent and shall run with the land in perpetuity. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors, heirs, assigns, and legal representatives. The easement shall continue in full force and effect regardless of any change in ownership of Grantor's Property or any reorganization, merger, or change in status of Grantee, subject only to the provisions of Section 6.2 below.
Section 6.2 — Abandonment. If Grantee permanently ceases to use the Easement Area for pump station purposes and determines, in its sole discretion, that the Easement Area is no longer needed for the Project or for any other governmental purpose, Grantee shall provide written notice of abandonment to Grantor. Upon the provision of such written notice, the easement granted herein shall terminate. Upon termination of the easement by abandonment, Grantee shall (a) remove all Improvements from the Easement Area and restore the Easement Area to agricultural use condition in accordance with Section 8.4 of this Agreement, and (b) record a quitclaim deed releasing the easement interest in the official records of the Whatcom County Auditor within ninety (90) days of providing notice of abandonment to Grantor. The temporary non-use of the Easement Area or the cessation of pump station operations for purposes of maintenance, repair, replacement, or reconstruction shall not constitute abandonment.
ARTICLE 7 — CONSTRUCTION REQUIREMENTS
Section 7.1 — Construction Standards. All design and construction activities within the Easement Area shall be performed in a good and workmanlike manner, in compliance with all applicable federal, state, and local laws, regulations, codes, and standards, including without limitation all permits and approvals obtained for the Project. Such permits and approvals include, but are not limited to, the following:
(a) State Environmental Policy Act ("SEPA") Determination of Significance and Environmental Impact Statement, as applicable;
(b) Shoreline Substantial Development Permit issued by Whatcom County pursuant to the Shoreline Management Act (Chapter 90.58 RCW);
(c) Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act permits issued by the U.S. Army Corps of Engineers, Seattle District;
(d) Section 401 Water Quality Certification issued by the Washington State Department of Ecology;
(e) National Pollutant Discharge Elimination System ("NPDES") Construction Stormwater General Permit issued by the Washington State Department of Ecology;
(f) Hydraulic Project Approval ("HPA") issued by the Washington Department of Fish and Wildlife; and
(g) All applicable Whatcom County building, grading, and land use permits.
The design floor elevation for PS-3 shall be sixty-five feet (65.0 ft) NAVD88, providing a minimum of two and one-half feet (2.5 ft) of freeboard above the base flood elevation of sixty-two and one-half feet (62.5 ft) NAVD88 in FEMA Zone AE, as applicable to adjacent sites and consistent with Project-wide design standards. All structural elements of PS-3 shall be designed and constructed to meet or exceed the flood protection standards established by FEMA and Whatcom County Flood Damage Prevention Ordinance.
Section 7.2 — Environmental Compliance. Grantee shall comply with all environmental mitigation requirements applicable to the Project and the Easement Area. Without limiting the generality of the foregoing:
(a) Wetland Mitigation. Grantee shall satisfy all wetland mitigation obligations associated with the Project, including mitigation for approximately 0.38 acres of permanent wetland fill across the Project at a ratio of 1.5:1, through the Whatcom County In-Lieu Fee Program or such other mitigation mechanism as may be approved by the U.S. Army Corps of Engineers and the Washington State Department of Ecology.
(b) Cultural Resources. A cultural resource monitoring protocol shall be implemented during all ground-disturbing activities within or in the vicinity of the Easement Area due to the proximity of archaeological site 45WH-1287, as identified in the Phase I Cultural Resources Survey completed by Pinnacle Geotechnical & Environmental Consulting Inc. (Dr. Raymond Ostrowski, PE) on February 10, 2025. The monitoring protocol shall include on-site monitoring by a qualified archaeologist during initial grading and excavation activities. If previously unidentified cultural resources, including but not limited to artifacts, features, human remains, or other archaeological materials, are discovered during construction, all work in the immediate area of the discovery shall cease, and Grantee shall comply with all applicable state and federal laws, including the Indian Graves and Records Act (RCW 27.44) and the Archaeological Sites and Resources Act (RCW 27.53), and shall promptly notify the Washington State Department of Archaeology and Historic Preservation and all affected federally recognized tribes.
