STAFFING AND CONSULTING SERVICES AGREEMENT FOR PROJECT ENVIRONMENTAL REVIEW SERVICES Between the City of Tacoma and Northwest Innovation Works, Tacoma, LLC for TACOMA METHANOL MANUFACTURING FACILITY This Agreement (?Agreement?) is entered into this _I_day of December, 2015 (?Effective Date"), by and between the City of Tacoma, a municipal corporation of the state of Washington and Northwest Innovation Works, Tacoma, LLC, a limited liability company organized under the laws of the State of Washington (sometimes individually or collectively referred to herein as ?Party? or ?Parties") for the purpose of establishing a process for the assignment of and reimbursement for City staff regarding project environmental review services for the Tacoma Methanol Manufacturing Facility project or ?Project?), described below. I. RECITALS A. NWIW is seeking to site, permit, construct and operate the Tacoma Methanol Manufacturing Facility within the Port of Tacoma ("Port") in Pierce County, Washington. The facility would include a natural gas-to?methanol production plant and storage facilities on an approximately 90-acre leased parcel in the Port. Up to four manufacturing lines are proposed, each capable of producing 5,000 metric tonnes of methanol per day. Natural gas will be delivered to the methanol plant via a proposed new transmission pipeline lateral. Northwest Pipeline GP will be responsible for obtaining permits for and constructing this pipeline, extending from its existing pipeline approximately 13 miles through unincorporated Pierce County and the cities of Milton, Fife and Tacoma. Methanol be stored in non-pressurized storage tanks with a total capacity of approximately 400,000 metric tonnes surrounded by a containment area. Methanol will be transferred by pipeline from the storage area to a marine terminal on the Blair Waterway. The anticipated yearly production at full capacity is approximately 7.2 million metric tonnes of methanol. NWIW anticipates loading between six and twelve ships per month dependent upon vessel size. The shipping terminal, owned and operated by Port of Tacoma, will be available for other users when not being used to load methanol. B. The Project objective is the manufacture and shipment of methanol to global markets for use as a feedstock for manufacturing olefins used in the production of plastics and other materials. The Project is not subject to site certification and operational oversight jurisdiction of the Washington Energy Facility Site Evaluation Council; see Exhibit A. C. Beginning in 2014 and continuing through the date of this Agreement, NWIW has been conducting land use and regulatory review to identify the federal, state, and local permits required to site, construct and operate the Project. NWIW has also been conducting environmental studies to identify and evaluate the Project?s potential impacts to the built and natural environment. NWIW has retained the services of highly specialized planning, environmental, engineering, and legal consultants to assist in this on?going work. D. The State Environmental Policy Act at RCW 43.210 will apply to the proposed Project. Tenant Improvements Design Review and Approval by the Port will likely be the first action triggering environmental review 41014931.: 005?-2l9- 000m 1 of the Project. Were the Port's approval the only action triggering SEPA for the Project, the Port would be the sole Lead Agency under WAC 197-11-930. However, when a proposal includes the planned construction of facilities designed for, or capable of, storing over one million gallons of any liquid fuel not under the jurisdiction of EFSEC, the lead agency shall be the Department of Ecology pursuant to WAC 197-11-938(8) unless, as is the case here. the Department of Ecology defers to a local jurisdiction; see Exhibit for delegation to the City. E. The purpose of this Agreement is to establish a procedure to ensure that the City can provide adequate qualified staff and third-party consultants to provide timely and cost-effective Project environmental review services for the TMMF. F. The Parties agree that an Environmental Impact Statement (EIS) is required for this project. AGREEMENT SECTION 1. TERM OF AGREEMENT The term of this Agreement shall commence on the Effective Date and continue until such time as it is terminated in Accordance with Section 5.3 of this Agreement. SECTION 2. ENVIRONMENTAL AND PROJECT PERMIT REVIEW SERVICES 2.1 The City shall provide adequate qualified staff to conduct timely environmental review of the Project in its role as Lead Agency. To the extent necessary the City may retain the services of a qualified third-party environmental consultant(s) to assist in performing its environmental review responsibilities arising under SEPA. SECTION 3. STAFFING AND THIRD-PARTY CONSULTANT COST REIMBURSEMENT 3.1 NWIW agrees to fully reimburse the City for its staff costs reasonably incurred in performing necessary environmental review services for the Project, including participating in the Federal Energy Regulatory Commission's environmental review of the Tacoma Lateral Extension and Northwest Pipeline's natural gas transmission line expansion, as appropriate. 