WATER EXCHANGE AGREEMENT
MERCED IRRIGATION DISTRICT AND CITY OF MERCED
This Agreement for the Exchange of Water (Agreement) is made this __ day of September, 2023 (the Effective Date), by and between the City of Merced, whose address is 678 W. 18th Street, Merced, California 95340 (hereinafter the City), and the Merced Irrigation District, whose address is 744 W. 20th Street, Merced, California 95340 (hereinafter the MID).
The City and MID may be referred to herein collectively as the "parties" or singularly as a "party".
RECITALS
WHEREAS, as of the Effective Date, the City lies almost entirely within the boundaries of, and the place of use for MID surface water, but currently relies on groundwater to meet its water supply needs; and
WHEREAS, MID owns and operates extensive irrigation water supply facilities throughout eastern Merced County, and particularly in and around the City's boundaries, and near its wastewater treatment plant (WWTP), which is currently located at 10260 Gove Road, Merced, California; and
WHEREAS, the WWTP, and the tertiary treated recycled wastewater (recycled wastewater) produced by the WWTP is a valuable resource that MID is willing, through this Agreement, to accept in order to put it to beneficial use; and
WHEREAS, the WWTP currently discharges recycled wastewater for three (3) general uses:
1) wetlands use within a local wetland management area; 2) agricultural irrigation use by local farmers upon lands owned by the City; and 3) discharges to the Hartley Slough, which are typically captured by MID and put to beneficial use. The only water supply being acquired by MID hereunder is recycled wastewater discharged (or intended for discharge) by the City to the Hartley Slough; and
WHEREAS, in exchange for the City's recycled wastewater, MID is willing to make available and the City is willing to accept, a combination of both MID surface and developed groundwater for City use: and
WHEREAS, for purposes of this Agreement and in the context of the Sustainable Groundwater Management Act (SGMA) and in relation to groundwater resources, MID surface water supplies that seep into and become part of the local groundwater resources are generally referred to as "Developed Water." Developed water, or developed groundwater, is still owned and controlled by MID, and is distinct from and accounted for separately from the "natural yield" of the Merced Groundwater Subbasin; and
impacts associated with the actions proposed in this Agreement. No action other than continued discharge into Hartley Slough shall be taken that irrevocably commits any material resources of any party, until all required environmental review is completed and all parties have independently made all findings required by CEQA and other applicable environmental laws. If, upon completion of such environmental review, a party finds one or more significant, unmitigated environmental impacts resulting from the actions contemplated by this Agreement and cannot make a finding that the benefits of the proposed project outweigh the impact or impacts, or that the impacts can be mitigated to a level below significance, then this Agreement may be terminated at the discretion of either party without further obligation or liability of any party, and any payments theretofore made by the City for water hereunder shall be immediately returned. Neither the execution of this Agreement, nor any steps taken to implement this Agreement, shall be taken into account in determining whether mitigating or avoiding any significant impact is feasible. Nothing in this Agreement pre-commits either party to any project approval.
5. Attorneys• Fees and Third-Party Challenges.
In the event of any action between MID and the City seeking enforcement or interpretation of any of the provisions of this Agreement, the prevailing party in such action shall be awarded, in addition to damages, its reasonable costs and expenses, including without limitation actual out of pocket costs and attorneys' fees, all as ordered by the trier of fact. In the event a third party challenges this Agreement or any of the provisions hereof, whether judicially or otherwise, MID and the City shall assist one another without cost in connection therewith by providing information and witnesses as reasonably requested. Any costs of defending any such challenge, including out-of-pocket costs and attorneys· fees, shall be borne by the party incurring them except to the extent such challenge results from the gross negligence or willful misconduct of one party, in which case such party shall be responsible for all such costs and fees. Each party shall retain the right, in its sole and absolute discretion, to choose counsel, elect to defend or not defend such a challenge, and control such defense. Notwithstanding the foregoing, (i) if a party elects to not defend such a challenge, then such non-defending party may elect to terminate this Agreement by written notice to the other unless the other party elects to defend the challenge and agrees to indemnify and hold the non-defending party harmless from all damages, costs, and expenses of defending as a result of such challenge or that may be imposed on the non-defending party as a result of such challenge, in which case the non-defending party shall not have the right to terminate this Agreement, and (ii) if any judicial, administrative or regulatory proceeding or order prevents the parties from proceeding with any or all of the deliveries of Available Water contemplated by this Agreement, then either party may elect to terminate this Agreement by written notice to the other.
6. Representations and Warranties.
Each party represents and warrants to the other party that (i) it has the authority to enter into this Agreement, to make available the water being made available hereunder, and to otherwise perfonn as set forth herein without any court approval or consents from third parties except for the CEQA processes referenced hereinabove and approval of a water transfer permit by the California State Water Resources Control Board, (ii) the execution of this Agreement and perfonnance of its obligations hereunder will not violate any agreement, option, covenant, 5 condition, obligation, court order or undertaking affecting the party or water being made available hereunder. nor to the best of the parties knowledge will it violate any law, ordinance, statute, order or regulation, (iii) to the best of the parties knowledge, there is no suit, action or arbitration, or legal, administrative, or other proceeding that affects the ability of the parties to perform hereunder and (iv) the water is free and clear of all liens and encumbrances.