Section 7.3 — Coordination with Grantor. Grantee shall provide Grantor with not less than thirty (30) days' prior written notice before the commencement of construction activities within the Easement Area. Such notice shall include a general description of the anticipated scope and duration of construction activities and the approximate location of construction staging and access areas. Grantee shall coordinate the scheduling of construction activities with Grantor to minimize disruption to Grantor's dairy farming operations to the extent reasonably practicable, taking into account seasonal agricultural activities, milking schedules, and livestock movements. During active construction, Grantee shall install and maintain fencing, barriers, or other protective measures as necessary to prevent livestock from entering active construction areas and to separate construction traffic from livestock and agricultural equipment.
Section 7.4 — Utilities. Grantee shall be solely responsible for all utility connections and costs associated with PS-3, including the installation of electrical service, telecommunications, and water and sewer connections (if any) necessary for the construction, operation, and maintenance of PS-3 and the Improvements. Grantee shall coordinate with applicable utility providers and shall obtain all necessary utility easements or rights-of-way independently of this Agreement.
ARTICLE 8 — RESTORATION AND SITE MAINTENANCE
Section 8.1 — Construction Restoration. Upon completion of initial construction of PS-3 and any subsequent repair, replacement, reconstruction, or upgrade activities within the Easement Area, Grantee shall, within a reasonable period of time following completion of such activities (not to exceed one hundred twenty (120) days, weather permitting), restore all portions of the Easement Area not occupied by permanent Improvements to a condition substantially similar to that existing prior to the commencement of such activities. Restoration shall include, without limitation, regrading to original contours (where not inconsistent with Improvement design), reseeding with appropriate pasture or forage grasses, repair of fencing damaged or removed during construction, and restoration of any drainage features disturbed during construction. Grantor and Grantee shall conduct a joint inspection of the Easement Area prior to the commencement of construction activities and again following the completion of restoration work to document pre-construction conditions and verify the adequacy of restoration.
Section 8.2 — Crop and Property Damage. Grantee shall compensate Grantor for any damage to crops, fencing, drainage tiles or ditches, irrigation equipment, or other property of Grantor located within or adjacent to the Easement Area that is caused by Grantee's construction, operation, maintenance, repair, or reconstruction activities, to the extent such damage is not already compensated by the easement consideration paid under Article 5 or by compensation paid under any separate Temporary Construction Easement Agreement between the parties. Claims for crop or property damage under this Section shall be submitted by Grantor to Grantee in writing within one hundred eighty (180) days of the occurrence of such damage, accompanied by reasonable documentation of the nature and extent of the damage and the amount of compensation claimed. The parties shall negotiate in good faith to resolve any such claims. If the parties are unable to resolve a damage claim within sixty (60) days of submission, either party may invoke the dispute resolution procedures set forth in Article 14.
Section 8.3 — Ongoing Maintenance. Grantee shall maintain the Improvements and the Easement Area in good condition and repair throughout the term of this Agreement. Grantee's ongoing maintenance obligations include, without limitation, weed control in compliance with the Whatcom County Noxious Weed Control Board requirements, management of stormwater runoff from the Improvements, maintenance of fencing and access roads within the Easement Area, and prevention of nuisance conditions, including excessive noise, dust, odors, or lighting that unreasonably interferes with Grantor's use and enjoyment of the adjacent portions of Grantor's Property.
Section 8.4 — Abandonment Restoration. Upon abandonment of the easement as described in Section 6.2, Grantee shall remove all Improvements from the Easement Area, including foundations, equipment, fencing, paving, utilities, and all other structures and materials, and shall restore the Easement Area to a condition suitable for agricultural use. Restoration shall include regrading to original or improved agricultural contours, installation of topsoil as necessary, reseeding with pasture or forage grasses, and restoration of drainage. Grantee shall complete all removal and restoration work within twelve (12) months of providing notice of abandonment to Grantor. The cost of all removal and restoration work shall be borne solely by Grantee.
