WSR 05-01-140

PROPOSED RULES

DEPARTMENT OF ECOLOGY


[ Order 04-09 -- Filed December 17, 2004, 8:39 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 04-11-038.

Title of Rule and Other Identifying Information: The rule making will establish a state water management program for the Columbia River. It includes proposing chapter 173-565 WAC, Columbia River mainstem water management program, and amending chapter 173-531A WAC, the Water resources program for the John Day-McNary Pools Reach of the Columbia River and chapter 173-563 WAC, the Instream resources protection program for the main stem Columbia River in Washington state.

Hearing Location(s): Vancouver, Water Resources Ed Center, 4600 S.E. Columbia Way, on February 7, at 7:00 p.m.; Pasco, TRAC, Sports Hall of Fame Room, 6600 Burden Boulevard, on February 8, at 7:00 p.m.; Moses Lake, Fire Department Multi-Purpose Room, 701 East Third Avenue, on February 9, at 12:00 noon; Grand Coulee, Grand Gallery Theater, 204 Main Street, on February 9, at 7:00 p.m.; Wenatchee, Chelan Co. PUD Auditorium, 327 North Wenatchee Avenue, on February 10, at 7:00 p.m.; Lacey, Department of Ecology Auditorium, 300 Desmond Drive, on February 15, at 7:00 p.m.; and at Colville, Community Colleges of Spokane, Colville Center, 985 South Elm Street, East Enterance, Dominion Room, on February 17, at 7:00 p.m.

Comment period ends March 4, 2005.

Date of Intended Adoption: May 20, 2005.

Submit Written Comments to: Gerry O'Keefe, P.O. Box 47600, Olympia, WA 98503, e-mail goke461@ecy.wa.gov, fax (360) 407-6989, postmarked by March 5, 2005.

Assistance for Persons with Disabilities: Contact Water Resources Program receptionist by January 28, TTY (711) or 1-800-833-6388 or (360) 407-6600.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The rule making will establish a state water management program for the Columbia River. It includes proposing chapter 173-565 WAC, Columbia River Mainstem water management program, and amending chapter 173-531A WAC, the Water resources program for the John Day-McNary Pools Reach of the Columbia River and chapter 173-563 WAC, the Instream resources protection program for the main stem Columbia River in Washington state.

Reasons Supporting Proposal: There are currently a large number of pending applications in Washington for new water rights from the Columbia River, and the demand for water is expected to grow over time as population and economic activity increase. At the same time, the endangered status of fish populations living in the river requires careful consideration of the effects [of] off-stream water use. The department has twice been petitioned to initiate rule making for the Columbia River: First to close the river and its tributaries in Washington to further appropriation; and, subsequently, to require the department to process existing water right applications. In light of these conflicting petitions and recognizing that rule making is necessary to reestablish a stable footing for implementation of state policy, there is a compelling need for a rule governing a state water management program for the river. The proposed rule is intended to protect a healthy ecosystem while allowing for additional development to occur.

Statutory Authority for Adoption: Chapters 90.03, 90.22, 90.54, 43.21A, and 43.27A RCW, and proposed policy bill: Management of water resources for the mainstem of the Columbia River.

Statute Being Implemented: Chapters 90.03, 90.22, 90.54, 43.21A, and 43.27A RCW, and proposed policy bill: Management of water resources for the mainstem of the Columbia River.

Rule is not necessitated by federal law, federal or state court decision.

Agency Comments or Recommendations, if any, as to Statutory Language, Implementation, Enforcement, and Fiscal Matters: The proposed rule is part of a package proposed by Governor Locke designed to institute a new mainstem water resources management program for the Columbia River. The rule language, as proposed, assumes the enactment of executive request legislation by the 2005 session of the legislature. It also assumes that funding is provided to implement the new program.

Given the importance of the issues under discussion, the department will not adopt the proposed rule prior to receiving direction from the next governor and the legislature regarding the state's policies guiding a management regime for the Columbia River.

Name of Proponent: Linda Hoffman, Director, Department of Ecology, governmental.

Name of Agency Personnel Responsible for Drafting: Keith Phillips/Gerry O'Keefe, Ecology Headquarters, Lacey, (360) 407-6610/(360)407-6640; Implementation and Enforcement: Joe Stohr, Ecology Headquarters, Lacey, (360) 407-6602.

A small business economic impact statement has been prepared under chapter 19.85 RCW.

Small Business Economic Impact Statement

I. Executive Summary: The Department of Ecology (ecology) is proposing a new chapter 173-565 WAC and amendments to chapters 173-531A and 173-563 WAC. The purpose of Mainstem Columbia River Water Management Program (chapter 173-565 WAC) is to implement a state water management program for the Mainstem Columbia River to facilitate water allocation decisions by the state. The purpose of the program is to:

Provide a framework for authorizing new and reliable uses of water from the Columbia mainstem in support of population growth and economic development; and

Reduce the risks to fish by dedicating water to instream uses and releasing such water into the river at times and in ways that maximize the benefits to fish.

This small business economic impact statement (SBEIS) is provided consistent with the requirements of chapter 19.85 RCW, the Regulatory Fairness Act. If the rule has its intended effect, ecology expects that this proposal will result in benefits to most affected businesses. However, under chapter 19.85 RCW ecology must review business costs associated with this proposal, regardless of the gain to businesses, to determine whether costs are disproportionately higher for small businesses in comparison to large businesses.

Conclusion: If this proposal imposes a net cost on a few businesses, then the impact is likely to be disproportionately greater for small businesses than for large businesses when measured on a cost per employee basis.

Under chapter 19.85 RCW ecology must reduce costs using methods listed [in RCW] 19.85.030(3).

Conclusion: The proposal itself could be interpreted as a cost reducing method under RCW 19.85.030 (3)(f).

Further cost reductions are reviewed in section IX of this SBEIS.

Note: The Department of Ecology will be accepting comments on this SBEIS during the formal public review portion of the rule-making process. Further information about how to provide input regarding this document and the rule proposal itself are available at http://www.ecy.wa.gov/programs/wr/cri/crihome.html.

Due to size limitations relating to the filing of documents with the Code Reviser, the SBEIS does not contain the appendices that further explain ecology's analysis. Additionally, it does not contain the raw data used in this analysis, or all of ecology's analysis of this data. However, this information is being placed in the rule-making file, and is available upon request.

II. Intent of the Rule Proposal: The rule proposal is intended to provide a more timely and affordable way to secure water from the Columbia River for water right applicants. It is also intended to reduce the risks to salmon and other aquatic species associated with new water withdrawals. Under current administrative requirements it is unlikely that businesses will obtain water from the mainstem of the Columbia River. If the rule proposal has its intended effect, businesses seeking water rights will experience gains.1

Through conservation, storage, water management, and acquisition, ecology will acquire 728,000 acre feet of water, 486,000 of which would be provided as mitigation for out-of-stream uses over the twenty year life of the rule proposal. This allocation of water to environmental, agricultural, municipal, and industrial uses can be expected to both save resources and shift resources from one set of uses to another.

III. Method and Baseline Background: 3.a Method: An SBEIS is required if costs are imposed on businesses. In this case it is clear that the existing set of rules makes the cost of obtaining water high through costs associated with potential litigation and delayed action by the state. As a result of facilitating timely water rights decisions and reducing the risk of litigation once decisions have been made, the rule proposal should reduce costs for most businesses.

It may be, however, that some businesses experience net cost increases. This analysis adopts a conservative approach and the possibility of increased costs is evaluated.

It is assumed that the maximum cost imposed by the rule would be the mitigation payment options that are provided to applicants for the various classes of water rights. The assumption is based upon the economic principal that individuals will seek to minimize the costs associated with a particular action. Therefore, individuals will choose the mitigation payment option if the costs associated with the other options are thought to be higher than the amount of the payment. As a result, the mitigation payment option establishes an upper bound on the costs to businesses associated with the proposed rule. For this reason, the cost of the mitigation payment option is the cost evaluated by the SBEIS.

3.b Baseline: The baseline for this SBEIS is grounded in ecology's experience administering water rights decisions for the Columbia River. Based upon this experience ecology has concluded that businesses are highly unlikely to be able to obtain water rights without significant costs due to lengthy delays, litigation, and the uncertainty associated with court-based outcomes.2

The expectation of a gain, for businesses that need water, in Section IV below is based on the fact that ecology will be able to implement the rule proposal.

IV. The Expected Impact of the Rule Proposal: Reducing the costs derived from legal uncertainty can add value for a business. Experience from the last ten Columbia River Mainstem water right applications, which were processed by ecology, indicates that the existing rules impose business costs due to long waiting periods and expensive litigation. If the proposal provides a more timely and affordable way to get water it will generate benefits for businesses receiving water. Given this reality, ecology has concluded that the proposal itself is a cost reducing method as defined by RCW 19.85.030 (3)(f).

V. Potential Gains and Costs: Changes to the law [executive request legislation: Management of water resources for the mainstem of the Columbia River] establish the basis for the management program being proposed in the draft rule. However, no allocation under the proposed management program could occur without the rule proposal. Thus both gains and costs discussed and evaluated in this SBEIS accrue to the rule proposal.

