D R A F T FOR DISCUSSION PURPOSES ONLY rev. 05/14/2012

Transcription

1 EDWARDS AQUIFER HABITAT CONSERVATION PLAN PROGRAM VOLUNTARY IRRIGATION SUSPENSION PROGRAM OPTION FORBEARANCE PAYMENT AGREEMENT This Voluntary Irrigation Suspension Program Option Forbearance Payment Agreement ( Agreement ) is entered into by and between the EDWARDS AQUIFER AUTHORITY ( EAA ), a conservation and reclamation district and political subdivision of the State of Texas, and [insert name of the permittee] ( Permittee ), the person or entity that is shown by the official permitting records of the EAA as the owner of record of Permit No. [insert permit number] ( Permit ). Each of these entities is, at times, referred to individually as a Party, and both are referred to collectively as Parties. RECITALS WHEREAS, under Section 1.02 of the Edwards Aquifer Authority Act ( EAA Act ) (Act of May 30, 1993, 73rd Leg., R.S., ch. 626, 1993 Tex. Gen. Laws 2350, as amended), the EAA is a conservation and reclamation district created by virtue of Article XVI, Section 59 of the Texas Constitution; and WHEREAS, under Section 1.14(a)(6), and (7) of the EAA Act, the EAA is required to protect aquatic and wildlife habitat, and protect species that are designated as threatened or endangered under federal or state law; and WHEREAS, under Section 1.14(h) of the EAA Act, the EAA is required to implement a plan to ensure that springflows at Comal Springs and San Marcos Springs are maintained to protect endangered and threatened species to the extent required by federal law; and WHEREAS, in January 2012, the EAA, among others, filed an application for an incidental take permit ( ITP ) with the U.S. Fish and Wildlife Service ( Service ) under the federal Endangered Species Act; and WHEREAS, a Habitat Conservation Plan ( HCP ) 1 was filed with and supports the ITP application by providing for, among other things, the implementation of various Conservation Measures intended to minimize or mitigate the impact of the use of the Edwards Aquifer on the authorized taking of the threatened and endangered species associated with the Aquifer or contribute to the recovery of such species; and 1 As of the Effective Date of this Agreement, the HCP that is in effect for purposes of this Agreement is dated December 2011 and is part of the ITP application. page 1 of 16

2 WHEREAS, Section of the HCP provides that the EAA will implement and administer the Voluntary Irrigation Suspension Program Option ( VISPO ) Program; and WHEREAS, the VIPSO Program basically operates by compensating irrigators to forbear exercising their right to make withdrawals of Aquifer groundwater for irrigation purposes during times of drought and thereby allow such water to be discharged at Comal Springs and/or San Marcos Springs; and WHEREAS, the Permittee desires to be a participant in the VISPO Program; and WHEREAS, under Section 1.11(d)(2) of the EAA Act, the EAA has the authority to enter into contracts; and WHEREAS, it is in the public interest that the EAA implement the VISPO Program by entering into this Agreement with the Permittee. AGREEMENT NOW, THEREFORE, for the mutual consideration expressed in this Agreement, the Parties agree as follows: 1.0 Definitions As used in this Agreement, the following terms shall have the following meanings: 1.1 Adjusted Total Authorized Groundwater Withdrawal Amount or ATAGWA means the Total Authorized Groundwater Withdrawal Amount as adjusted for critical period management reductions, if any, as calculated under Subchapter E of Chapter 715 of the EAA s rules. 1.2 BIG has the meaning of Base Irrigation Groundwater as provided in Section of the EAA s rules, as may be amended. 1.3 Edwards Aquifer or Aquifer means the Southern (or San Antonio) Segment of the Edwards Aquifer as defined in Section 1.03(1) of the EAA Act within the boundaries of the EAA. 1.4 Effective Date means the date of execution of this Agreement by the EAA. 1.5 General Manager means the general manager of the EAA. 1.6 Groundwater Available for Withdrawal or GAW means the Total Authorized Groundwater Withdrawal Amount less adjustments for the January 1 st CPWR Percentage and for the Pledged Forbearance Amount. page 2 of 16