ARTICLE 9 — INDEMNIFICATION
Section 9.1 — Grantee's Indemnification of Grantor. Subject to Section 9.4, Grantee shall indemnify, defend, and hold harmless Grantor and Grantor's officers, directors, shareholders, members, employees, agents, and representatives (collectively, the "Grantor Indemnitees") from and against any and all claims, demands, actions, causes of action, damages, losses, liabilities, judgments, costs, and expenses (including reasonable attorneys' fees and court costs) arising out of or related to Grantee's use, construction, operation, maintenance, repair, replacement, or reconstruction of the Easement Area and the Improvements, or the exercise of Grantee's rights under this Agreement, except to the extent that such claims, damages, or losses are caused by the negligence, gross negligence, or willful misconduct of any Grantor Indemnitee.
Section 9.2 — Grantor's Indemnification of Grantee. Grantor shall indemnify, defend, and hold harmless Grantee and Grantee's officers, directors, employees, agents, and representatives (collectively, the "Grantee Indemnitees") from and against any and all claims, demands, actions, causes of action, damages, losses, liabilities, judgments, costs, and expenses (including reasonable attorneys' fees and court costs) arising out of or related to Grantor's activities on, use of, or conditions existing upon the Easement Area or Grantor's Property, to the extent such claims arise from Grantor's acts or omissions, except to the extent that such claims, damages, or losses are caused by the negligence, gross negligence, or willful misconduct of any Grantee Indemnitee.
Section 9.3 — Survival. The indemnification obligations set forth in this Article 9 shall survive the termination, expiration, or abandonment of this Agreement and shall remain in full force and effect with respect to any claims arising from events occurring during the term of this Agreement, regardless of when such claims are asserted.
Section 9.4 — Sovereign Immunity Reservation. Nothing in this Agreement shall be construed as a waiver of CSIA's sovereign immunity, governmental immunity, or any immunities or defenses available to CSIA as a governmental instrumentality under applicable state or federal law, except as may be expressly provided herein. Grantee's indemnification obligations under Section 9.1 shall be subject to and limited by applicable provisions of Washington law governing claims against governmental entities, including without limitation Chapter 4.92 RCW, to the extent applicable.
ARTICLE 10 — INSURANCE
Section 10.1 — Grantee's Insurance. Grantee shall maintain, or shall cause its contractors and subcontractors to maintain, the following insurance coverages during construction of PS-3, and Grantee shall maintain the following insurance coverages (or self-insurance programs providing equivalent coverage) during the ongoing operation and maintenance of PS-3:
(a) Commercial General Liability Insurance. Commercial general liability ("CGL") insurance with limits of not less than Two Million Dollars ($2,000,000) per occurrence and Five Million Dollars ($5,000,000) in the annual aggregate, covering bodily injury, personal injury, property damage, and products/completed operations.
(b) Automobile Liability Insurance. Automobile liability insurance covering all owned, non-owned, and hired vehicles, with combined single limits of not less than One Million Dollars ($1,000,000) per occurrence.
(c) Workers' Compensation Insurance. Workers' compensation insurance as required by Washington State law (Title 51 RCW) and employer's liability insurance with limits of not less than One Million Dollars ($1,000,000) per accident.
(d) Environmental/Pollution Liability Insurance. Environmental or pollution liability insurance with limits of not less than Two Million Dollars ($2,000,000) per occurrence during the period of construction of PS-3, covering sudden and accidental pollution events, cleanup costs, and third-party claims for bodily injury and property damage arising from the release of pollutants.
Grantor shall be named as an additional insured on the CGL and automobile liability insurance policies maintained by Grantee or Grantee's contractors during the period of construction. Such additional insured status shall be provided on a primary and non-contributory basis.
Section 10.2 — Grantor's Insurance. Grantor shall maintain its existing liability insurance covering Grantor's Property in such amounts and coverages as Grantor deems appropriate for its agricultural operations. Grantor shall not be required to obtain any additional insurance policies or increase any existing coverage limits solely on account of this Agreement or the easement granted herein.
Section 10.3 — Evidence of Insurance. Upon written request by Grantor, Grantee shall, within fifteen (15) business days of such request, provide Grantor with certificates of insurance or other evidence reasonably satisfactory to Grantor demonstrating that the insurance coverages required by Section 10.1 are in full force and effect and that Grantor has been named as an additional insured as required herein.