The City hereby warrants and guarantees that water made available by the City shall, at a minimum, meet water quality standards as currently required in Title 22 Code of Regulations, Division 4, Environmental Health, Chapter 3, Water Recycling Criteria, which may be revised by the state from time to time, and which allows use of treated wastewater on agricultural crops.
MID must be able to put to beneficial use water made available by the ity, i.e., provide to customers for either agricultural irrigation or wildlife/environmental purposes.
MID expressly disclaims and makes no warranty or representation of fitness of its water made available for any particular use. The City accepts and uses MID's water, as-is.
7. Entire Agreement; Amendment.
This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. All prior agreements with respect to that subject matter, whether verbal, written or implied, are hereby superseded in their entirety by this Agreement and are of no further force or effect. Amendments to this Agreement shall be effective only if in writing, and then only when signed by the authorized representatives of the respective parties. Amendments or modifications of this Agreement shall be made by only by mutual consent of both parties by the execution of a written amendment or addendum, signed and dated by all parties.
8. No Permanent Right; Participation in Similar Activities.
This Agreement is entered into by the parties for the purpose of maximizing the beneficial use of water by each of them. No rights in favor of the City or any other party to water controlled by MID are created hereby except as expressly set forth herein. The City acknowledges that it does not hold and will not acquire any rights to any waters of MID or the Merced River by virtue of this Agreement except as expressly set forth herein.
This instrument in no way restricts the City or MID from participating in similar water transfer agreements or exchanges with other public or private agencies, organizations, and individuals, so long as such activities or agreements do not violate the terms of this Agreement.
9. Specific Performance.
The parties acknowledge that water is unique, and that the failure of either party to perform under this Agreement may not be readily compensable in monetary damages. Therefore, in addition to any other remedies available to the parties at law or in equity, in the event of a breach or threatened breach of this Agreement by either party, the other party shall be entitled to specific performance of this Agreement.
6 Except for the sole gross negligence or willful misconduct of the parties, each party agrees to indemnify and hold harmless the other party, its Directors, officers, agents, servants, employees and consultants from and against any and all losses, claims, liens, demands and causes of action of every kind and character, without limitation, occurring or in any way incident to, connected with or arising directly or indirectly out of the performance or nonperformance by a party or parties to this Agreement.
Notwithstanding any other provision of this Agreement, neither party shall be liable for any failure to perform resulting from any cause outside the reasonable control of that party.
10. Severability.
If any provision of this Agreement is determined by a court of competent jurisdiction to be void or unenforceable, that provision shall be deemed automatically reformed to be enforceable to the maximum extent legally permissible, and the balance of this Agreement shall be unaffected.
11. Ambiguities.
This Agreement shall be interpreted as if it had been jointly drafted by both parties.
Therefore, the normal rule of construction that ambiguities are construed against the drafter is hereby waived.
12. Notices.
All notices under this Agreement shall be effective (i) when personally delivered to MID or the City, as the case may be, (ii) when sent by email on a business day between the hours of 8 a.m. and 5 p.m. to MID or the City, as the case may be, or (iii) three business days after deposit in the United States mail, registered or certified, postage fully prepaid and addressed to the respective parties as follows:
To MID:
To City:
7 44 W. 20th Street
Merced, CA 95340
Telephone No.: (209) 722-5761
Attn: Bryan Kelly, Deputy General Manager, Water Resources bke I ly(trmerced id .org
With copy to:
Phillip McMurray, General Counsel
744 W. 20th Street
Merced, CA 95340
[email protected]
City Manager
City of Merced
678 W. t 8th Street
Merced, CA 95340
7 Telephone No.: (209)388-8670
Attn: Stephanie R. Dietz
d ietzs '([c ityofmerced.org
With copy to:
City Attorney
City of Merced 678 W. 18th Street
Merced, CA 95340
Attn: Brian Doyle
doylebra;cityofmerced.org
or such other address as the parties may from time to time designate in writing. As a matter of convenience, however, communications between MID and the City shall, to the extent feasible, be conducted orally by telephone or in person, and/or through the parties' respective counsel, with such communications to be confirmed and made effective in writing as set forth above; provided, no such oral notice or communication shall be effective unless so confirmed in writing.
13. Further Action.
The parties agree to perform all further acts, and to execute, acknowledge, and deliver any documents that may be reasonably necessary, appropriate or desirable to carry out the purposes of this Agreement. MID and the City acknowledge that the actions contemplated by this Agreement will require regular consultation and coordination and the parties shall in good faith engage in all such consultation and coordination necessary or appropriate to facilitate the arrangements contemplated by this Agreement.
14. Third Party Beneficiaries.
This Agreement does not create, and shall not be construed to create, any rights enforceable by any person, partnership, corporation, joint venture, limited liability company or other form of organization or association of any kind that is not a party to this Agreement.
15. Binding Effect; Counterparts; Rules Applicable.
This Agreement is intended to be and shall be binding upon and enforceable against each of the parties hereto.
This Agreement shall be governed by and construed in accordance with the laws of the State of California and may be signed in any number of counterparts. Facsimile and electronic signatures shall be binding. The delivery and use of MID water by the City under this Agreement shall be subject to all applicable restrictions imposed by federal, state or local law or regulation including MID Rules and Regulations Governing Distribution of Water.
16. Expiratio11 and Termination.
The Term of this Agreement shall commence on the Effective Date and expire on December 31, 2073. Twelve months prior to the expiration of this Agreement, the parties hereby agree to 8