MODEL CONTRACT BETWEEN SUPPLIER AND USER
This agreement is entered into this _____ day of ______, 20__, by and between ______(hereinafter, “SUPPLIER”) and ______(hereinafter “USER”). SUPPLIER and USER may be hereinafter referred to as the “Parties”.
WHEREAS, SUPPLIER is a ______[type of entity] _____ established under the laws of the State of______.
WHEREAS, USER is a ______[type of entity] _____ established under the laws of the State of______.
WHEREAS, SUPPLIER owns the rights to and wishes to lease (sell) _____ acre-feet of water per year; and
WHEREAS, USER desires to acquire an additional ______acre-feet of water per year; and
WHEREAS, the applicable Water Codes of the State of ______authorize ______[type of entity] ______to sell and otherwise transfer water that is surplus to its needs; and
WHEREAS, the parties have heretofore completed necessary environmental review and documentation as follows:
WHEREFORE, the parties agree as follows:
Article 1.0 Term of Agreement
1.1 Subject to the provisions of this Agreement, the SUPPLIER agrees to provide and the USER agrees to accept ______acre-feet of water per year.
1.2 The water transfer defined in this Agreement shall be a lease in effect for a period of _____ years beginning on __ [date] __ and ending on __ [date] __. [Alternatively, it could be established as a sale]
1.3 The USER agrees to accept water from the SUPPLIER for use by USER solely for __ [designated purposes] ______on _ ___ [designated parcels] ______. USER understands that said water originates from the operation of coal bed methane extraction wells.
1.4 The definitions of the designated purposes listed in Article 1.3 are further defined below:
1.4.1 Agricultural irrigation
1.4.2 Livestock water
1.4.3 Streamflow augmentation
1.4.4 Industrial use
1.4.5 Landscape irrigation
1.4.6 Potable water
1.4.7 Define others, as needed
Article 2.0 Responsibilities of SUPPLIER
2.1 The SUPPLIER warrants that it has legal right to the subject water and possesses rights under the applicable laws and regulations to offer the water for lease (sale).
2.2 Water shall be delivered by the SUPPLIER to the USER in the manner specified herein to the following point(s) of delivery:
2.2.1 Delivery Point A: A minimum of _____ acre feet per year shall be delivered to ____ [describe and provide latitude and longitude] ____. The maximum flow rate at Point A shall be _____cubic feet per second (cfs) and the minimum shall be _____ cfs.
2.2.2 Delivery Point B: A minimum of _____ acre feet per year shall be delivered to ____ [describe and provide latitude and longitude] ____. The maximum flow rate at Point B shall be _____ cfs and the minimum shall be _____ cfs.
2.2.3 Additional Delivery Points, as needed.
2.3 SUPPLIER shall at its sole cost and expense:
2.3.1 Install such treatment processes, equipment and facilities necessary to reliably achieve the water quality specified in subparagraph (2.3.4).
2.3.2 Install such pumps, pipelines, tanks, ponds, and other facilities necessary for the reliable delivery of water to the designated points of delivery.
2.3.3 Maintain and operate the facilities described in subparagraphs (2.3.1) and (2.3.2) for the term of this Agreement.
2.3.4 Be solely responsible for all costs of maintaining the facilities described in subparagraph (2.3.1) and (2.3.2) for the term of this Agreement.
2.3.5 Secure any required consents, permits, reports or orders pursuant to execution of the responsibilities of SUPPLIER described herein.
2.3.4 Provide water that meets the water quality specified below:
Specify acceptable water quality for designated purposes here. i.e.
- Total dissolved solids (TDS)
- Total Suspended Solids
- Biochemical oxygen demand
- Chlorine Residual
- Total Coliform
- Other water quality parameters applicable to the end use or as negotiated by the Parties
- Different water quality parameters may be applied to different points of delivery.