3.2 NWIW also agrees to reimburse the City for its costs up to $350,000 reasonably incurred for services provided to it by qualified third-party independent environmental consultant(s). 3.3 Depositary Account: Establishment, Invoices, Withdrawals, Balance. NWIW shall deposit the initial sum of Fifty Thousand Dollars ($50,000) in an interest-bearing account maintained by the City for the cost of paying for the City's staff and third-party consultant environmental review services described in Sections 3.1 and 3.2 of this Agreement 3.3.1 The City shall provide NWIW reasonably detailed invoices for all staff and independent third-party environmental consultant service costs, as described 8 054931 0055219- in this Agreement and incurred by the City, within 30 calendar days from the end of any calendar month. NWIW shall have 30 calendar days from the date it received each invoice to review the same and advise the City of any dispute it has with item(s) shown in the invoice, as further described below at Section 3.4 - Invoice Dispute and Resolution Process. It NWIW does not provide the City with notice of any diaputed item(s) contained in such invoice within 30 days of receipt thereof, then the City shall instruct the City Treasurer to pay the full amount shown on said invoice from NWIW's depositary account. In the event the City receives a Notice of Dispute in accordance with Section 3.4 below, the City shall not submit that disputed item(s) to the City Treasurerfor payment in accordance with Section 3.3.1 above; provided, however, that the City Treasurer shall make payment on all items submitted to it that are not in dispute on said invoice. 3.3.2 Any time that depositary account balance falls below $50,000, the City shall so advise NWIW, with a detailed description of the work remaining to complete the environmental review services required by this Agreement. NWIW shall deposit funds sufficient to maintain a $50,000 balance within thirty (30) days of the notice and detailed description of remaining work. Any and all interest credited to the account shall be added to the then existing balance. Any balance, including principal and accrued or capitalized interest, unearned and remaining in said account at the termination of this Agreement shall be refunded to NWIW within forty-five (45) days of termination, along with all bank statements and a detailed reconciliation of deposits, withdrawals and credits thereto. 3.3.3 Within 30 days of completion of the environmental review services, the City shall prepare a final invoice and accounting of funds disbursed from deposit and shall remit the remaining balance of the deposit to NWIW. 3.4 Invoice Dispute and Resolution Process In the event NWIW disputes an item(s) shown in an invoice issued in accordance with Section 3.3.1 above, it shall provide a written Notice of Dispute to the City within 30 days from the date of any invoice received. The Notice of Dispute shall describe with specificity the nature of the disputed item(s). The Parties, through their respective designated representatives, shall meet within 10 days of the receipt of a Notice of Dispute in an effort to resolve the dispute informally. During the pendency of the dispute process contained in this Section 3.4, the Parties are not excused from performing their remaining on-going services and obligations as otherwise provided for herein. 3.4.1 Mediation. If the Parties are unable to resolve the dispute informally pursuant to Section 3.4 above, either Party may give written Notice of a Demand for Mediation (?Notice of Mediation") to the other Party. Within 5 days of receipt of a Notice of Mediation, the parties shall select a mediator from the Pierce County Center for Dispute Resolution If the parties are unable to agree upon a mediator within the 5 day period. the parties shall submit a request for appointment of a mediator to the Director of the 3.4.1.1 A meeting with the mediator shall be held within 21 days from the appointment of the mediator, on a date and at a time selected by the mediator after consulting with the parties. The mediator shall work with the Parties to produce a suitable resolution to the dispute. The mediator shall establish the format of the mediation meeting. 