H-2177

AN ACT Relating to water resource management; amending RCW 90.03.380, 19.27.170, 35.67.020, 56.16.090, 57.20.020, 54.24.080, 80.28.010, and 80.28.025; reenacting and amending RCW 35.92.010; adding new sections to chapter 90.54 RCW; adding a new section to chapter 90.14 RCW; adding a new section to chapter 84.36 RCW; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.12 RCW; adding a new section to chapter 43.19 RCW; adding a new section to chapter 90.03 RCW; adding a new section to chapter 18.104 RCW; adding a new chapter to Title 90 RCW; adding new chapters to Title 82 RCW; creating new sections; prescribing penalties; making appropriations; and providing expiration dates.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. (1) The legislature finds that:

(a) The state of Washington is faced with a continuing shortage of water with which to meet existing and future water needs;

(b) The state, local governments, federally recognized tribal governments, and various private interests representing a broad range of water users and interests have agreed to pursue a cooperative water resources planning and management effort. This effort will address both current water needs, conflicts, critical situations, and long-term future needs;

(c) Conservation and water use efficiency programs should be the preferred method of addressing water uses because they can relieve current critical water situations, provide for presently unmet needs, and assist in meeting future water needs. It is further recognized that other combinations of water management tools may be necessary to resolve particular water resource needs within regions of the state; and

(d) The interests of the state will be served by developing programs and regional water resource plans, in cooperation with local governments, federally recognized tribal governments, appropriate federal agencies, private citizens, and the various water users and water interests in the state, that increase the overall ability to manage the state's waters in order to better satisfy both present and future needs for water.

(2) Consistent with the findings of this section, the purposes of this act are to:

(a) Improve the ability of the state to work with the United States, local governments, federally recognized tribal governments, water users, and various water interests in water conservation and water use efficiency programs designed to satisfy existing rights, presently unmet needs, and future needs, both instream and out-of-stream;

(b) Establish new incentives, enhance existing incentives, and remove disincentives for efficient water use;

(c) Establish improved means to disseminate information to the public and provide technical assistance regarding ways to improve the efficiency of water use;

(d) Create a trust water rights mechanism for the acquisition of water rights on a voluntary basis to be used to meet presently unmet needs and future needs;

(e) Accelerate the adoption of water efficiency, conservation, and recycling, including water efficient plumbing fixtures, irrigation systems and methods, landscaping techniques, conservation rates, conservation plans, and wastewater reclamation and reuse;

(f) Eliminate tax disincentives to water conservation, reuse, and improved water use efficiency;

(g) Require evaluation of state facilities and property to identify cost-effective water use efficiency improvement opportunities;

(h) Add achievement of water conservation as a factor to be considered by water supply utilities in setting water rates;

(i) Establish a water restoration account for deposit of water resources civil penalties and for use in restoring damaged water and related resources; and

(j) Establish means for providing funding for water resources related initiatives, including planning and water conservation.

NEW SECTION. Sec. 2. A new section is added to chapter 90.54 RCW to read as follows:

(1) State funding of water resource, supply, and quality related capital programs, both current and future, shall, to the maximum extent possible within state or federal legal requirements, be directed to assist in the resolution of current conflicts and implementation of regional water resource plans with priority given to current needs over new requirements.

(2) Priority shall be given, to the maximum extent possible within state or federal legal requirements, to those water conservation projects funded by the state that will result in the greatest water savings.

NEW SECTION. Sec. 3. (1) The legislature finds that a need exists for a means to facilitate the voluntary transfer of water and water rights, including conserved water, to provide water for presently unmet needs and emerging needs. The purpose of this chapter is to provide the mechanism for accomplishing this in a manner that will not impair existing rights to water.

(2) This chapter applies to all areas of the state except the Yakima river basin, which is governed by chapter 90.38 RCW.

NEW SECTION. Sec. 4. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Department" means the department of ecology.

(2) "Net water savings" means the amount of water that is determined to be conserved and usable for other purposes without impairing water rights existing at the time that a water conservation project is undertaken, reducing the ability to deliver water, or reducing the supply of water that otherwise would have been available to other existing water uses.

(3) "Trust water right" means any water right acquired by the state under this chapter for management in the state's trust water rights program.

(4) "Water conservation project" means any project or program that achieves physical or operational improvements that provide for increased water use efficiency in existing systems of diversion, conveyance, application, or use of water under water rights existing on the effective date of this section.

NEW SECTION. Sec. 5. (1) For purposes of this chapter, the state may enter into contracts to provide moneys to assist in the financing of water conservation projects. In consideration for the financial assistance provided, the state shall obtain public benefits defined in guidelines developed under section 8 of this act.

(2) If the public benefits to be obtained require conveyance or modification of a water right, the recipient of funds shall convey to the state the recipient's interest in that part of the water right or claim constituting all or a portion of the resulting net water savings for deposit in the trust water rights program. The amount to be conveyed shall be finitely determined by the parties, in accordance with the guidelines developed under section 8 of this act, before the expenditure of state funds. Conveyance may consist of complete transfer, lease contracts, or other legally binding agreements.