2.4 Should SUPPLIER fail to deliver water of such quality that meets or exceeds the requirements of subparagraph (2.3.4), or delivers water that is in violation of any Federal, State, or local law, regulation, or ordinance regarding water quality for the intended use herein, USER shall have the right to immediately cease acceptance of said water and may terminate this agreement if the water does not meet the standards established in this agreement within thirty (30) days after SUPPLIER receives written notice from USER.
2.5 For purposed of compliance with the National Environmental Quality Act (NEPA), SUPPLIER shall serve as ___ [lead agency or cooperating agency] _____.
2.6 SUPPLIER shall not be responsible for the operations, maintenance, permitting, management, or demolition and final disposition of any facilities located downstream of the point(s) of delivery defined above.
Article 3.0 Responsibilities of USER
3.1 USER commits to taking delivery of any and all water in compliance with the terms and conditions of this Agreement. If USER is unable to accept delivery at any one of the points of delivery, USER shall notify SUPPLIER as soon as is practicable.
3.2 USER shall pay SUPPLIER an annual (monthly) amount of $____ [USD] _____ commencing on __ [date] ___ and ending on __ [date] ___unless otherwise terminated in accordance with the provisions of this Agreement. An initial deposit of $___ [USD] ___ shall be due and payable to SUPPLIER upon execution of this agreement. The deposit amount shall be refunded to USER if ____ [legal challenge or other impediment brings the project to cessation] _____.
3.3 Secure any required consents, permits, reports or orders pursuant to execution of the responsibilities of USER described herein.
3.4 For purposed of compliance with the National Environmental Quality Act (NEPA), USER shall serve as ___ [lead agency or cooperating agency] _____.
3.5 USER shall not be responsible for the operations, maintenance, permitting, management, or demolition and final disposition of any facilities located upstream of the point(s) of delivery defined above.
Article 4.0 Water Rights
If transaction is a lease:
No transfer of water pursuant to this Agreement shall confer any appropriative, public trust or other right to water on any person or entity. Nothing in this Agreement shall act as a forfeiture, diminution or impairment of any rights of the SUPPLIER to its full deliveries of water after the expiration of the Agreement, and shall in no way prejudice any of the SUPPLIER’s rights thereto. The only rights granted to the Parties as a result of this Agreement are those expressly set forth herein.
If transaction is a sale:
Pursuant to the laws of the State of ______, this Agreement, upon receipt of payment from USER, confers the permanent transfer of a legal water right from SUPPLIER to USER. The only rights granted to the Parties as a result of this Agreement are those expressly set forth herein.
5.1 To the degree allowable by applicable laws and regulations, the Parties will maintain the confidentiality of this Agreement and the provisions herein.
5.2 During the term of this Agreement, the Parties may exchange proprietary information. To be considered proprietary, information must be furnished in writing and clearly marked as such. Proprietary information received by one party from the other will not be disclosed, released, discussed, furnished, transferred or otherwise made known to third parties or utilized by the receiving party other than for the purpose of complying with this Agreement. Proprietary information received by one party from another will be kept and maintained by the receiving party in a secure location and under the control of an employee with an obligation and responsibility to maintain its secrecy and who will restrict disclosure of and access to such information to persons with a need to know. The restrictions in this Article will not apply if such information (a) is or becomes in the public domain; or (b) is known to the receiving party prior to receipt; or (c) is authorized for disclosure by the written approval of the disclosing party; or (d) is lawfully derived by the receiving party from a source other than the disclosing party without restriction as to the use or disclosure of the information.
Article 6.0 Indemnification
6.1 USER agrees to indemnify SUPPLIER from any and all liabilities and claims for damages, fines, expenses and costs, including reasonable attorney’s fees, incurred by SUPPLIER as a result of the actions, inactions or negligence on the part of the USER including but not limited to use of water for purposes other than those explicitly stated in this Agreement, inadequate design, construction or maintenance of treatment, conveyance, storage or other facilities owned and operated by the USER.