3 1.7 Groundwater Forbearance Amount or GFA means the amount of groundwater in acre-feet per year (AFY) authorized and available to the Permittee for withdrawal from the Aquifer under the Permit that is not actually withdrawn from the Aquifer during a Suspension Year as a result of the Permittee s decision to enter into this Agreement. [Option No. 1 insert - for contracts executed: (1) on or before October 1 st ; or (2) after October 1 st and a Suspension Year was triggered on October 1 st and the Permittee agrees to forbearance during the Suspension Year as provided in Section 4.0(a)] 1.8 Initial Payment Year means the first year immediately following the year in which this Agreement becomes effective. [Option No. 2 - for contracts executed after October 1 st and: (1) a Suspension Year was not triggered on October 1 st ; or (2) a Suspension Year was triggered on October 1 st, but the Permittee does not agree to forbearance during the first Suspension Year immediately following the year of execution] 1.8 Initial Payment Year means the second year following the year in which this Agreement becomes effective. 1.9 January 1 st Critical Period Withdrawal Reduction Percentage or January 1 st CPWR Percentage means the applicable critical period withdrawal reduction percentage for the San Antonio or Uvalde Pool, as may be applicable, on January 1 st of a Suspension Year as provided in Table 1 of Section of the EAA s rules Payment Multiplier means the applicable multiplier in Table 1 in Section 6.3 to account for critical period management adjustments to the Pledged Forbearance Amount Pledged Forbearance Amount or PFA means the amount of groundwater in AFY as stated in Section 3.1(b) for which the Permittee agrees to forbear the Permittee s right to make withdrawals of groundwater from the Aquifer under the Permit, and to authorize the EAA to require and enforce such forbearance under the terms of this Agreement Suspend, suspending, or suspension means the complete curtailment of all or part of the right to make withdrawals under the Permit during a Suspension Year in no less than the Groundwater Forbearance Amount as calculated in Section 5.4(a) Suspension Year means a calendar year during which the Permittee agrees to forbear the Permittee s right to make withdrawals of groundwater from the Aquifer under the Permit in no less than the Groundwater Forbearance Amount as calculated in Section 5.4(a), and during which the EAA is authorized to require and enforce the forbearance through suspension of the right to make such withdrawals Total Authorized Groundwater Withdrawal Amount or TAGWA means the total amount of groundwater in AFY legally authorized to be withdrawn from the Aquifer by the Permittee during a year as of the Effective Date of this Agreement as shown by the official page 3 of 16

4 permitting records of the EAA, with no adjustments for critical period management reductions under Subchapter E of Chapter 715 of the EAA s rules UIG has the meaning of Unrestricted Irrigation Groundwater as provided in Section of the EAA s rules, as may be amended Well J-17 means State well number AY located in Bexar County Withdraw, withdrawn, or withdrawal means an act or a failure to act that results in taking groundwater from the Aquifer by or through man-made facilities, including pumping, withdrawing, or diversion. 2.0 Term 2.1 In General This Agreement is effective and commences on, 20, (the Effective Date) and terminates on December 31, 20, subject only to the provisions of Section Early Termination (a) This Agreement may be terminated prior to the term stated in Section 2.1 due to decisions made pursuant to the Adaptive Management Process of the FMA 2 only as follows: (1) if it is determined that the VISPO Program be discontinued as a Conservation Measure by the Implementing Committee of the Edwards Aquifer Habitat Conservation Plan Program under Section f of the FMA, and the EAA, in its sole discretion, provides advance written notice of termination to the Permittee by July 1 st of the year in which the decision to discontinue was made, then this Agreement terminates on December 31 st of that same year; or (2) if the VISPO Program is modified and such modification results in a material conflict with this Agreement, and the Parties are unable in good faith to renegotiate a modification to this Agreement to be consistent with the modified VISPO Program within 60 days from the date the EAA gives notice to the Permittee that the VISPO Program has been modified, and either Party provides advance written notice of termination to the other Party by July 1 st, then this Agreement terminates on December 31 st of the year in which one of the Parties 2 For purposes of this Agreement, FMA means the Funding and Management Agreement by and among the Edwards Aquifer Authority, the City of New Braunfels, the City of San Marcos, the City of San Antonio, acting by and through its San Antonio Water System Board of Trustees, and Texas State University San Marcos to fund and manage the Habitat Conservation Plan for the Edwards Aquifer Recovery Implementation Program (eff. Jan. 1, 2012). Adaptive Management Process or AMP means the iterative process designed to develop information through monitoring and research, and the review and use of the results to confirm the efficacy of or to adjust the Conservation Measures, all as described in Article Seven of the FMA and in Chapter 6 of the HCP. See FMA page 4 of 16