(3) If, as a result of a water conservation project and conveyance to the state of net water savings as provided in this section, the remaining water right of the participant is in excess of the quantity that can be beneficially used, the participant may be required to relinquish the excess portion of the remaining water right.

(4) No contract for acquisition of trust water rights under this section may be entered into by the state unless it appears that, upon completion of a water conservation project or program financed with moneys as provided in this section, a valid water right or portion thereof will exist for conveyance to the state.

(5) The state shall cooperate fully with the United States in the implementation of this chapter. Trust water rights may be acquired through expenditure of funds provided by the United States and shall be treated in the same manner as trust water rights resulting from the expenditure of state funds.

(6) If water is proposed to be acquired by or conveyed to the state as a trust water right by an irrigation district, evidence of the district's authority to represent the water right holders shall be submitted to and for the satisfaction of the department.

(7) The state shall not contract with any person to acquire a water right served by an irrigation district without the approval of the board of directors of the irrigation district. Disapproval by a board shall be factually based on probable adverse effects on the ability of the district to deliver water to other members or on maintenance of the financial integrity of the district.

NEW SECTION. Sec. 6. (1) The state may acquire all or portions of existing water rights, by purchase, gift, or other appropriate means other than by condemnation, from any person or entity or combination of persons or entities. Once acquired, such rights are trust water rights.

(2) The department may enter into leases, contracts, or such other arrangements with other persons or entities as appropriate, to ensure that trust water rights acquired in accordance with this chapter may be exercised to the fullest possible extent.

(3) Trust water rights may be acquired by the state on a temporary or permanent basis.

NEW SECTION. Sec. 7. (1) All trust water rights acquired by the state shall be placed in the state trust water rights program to be managed by the department. Trust water rights acquired by the state shall be held or authorized for use by the department for instream flows, irrigation, municipal, or other beneficial uses consistent with applicable regional plans and critical resource area agreements, or for other areas of the state as determined by the department under the guidelines required in section 8 of this act.

(2) The department shall issue a water right certificate in the name of the state of Washington for each permanent trust water right conveyed to the state and shall issue a superseding certificate, if applicable, to the original water right holder for the portion of the water right required for beneficial use following such conveyance. The superseding certificate shall retain the same priority date as the original right. For nonpermanent conveyances, the department shall issue certificates or such other instruments as are necessary to reflect the changes in purpose or place of use or point of diversion or withdrawal. Water rights for which such nonpermanent conveyances are arranged shall not be subject to relinquishment for nonuse.

(3) A trust water right retains the same priority date as the water right from which it originated, but as between them the trust right shall be deemed to be inferior in priority unless otherwise specified by an agreement between the state and the party holding the original right.

(4) Exercise of a trust water right may be authorized only if the department first determines that neither water rights existing at the time the trust water right is established, nor the public interest will be impaired. If impairment becomes apparent during the time a trust water right is being exercised, the department shall cease or modify the use of the trust water right to eliminate the impairment.

(5) Before any trust water right is created or modified, the department shall, at a minimum, require that a notice be published in a newspaper of general circulation published in the county or counties in which the storage, diversion, and use are to be made, and in other newspapers as the department determines is necessary, once a week for two consecutive weeks. At the same time the department shall send a notice containing pertinent information to all appropriate state agencies, potentially affected local governments and federally recognized tribal governments, and other interested parties.

(6) RCW 90.14.140 through 90.14.230 have no applicability to trust water rights held by the department under this chapter or exercised under this section.

(7) RCW 90.03.380 has no applicability to trust water rights acquired by the state through the funding of water conservation projects.

NEW SECTION. Sec. 8. The department, in cooperation with federally recognized Indian tribes, local governments, state agencies, and other interested parties, shall establish guidelines by July 1, 1992, governing the acquisition, administration, and management of trust water rights. The guidelines shall address at a minimum the following:

(1) Methods for determining the net water savings resulting from water conservation projects or programs carried out in accordance with this chapter, and other factors to be considered in determining the quantity or value of water available for potential designation as a trust water right;

(2) Criteria for determining the portion of net water savings to be conveyed to the state under this chapter;

(3) Criteria for prioritizing water conservation projects;

(4) A description of potential public benefits that will affect consideration for state financial assistance in section 5 of this act;

(5) Procedures for providing notification to potentially interested parties;

(6) Criteria for the assignment of uses of trust water rights acquired in areas of the state not addressed in a regional water resource plan or critical area agreement; and

(7) Contracting procedures and other procedures not specifically addressed in this section.

NEW SECTION. Sec. 9. The policies and purposes of this chapter shall not be construed as replacing or amending the policies or the purposes for which funds available under chapter 43.83B or 43.99E RCW may be used.

NEW SECTION. Sec. 10. Nothing in this chapter authorizes the involuntary impairment of any existing water rights, nor shall this chapter apply to any projects or programs within the exterior boundaries of any Indian reservation without the express approval of the tribe.

NEW SECTION. Sec. 11. A new section is added to chapter 90.14 RCW to read as follows:

This chapter shall not apply to trust water rights held or exercised by the department of ecology under chapter 90.38 or 90.-- RCW (sections 3 through 10 of this act).

