MUNCICIPAL & INDUSTRIAL WATER SUPPLY

D. GROUNDWATER EXTRACTION 21. Rights to and Management of Groundwater in the Main Basin Without limiting or modifying either Party's claim to water rights, Zone 7 acknowledges Contractor's right to extract groundwater based on Contractor's historical groundwater extractions, and upon the contractual arrangement setting Contractor's Groundwater Pumping Quota in Contractor's original M&I Contract with Zone 7. Contractor acknowledges that Zone 7 manages the Main Basin and that Zone 7 recharges, stores, and extracts from the Main Basin as necessary to supply water to each Contractor. Accordingly, Contractor shall not extract more than its Groundwater Pumping Quota from the Main Basin in any calendar year except as specifically authorized by this Agreement. The Groundwater Pumping Quota set forth in this Agreement is not a formal confirmation or quantification of any underlying right held by Contractor. Each Party reserves all rights to pursue an adjudication of the Main Basin, or any other legal action on extraction of groundwater that may impact Contractor's authority to extract groundwater from the Main Basin. Furthermore, Zone 7 reserves its authority to levy a replenishment assessment on the extraction of any groundwater, including Contractor's Groundwater Pumping Quota (excluding any adjudication of the Safe Yield), as necessary to protect the water supplies for users within Zone 7. Contractor acknowledges Zone 7's authority pursuant to SGMA as the exclusive Groundwater Sustainability Agency for the Livermore Valley Groundwater Basin. Nothing in this agreement is intended to modify the Parties' authorities or responsibilities pursuant to that statutory scheme, including Zone 7's authority as GSA to take necessary actions to secure the sustainability of the groundwater basin under Water Code section 10725 and following. These statutorily authorized actions may include, but are not limited to, restrictions on pumping, metering requirements, and the imposition of fees. 22. Contractor's Groundwater Pumping Quota Contractor shall be entitled to a Groundwater Pumping Quota (GPQ) equal to 3,500 acre-feet annually of extractions from the Main Basin. Contractor may carry over portions of its GPQ from year to year, as described in Section 23, below. Water extracted under Contractor's Groundwater Pumping Quota may not be transferred or used outside of the Contractor's Service Area. Extractions in excess of Contractor's GPQ and accumulated carryover will be subject to a recharge fee, as set forth in Section 30, below. Water from other sources that has been recharged and banked within the Main Basin by Contractor with the consent of Zone 7 and extracted for Contractor's later use will not be counted toward Contractor's GPQ or assessed a recharge fee. 11