5 provided the notice of termination. (b) In the event the Service denies the application for an ITP, and the EAA, in its sole discretion, provides advance written notice of termination to the Permittee by July 1 st of the year in which the decision to deny was issued, then this Agreement terminates on December 31 st of that same year. 3.0 Forbearance of the Right to Make Withdrawals 3.1 Groundwater Withdrawal Amount Subject to Forbearance (a) As of the Effective Date of this Agreement, the Total Authorized Groundwater Withdrawal Amount of the Permittee is AFY for irrigation use, allocated as AFY BIG and AFY UIG. (b) The Pledged Forbearance Amount under the Permit is AFY, allocated as AFY BIG and AFY UIG. (c) The portion of the Total Authorized Groundwater Withdrawal Amount that is not subject to forbearance under Subsection (b) is AFY, allocated as AFY BIG and AFY UIG, and specifically as to the Permit allocated as AFY BIG and AFY UIG. 3.2 Forbearance by Assignees of the Permittee The duty to forbear, and the authorization for the EAA to require and enforce the Pledged Forbearance Amount applies not only to the Permittee but also applies to the Permittee s lessees or other assigns, and any other person who makes withdrawals under the Permit, whether or not authorized by the Permittee, and whether the withdrawals are made by, for, or on behalf of the Permittee, or the other person or entity making the withdrawals. 3.3 Warranties and Representations of the Permittee The Permittee warrants and represents to the EAA that: (i) the Permittee has all requisite legal authority to enter into and to perform its obligations under this Agreement without the consent or joinder of any other person or entity, and (ii) except as expressly disclosed to the EAA in writing in Exhibit A, which is attached to and incorporated into this Agreement for all purposes, no rights under the Permit have been leased or otherwise assigned to another person or entity. In the event rights under the Permit have been leased or otherwise assigned, the Permittee agrees to and has provided an acknowledgment agreement executed by the Permittee and the lessee or other assign at Exhibit B, which is attached to and incorporated into this Agreement for all purposes. 4.0 Suspension of the Right to Make Withdrawals [Option No. 1 insert - for contracts: (1) executed on or before October 1 st ; (2) executed page 5 of 16

6 after October 1 st and a Suspension Year was not triggered on October 1 st ; or (3) executed after October 1 st and a Suspension Year was triggered on October 1 st, but the Permittee does not agree to forbearance during the Suspension Year] (a) Except as provided in Subsection (h), while a Suspension Year is in effect, the Permittee, and the Permittee s lessees or other assigns, and any other person as provided in Section 3.2, agree to and shall: (1) forbear the right to make withdrawals of groundwater from the Aquifer under the Permit in an amount no less than the Groundwater Forbearance Amount as calculated in Section 5.4(a); and (2) authorize the EAA to require and enforce the forbearance through suspension of the right to make such withdrawals. [Option No. 2 insert - for contracts executed after October 1 st and a Suspension Year was triggered on October 1 st and the Permittee agrees to forbearance during the Suspension Year as provided in Section 4.0(a)] (a) The Permittee warrants and represents that it understands that on January 1, 20, a Suspension Year commenced as provided in this section. The Permittee additionally warrants and represents that, notwithstanding the fact that the Effective Date for this Contract is after October 1, 20, the Permittee. agrees to be bound by the duty to forbear as provided in this subsection for the Suspension Year beginning on January 1, 20. Accordingly, except as provided in Subsection (h), while a Suspension Year is in effect at any time during the term of this Agreement, the Permittee, and the Permittee s lessees or other assigns, and any other person as provided in Section 3.2, agree to and shall: (1) forbear the right to make withdrawals of groundwater from the Aquifer under the Permit in an amount no less than the Groundwater Forbearance Amount as calculated in Section 5.4(a); and (2) authorize the EAA to require and enforce the forbearance through suspension of the right to make such withdrawals. (b) A Suspension Year commences on January 1 st of the year immediately following the year in which the General Manager issues a notice of commencement of suspension. (c) The General Manager shall issue a written notice of commencement of suspension if the maximum daily well level at Well J-17 as measured by the EAA is equal to or less than 635 feet mean sea level ( msl ) on October 1 st of any calendar year during the term of this Agreement. The General Manager shall issue a new or renewal notice of commencement of suspension for each year in which a Suspension Year is required to be commenced or continued pursuant to this subsection. (d) As soon as practicable after October 1 st, the notice of commencement of page 6 of 16