31054937.: 00552I9- 0000I3 3.4.2 Arbitration. If, after meeting with the mediator, the dispute remains unresolved, then the dispute shall, upon demand made by either Party, be resolved by expedited mandatory, binding arbitration as set forth in this Agreement. Nothing in this section shall restrict or limit the ability of any Party to obtain injunctive relief in superior court if such injunctive relief is necessary to avoid imminent or irreparable harm to either of the Parties, which might occur prior to or during the pendency of the arbitration process described herein. 3.4.2.1 Either party may demand arbitration by providing the other party with a written Notice of Demand for Arbitration (?Notice of Arbitration"). The notice shall describe the reasons for the demand, the nature of the dispute and the amount, if any, of any disputed monetary sum. 3.4.2.2 Within 10 days of the receipt of the Notice of Arbitration, the parties shall agree upon a single arbitrator meeting the qualification requirements set forth in Section 3.4.2.3 below. If the parties are unable to agree upon an arbitrator within the 10 day period, the parties shall submit a request for appointment of an arbitrator to the Seattle office of the American Arbitration Association The shall have 15 days from the date of submission of such request to designate an arbitrator meeting the qualification requirements described in Section 3.4.2.3 below. 3.4.2.3 The arbitrator must be a licensed attorney with experience as an arbitrator, and with a minimum of 15 years of cumulative experience in the areas of land use law, environmental review and regulatory law, and municipal law. 3.4.2.4 The arbitration hearing shall occur within 30 days from the date on which the arbitrator is appointed as described above. The hearing shall in no event last longer than 3 consecutive business days. There shall be no discovery or dispositive motion practice (such as motions for summary judgment or to dismiss or similar actions) except as may be permitted by the arbitrator. The arbitrator shall not be bound by any rules of civil procedures or evidence, but rather shall consider such writings and oral presentations as reasonable business persons would use in the conduct of their day-to-day affairs and may require the parties to present the case in a manner as the arbitrator may determine to be appropriate, including submission of written declarations in a timely fashion. It is the intention of the Parties to limit live testimony and cross-examination to the extent necessary to ensure a fair hearing to the Parties on all issues. The venue of any arbitration hearing conducted pursuant to this Agreement shall be in Pierce County, Washington 3.4.2.5 The arbitrator's decision shall be made within 30 calendar days of the commencement of the arbitration hearing. The arbitrator shall have no authority to fashion a compromise resolution to the dispute that has not been presented by either of the Parties. The award shall be final and judgment may be entered in any court having jurisdiction thereof. The Arbitrator may award specific performance. 81054937.] 0055219- 000014 SECTION . INTER-AGENCY DIALOGUE AND COMPLETION TIMEFRAME 4.1 Inter-Agency Dialogue. The City and NWIW recognize that this large scale. complex Project may involve inter-agency dialogue among the City, NWIW, the Port and others including without limit federal, state, regional and local agencies. The City acknowledges such inter-agency dialogue associated with the Project necessarily affects NWIW, and the City agrees to ensure that NWIW is afforded timely notice of its right of and an Opportunity to participate directly or by representation in all such meetings and discussions having a material bearing upon environmental review of the Project. 4.2 Timely Completion of Project Environmental Reviews. Timely completion of environmental review services within the timeframes required by SEPA review laws, applicable regulations and the terms herein is of the essence to this Agreement. The services required hereby shall conform with the schedule attached to this Agreement as Exhibit (Project Environmental Review Schedule). SECTION 5. TERMINATION 5.1 Defaults. 5.1.1 Failure of the City or NWIW to perform any material term or provision of this Agreement shall constitute a default under this Agreement. 