CONFIDENTIAL SETTLEMENT DOCUMENT

PORTAGE BAY PARTNERSHIP

MEMORANDUM OF AGREEMENT

January 5, 2017

  1. PURPOSE

The Signatories to this Memorandum of Agreement (MOA) recognize the urgent need to improve water quality in the Nooksack River Basin. The Lummi Nation and the undersigned entities (referred to collectively as the “Parties”) each depend on the health and productivity of the lands and waters of Whatcom County. In recognition of the Parties’ common interest in improving the water quality currently impacting Portage Bay, the Lummi Nation and the undersigned entities (the non-Lummi signatories referred to collectively as the “Facilities”) agree to work collaboratively and in good faith toward the goal of opening all of the shellfish beds in Portage Bay for unrestricted harvest and ensuring that there are no future shellfish bed closures in Portage Bay due to elevated bacteria levels that originate in the Nooksack River Basin. While the Facilities are not wholly responsible for the elevated bacteria levels currently impacting the Nooksack River Basin, they are willing to take a leadership role in improving the quality of the water impacting Portage Bay. It is the desire of the Parties to bring additional signatories into this process in order to achieve the goals of the Portage Bay Partnership.

Because all of the elements of this Portage Bay Partnership Agreement cannot be completed at the same time, the agreement will be implemented in the general phases listed below. It is noted that the phases are not necessarily sequential and that several may be performed simultaneously:

Phase 1: Demonstrations of Good Faith

Phase 2: Open the Agreement to Additional Signatories

Phase 3: Project Organization

Phase 4: Development of Facility Specific Plans

Phase 5: Development of Binding Agreements and Federal Court Actions

PHASE 1: DEMONSTRATIONS OF GOOD FAITH

  1. The Parties agree to work cooperatively and in good faith in order to achieve a significant improvement in the quality of the waters of the Nooksack River Basin.
  1. The Parties agree not to engage in any adversarial litigation against any other Party to this MOA concerning any claims for environmental damages or compliance with applicable environmental laws related to discharges of pollutants related tomanure management, particularly the elevated nutrient and bacteria levels, currently impacting Portage Bay under tribal, federal, state, or local law so long as the Parties continue to work in good faith to achieve resolution of the Portage Bay shellfish bed closure. “Good faith” will be evidenced by progress made toward achieving, implementing and complying withWater Quality Improvement Plans (WQIPs) for each specific facility as described below and compliance with the terms of this MOA, including making payments as agreed herein. Good faith will also be evidenced by efforts to work collaboratively to reduce bacterial pollution and thereby reopen shellfish beds in Portage Bay in a manner that allows the Facilities to remain viable business operations.
  1. The Parties agree that participation in this MOA is not, and shall not be construed as, an admission of liability, fault, or wrongdoing of any kind by any Party.
  1. The Parties agree not to bring any legal action based on environmental damages or compliance with applicable environmental laws related to the elevated nutrient and bacteria levels currently impacting Portage Bay against any Party so long as that Party remains actively engaged in the development and implementation of mutually agreed upon WQIPs described herein and participates in the Portage Bay Shellfish Recovery Fund.

The Parties agree not to bring any legal claims against any particular Party based on environmental damages or compliance with applicable environmental laws related to the elevated nutrient and bacteria levels currently impacting Portage Bay during the time it takes the federal court to review and approve the settlement agreement containing the WQIP directly applicable to that particular Party.

  1. The Parties agree that confidential business information and environmental data collected pursuant to this or subsequent agreements that is shared by a Party regarding the operation of a Facility or which is collected pursuant to this or subsequent agreements or facility-specific WQIPs shall remain strictly confidential and shall not be disclosed, shared or released to any person who is not a party to this MOA and shall not be used in evidence in any claim against a Party to this MOA other than in an action to enforce this MOA, subsequent agreements or WQIPs. This agreement extends to any attorneys, expert witnesses or consultants employed by any Party. As a condition of employment, the experts shall sign and provide non-disclosure and confidentiality agreements.
  1. The Parties agree to the establishment of the Portage Bay Shellfish Recovery Fund in order to address past, present and potential future damages to the Lummi Nation and individual tribal shellfish harvesters from the closure of the shellfish beds. As previously shared with the Ag Water Board, the Lummi Nation has identifiedeconomic damagestotaling$1,139,700 (One Million One Hundred Thirty-Nine Thousand Seven HundredDollars) to account for the closure of the Portage Bay Shellfish Beds for the 2014 through 2016 period. As a demonstration of good faith, an initial payment of $450,000(FourHundred FiftyThousandDollars) is due upon signing of this MOA. This initial good faith payment shall be provided to theLummi Nation. An additional payment of $150,000 (One Hundred Fifty Thousand Dollars), also provided to the Lummi Nation, will be due within thirty (30) days of signing of this MOA. The initial seven (7) Facilities that sign this MOA on or before January 6, 2017 will not be responsible for the remaining balance of $539,700 (Five Hundred Thirty Nine Thousand Seven Hundred Dollars). Additional payments after 2016, if necessary, will be determined based on the extent and duration of continuing or future Portage Bay shellfish bed closures.
  1. If any of the Parties believe that any other Party is not working in good faith to achieve the objectives of this MOA that Party shall give written notice to all Parties specifying the reasons why the complaining Party believes that the other Party is not operating in good faith. The Parties shall have twenty (20) days in order to work out their differences. If resolution of the differences is not achieved as evidenced in writing (e.g., e-mail or letter), this MOA shall no longer be effective as to the complained of Party. No action to enforce this MOA may be taken unless the alleged noncompliance has been subject to this dispute resolution process.