7 suspension shall be: (1) mailed to the Permittee by U.S. certified mail, postage prepaid, return receipt requested; and (2) posted on the EAA s internet website. (e) A Suspension Year expires on January 1 st of the year immediately following the year in which the General Manager issues a notice of expiration of suspension. (f) The General Manager shall issue a written notice of expiration of suspension if the maximum daily well level at Well J-17 as measured by the EAA is greater than 635 feet msl on October 1 st of any calendar year during the term of this Agreement. (g) As soon as practicable after October 1 st, the notice of expiration of suspension shall be mailed and posted as provided in Subsection (d). (h) A Permittee may opt out of a Suspension Year if: (1) the maximum daily water level at Well J-17 as measured by the EAA is equal to or greater than 660 feet msl on January 1 st of the Suspension Year; and (2) on or before January 15 th, the Permittee gives written notice to the EAA of his or her intent to opt out of the Suspension Year. (i) If the Permittee elects to opt out of the Suspension Year under Subsection (h), the Permittee shall have no right to receive from the EAA any groundwater forbearance payments under Section Procedures for Determining the Groundwater Forbearance Amount 5.1 Use of the EAA s Annual Groundwater Accounting Records The EAA will prepare and maintain annual groundwater withdrawal accounting records as necessary to determine the amounts of Aquifer groundwater withdrawn and forborne under the Permit during each calendar year during the term of this Agreement. The Permittee, and his lessees or other assigns, shall fully cooperate in the gathering and furnishing to the EAA of any information pertinent to the preparation of such records. Upon reasonable notice of the Permittee, the EAA will make available for inspection and copying by the Permittee or his or her representative all records developed under this section. 5.2 Determination of Groundwater Withdrawn from the Aquifer [Option No. 1 insert - for Permittees with points of withdrawals authorized under the Permit on the Effective Date] page 7 of 16

8 (a) Except as provided in subsection (b), the determination of the amount of groundwater withdrawn from the Aquifer under the Permit during a calendar year shall be based on the withdrawals recorded by real time automated meters installed by the EAA on the point(s) of withdrawals authorized under the Permit. The EAA will own, design, purchase, install, operate, and maintain all meters at its expense. Once the meters have been determined by the EAA to be in good operational condition, the EAA will begin to make meter readings on January 1 st and through December 31 st of each calendar year during the term of this Agreement, whether or not a Suspension Year is in effect. The EAA may make meter readings at any time between these dates as, in its discretion, may be necessary and appropriate to determine and ensure the accuracy of the amount of groundwater that has been withdrawn from the point(s) of withdrawal authorized under the Permit during the calendar year. The Parties agree that the EAA will from time to time provide quality assurance/quality control techniques for the withdrawal measurements as, in its discretion, may be necessary and appropriate to ensure the accuracy of the methodology described in this subsection. (b) During a year other than a Suspension Year, until the time that the EAA has installed a real time automated meter and determined it to be in good operational condition as provided in Subsection (a), the determination of the amount of groundwater withdrawn from the Aquifer under the Permit shall be based on meter readings made on a monthly and annual basis by the Permittee or, if requested by the Permittee, by the EAA. During a Suspension Year, the meter readings shall be made on a monthly basis by the EAA. The meter readings will be reported on monthly and annual groundwater use report forms developed by the EAA. The EAA will promptly provide copies of these report forms to the Permittee after their preparation. [Option No. 2 insert - for Permittees with no points of withdrawals authorized under the Permit on the Effective Date] (a) paragraph above]. Except as provided in Subsections (b) and (c), the [continue with the (b) Because the Permittee has no points of withdrawal authorized under the Permit as of the Effective Date of this Agreement, Subsection (a) does not apply to the Permittee and the determination of the amount of groundwater withdrawn from the Aquifer under the Permit during a calendar year shall be deemed to be zero. However, if, during the term of this Agreement, the Permittee installs points of withdrawal pursuant to the EAA s rules that are authorized points of withdrawal under the Permit, or transfers or otherwise assigns all or part of the right to withdraw groundwater from the Aquifer under the Permit to a lessee or other assignee who has an authorized point of withdrawal, then the provisions of Subsection (a) apply to the Permittee or transferee or other assign, as appropriate. (c) During a year other than a Suspension Year, until the time that the EAA has installed a real time automated meter and determined it to be in good operational condition as provided in Subsection (a), the determination of the amount of groundwater withdrawn from the Aquifer under the Permit shall be based on meter readings made on a monthly and annual basis by the Permittee or, if requested by the Permittee, by the EAA. During a Suspension Year, the meter readings shall be made on a monthly basis by the EAA. The meter readings will be page 8 of 16