ARTICLE 11 — HAZARDOUS MATERIALS AND ENVIRONMENTAL
Section 11.1 — No Known Environmental Conditions. Based on the Phase I Environmental Site Assessment completed by Pinnacle Geotechnical & Environmental Consulting Inc. on January 22, 2025, in accordance with ASTM E1527-21, no recognized environmental conditions ("RECs"), controlled recognized environmental conditions ("CRECs"), or historical recognized environmental conditions ("HRECs") have been identified on Grantor's Property, including the Easement Area. The parties acknowledge that the Phase I ESA provides a screening-level assessment and does not constitute a guarantee that no contamination exists on the property.
Section 11.2 — Grantee's Environmental Responsibility. Grantee shall not introduce, use, generate, store, treat, or dispose of hazardous substances, hazardous wastes, or other regulated materials (collectively, "Hazardous Materials") within the Easement Area, except in quantities and in the manner necessary for the construction, operation, and maintenance of PS-3 (including fuels, lubricants, paints, solvents, and cleaning agents used in the ordinary course of pump station operations), and only in full compliance with all applicable federal, state, and local environmental laws and regulations, including without limitation the Model Toxics Control Act (Chapter 70A.305 RCW), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), and the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.). Grantee shall be solely responsible for the investigation and remediation of any contamination of the Easement Area or Grantor's Property that is caused by or results from Grantee's activities, at Grantee's sole cost and expense.
Section 11.3 — Grantor's Environmental Responsibility. Grantor represents and warrants that, to the best of Grantor's actual knowledge as of the Effective Date, no Hazardous Materials have been released, discharged, or disposed of on, in, or under the Easement Area in violation of applicable environmental laws. Grantor shall be solely responsible for the investigation and remediation of any contamination originating from Grantor's activities on Grantor's Property, including the Easement Area, to the extent such contamination is attributable to Grantor's acts or omissions.
ARTICLE 12 — REPRESENTATIONS AND WARRANTIES
Section 12.1 — Grantor's Representations and Warranties. Grantor represents and warrants to Grantee as of the Effective Date as follows:
(a) Grantor is a corporation duly organized, validly existing, and in good standing under the laws of the State of Washington, and has elected S-corporation status under the Internal Revenue Code.
(b) Garrett Dunlap, as President and Sole Director of Grantor, has full power and authority to execute and deliver this Agreement on behalf of Grantor and to bind Grantor to the terms hereof. The execution and delivery of this Agreement has been duly authorized by a resolution of the board of directors of Grantor (consisting of sole director Garrett Dunlap), a copy of which resolution is attached hereto as Exhibit C.
(c) Grantor holds fee simple title to Grantor's Property, including the Easement Area, subject only to the encumbrances of record identified in the preliminary title commitment issued by Cascade Basin Title Company (Commitment No. to be provided prior to recording). No encumbrance of record prevents or restricts the grant of the easement herein.
(d) There are no pending or, to Grantor's knowledge, threatened litigation actions, condemnation proceedings, governmental investigations, or other proceedings affecting the Easement Area or the right of Grantor to grant the easement herein.
(e) Grantor has not entered into any agreement, contract, option, right of first refusal, or other arrangement with any third party that would prevent, restrict, or impair the grant of the easement herein or Grantee's exercise of its rights under this Agreement.
(f) Grantor has received independent legal counsel and has had the opportunity to consult with its own attorneys and advisors regarding this Agreement. Grantor is entering into this Agreement voluntarily and not under duress or coercion.
Section 12.2 — Grantee's Representations and Warranties. Grantee represents and warrants to Grantor as of the Effective Date as follows:
(a) Grantee is a governmental instrumentality duly created and existing pursuant to Chapter 43.99N of the Revised Code of Washington and has full authority under applicable law to acquire real property interests, including easements, for the purposes of the Project.