The rule proposal is likely to generate net benefits for business applicants.

Agriculture, municipal, and industrial users are expected to experience direct gains through receiving new water allocations. Businesses dependent on fisheries may experience some gains through fish population impacts as a result of water added to the river by the proposed program.

VI. Businesses which Gain: In so far as the state is successful in obtaining water for allocation, the benefit to businesses is expected to outweigh the cost to businesses because there will be a greater probability that businesses that apply for a water right will receive one in a timely manner. The following types of businesses are expected to gain from the program.

a. Businesses providing water through conservation.

b. Businesses with currently interruptible rights.

c. Businesses with permits issued in 2003.

d. Businesses obtaining new water rights.

e. Businesses involved with fisheries, although the potential gain is uncertain.

4.a Businesses Providing Water Through Conservation: Conservation through the reduction of conveyance losses, changes to irrigation measures, or changes to municipal water systems, are designed to increase the efficiency of these systems. The payment made by the state for the water yielded from these investments may benefit those providing the water.

Under the rule proposal, the new or additional water conservation undertaken by existing water right holders is voluntary. Given this, no conservation will take place unless it is cost effective. Thus, in order for conservation transfers to occur, there must be a benefit to an existing water right holder. Given that participants are willing sellers, this conservation purchase program would generate gains to those who conserve the water.

4.b Businesses With Interruptible Rights -- Drought Permits: Part III of the proposed rule is expected to benefit mainstem Columbia River interruptible water right holders who want to obtain a drought permit. Water right holders would be expected to evaluate costs and net values before deciding to apply for a drought permit. In order to make a decision, businesses must consider the cost and gain from receiving the drought permit versus other options available to them. Applying for the drought permit includes metering (consistent with existing state law and chapter 173-173 WAC) and the following options:


Option 1 Installing BMPs.

Adjusting existing interruptible water rights on the Columbia River mainstem based on efficiency gains or recalibration.

Submitting all their existing water rights for review and recalibration.

Option 2 Paying $10 per acre foot for mitigation.
Option 3 Providing a mitigation proposal.

Businesses also have options, with associated dollar values, that are not provided by the proposed rule, which they will consider in addition to the cost of applying for a drought permit:

The cost of acquiring a private contract for drought year water.

The cost of constructing private storage.

The change in the value of net product or crop value attributable to the change in the supply of drought year water.

As a result, the drought year permit options provided by the rule will only be selected if (1) the net value of the product will cover the cost and (2) there are no less expensive options available.

All options require the user to measure and report water use as required under proposed executive request legislation: Management of water resources for the mainstem of the Columbia River and WAC 173-173. These provisions require businesses to report water use on request. The proposed rule requires reporting to occur on an ongoing basis, and therefore may involve a small cost such as copying the records and sending them to ecology.

4.b.1 Best Management Practices (BMPs): The BMP option is only available to those who have an existing interruptible water right. The cost of the variety of options available within BMPs is in the matrix in Appendix 2. According to many sources, a significant number of businesses already have BMPs in place. These businesses will have at or near zero BMP-related costs necessary to receive a drought permit. The cost of choosing Option 1 will be minimal for these businesses. Given the costs associated with installing BMPs,3 it is unlikely that a business would choose Option 1 over Option 2 if they do not currently meet the BMP standards.

The following considers the relevant costs associated with BMPs for agricultural and municipal/industrial water users.

Irrigation: Based on informal discussions with Columbia River irrigators ecology anticipates that most irrigators have BMPs in place already. Over 97% of the three hundred thirty-four interruptible water right holders have irrigation as either their indicated use or as a component to their use (see Appendix 3). As a result of the proposed rule agricultural water users may have the option of converting their acreage to perennial plants that might have been precluded by an interruptible water supply. Alternatively, they may gain the net value of an annual crop during a dry year.

Gathering data for submitting the existing water rights for review is time consuming. Some may hire a professional to assist with the application in order to reduce the potential reduction of the existing water right. This service would involve some costs to an applicant.

Water saved through BMPs must be returned to the river system. The value of the long term flexibility provided by the water foregone is also a potential cost of obtaining the drought water. Again, it is unlikely that companies will choose to implement Option 1 if the cost is over $10 per acre foot per year because Option 2 is available.4

Businesses that need to install BMPs face costs that vary widely based on the systems chosen. For example, sprinkler or drip irrigation system costs may range from $195 to $979 per acre. Some of the BMPs are new requirements and some are not (see Matrix in Appendix 2). If the annual cost is higher than the cost of mitigation, then the irrigator is likely to shift to mitigation.

Irrigators will also factor in any productivity increases that can be expected as a result of compliance with the BMP standards. The productivity of acreage may increase with BMPs. Given a lack of available data regarding the potential productivity gain, it is not estimated.

Municipal and Industrial: Most developers installing residential water systems on over one hundred acres will have more than fifteen residences attached to the system.5 As currently proposed, the Department of Health efficiency requirements are more stringent than the BMPs proposed by ecology in this rule. Thus developers of landscapes such as parks or golf courses are more likely to experience costs associated with best management practices. New systems would not have conveyance losses but older systems can be expected to have conveyance losses over 5%.6 Depending on the age of the system, repairs can be as expensive as new installation.

4.b.2 Mitigation Fee Option: Alternatively, a business can pay $10 per acre foot for mitigation of water use, based on the amount of water used in the prior year.

Some businesses may choose not to have a drought permit if they have not installed BMPs, can't afford the $10 per acre foot of water per year, or find the mitigation planning too expensive. Often for agricultural interruptible water right holders the BMPs will be less expensive than the other options available to them. The irrigator's present value of paying $10 per acre foot for mitigation over a twenty-six year period when 2.5 acre feet per acre per year are needed for one acre of crop is $466 if the irrigator pays 6% on business loans.

In conclusion, for a business to justify the expense of installing BMPs the economic value of the water used would have to be quite high. Businesses with low values for the water are likely to choose another option or retain their interruptible water right.

4.b.3 Mitigation Proposals: Businesses currently have the option of providing mitigation in order to comply with Endangered Species Act (ESA) issues. Developing the mitigation proposals has in the past often required professional and engineering services in addition to the cost of water and/or capital and labor expenses. Mitigation can be any project or acquisition that offsets the fishery impact of the withdrawn water. These are not new costs, and therefore are not included in this analysis, since companies have been required to propose mitigation in the baseline operating environment.

In conclusion, for a business to justify the expense of a mitigation proposal the economic value of the water used would have to be high and the cost of the mitigation proposal would have to be lower than the cost per acre foot per year calculated by ecology. Businesses with either low values for the water or high costs for a mitigation proposal are likely to choose another option or retain their interruptible water right.

4.b.4 Choice of $10 per Acre Foot per Year as Cost Basis: Given the discussion above, the maximum cost incurred will be $10 per acre foot per year for the drought permit. This cost is used to calculate the ratios required by chapter 19.85 RCW.

4.c Businesses with 2003 Permits -- Obtaining Mitigation Water: Part IV of the proposed rule should reduce the uncertainty regarding obtaining mitigation for water right records of decision and permits that were issued in 2003. If sufficient water is obtained through conservation, then the rule proposal may also benefit these water right holders in so far as they still require mitigation. The mitigation proposal option includes replacing existing mitigation proposals with $10 per acre foot payments in exchange for access to mitigation water provided by the proposed state program. The amount of the mitigation payments will be set by the state after taking public input on the rule proposal. These businesses will have cost and gain considerations including:

The cost of acquiring mitigation water in the private market;

The cost of constructing private storage for use in April through August; and,

The value of net product or crop value attributable to the change in the supply of water.

Thus the mitigation fee option in the rule proposal will only be selected if the net value of the product will cover the costs imposed under the rule and if there are no less expensive options available to the permit holder.

4.d Businesses Obtaining New Water: Assuming that sufficient water is obtained through implementation of the state's water acquisition program, then Part V of the proposed rule will benefit Columbia River mainstem water rights applicants. Parties benefitting from the rule proposal include existing municipal, industrial, and agricultural applicants. If the rule does not result in adequate net benefits to an applicant for a new water right, then they would be unlikely to use it.

Requirements associated with the new water rights include the following elements of a mitigation plan:


Existing Requirements:7 New Either - Or Requirements
Metering

Achieving reasonable efficiency

o Providing mitigation

o Paying up to $40 per acre foot for mitigation


The amount of the mitigation payments will be set by the state after taking public input on the rule proposal.

Rather than paying for mitigation a business can choose to submit a mitigation proposal. Developing the mitigation proposals has in the past often required professional services in addition to the cost of water and/or capital and labor expenses. Businesses will not choose the mitigation proposal option if it costs more than the annual cost of mitigation payments established in the rule proposal.

The remaining cost and value considerations are similar to those listed in the section for businesses with interruptible rights.