Sec. 12. RCW 90.03.380 and 1987 c 109 s 94 are each amended to read as follows:

The right to the use of water which has been applied to a beneficial use in the state shall be and remain appurtenant to the land or place upon which the same is used: PROVIDED, HOWEVER, That said right may be transferred to another or to others and become appurtenant to any other land or place of use without loss of priority of right theretofore established if such change can be made without detriment or injury to existing rights. The point of diversion of water for beneficial use or the purpose of use may be changed, if such change can be made without detriment or injury to existing rights. Before any transfer of such right to use water or change of the point of diversion of water or change of purpose of use can be made, any person having an interest in the transfer or change, shall file a written application therefor with the department, and said application shall not be granted until notice of said application shall be published as provided in RCW 90.03.280. If it shall appear that such transfer or such change may be made without injury or detriment to existing rights, the department shall issue to the applicant a certificate in duplicate granting the right for such transfer or for such change of point of diversion or of use. The certificate so issued shall be filed and be made a record with the department and the duplicate certificate issued to the applicant may be filed with the county auditor in like manner and with the same effect as provided in the original certificate or permit to divert water.

This section shall not apply to trust water rights acquired by the state through the funding of water conservation projects under chapter 90.38 or 90.-- RCW (sections 3 through 10 of this 1991 act).

Sec. 13. RCW 19.27.170 and 1989 c 348 s 8 are each amended to read as follows:

(1) The state building code council shall adopt rules under chapter 34.05 RCW that implement and incorporate the water conservation performance standards in subsections ((~~(3)~~)) (4) and ((~~(4)~~)) (5) of this section. These standards shall apply to all new construction and all remodeling involving replacement of plumbing fixtures in all residential, hotel, motel, school, industrial, commercial use, or other occupancies determined by the council to use significant quantities of water.

(2) The legislature recognizes that a phasing-in approach to these new standards is appropriate. Therefore, standards in subsection ((~~(3)~~)) (4) of this section shall take effect on July 1, 1990. The standards in subsection ((~~(4)~~)) (5) of this section shall take effect July 1, 1993.

(3) No individual, public or private corporation, firm, political subdivision, government agency, or other legal entity may, for purposes of use in this state, distribute, sell, offer for sale, import, install, or approve for installation any plumbing fixtures unless the fixtures meet the standards as provided for in this section.

(4) Standards for water use efficiency effective July 1, 1990.

(a) Standards for waterclosets. The guideline for maximum water use allowed in gallons per flush (gpf) for any of the following waterclosets is the following:

Tank-type toilets............................... 3.5 gpf.

Flushometer-valve toilets....................... 3.5 gpf.

Flushometer-tank toilets........................ 3.5 gpf.

Electromechanical hydraulic toilets............. 3.5 gpf.

(b) Standard for urinals. The guideline for maximum water use allowed for any urinal is 3.0 gallons per flush.

(d) Standard for faucets. The guideline for maximum water use allowed in gallons per minute (gpm) for any of the following faucets and replacement aerators is the following:

Bathroom faucets................................ 3.0 gpm.

Lavatory faucets................................ 3.0 gpm.

Kitchen faucets................................. 3.0 gpm.

Replacement aerators............................ 3.0 gpm.

(e) Except where designed and installed for use by the physically handicapped, lavatory faucets located in restrooms intended for use by the general public must be equipped with a metering valve designed to close by spring or water pressure when left unattended (self-closing).

(f) No urinal or watercloset that operates on a continuous flow or continuous flush basis shall be permitted.

((~~(4)~~)) (5) Standards for water use efficiency effective July 1, 1993.

(a) Standards for waterclosets. The guideline for maximum water use allowed in gallons per flush (gpf) for any of the following waterclosets is the following:

Tank-type toilets............................... 1.6 gpf.

Flushometer-tank toilets........................ 1.6 gpf.

Electromechanical hydraulic toilets............. 1.6 gpf.

(b) Standards for urinals. The guideline for maximum water use allowed for any urinal is 1.0 gallons per flush.

(d) Standards for faucets. The guideline for maximum water use allowed in gallons per minute for any of the following faucets and replacement aerators is the following:

Bathroom faucets................................ 2.5 gpm.

Lavatory faucets................................ 2.5 gpm.

Kitchen faucets................................. 2.5 gpm.

Replacement aerators............................ 2.5 gpm.

(f) No urinal or watercloset that operates on a continuous flow or continuous basis shall be permitted.

(((5) The building code council shall make an assessment regarding the low-volume fixtures required under subsection (4) of this section. The assessment shall consider the availability of low-volume fixtures which are technologically feasible, will operate effectively, and are economically justified. The council shall also assess the potential impact on the necessary flow or water required to insure sewerage or septic lines and treatment plants will effectively operate.

The council shall submit a report to the chief clerk of the house of representatives and the secretary of the senate by October 30, 1992, setting forth its conclusions, and any recommendations for legislative action.))