(b) Grantee has full power and authority to enter into this Agreement and to acquire the easement interest granted herein. The execution and delivery of this Agreement and the expenditure of easement compensation in the amount of Three Hundred Fifteen Thousand Dollars ($315,000) have been authorized by appropriate CSIA board action and/or Executive Director authorization, as evidenced by the documentation attached hereto as Exhibit D.
(c) Grantee has obtained or will obtain, prior to the commencement of construction, all necessary permits, licenses, and governmental approvals for the construction and operation of PS-3 within the Easement Area, as described in Section 7.1 of this Agreement.
ARTICLE 13 — DEFAULT AND REMEDIES
Section 13.1 — Default. A party shall be in default under this Agreement if such party materially breaches any provision, term, covenant, representation, or warranty of this Agreement and fails to cure such breach within thirty (30) days after receipt of written notice from the non-defaulting party specifying the nature of the breach and the actions required to cure it. If the breach is of a nature that cannot be reasonably cured within thirty (30) days, the breaching party shall not be deemed in default if it commences cure within such thirty (30) day period and thereafter diligently and continuously prosecutes such cure to completion within a reasonable time, not to exceed ninety (90) days from receipt of the original notice of breach.
Section 13.2 — Remedies. Upon the occurrence of a default that has not been cured within the applicable cure period, the non-defaulting party shall be entitled to pursue any and all remedies available at law or in equity, including without limitation specific performance, injunctive relief, declaratory relief, and monetary damages. All remedies under this Agreement are cumulative and not exclusive; the exercise of one remedy shall not preclude the exercise of any other remedy. Nothing in this Section shall be construed to limit or waive any right or defense of either party, including Grantee's rights under Section 9.4.
Section 13.3 — Attorneys' Fees. In any action, suit, or proceeding to enforce or interpret this Agreement or any provision hereof, the prevailing party shall be entitled to recover from the non-prevailing party its reasonable attorneys' fees, expert witness fees, and costs incurred in connection therewith, including fees and costs incurred on appeal. For purposes of this Section, "prevailing party" means the party that substantially prevails on the merits of its claims or defenses.
ARTICLE 14 — DISPUTE RESOLUTION
Section 14.1 — Good Faith Negotiation. In the event of any dispute, controversy, or claim arising out of or relating to this Agreement, including any question regarding its existence, validity, interpretation, performance, breach, or termination, the parties shall first attempt in good faith to resolve such dispute through direct negotiation between authorized representatives of the parties. The period for such negotiation shall be thirty (30) days commencing upon the date on which one party delivers written notice of the dispute to the other party.
Section 14.2 — Mediation. If the parties are unable to resolve the dispute through good faith negotiation within the thirty (30) day period provided in Section 14.1, the parties agree to participate in non-binding mediation before a mutually agreed-upon mediator in Whatcom County, Washington, before initiating litigation. The parties shall share the costs of the mediator equally. If the parties are unable to agree upon a mediator within fifteen (15) days after the expiration of the negotiation period, either party may request that the presiding judge of the Whatcom County Superior Court appoint a mediator. The mediation shall be completed within sixty (60) days of the appointment of the mediator, unless the parties agree in writing to extend such period.
Section 14.3 — Jurisdiction and Venue. If the dispute is not resolved through negotiation or mediation, either party may initiate litigation. Any such litigation shall be brought exclusively in the Superior Court of Whatcom County, Washington, or, if federal subject matter jurisdiction exists, in the United States District Court for the Western District of Washington, sitting in Seattle, Washington. Each party hereby consents to the personal jurisdiction of such courts and waives any objection to venue or convenience of forum.
ARTICLE 15 — GENERAL PROVISIONS
Section 15.1 — Governing Law. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Washington, without regard to its conflict-of-laws principles.
Section 15.2 — Recording. This Agreement shall be recorded in the official real property records of the Whatcom County Auditor at Grantee's sole cost and expense. Upon recording, Grantee shall promptly provide Grantor with a conformed copy of the recorded Agreement bearing the Whatcom County Auditor's recording number and filing stamp.
Section 15.3 — Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted under this Agreement shall be in writing and shall be deemed duly given and received (a) upon personal delivery, (b) on the third (3rd) business day following deposit in the United States mail, postage prepaid, sent by certified mail with return receipt requested, or (c) on the next business day following deposit with a nationally recognized overnight courier service, addressed as follows:
If to Grantor: Dunlap Creek Ranch Inc.