4.e Businesses Involved With Fisheries: In addition, the rule proposal may benefit the fisheries sector. If fish populations are compromised in the months of July and August in low flow years,8 then the additional instream flow may tend to help those populations on which the fisheries sector depends. In moderate flow years there may also be a benefit to these businesses from the 1/3 of the water allocated to instream flow. While it is not possible to quantify these benefits, the resulting potential reduction in risk to salmon populations in the mainstem of the Columbia River is nonetheless a benefit of the proposed rule.

VII. Businesses Which May Experience Costs: Businesses may experience a net reduction in costs. However, the potential for the costs of exercising the new rights under the rule must still be evaluated.

VIII. Disproportionate Impact: The cost of exercising the right to receive water under the proposed rule is likely to have a disproportionate impact on small businesses. A disproportionate impact is determined here by dividing the cost for small and large businesses by the average number of employees they each have and comparing these ratios. The ratio is calculated for the largest 10% of employers and the businesses with fifty or fewer employees.

Ratio = Cost for the average business
Average number of employees

Each entity has choices, which affect the level of the costs. For example a new applicant can chose (a) not to apply, (b) to provide mitigation, or (c) to make payments to the state for mitigation. Ecology assumes each business will make the best possible choice given its unique situation. Applicants vary widely by sector. Based on employment security data, the cubic feet per second per employee is a declining function of employment for businesses applying for water.

Some of the applicants with the largest water right applications have very few employees thus the water loss per employee is very high amongst the small businesses. On the other hand, many of the largest businesses have small applications, thus the water loss per employee is over two orders of magnitude less. On average a business within the largest 10% of businesses would have a cost of $3 per employee and a business with fifty or fewer employees would have a cost of $289 per employee. This is based on an assumption that the amount of the mitigation payments are set by the state at $10 per acre foot.9 The actual economic value of the water may be higher or lower based on the range of values that water produces as a result of application.


Employment Range Average Employment Average CFS in Application CFS per Employee
5 or less 2 11.2 5.28
6 to 24 12 6.2 0.50
25 to 50 31 1.8 0.06
51 or more 259 1.6 0.01

From this analysis we conclude that, if any net costs are imposed by the rule, then they would fall disproportionately upon smaller businesses.

However, it is reasonable to assume that applicants receiving drought permits, mitigation water, or new water rights under the proposed rule would choose not to apply for a new water right unless there is a reasonable expectation of benefits resulting from this action. While costs might fall disproportionately upon small businesses, businesses are not expected to experience net cost increases as a result of the proposed rule.

IX. What has Ecology Done to Reduce the Cost of the Rule for Small Business? The reason for the rule proposal is to reduce the cost of obtaining a right to water. If the program is successful, it will produce gains for affected businesses by reducing delays associated with agency decision-making, litigation, and acquisition and approval of mitigation.

Ecology does expect that although the costs may be disproportionate, that the net gain will be appreciable. Since it is unlikely that a disproportionate net cost impact on small businesses will occur, ecology could not reduce these costs without reducing the gain. However, the rule proposal includes a number of features that have been included to increase flexibility and reduce costs for small businesses under the following criteria:

(a) Reducing, modifying, or eliminating substantive regulatory requirements;

Small businesses may propose and implement mitigation plans that work for them.

Small business irrigators with existing interruptible rights will have fewer best management practices to comply with and will not be required to use expensive variable speed pumps.

(b) Simplifying, reducing, or eliminating record keeping and reporting requirements;

The metering requirements in this rule follow existing rule chapter 173-173 WAC, which allows people to use photographs and electrical bills to document their water usage.

(c) Reducing the frequency of inspections;

It is not feasible to meet this criterion. In order to assure that existing water right holders are not harmed by this program, and to ensure proper administration of the proposed program, additional attention to compliance activities will be necessary.

(d) Delaying compliance timetables;

In the proposed rule, applicants are given additional time to make decisions and to respond to the new options based on the language of the rule.

(e) Reducing or modifying fine schedules for noncompliance; or

It is not feasible to meet this criterion. In order to assure that existing water right holders are not harmed by this program, and in order to ensure equity among water right holders, similar compliance and enforcement efforts will be necessary for existing and new water users.

(f) Any other mitigation techniques.

The rule proposal is designed to reduce the cost of obtaining water for businesses with existing interruptible rights, 2003 permits, or existing applications for a water right.

X. Ecology will Involve Small Businesses in the Development of the Rule: Interested parties, including small businesses will be able to participate in the rule development process in several ways. An e-mail listserv has been created for the Columbia River initiative. This listserv is used to send out rule development updates to interested parties. In addition, a website offers updates about rule activities. The website also contains contact information so that small business owners can contact ecology staff with specific questions or concerns.

When proposing the rule language, notice will go out to all interested parties, on several ecology e-mail listservs and mailing lists. The department will send mailings to all current water right applicants for water from the Columbia River mainstem and post 1980 mainstem Columbia River water right holders. Public hearings will be held in several locations (web address for hearing locations) around the state to provide the public with opportunities to submit formal comments. Comments can be submitted electronically through the website as well as by mail.

Once a rule is adopted, notice will be sent out once again to all automated listservs and mailing lists. As required by chapter 34.05 RCW, notice must be sent out to all affected businesses.

1 Economics of the Columbia River initiative: http://www.ecy.wa.gov/programs/wr/cri/crieconrev.html#uwecon.

2 An evaluation of probable benefits and costs, for the proposed rule to establish the Columbia River water resources management program, chapter 173-565 WAC, Section (2) History and baseline.

3 See appendixes 2 and 4.

4 Based on Columbia Basin project water from economics of the Columbia River itiative: http://www.ecy.wa.gov/programs/wr/cri/crieconrev.html#uwecon.

5 Cities may pass on the costs of zone meters.

6 Dave Reich, Ecology, August 2, 2004.

7 The requirements are not new costs. Metering is required in chapter 173-173 WAC. Reasonable efficiency is required in Ecology v. Grimes, 121 Wn.2d 459, 852 P.2d 1044, "[10] Waters -- Water Rights -- Appropriation -- Beneficial Use -- Reasonable Use -- Waste -- What Constitutes. For purposes of appropriated water rights, the amount of water that constitutes a "reasonable use" is limited by the doctrine of waste. Water usage must be reasonably efficient and economical in light of other present and future demands upon the source of supply." Downloaded November 5, 2004, from http://www.ecy.wa.gov/programs/wr/caselaw/grimes.htm.

8 National Academe [Academy] of Science Report: http://www.ecy.wa.gov/programs/wr/cri/crisnr.html.

9 Average CFS application data for small and large companies was converted into an approximate average annual acre footage of waste which was valued at $10/AF/Yr based on the mitigation fee, which is a maximum cost of the water for the business.

A copy of the statement may be obtained by contacting Cathy Carruthers, Department of Ecology, Rules Unit, P.O. Box 47600, Lacey, WA 98502-7600, phone (360) 407-6564, fax (360) 407-6989, e-mail caca461@ecy.wa.gov.

A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Shidong Zhang, PhD, Department of Ecology, Rules Unit, P.O. Box 47600, Lacey, WA 98504-7600, phone (360) 407-6774, fax (360) 407-6989, e-mail szha461@ecy.wa.gov. A draft environmental impact statement realted to this rule making is also available for public comment. A copy can be downloaded at the following website: http://www.ecy.wa.gov/biblio/wr.html or you can request a copy by calling Jean Witt at (360) 407-7472.

December 16, 2004

Linda Hoffman

Director

OTS-7635.3

Chapter 173-565 WAC

COLUMBIA RIVER MAINSTEM WATER MANAGEMENT PROGRAM

PART I

COLUMBIA RIVER MAINSTEM WATER MANAGEMENT PROGRAM
NEW SECTION
WAC 173-565-100   What is the Columbia River mainstem water management program?   The Columbia River mainstem water management program (program) is a combination of actions taken by the state of Washington to manage the water resources of the mainstem of the Columbia River consistent with chapter . . . . . . RCW (Policy Bill: Management of water resources for the mainstem of the Columbia) and other applicable water resource laws. These actions include the adoption of this chapter, and an ongoing investment of state resources to facilitate the timely and effective implementation of this chapter.

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NEW SECTION
WAC 173-565-110   What are the goals and objectives of the Columbia River mainstem water management program?   (1) As established in RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 2(1)), the goals of the Columbia River mainstem water management program are to:

(a) Meet the water supply needs of growing communities and the local economies on which they depend by providing a timely and affordable supply of water from the Columbia River mainstem that will allow for new and reliable uses of water from the Columbia River mainstem; and

(b) Manage water to protect and enhance the quality of the natural environment, including stream flows necessary for the preservation of environmental values, by securing and dedicating water to improve stream flows in the Columbia River mainstem.

(2) As established in RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 2(2)), the objectives of the Columbia River mainstem water management program are to:

(a) Improve the reliability of water rights issued by the department of ecology between 1980 and 2003 that are subject to minimum instream flows or other mitigation conditions to protect stream flows;

(b) Improve stream flows during the primary period of fish out migration on the Columbia River mainstem; and

(c) Mitigate for the stream flow impacts of future water right permits as provided by the program.