(6) The building code council shall establish methods and procedures for testing and identifying fixtures that meet the standards established in this section. The council shall use the testing standards designated as American national standards, written under American national standards institute procedures or other widely recognized national testing standards. The council shall either review test results from independent testing laboratories that are submitted by manufacturers of plumbing fixtures or accept data submitted to and evaluated by the international association of plumbing and mechanical officials. The council shall publish and widely distribute a current list of fixtures that meet the standards of this section.

(7) The building code council shall adopt rules for marking and labeling fixtures meeting the standards of this section.

(8) This section shall not apply to fixtures installed before the effective date of this section that are removed and relocated to another room or area of the same building after the effective date of this section, nor shall it apply to fixtures, as determined by the council, that in order to perform a specialized function, cannot meet the standards specified in this section.

(9) The water conservation performance standards shall supersede all local government codes. After July 1, 1990, cities, towns, and counties shall not amend the code revisions and standards established under subsection ((~~(3) or~~)) (4) or (5) of this section.

NEW SECTION. Sec. 14. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Applicant" means a person applying for a tax deferral under this chapter.

(2) "Person" has the meaning given in RCW 82.04.030.

(3) "Department" means the department of ecology.

(4) "Eligible project" means:

(a) Acquisition and installation, before December 31, 2001, of water-conserving irrigation equipment for agricultural use.

(b) A modernization project commenced after October 1, 1991, involving the upgrading of an existing irrigation system through the acquisition and installation of water-conserving irrigation equipment for agricultural use.

(5) "Water-conserving irrigation equipment" means all new pumping and piping equipment or other material necessary to move irrigation water that the department of ecology has certified that, when installed, will result in the more efficient use of water being used to grow the same crop or crops on the same land. For purposes of this chapter, new pumping and piping equipment means either new to the taxing jurisdiction of the state or new to the certificate holder. Used equipment may be treated as new equipment if the certificate holder either brings the equipment into Washington or makes a retail purchase of the equipment in Washington or elsewhere.

(6) "Recipient" means a person receiving a tax deferral under this chapter.

(7) "Certificate holder" means an applicant to whom a tax deferral certificate has been issued.

(8) "Operationally complete" means constructed or improved to the point of being functionally useable for the intended purpose.

(9) "Initiation of installation" means that date upon which on‑site installation commences.

(10) "For agricultural use" means use by a person exempt from business and occupation taxes under RCW 82.04.330.

NEW SECTION. Sec. 15. (1) Application for deferral of taxes under this chapter shall be made before initiation of installation of the water-conserving irrigation equipment or acquisition of such equipment. Application for deferral of taxes for modernization projects shall be made during the calendar year in which acquisition and installation of equipment occurs.

(2) The application shall be made to the department in a form and manner prescribed by the department. The application shall contain information regarding the location of the project, estimated or actual costs, time schedules for completion and operation, past average annual irrigation water consumption, estimated future irrigation water conservation, and other information required by the department.

(3) The department shall rule on an application within sixty days. A certificate holder shall initiate installation within one hundred eighty days of receiving approval from the department and issuance of the tax deferral certificate.

NEW SECTION. Sec. 16. Only a person exempt from business and occupation taxes under RCW 82.04.330 shall be eligible to apply for deferral of retail sales and use taxes as provided for in this chapter.

NEW SECTION. Sec. 17. The department shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on each eligible project. The use of the certificate shall be governed by rules established by the department of revenue. Upon issuance, the department shall provide a copy of the certificate to the department of revenue.

NEW SECTION. Sec. 18. (1) The recipient shall begin paying the deferred taxes in the third year after the date certified by the department as the date on which the project is operationally complete. The first payment shall be due on December 31st of the third calendar year after such certified date, with subsequent annual payments due on December 31st of the next succeeding four years with amounts of payment scheduled as follows:

Repayment Year Percent of Deferred Tax Repaid

1 10 percent

2 15 percent

3 20 percent

4 25 percent

5 30 percent

(2) The department of revenue may authorize an accelerated repayment schedule upon request of the recipient.

(3) Interest shall not be charged on any taxes deferred under this chapter for the period of deferral, although all other penalties and interest applicable to delinquent excise taxes may be assessed and imposed for delinquent payments under this chapter. The debt for deferred taxes is not extinguished by insolvency or other failure of the recipient.

(4) If the recipient sells the water-conserving irrigation equipment or the underlying land, the department of revenue may require that the recipient repay the deferred taxes on an accelerated repayment schedule.

NEW SECTION. Sec. 19. The department, along with the department of revenue and the department of agriculture, shall report to the legislature about the effects of this chapter on the use of water-conserving irrigation equipment resulting from the deferral provided in this chapter. The report shall contain information concerning the number of deferral certificates granted, the amount of sales tax deferred, the amount of water conserved annually, and other information useful in measuring the success of the deferral. Reports shall be submitted by January 1, 1994, and by January 1 of each year through 2002.

NEW SECTION. Sec. 20. The department shall, in consultation with the department of revenue and the department of agriculture, develop and adopt such rules, forms, and procedures as are necessary to implement and administer this exemption. Chapter 82.32 RCW shall apply to the administration of this chapter.