Attn: Garrett Dunlap
18500 Guide Meridian Road Lynden, WA 98264
If to Grantee: Cascadia State Infrastructure Authority
Attn: General Counsel (Priya Shankar-Wells)
1100 Jefferson Avenue SE, Suite 400 Olympia, WA 98501
With a copy to: Calderwood & Harkness LLP
Attn: Angela Fontaine
999 Second Avenue, Suite 4200 Seattle, WA 98104
Either party may change its notice address by providing written notice of such change to the other party in accordance with this Section.
Section 15.4 — Entire Agreement. This Agreement, together with all Exhibits attached hereto and incorporated herein by this reference (Exhibits A, B, C, and D), constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, discussions, representations, understandings, and agreements, whether oral or written, between the parties relating to the easement interest granted herein.
Section 15.5 — Amendment. This Agreement may not be amended, modified, or supplemented except by a written instrument duly executed by both parties and recorded in the official records of the Whatcom County Auditor. No oral modification or amendment of this Agreement shall be effective.
Section 15.6 — Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and the remainder of this Agreement shall continue in full force and effect. The parties shall negotiate in good faith to replace any invalid or unenforceable provision with a valid and enforceable provision that achieves, to the greatest extent practicable, the original intent and economic effect of the invalid or unenforceable provision.
Section 15.7 — No Third-Party Beneficiaries. This Agreement is made solely for the benefit of the parties hereto and their respective permitted successors and assigns. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person or entity other than the parties hereto and their respective permitted successors and assigns any right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
Section 15.8 — Waiver. No failure or delay by either party in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the waiving party. No waiver of any breach of this Agreement shall constitute a waiver of any subsequent breach, whether of the same or a different provision.
Section 15.9 — Assignment. Grantee may assign its rights and obligations under this Agreement to any successor governmental entity or instrumentality without Grantor's consent, provided that Grantee delivers written notice of such assignment to Grantor within thirty (30) days of the effective date of the assignment. Any such assignee shall assume all obligations of Grantee under this Agreement. Grantor's obligations under this Agreement are covenants running with the land and shall be binding upon Grantor's successors, heirs, and assigns, including any subsequent purchaser or transferee of Grantor's Property or any portion thereof.
Section 15.10 — Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Electronic or digital signatures shall have the same force and effect as original ink signatures.
Section 15.11 — Relationship to Other Agreements. This Agreement is a separate and independent agreement from, and does not modify, amend, supersede, or replace, the following agreements between the parties:
(a) The Temporary Construction Easement Agreement between Grantor and Grantee pertaining to approximately 1.6 acres on Grantor's Property for construction staging purposes (compensation of $32,000); and
(b) The Pipeline Corridor Easement Agreement between Grantor and Grantee pertaining to Whatcom County Assessor's Parcel No. 380220-108401 for pipeline corridor rights.
Each such agreement shall be interpreted and enforced independently of this Agreement, and the rights and obligations of the parties under each such agreement shall not be affected by the terms of this Agreement.
Section 15.12 — Condemnation Authority Acknowledgment. Grantor acknowledges that CSIA possesses the power of eminent domain under Chapter 43.99N RCW and that CSIA has the legal authority to acquire the easement interest by condemnation if necessary. Notwithstanding such authority, Grantor further acknowledges and agrees that this Agreement represents a voluntary conveyance of the easement interest, negotiated at arm's length, and that Grantor has entered into this Agreement freely and without coercion.
IN WITNESS WHEREOF, the parties have caused this Permanent Easement Agreement to be executed as of the dates set forth below.