5.1.2 The Party alleging the default shall give the other not less than fourteen (14) calendar days' prior written notice of the alleged default in order for the party alleged to be in default to address and cure such default before any further action is taken. Any notice of default shall specify the nature of the alleged default and, where appropriate, the manner in which said default may be satisfactorily cured. lf notice of default is given, the Parties shall make reasonable efforts to agree to an action plan to cure the default within the 14 calendar days or longer time as agreed. 5.1.3 If any default is not cured within the time allowed, the Party alleging the default may give notice of intent to terminate this Agreement. 5.1.4 Failure or delay in giving notice of default shall not constitute a waiver of any default. Any failure or delay by either party in asserting any of its rights or remedies as to any default shall not operate as a waiver of any default of its rights or remedies, and shall not deprive either party of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 5.1.5 No Party shall be in default of this Agreement for delays in performance due to war, litigation, insurrection, strikes of a regional or national nature, ?oods, earthquakes, ?res, casualties, acts of God, governmental restrictions imposed or mandated by governmental entities or its constituent agencies other than the City, enactment of con?icting State or Federal laws or regulations, orjudicial decisions. Any action or proceeding addressing the validity of this Agreement, any project approval, or any permit, approval, agreement or other entitlement related to the Project, or any action of a governmental agency necessary or desirable to the development of the Project shall create an excusable delay as to the City or NWIW. 31036917.! 0055219. 000015 5.2 Remedies. In addition to any other rights or remedies, either Party may institute an equitable action to cure, correct. or remedy any default, enforce any covenant or agreement herein, enjoin any threatened or attempted violation thereof, enforce by specific performance the obligations and rights of the Parties hereto, or to obtain any other remedies consistent with the foregoing and the purposes of this Agreement. Prior to the initiation of any litigation hereunder, the Parties agree to pursue mediation to resolve any disputes. 5.3 Termination. This Agreement shall terminate upon the occurrence of the following events: 5.3.1 Upon the second (2nd) anniversary of the Effective Date, or such later date as the Parties establish for the extension of this Agreement; or 5.3.2 Upon issuance of ?nal. unappealable Environmental review documentation: or 5.3.3 In the event of an uncured default under section 5.1 above. 5.4 Effect of Termination of NWIW Obligations. Termination of this Agreement shall not affect any of NWIW's obligations to comply with the terms and conditions of any Project permit decisions issued by other agencies with jurisdiction, and all other regulations applicable to the Project. SECTION 6. PUBLIC DOCUMENTS AND CONFIDENTIALITY EXEMPTION 6.1 Public Records Act. The City is a governmental authority subject to the requirements of RCW 42.56, the Washington Public Records Act and with exceptions, is required to produce and disclose to the public (upon request) documents possessed by the City relating to the Project. 6.2 Confidentiality and Exemptions. Should NWIW wish to assert con?dentiality over any document it provides to the City on the basis that it contains certain ?nancial, commercial, and/or proprietary information that is exempt from production or disclosure under the PRA. it shall provide the documents with a coversheet bearing a clear and prominent statement that the document attached thereto is a con?dential document containing ?nancial, commercial and/or proprietary information subject to protection against disclosure to third-parties pursuant to RCW 42.56 and other such laws enacted by the State of Washington that create additional exemptions to production and disclosure under the PRA. The City agrees to handle all documents NWIW marks as confidential in the manner provided below: 6.2.1 The City shall, within ?ve (5) days of its receipt of a request for production or inspection of documents over which NWIW has asserted confidentiality (a "Request?), provide written notice of such request to NWIW. 6.2.2 The City shall take no action to produce or allow inspection of such record(s) for at least ten (10) calendar days from the date the notice is provided to NWIW in order to afford both Parties the opportunity to evaluate the potentially responsive record(s) under the Request and the PRA and to seek a protective order when and where 3i0369ir.i 0055219? 000016 deemed by either Party to be appropriate. Both Parties will keep each other apprised of all actions intended to be taken and communications made regarding the Request. . 