NEW SECTION. Sec. 21. Sections 14 through 20 of this act shall expire December 31, 2002.

NEW SECTION. Sec. 22. A new section is added to chapter 84.36 RCW to read as follows:

(1) All water-conserving irrigation equipment, both real and personal, shall be exempt from ad valorem taxation.

(2) The exemption shall apply only if the taxpayer provides, upon an application provided by the department of revenue and supplied by the county assessor, sufficient information for the county assessor to determine that the property for which the exemption is requested meets the requirements of this section.

(3) The county legislative authority may require that a reasonable one-time processing fee accompany the application.

(4) The county assessor shall make the necessary information, including copies of chapter ---, Laws of 1991 (this act) and accompanying rules, readily available to interested persons, and the county assessor shall render reasonable assistance upon request.

(5) For purposes of this exemption, the term "water-conserving irrigation equipment" means all irrigation equipment that results in the more efficient use of water to grow crops.

(6)(a) Upon removal from agricultural use of the land upon which water conservation equipment has been installed for which an exemption has been granted under this section, the owner of the land at the time of such removal shall remit all amounts of tax that would have been paid during the previous ten-year period had the equipment not been exempt from tax under this section, including applicable interest. Such tax shall be due and payable at the time of sale and shall be considered delinquent thereafter.

(b) Interest shall be charged on any amount of tax becoming due by reason of removal from agricultural use at the statutory rate charged on delinquent property taxes from the dates on which such tax could have been paid without penalty if the irrigation equipment had been assessed without regard to this section.

(c) All amounts of tax becoming due as result of removal from agricultural use, together with applicable interest, shall become a lien at the time of removal upon the property against which such taxes are imposed. This lien shall have priority to and shall be fully paid and satisfied before any recognizance, mortgage, judgment, debt, obligation, or responsibility to or with which such property may become chargeable.

(d) In the case of real property taxes becoming due as a result of removal from agricultural use, the lien may be foreclosed upon expiration of the same period after delinquency and in the same manner provided by law for foreclosure of liens for delinquent real property taxes as provided in RCW 84.64.050.

(e) Personal property taxes becoming due as a result of removal from agricultural use shall be subject to collection by the county treasurer in the manner as provided for the collection of delinquent personal property taxes in chapter 84.56 RCW.

(7) The department of revenue shall adopt such rules as are necessary for the administration of this section.

(8) This exemption shall be effective for taxes assessed in 1992 for collection in 1993.

NEW SECTION. Sec. 23. A new section is added to chapter 82.04 RCW to read as follows:

The tax imposed by RCW 82.04.240 shall not apply to the treatment or processing of effluent water purchased for commercial use directly from a sewage treatment facility operated by any county, city, town, political subdivision, or municipal or quasi-municipal corporation of this state.

NEW SECTION. Sec. 24. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Water distribution system" means a system for the distribution of water for hire or sale operated by a person subject to the tax imposed by RCW 82.16.020.

(2) "Person" shall have the meaning in RCW 82.04.030.

(3) "Department" means the department of revenue.

(4) "Taxpayer" means that person upon whom the tax under this chapter is imposed.

(5) "Water system operator" means any person operating a water distribution system subject to the tax imposed by RCW 82.16.020 who permits a taxpayer to make a connection to such system for the delivery of water to the taxpayer.

NEW SECTION. Sec. 25. There is imposed on each person making a connection to a water distribution system for the purpose of the delivery of water to such person a tax in the amount of two dollars per year for each connection.

NEW SECTION. Sec. 26. The water system operator shall collect the tax imposed in this chapter. If any person charged with collecting the tax fails to bill the taxpayer for the tax, or in the alternative has not notified the taxpayer in writing of the imposition of the tax, or having collected the tax, fails to pay it to the department in the manner prescribed by this chapter, whether such failure is the result of the person's own acts or the result of acts or conditions beyond the person's control, he or she shall, nevertheless, be personally liable to the state for the amount of the tax.

NEW SECTION. Sec. 27. (1) Taxes collected under this chapter shall be held in trust until paid to the state. Any person collecting the tax who appropriates or converts the tax collected shall be guilty of a gross misdemeanor if the money required to be collected is not available for payment on the date payment is due. The tax required by this chapter to be collected shall be stated separately from other charges made by the water system operator in any invoice or other statement of account provided to the taxpayer.

(2) If a taxpayer fails to pay the tax imposed by this chapter to the person charged with collection of the tax and the person charged with collection fails to pay the tax to the department, the department may, in its discretion, proceed directly against the taxpayer for collection of the tax.

(3) The tax shall be due from the water system operator at the end of the tax period in which the tax is received from the taxpayer.

(4) The amount of tax, until paid by the taxpayer to the water system operator or to the department, shall constitute a debt from the taxpayer to the water system operator and any person required to collect the tax who fails or refuses to do so as required with intent to violate the provisions of this chapter, and any taxpayer who refuses to pay any tax due under this chapter shall be guilty of a misdemeanor. (5) Taxes received by the state under the provisions of this chapter shall be deposited into the water management account created in section 43 of this act.

