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conduct of the Project will remove contaminants from the groundwater basin and increase available groundwater supplies within OCWD's boundaries. E. The Legislature of the State of California has vested in OCWD the statutory responsibility to manage, regulate, replenish and to protect the quality of the groundwater supplies within the boundaries of OCWD. F. In April of each year, the Board of Directors of OCWD acts in accordance with Section 31.5 of the Orange County Water District Act ( "OCWD Act ") to find, determine and establish the basin production percentage (the "BPP "), and sets basin equity assessments (each, a "BEA ") for each producer within OCWD for the period from July lst through June 30th of the next succeeding year. G. Section 2.6.(1.) of the OCWD Act authorizes OCWD to enter into an agreement with the owner operating a groundwater production facility within OCWD's boundaries to increase the production of groundwater in lieu of water from an alternative non - tributary source for the purpose of removing contaminants or pollutants from the groundwater basin, and paying from OCWD funds that portion of the cost of groundwater production that will encourage the production for beneficial use of the polluted or contaminated groundwater that is impairing the quality of the water supplies within OCWD. H. OCWD and the City mutually desire to enter into this Agreement pursuant to Section 2.6.(1.) of the OCWD Act to set forth the specific terms and conditions under which the City will conduct the Project and remove nitrate - impaired groundwater from the Orange County groundwater basin by producing groundwater from Well 32 and blending that groundwater with non - impaired groundwater produced from the Wells 36 and 39 for ultimate distribution to City customers for potable beneficial uses, with the City recovering the Project Cost by means of a partial exemption of that water from the payment of the BEA. OCWD and they City understand and agree that this Agreement does not and cannot become effective unless and until the City files a petition for a partial exemption from the BEA of the water produced from Well 32, and the Board of Directors of OCWD approves such a partial BEA exemption, in accordance with Section 38.1 of the OCWD Act. EXECUTORY AGREEMENTS NOW, THEREFORE, in consideration of the facts recited above and the covenants, conditions and promises contained herein, and subject to this Agreement taking effect in accordance with Section 5 below, OCWD and the City hereby agree as follows: SECTION 1. LIMITED TERM NITRATE REMOVAL PROJECT 1.1. Once the Project has been constructed, the Project Costs have been reviewed to ensure they are consistent with this agreement, and the City has filed with OCWD a petition pursuant to Section 38.1 of the OCWD Act (as outlined in Section 5), this Agreement will be implemented in the first fiscal year after the Project is complete, beginning July 1" of that year, and last for up to six fiscal years through June 30th of the last year (the "Project Term "). During the Project Term, the City may produce groundwater in an amount equal to the BPP for that given year, plus additional groundwater production from Well 32, provided that all of the City of Santa Ana Agreement XX..I a08/02/13 -2- xxxxx.' 251 -6