6.2 SUPPLIER agrees to indemnify USER from any and all liabilities and claims for damages, fines, expenses and costs, including reasonable attorney’s fees, incurred by USER by reason of the actions, inactions or negligence on the part of the SUPPLIER including but not limited to delivery of water that does not meet the quality specified in subparagraph (2.3.4) of this Agreement, inadequate design, construction or maintenance of treatment, conveyance, storage or other facilities owned and operated by the SUPPLIER.
Article 7.0 Termination
A number of different approaches to termination for cause and termination for convenience can be negotiated depending on the impact to or benefit to each party.
Parties might also consider the following clause:
Should SUPPLIER, due to economic conditions in the gas industry, decide to shut in a well or well field, USER can, upon execution of an Amendment to this Agreement mutually acceptable to both Parties and pursuant to all applicable laws and regulations, provide operations and maintenance of water production, treatment and conveyance facilities necessary to maintain the delivery of water to the USER. Exercise of this provision in accordance with any subsequent amendment does not result in sale of a water right unless the amended agreement so specifically states.
Article 8.0 Notices
8.1 All notices required by the terms of this agreement shall be deemed delivered at the time deposited in the United States Mail, First Class postage prepaid, or served upon the other party if delivered personally. Notice to the parties shall be mailed to them at the addresses shown below:
Article 9.0 Dispute Resolution
In the event of a dispute regarding interpretation or implementation of this Agreement, the Parties shall endeavor to resolve the dispute by negotiations within 30 calendar days after the request of either party. If such negotiations are not fully successful, the Parties agree to attempt to resolve any remaining items in dispute by formal non-binding mediation conducted in accordance with rules and procedures agreed upon by the Parties. Should meditation not result in a resolution acceptable to both Parties, either Party may at its option pursue any available legal remedy, including but not limited to injunctive or equitable relief.
Article 10.0 Miscellaneous Provisions
10.1 This Agreement is complete and entire and may not be altered except by a written amendment executed by both Parties.
10.2 SUPPLIER represents to USER that it has not dealt with any finder, agent, broker, or person with respect to this transaction and that no other finder, agent, broker, or other person employed by SUPPLIER is entitled to the payment of a fee, commission, or other compensation with respect thereto. SUPPLIER hereby agrees to indemnify and hold USER harmless from all loss and liability including, without limitation, costs and attorneys’ fees in the event any claim is made which is contrary to such representation. USER also hereby agrees to indemnify and hold SUPPLIER harmless from all loss and liability including, without limitation, costs and attorneys’ fees in the event any claim is made from any such person dealt with or employed by USER.
10.3 This Agreement will be governed by and construed under the laws of the State of ______.
10.4 The Agreement is subject at all times to any and all valid laws, ordinances, and regulations, whether Federal, State, County or Municipal, and any modification made to this Agreement by any such law, ordinance or regulation that affects the conduct of the parties to this Agreement shall not impose liability on either party hereto for breach of their duties under this Agreement.
10.5 If it shall be necessary to commence legal action to enforce the terms and provisions of this agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, including the costs of experts and consultants employed in the preparation and/or presentation of evidence.
10.6 While this Agreement remains in force, neither party shall sell, assign, transfer, convey or encumber this Agreement or any right of interest therein or suffer or permit such assignment, transfer or encumbrance to occur by operation of law without the prior written consent of the other party, which consent shall not be unreasonably delayed or withheld.
10.7 The Parties to this Agreement do not intend to create any third party beneficiaries to the Agreement and expressly deny the creation of any third party beneficiary rights hereunder toward any person or entity.
10.8 This agreement shall be binding upon, and inure to the benefit of, the assigns or successors-in-interest of the parties hereto.
10.9 The failure to enforce any provision hereof shall not constitute a waiver or estoppel or bar the later enforcement of those provisions.
10.10 The signatories represent that they have appropriate authorization to enter into this Agreement on behalf of the party for whom they sign. If either party is a public agency, such party will attach a resolution of the City Council, Board of Supervisors, Commission or other governing body confirming authorization to enter into this agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as the day and year first above written.
By: ______By: ______
Produced Water Model Contract1
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