NEW SECTION. Sec. 28. The taxes imposed in this chapter shall not apply to any agency, division, or branch of the federal government or to services rendered under a contract therewith.

NEW SECTION. Sec. 29. Chapter 82.32 RCW shall apply to the taxes imposed under this chapter.

NEW SECTION. Sec. 30. The department of revenue shall adopt such rules as may be necessary to enforce and administer this chapter.

NEW SECTION. Sec. 31. The expiration of this chapter shall not be construed as affecting any existing right acquired or liability or obligation incurred under any section making up a part of this chapter or under any rule or order adopted under that section, nor as affecting any proceeding instituted under that section.

NEW SECTION. Sec. 32. This chapter shall expire June 30, 1993.

NEW SECTION. Sec. 33. A new section is added to chapter 82.12 RCW to read as follows:

This chapter shall not apply with respect to the use of treated or processed effluent water purchased for commercial use directly from a sewage treatment facility operated by any county, city, town, political subdivision, or municipal or quasi-municipal corporation of this state.

NEW SECTION. Sec. 34. A new section is added to chapter 43.19 RCW to read as follows:

(1) The department of general administration, in consultation with the department of ecology and with state agencies and institutions that manage or occupy state facilities and property, shall develop and initiate a program to evaluate all state-owned facilities and state-owned property to determine the potential for improving the efficiency of water use.

(2) By July 1, 1993, the department shall report to the appropriate committees of the senate and the house of representatives outlining the results of the evaluation, making recommendations for installing cost-effective water use efficiency measures, and estimating the water savings and net cost savings associated with the measures. The report shall also be provided to affected state agencies and institutions.

(3) Each state agency, institution, or other branch of government shall request appropriations to implement the cost-effective water saving measures identified by the department in its facility or property evaluations. The department shall prepare guidelines and shall provide technical assistance to agencies and institutions in evaluating water savings, pay-back period, and cost-effectiveness of implementing water use efficiency measures.

Sec. 35. RCW 35.67.020 and 1965 c 7 s 35.67.020 are each amended to read as follows:

Every city and town may construct, condemn and purchase, acquire, add to, maintain, conduct, and operate systems of sewerage and systems and plants for refuse collection and disposal together with additions, extensions, and betterments thereto, within and without its limits, with full jurisdiction and authority to manage, regulate, and control them and to fix, alter, regulate, and control the rates and charges for the use thereof: PROVIDED, That the rates charged must be uniform for the same class of customers or service. In classifying customers served or service furnished by such system of sewerage, the city or town legislative body may in its discretion consider any or all of the following factors: The difference in cost of service to the various customers; the location of the various customers within and without the city or town; the difference in cost of maintenance, operation, repair, and replacement of the various parts of the system; the different character of the service furnished various customers; the quantity and quality of the sewage delivered and the time of its delivery; the achievement of water conservation goals and the discouragement of wasteful water use practices; capital contributions made to the system, including but not limited to, assessments; and any other matters which present a reasonable difference as a ground for distinction.

Sec. 36. RCW 35.92.010 and 1985 c 445 s 4 and 1985 c 444 s 2 are each reenacted and amended to read as follows:

A city or town may construct, condemn and purchase, purchase, acquire, add to, alter, maintain and operate waterworks, within or without its limits, for the purpose of furnishing the city and its inhabitants, and any other persons, with an ample supply of water for all purposes, public and private, including water power and other power derived therefrom, with full power to regulate and control the use, distribution, and price thereof: PROVIDED, That the rates charged must be uniform for the same class of customers or service. Such waterworks may include facilities for the generation of electricity as a byproduct and such electricity may be used by the city or town or sold to an entity authorized by law to distribute electricity. Such electricity is a byproduct when the electrical generation is subordinate to the primary purpose of water supply. In classifying customers served or service furnished, the city or town governing body may in its discretion consider any or all of the following factors: The difference in cost of service to the various customers; location of the various customers within and without the city or town; the difference in cost of maintenance, operation, repair, and replacement of the various parts of the system; the different character of the service furnished various customers; the quantity and quality of the water furnished; the time of its use; the achievement of water conservation goals and the discouragement of wasteful water use practices; capital contributions made to the system including, but not limited to, assessments; and any other matters which present a reasonable difference as a ground for distinction. No rate shall be charged that is less than the cost of the water and service to the class of customers served.

For such purposes any city or town may take, condemn and purchase, purchase, acquire, and retain water from any public or navigable lake or watercourse, surface or ground, and, by means of aqueducts or pipe lines, conduct it to the city or town; and it may erect and build dams or other works across or at the outlet of any lake or watercourse in this state for the purpose of storing and retaining water therein up to and above high water mark; and for all the purposes of erecting such aqueducts, pipe lines, dams, or waterworks or other necessary structures in storing and retaining water, or for any of the purposes provided for by this chapter, the city or town may occupy and use the beds and shores up to the high water mark of any such watercourse or lake, and acquire the right by purchase, or by condemnation and purchase, or otherwise, to any water, water rights, easements or privileges named in this chapter, or necessary for any of said purposes, and the city or town may acquire by purchase or condemnation and purchase any properties or privileges necessary to be had to protect its water supply from pollution. Should private property be necessary for any such purposes or for storing water above high water mark, the city or town may condemn and purchase, or purchase and acquire such private property. For the purposes of waterworks which include facilities for the generation of electricity as a byproduct, nothing in this section may be construed to authorize a city or town that does not own or operate an electric utility system to condemn electric generating, transmission, or distribution rights or facilities of entities authorized by law to distribute electricity, or to acquire such rights or facilities without the consent of the owner.