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NEW SECTION
WAC 173-565-120   What does this chapter do?   This chapter establishes the implementation requirements for the regulatory portion of the Columbia River mainstem water management program (program).

(1) As required by RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Sections 3 and 7), to implement the program, the department must:

(a) Acquire water prior to, and in mitigation for, decisions to authorize new uses of water from the Columbia River mainstem and secure acquired water in a Columbia River mainstem account (mainstem account) under the state trust water right program;

(b) Allocate two-thirds of the water secured and deposited in the mainstem account as mitigation water for new water uses to be made available to qualified users through a state mitigation program; and allocate one-third of the water to be permanently retained in the mainstem account to improve stream flows for the benefit of fish;

(c) Authorize new uses of water from the Columbia River mainstem consistent with the requirements of RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia) and other applicable requirements.

(2) To implement the statutory requirements, this chapter:

(a) Establishes the management guidelines for the mainstem account under the state trust water rights program, chapter 90.42 RCW. The mainstem account is a mechanism to manage water to mitigate for potential impacts from new uses of water from the Columbia River mainstem and to permanently dedicate water for instream uses;

(b) Establishes an administrator for the mainstem account;

(c) Sets priorities for allocation of water from the mainstem account;

(d) Establishes requirements and procedures for issuance of drought permits to complement existing interruptible rights on the Columbia River mainstem that are subject to the minimum instream flows set in WAC 173-563-040;

(e) Establishes requirements and procedures to secure a reliable supply of water for holders of water rights on the Columbia River mainstem issued in 2003 and for applications for new water rights to Columbia River mainstem surface waters that have been pending since 1991; and

(f) Establishes requirements and procedures for issuance of new surface and ground water rights from the Columbia River mainstem for applications currently on file with the department of ecology (department), and for any future water right applications affecting the Columbia River mainstem.

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NEW SECTION
WAC 173-565-140   Under what authority is this chapter adopted?   This chapter is adopted under the authority of chapters 90.03, 90.22, 90.54, 43.21A, 43.27A, and chapter . . . . . . RCW (Policy Bill: Management of water resources for the mainstem of the Columbia), and in relation to chapter 173-500 WAC.

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NEW SECTION
WAC 173-565-150   How are existing water rights and processes protected?   (1) Nothing in this chapter will be construed to lessen, enlarge, or modify existing rights acquired by appropriation or other means, including state authorized rights and federal reserved rights. Nothing in this chapter shall impair existing water rights.

(2) Nothing in this chapter affects the policies and procedures for water rights placed in trust on a short-term basis. Such rights will not be deposited into the mainstem account and will be managed separately within the state trust water rights program.

(3) This chapter will not be used to hinder or otherwise limit the existing water right change and transfer processes established under state law.

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NEW SECTION
WAC 173-565-160   How will the department achieve compliance with this chapter?   To ensure compliance with this chapter, the department may take such actions as appropriate within the compliance sequence established by RCW 90.03.605.

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NEW SECTION
WAC 173-565-170   What happens if part of this rule is successfully challenged?   Severability. If any provision of this chapter or its application to any person or circumstance is held invalid, the remainder of this chapter or the application of the provision to other persons or circumstances shall not be affected.

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PART II

THE COLUMBIA RIVER MAINSTEM WATER MANAGEMENT ACCOUNT
NEW SECTION
WAC 173-565-200   What is the Columbia River mainstem water management account and how is it established?   As required by RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 3(1)(b)), the Columbia River mainstem water management account (mainstem account) is hereby established by the department within the state trust water rights program. The mainstem account provides a mechanism for holding, dedicating and obligating mitigation water for new out-of-stream water uses from the Columbia River mainstem and for holding and dedicating water permanently in trust to improve mainstem stream flows for the benefit of fish.

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NEW SECTION
WAC 173-565-210   How will the department manage the mainstem account?   Water acquisition and allocation.

(1) As required by RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 3(1)(a)), the department will acquire water to be deposited into the mainstem account.

(2) As required by RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 3(2)), water is eligible for deposit to the mainstem account only when it can be deposited in accordance with applicable state laws for water right changes, amendments, and transfers, or through government to government agreements, contracts, assignments, and other instruments that ensure a highly reliable and long-term supply of water, in sufficient quantity, is dedicated to the account. The department may secure water from Canada and other governments to be deposited in the mainstem account.

(3) As required by RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 3(3)), as water is deposited into the mainstem account, the department will dedicate two-thirds of the deposited water to be available for mitigation for new out-of-stream consumptive uses and will dedicate one-third of the deposited water to be held permanently in trust solely for instream uses to benefit fish.

Mainstem account in balance

(4) The department will not obligate water from the mainstem account to mitigate for new uses of water where such obligation would exceed the amount of water available in the portion of the mainstem account dedicated to new out-of-stream consumptive uses.

Water for new out-of-stream uses

(5) This subsection applies to all new uses of water authorized under this chapter except where a mitigation proposal is approved under WAC 173-565-340 (5)(c) or 173-565-540 (3)(a). Except where a mitigation proposal is approved under WAC 173-565-340 (5)(c) or 173-565-540 (3)(a), no new out-of-stream consumptive uses occurring between April 1 and August 31 will be approved under this chapter unless:

(a) An amount of water sufficient to offset the consumptive portion of such out-of-stream use is available in the portion of the mainstem account dedicated to mitigation for out-of-stream uses; and

(b) The source of such mitigation water is coincident with or upstream from the proposed out-of-stream use.

(6) Water in the portion of the mainstem account dedicated to mitigation for out-of-stream consumptive uses will be obligated only for mitigation of out-of-stream consumptive uses that are:

(a) Approved under this chapter; and

(b) Occur between April 1 and August 31.

Water for instream uses

(7) This subsection is applicable to all new uses of water authorized under this chapter, including uses where a mitigation proposal is approved under WAC 173-565-340 (5)(c) or 173-565-540 (3)(b). Including uses where a mitigation proposal is approved under WAC 173-565-340 (5)(c) or WAC 173-565-540 (3)(b), no new out-of-stream water uses will be approved under this chapter unless:

(a) An amount of water that is greater than or equal to fifty percent of the consumptive portion of the out-of-stream uses, during the period of April 1 through August 31, is held in trust in the portion of the mainstem account dedicated to instream uses; and

(b) The source of such water is coincident with or upstream from the proposed out-of-stream use.

(8) Water in the portion of the mainstem account permanently dedicated to instream uses will be obligated only for instream uses and, as required by RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 3(4)), will be managed in collaboration with the department of fish and wildlife, in consultation with natural resource managers in tribal governments and federal agencies to maximize the benefits of such water to fish.

No upstream transfer of water

(9) Water in the mainstem account may be obligated only for out-of-stream or instream uses that are coincident with or downstream from the original source of water deposited into the mainstem account.

Processing water right applications

(10) All applications for new water rights from the Columbia River mainstem will be processed in accordance with RCW 90.03.250 through 90.03.330 and other provisions of law, as applicable.

New consumptive uses of water in the tributaries

(11) The department will maintain a reserve of a sufficient quantity of water in the mainstem account to offset the estimated future consumptive uses that the department might approve within the Washington portion of tributary basins to the Columbia River after the effective date of this chapter. The source of this water may be any of the sources of water deposited in the account, as described in WAC 173-565-220.

(12) The department will estimate future consumptive uses in tributary basins, and thereby define the amount of water needed for the tributary reserve, by considering:

(a) The expected growth and development in the tributary watershed, on a ten-year rolling forecast basis;

(b) Any regulations related to minimum instream flows, reservations for out-of-stream consumptive uses, basin or stream closures, or other requirements related to use of water in tributaries;

(c) Existing watershed management plans and the views of watershed groups; and

(d) Other information appropriate to predicting future water use within a tributary.

(13) When new consumptive water uses are approved by the department in the tributaries, the department will obligate water from the portion of the mainstem account reserved for tributary consumptive uses.

(14) As provided in RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia River, Section 3(5)), the amount of water in the tributary reserve of the mainstem account shall not govern, be used to regulate, or be a determinative factor in the department's water management decisions for rivers that are tributary to the Columbia River mainstem. The purpose of this policy is to ensure that decisions in the tributaries related to watershed plans, water rights and water management projects are made based on the conditions and needs existing within the affected tributary.

Mainstem account administration

(15) The director will appoint a mainstem account administrator who will be responsible for managing the account. The mainstem account administrator must be an employee of the department.

(16) The duties of the mainstem account administrator will include, but not be limited to:

(a) Securing water to be deposited into the mainstem account in accordance with WAC 173-565-210 (1) and (2);

(b) Dedicating water in the mainstem account for out-of-stream and instream uses in accordance with WAC 173-565-210 (3) and (4);

(c) Consulting with permit decision makers and certifying the availability of water in the mainstem account in accordance with WAC 173-565-330, 173-565-430, and 173-565-530;

(d) Obligating water from the mainstem account for out-of-stream and instream uses in accordance with WAC 173-565-210 (5) through (9);

(e) Accepting and depositing payments for mitigation water from the mainstem account into the Columbia River investment account established in RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 7);

(f) Reporting on the status of the mainstem account, the investment account, and the program in accordance with RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 9) and WAC 173-565-215(1); and

(g) Other duties as assigned by the director.