9 reported on monthly and annual groundwater use report forms developed by the EAA. The EAA will promptly provide copies of these report forms to the Permittee after their preparation. 5.3 Withdrawals by Persons Other than the Permittee The EAA shall account for withdrawals of groundwater from the Aquifer under the Permit made not only by the Permittee, but also by the Permittee s lessees or other assigns, and by any other person who makes withdrawals under the Permit, whether or not authorized by the Permittee, and whether the withdrawals are made by, for, or on behalf of the Permittee, or the other person or entity making the withdrawals. 5.4 Determination of Groundwater Forbearance Amount (a) No later than February 1 st of a Suspension Year, the Groundwater Forbearance Amount for purposes of payment of the forbearance payment under Section 6.3 shall be determined by the EAA as follows: GFA = PFA - (PFA x January 1 st CPWR Percentage). (b) No later than February 15 th of the year immediately following a Suspension Year, the Groundwater Forbearance Amount for purposes of compliance with this Agreement under Sections 5.4(a) shall be determined by the EAA as follows: GAW = ATAGWA x (1-[PFA/TAGWA]). If the actual withdrawals as metered under Section 5.2 during a Suspension Year are less than or equal to the GAW, then the Permittee is in compliance with all forbearance obligations under this Agreement. If the actual withdrawals as metered under Section 5.2 during a Suspension Year are greater than the GAW, then the Permittee is not in compliance with the forbearance obligations under this Agreement and is subject to enforcement under Sections 7.3 and/or 7.4 as the EAA in its sole discretion determines is most appropriate. 6.0 Payments by the EAA to the Permittee 6.1 In General The EAA will make all payments under this section only to the Permittee. The payment of standby fees as provided in Section 6.2 commences in the Initial Payment Year. The payment of forbearance payments as provided in Section 6.3 is made only in Suspension Years. 6.2 Calculation of Standby Fee Payment [Option No. 1 - Insert for a 5-year contract] Not later than March 1 st of the Initial Payment Year and each year during the remaining term of this Agreement, the EAA shall make a standby fee payment to the Permittee page 9 of 16

10 calculated as follows: the unit amount of $50.00/AFY x PFA = $.00. The unit amount of the standby fee shall be adjusted for a 1.5 percent (%) increase, compounded annually for the years that have elapsed since the Initial Payment Year. The EAA shall make the annual standby fee payment to the Permittee regardless of the well level at Well J-17. ] [Option No. 2 - Insert for a 10-year contract] Not later than March 1 st of the Initial Payment Year and each year during the remaining term of this Agreement, the EAA shall make a standby fee payment to the Permittee calculated as follows: (1) for years one through five of the term of this Agreement, $57.50/AFY x PFA = $.00; and = $.00. (2) for years six through ten of the term of this Agreement, $70.20/AFY x PFA The EAA shall make the annual standby fee payment to the Permittee regardless of the well level at Well J-17. ] 6.3 Calculation of Groundwater Forbearance Payments [Option No. 1 - Insert for a 5-year contract] Not later than March 1 st of a Suspension Year, the EAA shall make a groundwater forbearance payment to the Permittee calculated as follows: GFA x the unit amount of $150.00/AFY x the applicable Payment Multiplier = $.00. The unit amount of the groundwater forbearance payment shall be adjusted for a 1.5 percent (%) increase, compounded annually for the years that have elapsed since the Initial Payment Year. ] [Option No. 2 - Insert for a 10-year contract] Not later than March 1 st of a Suspension Year, the EAA shall make a groundwater forbearance payment to the Permittee calculated as follows: (1) for years one through five of the term of this Agreement (with year one being the Initial Payment Year), GFA x $172.50/AFY x applicable Payment Multiplier = $.00; and (2) for years six through ten of the term of this Agreement, GFA x page 10 of 16

11 $210.60/AFY x the applicable Payment Multiplier = $.00. ] For the purpose of making forbearance payments under this section, the Payment Multipliers shall be as follows: Table 1 - Payment Multipliers Critical Period Stage San Antonio Pool Uvalde Pool 7.0 General Provisions I II III IV V Access to Property The Permittee authorizes the EAA, through any of its authorized officers, agents, employees, or representatives, to enter upon the Permittee s property on which the EAA has installed its real time meters under Section 5.2 for the purpose of installing, operating, maintaining, repairing, rehabilitating, or replacing the meters and to ensure compliance with this Agreement. The entry may be at any reasonable time for this purpose. The persons conducting such entry shall notify the Permittee, or his or her representative, of their presence, present proper identification, and conduct such entry with due regard for the safety of the premises and its occupants. The employees or representatives of the EAA that enter the Permittee s property shall remain on established roads, paths, and well sites at all times and are prohibited from hunting or removing any artifacts, or any plant or animal species from the Permittee s property. No third-party riders are allowed to accompany EAA employees or representatives. 7.2 Transfers or Other Assignments (a) This Agreement is binding on and inures to the benefit of the Parties and their respective successors, representatives, and assigns. In addition to the requirements of Subsection (b), rights under this Agreement may be transferred or otherwise assigned by the Permittee as provided in Sections of the EAA s rules, as may be amended and are applicable. The EAA may not withhold approval except as is provided by these rules. (b) After the Effective Date of this Agreement, at the time an application to transfer or amend any rights under this Agreement is filed with the EAA as required by the EAA s rules, the Permittee agrees to provide notice to the EAA as follows: (1) (groundwater not subject to forbearance): for leases or other assignments from the Permittee to a third-party of the right to make withdrawals from the Aquifer of all or a portion of the Total Authorized Groundwater Withdrawal Amount that is not page 11 of 16

