Ruataniwha water users will be obliged to give their full support to any consent application made by Hawke's Bay Regional Investment Company.
According to the Foundation Water User Agreement the water user agrees not to lodge any objection under the Resource Management Act 1991 to any consent application undertaken by or on behalf of HBRIC - in respect of any amendment to or extension or re-granting of all or any of the Ruataniwha Water [Storage] Scheme (RWSS) consents.
"Without limiting the generality of [the above paragraph], the water user will not, and shall ensure that no persons under its control, either directly or indirectly object to, oppose or impede any application made by HBRIC," the contract reads.
"For the grant, renewal, variation or continuation of the RWS consents or any consent, authority or permit, or appeal any current or future consent, authority or permit for any operations and activities to be undertaken by HBRIC. And fund, facilitate, assist or promote any other person, entity or group to take any action that would be in breach of this paragraph [20.2] if done by the water user."
If required by HBRIC the water user must co-operate with any application made by the company, if need be in writing within 10 working days of it being requested.
HBRIC chief executive Andrew Newman said the company wants to leave it to the farmers and their professional advisers to decide if they feel the water user agreement is appropriate for their operation.
"The Water User Agreement is a substantial document and we have encouraged farmers to seek independent professional advice before signing it.
"The farmers signing up for water are running significant farming operations and as they would with any major decision in their business they will weigh up all the elements and make an informed decision after seeking that independent advice."
Further to this support, the credit support provided for this 35-year contract must be for an amount no fewer than two years' contracted water charges.
"The credit support provided by the water user under the above paragraph must before an amount of no less than two years' contracted water charges," it reads.
According to the agreement the water user must, prior to the first scheduled delivery of water, provide to HBRIC an irrevocable letter of credit issued by a bank registered in New Zealand having a long term credit rating of no less than BBB+ on the Standard & Poor's (S&P) scale, or other credit support acceptable to HBRIC in its absolute discretion.
According to S&P a bond is considered investment grade if its credit rating is BBB- or higher BB+ and below are thought of as speculative bonds.
"The credit support must be in form and substance acceptable to HBRIC and must be able to be called on by HBRIC to meet any liabilities of the water user under this agreement that are no less than 20 business days overdue," the agreement reads.
Because of this the company may elect not to deliver any water until credit support is provided, and it may agree on alternative credit support arrangements.
There is also an out for the water user if no agreement can be reached in regards to the Farm Environment Management Plan (FEMP).
The FEMP must be submitted to HBRIC within 12 months after the water uptake condition precedent one is satisfied, and may be amended from time to time. The agreement states that to the extent that relief for inability to agree FEMP on regulatory grounds applies, "either party may cancel this agreement on written notice to the other, and no payment will be due, nor will any party have any claim against another party under or in respect of this agreement".
"The water user must prepare and submit to HBRIC Ltd a draft FEMP containing such details as are necessary to comply with the RWSS consents to the extent the same apply to the Farm. Once HBRIC confirms that the draft FEMP satisfies the RWSS consents, the FEMP will be deemed to be finalised for the purposes of this agreement. Any dispute in relation to finalisation of the FEMP may be referred by either party to dispute resolution in accordance in accordance with this agreement."
If the water user and HBRIC are unable to finalise a FEMP as a result of regulatory or statutory consents and they have taken all reasonable endeavours to address the issues either party may cancel the agreement with no payment being made.