(17) The mainstem account administrator shall not be responsible for processing water right applications or for administering compliance activities. Department permit decision makers must consult the mainstem account administrator about the availability of water in the mainstem account prior to approving new water rights from the Columbia River mainstem.

(18) The mainstem account administrator will maintain a current record of:

(a) The total quantity of water deposited into the mainstem account;

(b) For new out-of-stream uses:

(i) The amount of water currently available in the mainstem account to mitigate for new out-of-stream consumptive uses;

(ii) The sources of such water;

(iii) The amount of water in the mainstem account that has been obligated to mitigate out-of-stream consumptive uses; and

(iv) The location of each obligation;

(c) For instream uses:

(i) The total amount of water currently available in the mainstem account for dedicated instream uses;

(ii) The sources of such water; and

(iii) The amount of water in the mainstem account that has been obligated to supplement the mitigation for out-of-stream uses;

(d) The amount of water reserved to offset tributary needs.

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NEW SECTION
WAC 173-565-215   How will the program be monitored and evaluated?   (1) As required by RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 9), the department will submit to the Washington state legislature and to the governor, a biennial report on the status of the mainstem account, the investment account, and the program. At a minimum, the report will include:

(a) A summary of the status of the mainstem account including a summary of all the records required under WAC 173-565-210(17) and a statement of compliance with the mitigation requirements established in RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 3(3)), and a summary of the anticipated future conditions of water supplies in the mainstem account and how those water supplies correspond to current and anticipated future water needs;

(b) A summary of the numbers, types and quantities of authorized new uses of water under the program, and a summary of reports of water use under the program;

(c) A summary of compliance monitoring and enforcement activities on the Columbia River mainstem, including an estimate of compliance with state water use measurement and reporting requirements on the Columbia River mainstem, the stream flow conditions in the Columbia River mainstem and in the primary tributaries to the Columbia River;

(d) A summary of the number and amount of payments collected under the program, and a description of the status of funding for the program and any current or anticipated additional funding requirements; and

(e) A discussion of any known or potential regional and international changes in water supplies, management or obligations that could affect the long-term effectiveness of the program.

(2) Once every two years, the department will convene a meeting to formally consult with affected tribal governments on the status and effects of, and on needed improvements and potential changes to, the program. The department will summarize the results of the consultation in the report required in subsection (1) of this section.

(3) The department will conduct formal review of the program and this chapter every ten years pursuant to the procedures required by RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 10).

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NEW SECTION
WAC 173-565-220   What are potential sources of water for the mainstem account?   Potential sources of water for the mainstem account include, but are not limited to:

(1) Implementation of water conservation measures that result in consumptive savings that can be credited to, and accounted for in, the Columbia River mainstem;

(2) The development of new or expanded multipurpose storage of water;

(3) Changes in management of existing storage projects and conveyance systems;

(4) Acquisition of existing water rights, in part or whole, through purchase or donation;

(5) Water contributed to the Columbia River as a result of water management actions taken within Columbia River tributaries; and

(6) Conserved water from consumptive savings returned to the state by water right holders who choose to implement best management practices under Part III of this chapter.

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NEW SECTION
WAC 173-565-230   What are the priorities for obligation of water in the portion of the mainstem account dedicated to mitigation for new out-of-stream consumptive uses?   (1) The department will obligate water from the out-of-stream portion of the mainstem account for the consumptive portion of new out-of-stream uses in the following priority order:

(a) First, issuance of drought permits to complement existing interruptible rights that are subject to the minimum instream flows set in WAC 173-563-040 (see Part III);

(b) Second, assuring a reliable supply of water for permits issued in 2003 and for premoratorium applications for new surface water rights to the Columbia River mainstem that have been pending since 1991 (see Part IV); and

(c) Third, processing new water rights for applications currently on file with the department, and for future water right applications (see Part V).

(2) In accordance with RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 6(3)), the department may process applications on file for which mitigation water is secured ahead of previously filed applications for which mitigation water is not secured.

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PART III

INTERRUPTIBLE WATER RIGHTS AND DROUGHT PERMITS
NEW SECTION
WAC 173-565-300   Who is covered under Part III?   Part III applies to water right holders with water rights issued after 1980 that are subject to regulation and interruption when minimum instream flows are not met on the Columbia River mainstem as determined in WAC 173-563-050. These rights are commonly referred to as "interruptible" water rights.

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NEW SECTION
WAC 173-565-310   What is the purpose of Part III?   Part III describes the criteria, requirements, and procedures related to application for, granting, and use of drought permits under the Columbia River mainstem water management program (program).

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NEW SECTION
WAC 173-565-320   What are the benefits of Part III?   Part III provides for issuance of drought permits. Drought permits allow water right holders to use water during times when their current water rights would otherwise be interrupted. Drought permits issued under this chapter will not be subject to interruption in response to minimum instream flows set under chapter 173-563 WAC that are not being met.

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NEW SECTION
WAC 173-565-330   When may the department issue drought permits under Part III?   (1) Except in cases where an applicant elects to prepare a mitigation proposal under WAC 173-565-340 (5)(c), the department may issue a drought permit under Part III only when the mainstem account administrator certifies that the portion of the mainstem account dedicated to provide for mitigation for new out-of-stream consumptive uses holds an unobligated amount of water sufficient to fully offset the consumptive use to be authorized by the drought permit to avoid any reduction in stream flows, and the source of such mitigation water is coincident with or upstream from the proposed drought permit.

(2) Including in cases where an applicant elects to prepare a mitigation proposal under WAC 173-565-540 (3)(b), the department may issue permits under Part III only after the mainstem account administrator certifies that the portion of the mainstem account dedicated to provide water for instream uses holds an unobligated amount of water that is fifty percent or greater than the consumptive use to be authorized by the permit.

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NEW SECTION
WAC 173-565-340   What is required to obtain a drought permit?   To obtain a drought permit, a water right holder must:

(1) Hold a water right that was issued after 1980 and that is subject to regulation and interruption when minimum instream flows are not met on the mainstem of the Columbia River as determined in WAC 173-563-050.

(2) For all water rights on the Columbia River mainstem in which the applicant holds a controlling interest on lands adjoining or contiguous to the land irrigated by the interruptible water right or rights, and on lands served by a connected water distribution system that also provides the source water for the interruptible water right or rights, demonstrate that he or she is measuring and reporting water use in accordance with chapter 173-173 WAC.

(3) Submit to the department a complete drought water right permit application, in the form required by the department, on or before December 31, 2008, including records to document the quantity of water used under the water right.

(4) Maintain the application by notifying the department of any change in ownership of the water right, or change in mailing address, within thirty days of such change.

(5) Select one of three options below and indicate to the department which option is chosen:

(a) Option 1, best management practices (BMPs): The water right holder must implement best management practices (BMPs) for all of their existing water rights, in accordance with the requirements described in "Best Management Practices for Securing a Drought Permit" as published and periodically revised by the department, and, except as noted in WAC 173-565-354(2), must transfer any water saved through implementation of BMPs to the state. In addition, the water right holder must submit to the department for review and recalibration under WAC 173-565-352 all of the water rights on the Columbia River mainstem in which he or she holds a controlling interest on lands adjoining or contiguous to the land irrigated by the interruptible water right or rights, and on lands served by a connected water distribution system that also provides the source water for the interruptible water right or rights.

(b) Option 2, mitigation payments: The water right holder must enter into an agreement with the department to make annual mitigation payments to the department under WAC 173-565-360 and 173-565-364. In exchange for payment, the department will obligate water from the mainstem account to mitigate for the consumptive portion of water used under the drought permit.

(c) Option 3, mitigation proposal: The water right holder must develop and submit to the department for review and approval a mitigation proposal that provides water to fully offset the consumptive portion of water authorized for use under the drought permit so that stream flows are not diminished by use under the new permit.

(6) Submit any additional information required to complete the application within the time frame specified within a written request from the department listing the information needed and the reasons for requesting that information. If the information is not available to the applicant, the applicant may respond to the department to explain why they will be unable to provide the information. The water right holder may request the department extend the specified time period if additional time is needed to compile this information. An application will not be considered complete until all information requested by the department is submitted.

(7) Sign the application. Signature must be by the owner of the interruptible water right or by an authorized representative of the owner.

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NEW SECTION
WAC 173-565-342   How will the department notify water right holders of the opportunity to apply for drought permits?   (1) Within six months of the effective date of this chapter, and once each year thereafter until December 31, 2008, the department will notify holders of interruptible water rights of their opportunity to apply for a drought permit. Notification will be made by public notice and by mail.

(2) Notices mailed under subsection (1) of this section will describe the drought permit program including:

(a) Eligibility requirements;

(b) BMPs, mitigation payments and mitigation proposal options;

(c) Directions for obtaining a copy of the drought permit application form;

(d) Availability of technical assistance; and

(e) Department contact information for the drought permit program.