12 subject to forbearance as stated in Section 3.1(c) at a point of withdrawal other than one authorized under the Permit, by executing and providing to the EAA the notice at Exhibit C, which is attached to and incorporated into this Agreement for all purposes; (2) (groundwater subject to forbearance for a term of one year or less not during a Suspension Year): for leases or other assignments from the Permittee to a thirdparty of the right to make withdrawals from the Aquifer of all or a portion of the Pledged Forbearance Amount as stated in Section 3.1(b) at a point of withdrawal other than one authorized under the Permit, and the term of the lease or other assignment is for one year or less and is not or will not be effective during a Suspension Year, by executing and providing to the EAA the notice at Exhibit C; (3) (groundwater subject to forbearance for a term of more than one year): for leases or other assignments from the Permittee to a third-party of the right to make withdrawals from the Aquifer of all or a portion of the Pledged Forbearance Amount as stated in Section 3.1(b) at a point of withdrawal other than one authorized under the Permit, and the term of the lease or other assignment is for more than one year, by providing to the EAA the notice at Exhibit C executed by the Permittee and the transferee or other assign; or (4) (third-party transfers to the Permittee): leases or other assignments from a third-party to the Permittee of the right to make withdrawals from the Aquifer under a groundwater withdrawal permit issued by the EAA at a point of withdrawal that is authorized under the Permit, by executing and providing to the EAA the notice at Exhibit C. (c) At the time of the execution of this Agreement by the EAA, the Permittee agrees to provide notice to the EAA of the following transfers made prior to and that are in effect at the time of the Effective Date of this Agreement using the form at Exhibit A: (1) leases or other assignments from the Permittee to a third-party of any rights under the Permit; or (2) leases or other assignments from a third-party to the Permittee of the right to make withdrawals from the Aquifer at the points of withdrawal that are authorized under the Permit. 7.3 Failure to Forbear If, as calculated under Section 5.4(b), the Permittee fails to meet its forbearance obligations under this Agreement, then the Permittee acknowledges that a breach of this Agreement has occurred. The Permittee also acknowledges that the EAA may consider this breach to be an unauthorized withdrawal of groundwater from the Aquifer and may process the breach under its compliance and enforcement processes and procedures. If the EAA refers the Permittee s failure to forbear for processing as a compliance and enforcement matter, the Permittee acknowledges that the EAA is not waiving any rights or remedies it may have under law or this Agreement to enforce the terms of this Agreement. page 12 of 16

13 7.4 Remedies In addition to the remedies provided in Section 7.3, each Party shall have those remedies that may be provided by applicable law, except that termination or rescission of this Agreement shall not be a remedy as long as the ITP is in effect. 7.5 Default Notice and Opportunity to Cure If the EAA fails to make any payment in the required amount when due under this Agreement, the Permittee may, without prejudice to any other right or remedy it may have under this Agreement, provide written notice of default to the EAA. The EAA has 60 days from receipt of the notice within which to remedy the default. 7.6 Payments from EAA Revenue The Permittee does not have the right to demand payment by the EAA of any obligations imposed upon the EAA under this Agreement from any funds raised or to be raised by taxation unless otherwise authorized by law. The EAA s obligation under this Agreement will never be construed to be a debt of the EAA of such kind as to require it under the Constitution and laws of the State to levy and collect an ad valorem tax to discharge such obligation. 7.7 Rights Regarding Books and Records The EAA will authorize the Permittee upon reasonable notice to examine and copy all the books and records kept by the EAA regarding this Agreement. In addition, upon reasonable prior written notice to the EAA, the Permittee may conduct a complete audit of the books and records. Any such audit will be at the Permittee s sole expense and will be prepared by a certified public accounting firm. If the audit report discloses actual errors in the books and records of the EAA such that the payments made to the Permittee are in error, then such error will be corrected for the period up to four years after the erroneous payment was paid and all payments reconciled over the subsequent twelve month period beginning with the EAA s fiscal year. If the error identified in the audit is greater than the cost of the audit, the EAA will reimburse the Permittee s cost of the audit. 7.8 Participation by the Parties Each Party represents to the other that it is authorized by law to execute this Agreement, and that its execution of this Agreement has been duly authorized by appropriate action of its governing body or other appropriate official. Each Party affirms that it has taken all necessary official action to approve this Agreement. 7.9 Modification This Agreement may be amended only by written agreement of the Parties. No change, amendment, or modification of this Agreement will be made or be effective that will: (a) cause this Agreement to diverge from or create an inconsistency with the HCP; or (b) affect adversely page 13 of 16