SIGNATURE PAGE
GRANTOR:
DUNLAP CREEK RANCH INC. a Washington corporation
By: ________
Name: Garrett Dunlap
Title: President and Sole Director
Date: ________
[Corporate Seal]
GRANTEE:
CASCADIA STATE INFRASTRUCTURE AUTHORITY a Washington State governmental instrumentality
By: ________
Name: Martin R. Calloway
Title: Executive Director
Date: ________
ATTESTED BY:
By: ________
Name: Priya Shankar-Wells
Title: General Counsel
Date: ________
NOTARY ACKNOWLEDGMENTS
NOTARY ACKNOWLEDGMENT — GRANTOR
STATE OF WASHINGTON ) ) ss. COUNTY OF WHATCOM )
On this _ day of _____, 2025, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Garrett Dunlap, to me known to be the President of Dunlap Creek Ranch Inc., the corporation that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument on behalf of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.
________________________________________
Notary Public in and for the State of Washington Residing at: ______ My commission expires: ____
Print Name: ________
NOTARY ACKNOWLEDGMENT — GRANTEE
STATE OF WASHINGTON ) ) ss. COUNTY OF THURSTON )
On this _ day of _____, 2025, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Martin R. Calloway, to me known to be the Executive Director of the Cascadia State Infrastructure Authority, the governmental instrumentality that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said governmental instrumentality for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument on behalf of said governmental instrumentality.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.
________________________________________
Notary Public in and for the State of Washington Residing at: ______ My commission expires: ____
Print Name: ________
EXHIBIT A
EASEMENT PLAT
Easement Plat prepared by Ironclad Surveying & Land Services LLC, under the supervision of Karen Whitfield, Professional Land Surveyor (PLS), License No. 47283, State of Washington, with offices at 4850 Cordata Parkway, Suite 110, Bellingham, WA 98226.
Date of Survey: February 28, 2025
Description: This Easement Plat depicts the approximately 2.1-acre Easement Area situated within Whatcom County Assessor's Parcel No. 380220-108400, owned by Dunlap Creek Ranch Inc. The plat shows the following features:
• Parcel boundaries of Parcel No. 380220-108400
• Easement Area boundaries (shaded and dimensioned)
• Hannegan Road right-of-way
• Nooksack River crossing and ordinary high water mark
• Adjacent parcels and parcel numbers
• Existing improvements, structures, and fencing within and adjacent to the Easement Area
• Point of beginning and reference monuments
• Scale, north arrow, and legend
• Surveyor's certificate, seal, and signature
Scale: 1 inch = 100 feet
[Easement Plat to be inserted — Ironclad Surveying & Land Services LLC]
SURVEYOR'S CERTIFICATE
I, Karen Whitfield, a Professional Land Surveyor licensed in the State of Washington (PLS No. 47283), hereby certify that this Easement Plat is a true and correct representation of the approximately 2.1-acre Easement Area within Whatcom County Assessor's Parcel No. 380220-108400, as surveyed under my direction on February 28, 2025, and is based upon an actual field survey and record research.
________________________________________
Karen Whitfield, PLS License No. 47283 State of Washington
Date: ________
[Surveyor's Seal]
EXHIBIT B
METES-AND-BOUNDS LEGAL DESCRIPTION
Legal Description of the Easement Area prepared by Ironclad Surveying & Land Services LLC, under the supervision of Karen Whitfield, Professional Land Surveyor (PLS), License No. 47283, State of Washington, with offices at 4850 Cordata Parkway, Suite 110, Bellingham, WA 98226.
Parcel: A portion of Whatcom County Assessor's Parcel No. 380220-108400
Basis of Bearings: Washington State Plane Coordinate System, North Zone, NAD83(2011), as referenced to the centerline of Hannegan Road per Whatcom County Survey Records.
Area: Approximately 2.1 acres (91,476 square feet, more or less)
[Full metes-and-bounds legal description to be inserted — Ironclad Surveying & Land Services LLC]
The legal description shall include the point of beginning, all courses (bearings and distances), curve data (where applicable), closure calculations, and area calculation, prepared and certified by Karen Whitfield, PLS.
SURVEYOR'S CERTIFICATE
I, Karen Whitfield, a Professional Land Surveyor licensed in the State of Washington (PLS No. 47283), hereby certify that the foregoing metes-and-bounds legal description accurately describes the approximately 2.1-acre Easement Area within Whatcom County Assessor's Parcel No. 380220-108400, and was prepared under my supervision from an actual field survey completed on February 28, 2025.