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NEW SECTION
WAC 173-565-344   What help is available to water right holders who may wish to apply for a drought permit?   The holder of an interruptible water right who may wish to apply for a drought permit may request a technical assistance meeting with their local conservation district or with the department. Staff providing technical assistance may help the water right holder evaluate a decision whether or not to apply for a drought permit, evaluate the effects of the different options for receiving a permit, and assist in completing the necessary application forms at the direction of the water right holder.

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NEW SECTION
WAC 173-565-350   If the best management practices (BMPs) option is chosen, what is required to make an application?   In addition to compliance with WAC 173-565-340, if the BMP option is chosen, the water right holder must:

(1) Submit to the department a completed and signed BMP checklist on a form provided by the department. Where the form provides different options for BMPs, the checklist must indicate which BMP is being selected;

(2) Submit to the department documentation of all water rights on the Columbia River mainstem for which the applicant holds a controlling interest on lands adjoining or contiguous to the land irrigated by the interruptible water right or rights, and on lands served by a connected water distribution system that also provides the source water for the interruptible water right or rights;

(3) For all water rights identified by subsection (2) of this section, submit to the department documentation of water use each year for the past five years through metering data, documentation of crops and acres irrigated, or other appropriate measure of water use as approved by the department. If a water right identified by subsection (2) of this section, or any portion thereof, has not been put to use in the last five years, the water right holder may submit information about the reasons for lack of use, and may describe future plans that might require use of the water right or portion thereof.

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NEW SECTION
WAC 173-565-352   If the best management practices (BMPs) option is chosen, how will water rights be recalibrated?   (1) If the BMPs option is chosen, water right holders must submit to the department for review and recalibration all of their existing water rights, for the mainstem of the Columbia River for which they have a controlling interest on lands adjoining or contiguous to the land irrigated by the interruptible water right or rights, and on lands served by a connected water distribution system that also provides the source water for the interruptible water right or rights. This includes all surface water rights from the Columbia River mainstem and all ground water rights within one mile of the Columbia River mainstem.

(2) The department will review all water rights submitted by the water right holder under subsection (1) of this section. As required by application of current state laws and established procedures for water right changes, transfers, and amendments, the department will evaluate each water right based on the legal extent and validity of the right.

(3) The department will provide a draft copy of its evaluation of existing water rights to the water right holder for a sixty-day period for review and comment. During this time, the water right holder can provide any additional information that might further inform the department's review.

(4) After the sixty-day period, and after review of any comments or additional information provided by the water right holder, the department may issue a drought permit to the water right holder in accordance with the requirements of Part III of this chapter and other applicable requirements of this chapter. Together with any drought permit issued, the department will issue any superseding water right documents that result from the review and recalibration of water rights described in WAC 173-565-352 (1) through (3).

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NEW SECTION
WAC 173-565-354   If the best management practices (BMPs) option is chosen, what conditions will be placed upon the drought permit?   If the BMPs option is chosen, drought permit conditions will require the water right holder to:

(1) Implement and maintain the BMPs within the time frame and conditions as specified in the drought permit. The water right holder must certify implementation of the BMPs within five years of the date of the drought permit on a certification form provided by the department, and must request a field visit from either their local conservation district or the department to inspect the installed BMPs and to sign the certification form;

(2) Transfer to the state any water saved as a result of implementing the BMPs. Transfers must be made upon submittal of the BMP certification form and are subject to current laws governing water conservation and water right transfers. This subsection does not apply to water rights for municipal water supply; and

(3) Measure and report water use in accordance with chapter 173-173 WAC.

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NEW SECTION
WAC 173-565-360   If the mitigation payment option is chosen, what is required to make an application?   If the mitigation payment option is chosen, the water right holder must comply with WAC 173- 565-340, including the selection of the mitigation payment option under WAC 173-565-340 (5)(b).

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NEW SECTION
WAC 173-565-362   If the mitigation payment option is chosen, what conditions will be placed upon the drought permit?   If the mitigation payment option is chosen, drought permit conditions will require the water holder to:

(1) By January 31st of each year, submit to the department an annual mitigation payment in the amount of ten dollars per acre foot for the volume of water authorized by the drought permit. This payment must be made every year, regardless of whether the drought permit was exercised. The amount of this payment will be adjusted annually by the implicit price deflator. The department will provide annual notice by November 1st of each year of the rate to be applied for that year in the following January's payment; and

(2) Measure and report any water use under the drought permit in accordance with chapter 173-173 WAC.

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NEW SECTION
WAC 173-565-364   How are mitigation payments made?   Mitigation payments must be made by check or money order payable to the department of ecology, and sent to the following address:


Department of Ecology

Columbia River Mainstem Water Management Program

P.O. Box 47600

Olympia, WA 98504-7600

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NEW SECTION
WAC 173-565-370   If the mitigation proposal option is chosen, what is required to make an application?   (1) In addition to compliance with WAC 173-565-340, if the mitigation proposal option is chosen, the water right holder must submit a detailed mitigation proposal to the department for review and approval. The mitigation proposal must describe how the water right holder will gain permanent access to mitigation water, and how use of mitigation water will ensure that consumptive uses under the new permit will be fully offset so that stream flows are not diminished by use under the new permit. At a minimum, mitigation proposals must include:

(a) The proposed source of mitigation water;

(b) Identification of the water rights associated with the proposed source of mitigation water;

(c) An engineering analysis demonstrating that consumptive uses under the new permit will be fully offset by the mitigation water so that stream flows are not diminished.

(2) As part of their review of a mitigation proposal, the department will request a review of the mitigation proposal from the department of fish and wildlife, and from natural resource managers in affected tribal governments and federal agencies.

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NEW SECTION
WAC 173-565-372   If the mitigation proposal option is chosen, what conditions will be placed on the drought permit?   If the mitigation proposal option is chosen, permit conditions will require the water right holder to:

(1) Implement measures appropriate to the proposed water use to ensure a reasonable efficiency of water use considering up-to-date conservation practices and water delivery system technologies;

(2) Implement his or her mitigation proposal according to the approved terms and conditions; and

(3) Measure and report any water use under the drought permit in accordance with chapter 173-173 WAC.

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NEW SECTION
WAC 173-565-380   What are the procedures for appealing the department's decisions about drought permit applications?   The department's decisions about drought permit applications may be appealed to the pollution control hearings board as specified in chapter 43.21C RCW.

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PART IV

PROVIDING RELIABILITY FOR COLUMBIA RIVER MAINSTEM SURFACE WATER PERMITS ISSUED IN 2003 AND PREMORATORIUM APPLICATIONS FOR NEW MAINSTEM SURFACE WATER RIGHTS PENDING SINCE 1991
NEW SECTION
WAC 173-565-400   Who is covered by Part IV?   Part IV applies to the following water right application numbers: S4-29956, S4-30052, S4-30465, S4-30584, S4-31083, S4-30976P, and S4-31106P. These are commonly referred to as 2003 permits and premoratorium applications.

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NEW SECTION
WAC 173-565-410   What is the purpose of Part IV?   Part IV describes the requirements and procedures that allow persons described in WAC 173-565-400 to request and secure use of mitigation water from the Columbia River mainstem water management account.

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NEW SECTION
WAC 173-565-420   What are the benefits of Part IV?   Part IV provides persons identified by WAC 173-565-400 access to a reliable and affordable source of mitigation water from the mainstem account.

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NEW SECTION
WAC 173-565-430   When may the department provide access to water from the account under Part IV?   The department may provide access to water from the account for 2003 permits only after the mainstem account administrator certifies that the portion of the mainstem account dedicated to provide for mitigation for new out-of-stream consumptive uses holds an unobligated amount of water sufficient to fully offset the amount of water requested, and the source of such mitigation water is coincident with or upstream from the 2003 permit or premoratorium application water use.

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NEW SECTION
WAC 173-565-440   What is required to obtain mitigation water for 2003 permits and premoratorium applications?   To obtain mitigation water, the persons described in WAC 173-565-400 must:

(1) Submit a letter of request for mitigation water from the mainstem account to the department;

(2) For permits issued in 2003, demonstrate current compliance with the applicable terms of the permit; and

(3) Enter into formal agreement with the department to obligate mitigation water from the mainstem account for the 2003 permit or premoratorium application. The agreement will require annual mitigation payments for the amount of water used by the right holder.

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NEW SECTION
WAC 173-565-450   What is the amount of the mitigation payment for the 2003 permits and premoratorium applications, and how is payment made?   (1) The amount of the mitigation payment is ten dollars per acre foot of mitigation water required to offset use in the preceding water year. The payment amount will be adjusted annually by the implicit price deflator. The department will provide annual notice by November 1st of each year of the rate to be applied for that year, in the following January's payment.