PHASE 2: OPEN THE AGREEMENT TO ADDITIONAL SIGNATORIES

Additional signatories to this MOA will be permitted provided no party objects to their inclusion.

PHASE 3: PROJECT ORGANIZATION

  1. The Parties agree to identify experts in order to review current on farm practices and to identify additional best management practices, if needed, for each of the facilities evaluated. The experts must be judged by the parties to have the necessary qualifications to (1) independently and objectively conduct the facility specific evaluations and to (2) identify any practicable modifications to operational or maintenance practices needed to ensure that the facility is not causing or contributing to the elevated bacteria levels that have resulted in the closure of the Portage Bay shellfish beds. The parties shall identify the experts within thirty (30) days of the signing of this MOA.
  1. The Parties agree to collectively identify two Facilities within twenty (20) days of the signing of this MOA to first work with the Lummi Nation to develop WQIPs. A schedule for the remaining signatory Facilities shall be agreed upon within the next forty-five (45) days of signing the agreement. The timing and implementation of the measures identified in the facility-specific plans shall be reasonable and determined on a case-by-case basis with due consideration given to the relative costs of compliance.
  1. The Parties shall begin to work immediately toward developing a manure application certification process, to be in place by no later than August 31, 2017. The Parties shall work with the Washington Departments of Ecology and Agriculture to find the best mechanisms for enforcement of this requirement.
  1. The parties agree to work collaboratively to develop a communication plan to educate the public about water quality issues and potential solutions.
  1. Settlement agreements with at leastthe first two collectively identified Facilities shall be finalized by May 1, 2017. Settlement agreements with the remaining Facilities shall be finalized according to the schedule referenced above.

PHASE 4: DEVELOPMENT OF FACILITY SPECIFIC PLANS

  1. Collaboratively develop effective,enforceable facility-specificWQIPs.
  1. In recognition of the critical importance of a thorough understanding of the current Facility operations of each of the undersigned Facilities, the Parties agree to devote substantial time and energy to developing an intimate understanding of each unique Facility operation. This understanding will require a deeper level of trust than presently exists and the Parties will endeavor to establish that trust.
  1. In order to develop this greater understanding of current Facility operations as well as to strengthen the level of trust among the parties, each individual Facility will open its operation to mutually agreed upon Lummi technical and policy representatives, upon adequate notice and at mutually convenient times, to facilitate the development of facility-specific WQIPs crafted to ensure harmonious coexistence.
  1. Facility-specific WQIPs shall include (where appropriate) the following mutually agreed upon elements in order to ensure improved water quality:
  1. Manure management application and field management practices, including effective irrigation management practices, intended to prevent discharges to waters of the state within the Nooksack River Basin.
  1. Effective approaches to manure storage collaboratively identified and intended to prevent discharges of pollutants to waters of the state within the Nooksack River Basin.
  1. Surface water monitoring of eachFacility intended to prevent discharges to the waters of the state within the Nooksack River Basin.
  1. Ground water monitoring of the fields upon which the Facility applies manure intendedto prevent discharges of pollutants to waters of the state within the Nooksack River Basin and to measure the success of the manure management measures.
  1. Animal pen inspection and, if needed, associated improvementsintended to prevent discharges of pollutants to waters of the state within the Nooksack River Basin.
  1. Silage and compost areas inspection and, if needed, associated improvements intended to prevent discharges of pollutants to waters of the state within the Nooksack River Basin.
  1. Underground conveyance and tile drain inspection and, if needed, associated improvements intended to prevent discharges of pollutants to waters of the state within the Nooksack River Basin.
  1. Effective controls governing the responsible export and application of manure intended toprevent discharges of pollutants to waters of the state within the Nooksack River Basin.
  1. The Parties agree that the goal of the WQIPs is to prevent discharges of bacterial pollution from the participating Facilities. However, the Parties recognize that unexpected high precipitation events and/or floods may cause discharges of bacterial pollution despite best efforts to avoid them. WQIPs shall include measures and emergency actions to be taken in such unusual conditions to minimize discharges and pollutant loading.
  1. Data gathered by virtue of surface and groundwater monitoring at each facility shall be used to determine progress with implementation of the facility-specific WQIPs.
  1. In the absence of a state manure applicator licensing program, all manure applications will be performed by individuals who have participated in and been certified in an annual applicator training program with annual refresher trainings.

PHASE 5: DEVELOPMENT OF BINDING AGREEMENTS AND FEDERAL COURT ACTIONS

Once this MOA is executed, the parties will collaboratively seek federally enforceable settlement agreementsthat incorporate the mutually agreed upon facility-specific WQIPs.

SIGNATORIES

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Timothy Ballew II, ChairmanEd Blok

Lummi Indian Business CouncilBlok’s Evergreen Dairy, Inc.

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Roger Blok Mitch Moorlag

RJ Blok & Sons Dairy, LLCEdaleen Dairy, LLC

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Dan NoteboomJeffSnydar

NoteboomFarm, LLCSnydar Farms, LLC

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Grant Van DykLarry Stap

Van Dyk-S Holsteins, LLCTwin Brook Creamery, LLC

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