14 the prompt payment when due of all money required to be paid by the EAA under the terms of this Agreement. Execution by the EAA of Exhibit C as provided in Section 7.2 will constitute an amendment to Section 3.1 as appropriate Administration of the Agreement; Addresses and Notice The EAA and the Permittee hereby appoint the persons below as their Agreement Administrator to coordinate their respective activities hereunder. The EAA and the Permittee each agree to fully cooperate and to meet as needed for the purpose of sharing information and coordinating administration and implementation of this Agreement. Any notice provided for in this Agreement will be in writing and given by depositing the same in the United States mail postage prepaid and registered or certified and addressed to the Party to be notified, with return receipt requested. For the purposes of notice, the addresses of the Parties are as follows: the EAA: General Manager Edwards Aquifer Authority 1615 N. St. Mary s Street San Antonio, Texas the Permittee: [name, title] [address] [city, state zip] If a Party changes its address or Agreement Administrator it will provide at least five days written notice to the other Party Severability The Parties specifically agree that in case any one or more of the sections, clauses, or words of this Agreement or their application to any situation is held to be, for any reason, invalid, such invalidity will not affect any other sections, clauses, or words of this Agreement or their application. It is intended that this Agreement will be severable and will be construed and applied as if any such invalidity had not been included herein, and the rights and obligations of the Parties hereto will be construed and remain in force accordingly Entire Agreement This Agreement constitutes the entire agreement among the Parties with respect to the matters described herein. page 14 of 16

15 7.13 Record Notice The EAA may, in its sole discretion, record a memorandum of this Agreement with the County Clerk of the county in which the Permittee s property is located Applicable Law; Venue This Agreement will be governed by and construed in accordance with the laws of the State of Texas, and the obligations, rights, and remedies of the Parties hereunder will be determined in accordance with such laws without reference to the laws of any other state or jurisdiction, except for applicable federal laws, rules, and regulations. The Parties also specifically agree that in the event that any legal proceeding is brought to enforce this Agreement, the same will be brought in Bexar County, or the county in which the Permittee s property on which the points of withdrawal authorized in the Permit are located No Third Party Beneficiary This Agreement is not intended to confer any rights, privileges or causes of action upon any third party other than the Parties. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized representatives as of the date first set forth hereinabove. EDWARDS AQUIFER AUTHORITY Karl J. Dreher General Manager ATTEST: Jennifer Wong-Esparza Assistant to Board Secretary [NAME OF THE PERMITTEE] [name] [title] page 15 of 16

16 ATTEST: [name] [title] NOTICE TO PERMITTEE AS A PERMITTEE OF THE EDWARDS AQUIFER AUTHORITY, YOU SHOULD SEEK THE ADVISE AND GUIDANCE OF A QUALIFIED ATTORNEY BEFORE AGREEING TO THE TERMS OF THIS VOLUNTARY IRRIGATION SUSPENSION PROGRAM OPTION FORBEARANCE PAYMENT AGREEMENT. THERE IS A PLACE BELOW FOR YOUR ATTORNEY TO SIGN THE AGREEMENT APPROVING IT AS TO FORM. STATE OF TEXAS COUNTY OF BEXAR ACKNOWLEDGEMENT This instrument was acknowledged before me on, 2012 by Karl J. Dreher, General Manager of the Edwards Aquifer Authority, known personally to me to be the person who subscribed to this instrument, on behalf of the Edwards Aquifer Authority. Notary Seal Notary Public, State of Texas STATE OF TEXAS COUNTY OF This instrument was acknowledged before me on, 2012 by, the Permittee, known personally to me to be the person who subscribed to this instrument, on behalf of the Permittee. Notary Seal Notary Public, State of Texas page 16 of 16

17 APPROVED AS TO FORM: Darcy Alan Frownfelter, General Counsel For the Edwards Aquifer Authority page 17 of 16

18 EXHIBIT A - NOTICE OF PRE-EXISTING TRANSFERS Pursuant to Sections 3.3 and 7.2(c) of the Agreement, the Permittee hereby gives notice to the EAA that he or she has leased or otherwise assigned to a third-party the following rights under the Permit, or that the Permittee has leased from a third-party the right to make withdrawals from the Aquifer at the points of withdrawal that are authorized under the Permit and that such transfers or other assignments were made prior to, and remain in effect at the time of, the Effective Date of the Agreement. 1.0 Transfers from the Permittee to a Third-Party Lessee or Other Assign Name of Lessee or other Assign: Permit No.: Amount Transferred: AFY BIG AFY UIG Transfer term: Date transfer application filed: Date transfer application approved: [NOTE: If additional transfers have been made, please attach an extra page with the above information.] 2.0 Transfers from a Third-Party Permit Holder to the Permittee Name of Permit Holder: Permit No.: Amount Transferred: AFY BIG AFY UIG Transfer term: Point(s) of Withdrawal: Date transfer application filed: Date transfer application approved: page A-1 of A-2 Exhibit A