(2) Payments must be submitted to the department by January 31st of each year, and made by check or money order payable to the department of ecology and mailed to the following address:


Department of Ecology

Columbia River Mainstem Water Management Program

P.O. Box 47600

Olympia, WA 98504-7600

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PART V

APPLICATIONS FOR NEW WATER RIGHTS FROM THE COLUMBIA RIVER
NEW SECTION
WAC 173-565-500   Who is covered under Part V?   Part V applies to existing and new applications for new water rights on the Columbia River mainstem that are not covered by Part IV.

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NEW SECTION
WAC 173-565-510   What is the purpose of Part V?   Part V describes the criteria, requirements, and procedures that the department will apply when processing applications for new water rights described in WAC 173-565-500.

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NEW SECTION
WAC 173-565-520   What are the benefits of Part V?   (1) Applicants that meet the requirements of this chapter will be eligible to receive a new water right for use of water from the Columbia River mainstem.

(2) Applicants have the option of securing affordable and reliable mitigation water from the Columbia River mainstem water management account (mainstem account).

(3) New water right permits issued under this chapter will not be subject to interruption in response to minimum instream flows set under chapter 173-563 WAC that are not being met.

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NEW SECTION
WAC 173-565-530   When may the department issue permits under Part V?   (1) Except in cases where an applicant elects to prepare a mitigation proposal under WAC 173-565-540 (3)(b), the department may issue permits under Part V only after the mainstem account administrator certifies that the portion of the mainstem account dedicated to provide for mitigation for new out-of-stream consumptive uses holds an unobligated amount of water sufficient to fully offset the consumptive use to be authorized by the permit to avoid any reduction in stream flows from April 1 to August 31, and the source of such mitigation water is coincident with or upstream from the proposed permit.

(2) Including in cases where an applicant elects to prepare a mitigation proposal under WAC 173-565-540 (3)(b), the department may issue permits under Part V only after the mainstem account administrator certifies that the portion of the mainstem account dedicated to provide water for instream uses holds an unobligated amount of water that is fifty percent or greater than the consumptive use to be authorized by the permit during the period of April 1 through August 31st.

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NEW SECTION
WAC 173-565-540   What is required to obtain a new water right from the Columbia River mainstem?   To obtain a new water right from the Columbia River mainstem, an applicant must:

(1) Have a complete water right application for the Columbia River mainstem on file with the department or submit a complete water right application for the Columbia River mainstem to the department;

(2) For all water rights on the Columbia River mainstem in which the applicant holds a controlling interest, demonstrate that she or he is measuring and reporting water use in accordance with chapter 173-173 WAC;

(3) Maintain the application by notifying the department of any change in ownership of the water right, or change in mailing address, within thirty days of such change;

(4) For uses that would consume water between April 1st and August 31st, select one of two options below and indicate to the department which option is chosen:

(a) Option 1, mitigation proposal: The applicant must develop and submit to the department for review and approval a mitigation proposal that provides water to fully offset the consumptive portion of water used between April 1st and August 31st of each year so that stream flows are not diminished by use under the new permit;

(b) Option 2, mitigation payment: The applicant must enter into an agreement with the department to make annual mitigation payments to the department under WAC 173-565-560 through 173-565-564. Subject to annual payments, the department will obligate water from the mainstem account to mitigate for the consumptive portion of water used during the April 1st through August 31st period;

(4) Submit any additional information required to complete the application within the time frame specified within a written request from the department listing the information needed and the reasons for requesting the information. If the information is not available to the applicant, the applicant may respond to the department to explain why they will be unable to provide the information. The applicant may request the department extend the specified time period if additional time is needed to compile this information. An application will not be considered complete until all information requested by the department is submitted;

(5) Sign the application. Signature must be by the owner of the application or by an authorized representative of the owner.

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Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 173-565-550   If the mitigation proposal option is chosen, what is required to make an application?   (1) In addition to compliance with WAC 173-565-540, if the mitigation proposal option is chosen, the applicant must submit a mitigation proposal to the department for review and approval. The mitigation proposal must describe how the applicant will gain permanent access to the mitigation water, and how use of the mitigation proposal will ensure that between April 1st and August 31st of each year, consumptive uses under the new permit will be fully offset so that stream flows are not diminished by use under the new permit. At a minimum, mitigation proposals must include:

(a) The proposed source of mitigation water;

(b) Identification of the water rights associated with the proposed source of mitigation water;

(c) An engineering analysis demonstrating that between April 1st and August 31st of each year consumptive uses under the new permit will be fully offset by the mitigation water so that stream flows are not diminished.

(2) As part of their review of a mitigation proposal, the department will request a review of the mitigation proposal from the department of fish and wildlife, and from natural resource managers in affected tribal governments and federal agencies.

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NEW SECTION
WAC 173-565-552   If the mitigation proposal option is chosen, what conditions will be placed on the permit?   If the mitigation proposal option is chosen, permit conditions will require the water right holder to:

(1) Implement measures appropriate to the proposed water use to ensure a reasonable efficiency of water use considering up-to-date conservation practices and water delivery system technologies;

(2) Implement his or her mitigation proposal according to the approved terms and conditions; and

(3) Measure and report water use in accordance with chapter 173-173 WAC.

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NEW SECTION
WAC 173-565-560   If the mitigation payment option is chosen, what is required to make an application?   If the mitigation payment option is chosen, the applicant must comply with the requirements of WAC 173-565-540.

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NEW SECTION
WAC 173-565-562   If the mitigation payment option is chosen, what conditions will be placed on the permit?   If the mitigation payment option is chosen, permit conditions will require the permittee to:

(1) Implement measures appropriate to the proposed water use to ensure a reasonable efficiency of water use considering up-to-date conservation practices and water delivery system technologies;

(2) By January 31st of each year, submit to the department an annual mitigation payment in an amount not to exceed forty dollars per acre foot for the volume of consumptive use between April 1st and August 31st. To meet the cost recovery requirements of RCW . . . . . . (Policy Bill: Management of water resources for the mainstem of the Columbia Section 5(3)), the department may reduce the amount of the annual payment to better reflect the actual cost of acquiring the mitigation water. The amount of this payment will be adjusted annually by the implicit price deflator. The department will provide notice by November 1st of each year of the rate to be applied for that year in the following January's payment; and

(3) Measure and report water use in accordance with chapter 173-173 WAC.

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NEW SECTION
WAC 173-565-564   How are mitigation payments made?   Mitigation payments must be made by check or money order payable to the department of ecology, and sent to the following address:


Department of Ecology

Columbia River Mainstem Water Management Program

P.O. Box 47600

Olympia, WA 98504-7600

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NEW SECTION
WAC 173-565-570   What are the procedures for appealing the department's decision on a new water right?   The department's decision to approve, condition, or deny an application for a new water right from the Columbia River mainstem may be appealed to the pollution control hearings board in accordance with chapter 43.21C RCW.

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PART VI

WATER METERING AND REPORTING REQUIREMENTS
NEW SECTION
WAC 173-565-600   Is water measurement required for uses of water from the Columbia River?   (1) Consistent with state law and chapter 173-173 WAC, all state water right holders are required to install and maintain devices to measure their use of water, and must report their diversions and withdrawals as required by the department.

(2) As part of the Columbia River mainstem water management program, the department will secure and commit the compliance resources necessary to achieve compliance for water use measurement and reporting for eighty percent of the annual volume of water authorized for diversion via state water permits, certificates and claims from the Columbia River mainstem within four years of the effective date of this chapter.

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PART VII

DEFINITIONS
NEW SECTION
WAC 173-565-800   What special terms and definitions are used in this chapter?   "Applicant" is any individual, government agency, company, or corporation applying for a water right under this chapter.

"Application" is a form provided by the department used to comply with the application requirements in Part III and Part V.

"Best management practices" are the irrigation practices described in "Best Management Practices for Securing a Drought Permit" as published and periodically revised by the department.

"Columbia River mainstem" includes all surface water between the border of the United States and Canada to the Bonneville Dam and, for purposes of this chapter, includes the surface waters of the Snake River from the Ice Harbor Dam to the confluence with the Columbia River, and all ground waters within one mile of the ordinary high-water line of the affected surface waters.

"Conservation measures" are measures that reduce water loss in transportation or distribution, or improve water use efficiency resulting in a reduction in water diversion or withdrawal. It does not generally include reduction in farmed acreage or changing to crops with reduced water needs.

"Conserved water" is water that is no longer diverted or withdrawn as a result of the implementation of conservation measures.

"Controlling interest" means a property interest that can be transferred to another person, the percentage interest so transferred being sufficient to effect a change in control of the landlord's rights and benefits. Ownership of property held in trust will not be deemed a controlling interest where no part of the trust has been established through expenditure or assignment of assets of the beneficiary of the trust and where the right is a part of the trust that cannot be transferred to another by the beneficiary of the trust under terms of the trust. Each trust of a separate donor origin will be treated as a separate entity and the administration of property under trust will not represent a controlling interest on the part of the trust officer.

"Department" refers to the Washington state department of ecology.

"Director" is the director of the Washington state department of ecology.

"Drought permit" is a permit to put water to beneficial use that is limited solely to periods when interruptible water rights are curtailed because minimum stream flows set under chapter 173-563 WAC are not being met.