Sec. 37. RCW 56.16.090 and 1974 ex.s. c 58 s 3 are each amended to read as follows:

The sewer commissioners of any sewer district, in the event that such sewer revenue bonds are issued, shall provide for revenues by fixing rates and charges for the furnishing of sewerage disposal service to those to whom such service is available. Such rates and charges may be combined for the furnishing of more than one type of sewer service such as but not limited to storm or surface water and sanitary. Such rates and charges are to be fixed as deemed necessary by such sewer commissioners, so that uniform charges will be made for the same class of customer or service. In classifying customers served or service furnished by such system of sewerage, the board of commissioners may in its discretion consider any or all of the following factors: The difference in cost of service to the various customers; the location of the various customers within and without the district; the difference in cost of maintenance, operation, repair, and replacement of the various parts of the system; the different character of the service furnished various customers; the quantity and quality of the sewage delivered and the time of its delivery; the achievement of water conservation goals and the discouragement of wasteful water use practices; capital contributions made to the system including but not limited to assessments; and any other matters which present a reasonable difference as a ground for distinction. Such rates are to be made on a monthly basis and shall produce revenues sufficient to take care of the costs of maintenance and operation, revenue bond and warrant interest and principal amortization requirements, and all other charges necessary for efficient and proper operation of the system.

Sec. 38. RCW 57.20.020 and 1983 c 167 s 164 are each amended to read as follows:

(1) Whenever any issue or issues of water revenue bonds have been authorized in compliance with the provisions of RCW 57.16.010 through 57.16.040, said bonds shall be in bearer form or registered as to principal or interest or both, as provided in RCW 39.46.030, and may provide for conversion between registered and coupon bonds; shall be in such denominations, shall be numbered, shall bear such date, and shall be payable at such time or times up to a maximum period of not to exceed thirty years as shall be determined by the board of water commissioners of the district; shall bear interest at such rate or rates payable at such time or times as authorized by the board; shall be payable at the office of the county treasurer of the county in which the water district is located and may also be payable at such other place or places as the board of water commissioners may determine; shall be executed by the president of the board of water commissioners and attested and sealed by the secretary thereof, one of which signatures may, with the written permission of the signator whose facsimile signature is being used, be a facsimile; and may have facsimile signatures of said president or secretary imprinted on any interest coupons in lieu of original signatures.

The water district commissioners shall have power and are required to create a special fund or funds for the sole purpose of paying the interest and principal of such bonds into which special fund or funds the said water district commissioners shall obligate and bind the water district to set aside and pay a fixed proportion of the gross revenues of the water supply system or any fixed amount out of and not exceeding a fixed proportion of such revenues, or a fixed amount or amounts without regard to any fixed proportion and such bonds and the interest thereof shall be payable only out of such special fund or funds, but shall be a lien and charge against all revenues and payments received from any utility local improvement district or districts pledged to secure such bonds, subject only to operating and maintenance expenses.

In creating any such special fund or funds the water district commissioners of such water district shall have due regard to the cost of operation and maintenance of the plant or system as constructed or added to and to any proportion or part of the revenue previously pledged as a fund for the payment of bonds, warrants or other indebtedness, and shall not set aside into such special fund a greater amount or proportion of the revenue and proceeds than in their judgment will be available over and above such cost of maintenance and operation and the amount or proportion, if any, of the revenue so previously pledged. Any such bonds and interest thereon issued against any such fund as herein provided shall be a valid claim of the owner thereof only as against the said special fund and its fixed proportion or amount of the revenue pledged to such fund, and shall not constitute an indebtedness of such water district within the meaning of the constitutional provisions and limitations. Each such bond shall state upon its face that it is payable from a special fund, naming the said fund and the resolution creating it. Said bonds shall be sold in such manner, at such price and at such rate or rates of interest as the water district commissioners shall deem for the best interests of the water district, either at public or private sale, and the said commissioners may provide in any contract for the construction and acquirement of the proposed improvement (and for the refunding of outstanding local improvement district obligations, if any) that payment therefor shall be made in such bonds at par value thereof.

When any such special fund shall have been heretofore or shall be hereafter created and any such bonds shall have been heretofore or shall hereafter be issued against the same a fixed proportion or a fixed amount out of and not to exceed such fixed proportion, or a fixed amount or amounts without regard to any fixed proportion, of revenue shall be set aside and paid into said special fund as provided in the resolution creating such fund or authorizing such bonds, and in case any water district shall fail thus to set aside and pay said fixed proportion or amount as aforesaid, the owner of any bond payable from such special fund may bring suit or action against the water district and compel such setting aside and payment.