19 [NOTE: If additional transfers have been made, please attach an extra page with the above information.] The undersigned Permittee hereby affirms and acknowledges that the above information is true to the best of my knowledge and belief. [NAME OF THE PERMITTEE] [name] [title] page A-2 of A-2 Exhibit A

20 EXHIBIT B - ACKNOWLEDGMENT OF VISPO FORBEARANCE PAYMENT AGREEMENT BY PERMITTEE AND ANY LESSEES OR ASSIGNEES The EDWARDS AQUIFER AUTHORITY ( EAA ) and the undersigned Permittee have entered into that certain Voluntary Irrigation Suspension Program Option Forbearance Payment Agreement (the Agreement ), the terms of which place significant limitations and related obligations upon the Permittee, and the Permittee s lessees and assignees, in making withdrawals of groundwater from the Edwards Aquifer as set forth in the Agreement. The Permittee warrants and represents to the EAA that: the Permittee has all requisite legal authority to enter into and to perform its obligations under the Agreement without the consent or joinder of any other person or entity, except as provided below in this Exhibit B, which is attached to and incorporated into the Agreement for all purposes. To further the purposes of Sections 3.2, 3.3, and 4.0(a) of the Agreement, the Permittee, and the Permittee s lessees and other assigns as identified below, all acknowledge and agree that the provisions and limitations set forth in the Agreement are also applicable to all lessees and assigns of the Permittee. The undersigned Permittee, together with and joined by the undersigned lessee, assignee or other transferee or successor of the Permittee, hereby consent, affirm and acknowledge the express obligations, duties, rights and conditions of the Agreement as made applicable to and binding upon them in accordance with the terms of said Agreement. [NAME OF THE PERMITTEE] [name] [title] [NAME OF THE LESSEE OR ASSIGNEE] [name] [title] Check one: Lessee Assignee Other Transferee or Successor Please describe: page B-1 of B-1 Exhibit B

21 EXHIBIT C - NOTICE OF POST-EXECUTION TRANSFERS AND AMENDMENT OF VISPO FORBEARANCE PAYMENT AGREEMENT Pursuant to Section 7.2(b) and 7.9 of that certain VISPO Forbearance Payment Agreement dated ( Agreement ), the Permittee hereby gives notice to the EAA that he or she has, after the Effective Date of the Agreement: (1) leased or otherwise assigned to a third-party the right to make withdrawals from the Aquifer under Permit No. ; or (2) leased or otherwise received an assignment from a third-party of the right to make withdrawals from the Aquifer at the points of withdrawal authorized under Permit No.. This notice accompanies the application to transfer or amend filed with the EAA as required by the EAA s rules by the third-party permit holder. Upon execution of this notice by the EAA, Section 3.1 of the Agreement is amended as follows: 3.1 Groundwater Withdrawal Amount Subject to Forbearance (a) As of the Effective Date of this Agreement, the Total Authorized Groundwater Withdrawal Amount of the Permittee is AFY for irrigation use, allocated as AFY BIG and AFY UIG. (b) The Pledged Forbearance Amount under the Permit is AFY, allocated as AFY BIG and AFY UIG. (c) The portion of the Total Authorized Groundwater Withdrawal Amount that is not subject to forbearance under Subsection (b) is AFY, allocated as AFY BIG and AFY UIG, and for the Permit allocated as AFY BIG and AFY UIG. IN WITNESS WHEREOF, the EDWARDS AQUIFER AUTHORITY and the PERMITTEE have caused this Amending Agreement to be executed by their respective duly authorized representatives as of the date first set forth hereinabove. EDWARDS AQUIFER AUTHORITY Karl J. Dreher General Manager page C-1 of C-3 Exhibit C

22 ATTEST: Jennifer Wong-Esparza Assistant to Board Secretary [NAME OF THE PERMITTEE] [name] [title] [INSERT IF APPLICABLE] ATTEST: [name] [title] [INSERT IF APPLICABLE DUE TO SEC. 7.2(b)(3)] [NAME OF THE TRANSFEREE OR OTHER ASSIGN] [name] [title] [INSERT IF APPLICABLE] ATTEST: [name] [title] page C-2 of C-3 Exhibit C

23 APPROVED AS TO FORM: Darcy Alan Frownfelter, General Counsel For the Edwards Aquifer Authority [OPTIONAL] [attorney name] For the Permittee [attorney name] For the Transferee or Other Assign page C-3 of C-3 Exhibit C