"Interruptible water right" means a water right that was issued subsequent to 1980 that is subject to regulation or interruption when minimum instream flows set in WAC 173-563-050 are not met.

"Mainstem account" is the Columbia River mainstem water management mainstem account.

"Mainstem account administrator" is the person or persons designated by the director to manage the Columbia River mainstem water management mainstem account.

"Mitigation payment" is a payment made to the state in exchange for access to mitigation water to offset a new use of water from the mainstem of the Columbia River.

"Obligate" means dedicating a portion of the water deposited into the Columbia River mainstem water management account to mitigate for decisions to allocate water from the mainstem of the river by issuing permits for beneficial use out-of-stream.

"Person" is any political subdivision, government agency, municipality, industry, public or private corporation, copartnership, association, firm, individual or any other entity whatsoever.

"Premoratorium" means applications for water rights that have been on file with the department prior to the moratorium on the issuance of new water rights in 1991 (WAC 173-563-015 repealed).

"Program" means the Columbia River mainstem water management program.

"Recalibrate" means to reissue a water right permit or certificate based on an evaluation of the legal extent and validity of the beneficial uses of water under the permit or certificate.

"Storage" is the use of a natural or man-made formation that is able to hold water, typically from periods of high to moderate availability, for retrieval or release at some later time. Examples include: On and off stream reservoirs, and aquifer storage. Storage does not typically refer to water within natural water bodies, including aquifers, which are not recharged, increased, or retained by man-made intervention.

"Storage water" or "stored water" is water that has been purposely diverted, withdrawn, or captured for retrieval or release at a later time, and includes water in on and off stream reservoirs, and aquifer storage and recovery systems.

"Tributary" means all waters hydrologically associated with the Columbia River mainstem within Washington state above the Bonneville Dam, including all streams flowing into rivers, ground water hydraulically connected to streams, and hydraulically connected ground water more than one mile distant from the Columbia River. For the purposes of this chapter, tributaries include water resource inventory areas numbered twenty-nine through sixty-two as defined in WAC 173-500-040.

"Water right" means a right to make beneficial use of public waters, as established under state or federal law. Water rights include interruptible and noninterruptible rights.

"Water right holder" is any person that holds a water right.

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OTS-7697.2


AMENDATORY SECTION(Amending Order 97-15, filed 3/30/98, effective 4/30/98)

WAC 173-531A-060   Permit conditions.   (1) All permits issued for waters reserved under WAC 173-531A-040 or 173-531A-050 after the effective date of this chapter and prior to July 27, 1997, shall be subject to the provisions of chapter 173-563 WAC - instream resources protection program for the main stem Columbia River in Washington state.

(2) Any application for waters reserved under WAC 173-531A-040 or 173-531A-050 ((which is considered for approval or denial after July 27, 1997)) on which a decision is made by the department after July 27, 1997, and prior to July 11, 2005, (the effective date of chapter 173-565 WAC), will be evaluated for possible impacts on fish and existing water rights. The department will consult with appropriate local, state, and federal agencies and Indian tribes in making this evaluation. Any permit which is then approved for the use of such waters will be, if deemed necessary, subjected to instream flow protection or mitigation conditions determined on a case-by-case basis through the evaluation conducted with the agencies and tribes.

(3) Applications for water reserved under WAC 173-531A-040 or 173-531A-050 on which a decision is made by the department after July 11, 2005, will be subject to the requirements of chapter 173-565 WAC.

[Statutory Authority: Chapter 90.54 RCW, WAC 173-563-090 and ESHB 1110 (1997). 98-08-062 (Order 97-15), 173-531A-060, filed 3/30/98, effective 4/30/98. Statutory Authority: Chapter 90.54 RCW. 80-08-022 (Order DE 80-19), 173-531A-060, filed 6/24/80. Formerly WAC 173-531-060.]

OTS-7698.2


AMENDATORY SECTION(Amending Order DE 80-2, filed 6/24/80)

WAC 173-563-010   Background and purpose.   The Columbia River is an international as well as an interstate river with its waters subject to laws of seven western states, the Province of British Columbia, Canada and the federal governments of the United States and Canada. The flows and levels of the river are in a state of continuous change through the operation of numerous federally owned or federally licensed dams located within the river. The waters of the Columbia River are operated to support extensive irrigation development, inland navigation, municipal and industrial uses, and hydroelectric power development. Among all these uses, the anadromous fisheries of the Columbia River, which are dependent on clean flowing water, require for their survival the establishment of minimum flows of water and special actions by all agencies sharing in the management of the Columbia River.

The ((provisions of this chapter apply, as a matter of state law, to water right permits issued pursuant to the state's water rights code. The provisions hereof shall provide the department of ecology the basic state policy relating to minimum flows and levels for the Columbia River, for submission to various federal, interstate and state agencies having jurisdiction over the river. Further, the)) department of ecology of the state of Washington recognizes that, under our federal constitutional system, regulatory powers over the river are shared powers between the United States and the state of Washington and that by various federal actions the state's powers may, and in some cases have been superseded through the mandates of the Supremacy Clause of the United States Constitution.

This chapter is adopted under state legislation, to promote the proper utilization of the water resources of the Columbia River and to protect and insure the viability of the instream resource values associated with the main stem of the Columbia River in the future through (1) the establishment of minimum flows on the main stem Columbia River in Washington state, and (2) the establishment of conservation and efficiency fundamentals relating to out-of-stream and instream uses and values.

[Statutory Authority: RCW 90.54.040, 90.54.050, chapters 90.03 and 90.22 RCW. 80-08-021 (Order DE 80-2), 173-563-010, filed 6/24/80.]


AMENDATORY SECTION(Amending Order 97-15, filed 3/30/98, effective 4/30/98)

WAC 173-563-020   Applicability.   (1) This chapter applies to any application to divert public surface waters of the main stem Columbia River in Washington state ((and)), or to withdraw any ground water ((the withdrawal of)) which is determined by the department of ecology to have a significant and direct impact on the surface waters of the main stem Columbia River, for which a decision is made by the department prior to July 11, 2005, (the effective date of chapter 173-565 WAC).

For the purposes of this chapter, the extent of the "main stem" Columbia River shall be the Columbia River from the upstream extent of tidal influence (Bonneville Dam-River Mile 146.1) upstream to the United States-Canada border (River Mile 745) and including those areas inundated by impounded waters at full pool elevations.

(2) Chapter 173-500 WAC, the general rules of the department of ecology for the implementation of the comprehensive water resources program mandated by RCW 90.54.040, applies to this chapter.

(3) Nothing in this chapter shall affect existing water rights, riparian, appropriative, or otherwise, existing on the effective date of this chapter, including existing rights relating to the operation of any navigation, hydroelectric, or water storage reservoir, or related facilities. This exemption includes rights embodied in all water right permits and certificates existing on the effective date of this chapter.

(4) The instream flows established and implemented by this chapter for instream and out-of-stream uses, and the average weekly flows applied by this chapter to out-of-stream uses do not apply to any application for water from the main stem Columbia River on which a decision is made by the department of ecology on or after July 27, 1997. Any water right application considered for approval or denial after that date and prior to July 11, 2005, (the effective date of chapter 173-565 WAC) will be evaluated for possible impacts on fish and existing water rights. The department will consult with appropriate local, state, and federal agencies and Indian tribes in making this evaluation. Any permit which is then approved for the use of such waters will be, if deemed necessary, subjected to instream flow protection or mitigation conditions determined on a case-by-case basis through the evaluation conducted with the agencies and tribes. Applications for which a decision will be made by the department after July 11, 2005, are subject to the requirements of chapter 173-565 WAC.

(5) Waters withdrawn by the United States pursuant to RCW 90.40.030 prior to the effective date of this rule relating to the second half of the Columbia basin project, and water right permits and certificates hereafter issued by the department of ecology pertaining to such withdrawn waters, are not subject to the provisions of this chapter.

(6) For the purposes of this chapter, average weekly flows shall be the average of the daily average flows reported in the Columbia River operational hydromet and management system (CROHMS) for a seven-day period beginning at 12:01 a.m. Monday and ending at midnight on Sunday. When the beginning of the seven-day period defined in this section does not correspond to the dates on which flows are established in WAC 173-563-040, the flow requirements for that week shall be the arithmetic average of the required flows listed in WAC 173-563-040 for each of the seven days, rounded to the nearest 1,000 cfs.

[Statutory Authority: Chapter 90.54 RCW, WAC 173-563-090 and ESHB 1110 (1997). 98-08-062 (Order 97-15), 173-563-020, filed 3/30/98, effective 4/30/98. Statutory Authority: RCW 90.54.040, 90.54.050, chapters 90.03 and 90.22 RCW. 82-21-001 and 82-21-007 (Orders DE 82-35 and DE 82-35A), 173-563-020, filed 10/7/82 and 10/8/82; 80-08-021 (Order DE 80-2), 173-563-020, filed 6/24/80.]

Washington State Code Reviser's Office