6.2.3 The City agrees to follow any ruling of the Pierce County Superior Court regarding production and disclosure of NWIW information/documents; however, the City is under no obligation to petition Pierce County Superior Court for any such ruling. SECTION 7. MISCELLANEOUS 7.1 No Agency, Joint Venture or Partnership. Although the City and NWIW intend to cooperate in the timely processing of Project environmental review, the Parties renounce the existence of any form of agency relationship, joint venture, or partnership between the City and NWIW and nothing contained herein or in any document executed in connection herewith shall be construed as creating any such legal relationship. 7.2 Severability. if any provision of this Agreement or the application of any provision of this Agreement to a particular situation is held by a court of competent jurisdiction to be invalid, void, or unenforceable, such provision shall be disregarded and this Agreement shall continue in force and effect unless enforcement of this Agreement without the invalidated provision would be unreasonable or grossly inequitable under all the circumstances or would frustrate the purposes of this Agreement. 7.3 Other Necessary Acts. Each Party shall execute and deliver to the other all further instruments and documents as may be reasonably necessary to carry out this Agreement and the applicable law in order to provide and secure to each Party the full and complete enjoyment of its rights and privileges hereunder. 7.4 Construction. This Agreement has been reviewed and revised by legal counsel for both the City and NWIW, and no presumption or rule that ambiguities shall be construed against the drafting Party shall apply to the interpretation or enforcement of this Agreement. 7.5 Washington Law I Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of Washington. The Parties agree that venue for any action instituted to enforce this Agreement shall be in the Superior Court of Washington for Pierce County. 7.6 Assignment. NWIW may assign its rights to develop the Project, or any portion or phase thereof, to any successor in interest which acquires any legal or equitable interest in any portion of the Project, which rights shall run with the Property on which the Project is constructed. The City must consent to any assignment of this Agreement before such assignment shall become effective, and the City's approval shall not be unreasonably withheld. Each successor in interest to NWIW shall be bound by all the terms and provisions applicable to the Project. Subject to the foregoing, during the term of this Agreement, all of the provisions, agreements, rights, powers, standards, terms, covenants and obligations contained in this Agreement shall be binding upon the Parties and their respective heirs, successors (by merger, consolidation or otherwise) and assigns, whether by sale, operation of law or in any manner whatsoever, and shall inure to the benefit of the Parties and their respective heirs, successors (by merger, consolidation or othenivise) and assigns. 8l0369l7.l 0055219. 000017 7.7 Waivers. No provision or condition of this Agreement shall be considered waived unless such waiver is in writing and signed by the Party to be bound. 7.8 Duty to Act Reasonably and in Good Faith. Unless otherwise expressly provided, each Party shall act reasonably in giving consent, approval, or taking any other action under this Agreement. The City and NWIW agree that each of them shall at all times act in good faith in order to carry out the terms of this Agreement and each of them covenants that it will not at any time voluntarily engage in any actions which frustrate the purpose and intent of the Parties as established herein. 7.9 Time of the Essence. Time is of the essence in the performance of each and every covenant and obligation to be performed by the Parties hereunder. 7.10 Entire Agreement. This Agreement, together with all Exhibits hereto, constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement. This Agreement is specifically intended by the Parties to supersede all prior agreements, whether written or oral, related to the subject matter of this Agreement which may exist between the City and NWIW. SECTION 8. NOTICES 8.1 Any notice, demand, or other communication (?Notice?) given under this Agreement shall be in writing and given personally or by registered or certified mail (return receipt requested). If given by registered or certified mail, a notice shall be deemed to have been given and received on actual receipt by the addressee. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. A courtesy copy of the notice may be sent by facsimile transmission. Any Party may designate any other address in substitution of the address contained herein by like written notice. 8.2 Notices shall be given to the Parties at their addresses set forth below. If to the City: Peter Huffman Director, Planning and Development Services City of Tacoma 747 Market Street, Ffoom 345 Tacoma, WA 98402 With a copy to: Jeff Capell Deputy City Attorney City of Tacoma 747 Market Street, #1120 Tacoma, WA 98402 Phone: (253) 591-5638 Fax: (253) 591 -5755 310549111005=219 000018 If to Northwest Innovation Works, Tacoma, LLC.: Murray V. Godley, Tom Luce 380 West Marine Drive Kalama, WA 98625 Tel: 360-673-7800 Fax: 360-67307810 With a copy to: Erin Anderson 600 University St. Suite 3600 Seattle. WA 98101 Tel: 206.386.7665 Fax: 206.386.7500 Email: erin.anderson@stoel.com IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto on the day and year ?rst above written. Northwest Innovation Works, Tacoma. LLC rib-?JE? By: Murray V. Godley, Its: Vice President Peter Huffrnan. i cto :BIanning and Development Se i Approved as to Form: Deputy E10369l?.100552l9- 000019 Exhibit A STATE OF WASHINGTON ENERGY FACILITY SITE EVALUATION COUNCIL PO Box 431' 72 0 Olympia, Washington 98504-31 1'2 September 23, 2015 Murray V. Godley, President NW Innovation Works, Tacoma, LLC 380 W. Marine Drive. Kalama. WA 93625 Subject: EFSEC Determination of Jurisdiction for the Proposed NW Innovation Works, Tacoma. LLC Dear Mr. Godleyt Thank you for your letter dated September I6, 2015 describing NW Innovation 1 Works proposed methanol manufacturing facility. to be sited at the Port of Tacoma. Your letter describes the proposal as a facility that will receive natural gas by pipeline and use it to manufacture methanol for export from a terminal at the Port of Tacoma. The proposed project is comprised of two main elements, a natural gas delivery system and the methanol processing operations. Revised Code of Washington (RCW) 80.50.02?' (12) de?nes six categories of facilities that constitute an ?energy plant?. The proposed facility, as described in your letter does not appear to fall under any of these categories. A transmission pipeline associated with the proposed facility is also described in your letter. Your proposal to construct a total of 1 miles of natural gas pipeline does not meet the statutory criterion of a ?transmission pipeline? contained in (RCW) 80.50.020 A?er consideration of the information in your letter and relevant statutory requirements, we have determined the proposed facility is not subject to Energy Facility Site Evaluation Council jurisdiction. This determination applies only to the proposed facility described in your September 16 letter. Please contact me at 360-664-1903, if you have any questions concerning this matter. Sincerely. Stephan Posner EFSEC Manager cc: Sally Toteff, Ecology Exhibit STATE OF WASHINGTON DEPARTMENT OF ECOLOGY PO Box 47??5 - Oiympia Washington 98504-7775 (360) 407-6300 711 for Washington Relay Service - Persons With a speech disability can cat! 877-833-6341 November 18, 2015 Mr. Ian Munce Planning and Development Services Department City of Tacoma 747 Market Street Tacoma, WA 98402 RE: Transfer of Lead Agency Status for the Northwest Innovations Work, Tacoma, LLC Methanol Manufacturing Facility at the Port of Tacoma from the Department of Ecology to the City of Tacoma Dear Mr. Munce: With this letter, the Department of Ecology (Ecology) transfers the State Environmental Policy Act (SEPA) lead agency status for the proposed Northwest Innovations Work, Tacoma (NWIWT) methanol manufacturing facility to the City of Tacoma. As the new lead agency, the City of Tacoma is now responsible to complete the environmental review under SEPA, RCW 43.21C. On October 12, 2015, Ecology sent emails to potential agencies with jurisdiction requesting concurrence for the transfer status for this proposal consistent with the SEPA Rules found in WAC 197-11?942. Those agencies included the Port of Tacoma, Pierce County, Puget Sound Clean Air Agency, Washington Department of Fish and Wildlife, Washington Department of Natural Resources, Washington State Department of Transportation and Washington State Utilities and Transportation Commission. In response, all of the agencies with potential jurisdiction agreed to the transfer request. Points of contacts for the agencies above are copied on this letter. In addition, WSDOT requested the City of Tacoma include Megan White, ESO Directon {meaanwhitef??wsdotwagov} and Dale Severson, Olympic Region Transportation Services Engineer, on the project SEPA distribution list when the environmental documents are ready for distribution.