(2) Notwithstanding subsection (1) of this section, such bonds may be issued and sold in accordance with chapter 39.46 RCW.

(3) The water district commissioners of any water district, in the event that such water revenue bonds are issued, shall provide for revenues by fixing rates and charges for the furnishing of water supply to those receiving such service, such rates and charges to be fixed as deemed necessary by such water district commissioners, so that uniform charges will be made for the same class of customer or service.

In classifying customers served or service furnished by such water supply system, the board of water commissioners may in its discretion consider any or all of the following factors: The difference in cost of service to the various customers; the location of the various customers within and without the district; the difference in cost of maintenance, operation, repair and replacement of the various parts of the system; the different character of the service furnished various customers; the quantity and quality of the water furnished; the time of its use; the achievement of water conservation goals and the discouragement of wasteful practices; capital contributions made to the system including but not limited to assessments; and any other matters which present a reasonable difference as a ground for distinction. Such rates shall be made on a monthly basis as may be deemed proper by such commissioners and as fixed by resolution and shall produce revenues sufficient to take care of the costs of maintenance and operation, revenue bond and warrant interest and principal amortization requirements and all other charges necessary for efficient and proper operation of the system.

Sec. 39. RCW 54.24.080 and 1959 c 218 s 9 are each amended to read as follows:

(1) The commission of each district which shall have revenue obligations outstanding shall have the power and shall be required to establish, maintain, and collect rates or charges for electric energy and water and other services, facilities, and commodities sold, furnished, or supplied by the district which shall be fair and nondiscriminatory and adequate to provide revenues sufficient for the payment of the principal of and interest on such revenue obligations for which the payment has not otherwise been provided and all payments which the district is obligated to set aside in any special fund or funds created for such purpose, and for the proper operation and maintenance of the public utility and all necessary repairs, replacements, and renewals thereof.

(2) In establishing rates or charges for water service, commissioners may in their discretion consider the achievement of water conservation goals and the discouragement of wasteful water use practices.

Sec. 40. RCW 80.28.010 and 1990 1st ex.s. c 1 s 5 are each amended to read as follows:

(1) All charges made, demanded or received by any gas company, electrical company or water company for gas, electricity or water, or for any service rendered or to be rendered in connection therewith, shall be just, fair, reasonable and sufficient.

(2) Every gas company, electrical company and water company shall furnish and supply such service, instrumentalities and facilities as shall be safe, adequate and efficient, and in all respects just and reasonable.

(3) All rules and regulations issued by any gas company, electrical company or water company, affecting or pertaining to the sale or distribution of its product, shall be just and reasonable.

(4) Until June 30, 1991:

(a) Utility service for residential space heating shall not be terminated between November 15 through March 15 if the customer:

(i) Notifies the utility of the inability to pay the bill, including a security deposit. This notice should be provided within five business days of receiving a payment overdue notice unless there are extenuating circumstances. If the customer fails to notify the utility within five business days and service is terminated, the customer can, by paying reconnection charges, if any, and fulfilling the requirements of this section, receive the protections of this chapter;

(ii) Provides self-certification of household income for the prior twelve months to a grantee of the department of community development which administers federally funded energy assistance programs. The grantee shall determine that the household income does not exceed the maximum allowed for eligibility under the state's plan for low-income energy assistance under 42 U.S.C. 8624 and shall provide a dollar figure that is seven percent of household income. The grantee may verify information provided in the self-certification;

(iii) Has applied for home heating assistance from applicable government and private sector organizations and certifies that any assistance received will be applied to the current bill and future utility bills;

(iv) Has applied for low-income weatherization assistance to the utility or other appropriate agency if such assistance is available for the dwelling;

(v) Agrees to a payment plan and agrees to maintain the payment plan. The plan will be designed both to pay the past due bill by the following October 15 and to pay for continued utility service. If the past due bill is not paid by the following October 15, the customer shall not be eligible for protections under this chapter until the past due bill is paid. The plan shall not require monthly payments in excess of seven percent of the customer's monthly income plus one-twelfth of any arrearage accrued from the date application is made and thereafter during November 15 through March 15. A customer may agree to pay a higher percentage during this period, but shall not be in default unless payment during this period is less than seven percent of monthly income plus one-twelfth of any arrearage accrued from the date application is made and thereafter. If assistance payments are received by the customer subsequent to implementation of the plan, the customer shall contact the utility to reformulate the plan; and

(vi) Agrees to pay the moneys owed even if he or she moves.

(b) The utility shall:

(i) Include in any notice that an account is delinquent and that service may be subject to termination, a description of the customer's duties in this section;

(ii) Assist the customer in fulfilling the requirements under this section;

(iii) Be authorized to transfer an account to a new residence when a customer who has established a plan under this section moves from one residence to another within the same utility service area;

(iv) Be permitted to disconnect service if the customer fails to honor the payment program. Utilities may continue to disconnect service for those practices authorized by law other than for nonpayment as provided for in this subsection. Customers who qualify for payment plans under this section who default on their payment plans and are disconnected can be reconnected and maintain the protections afforded under this chapter by paying reconnection charges, if any, and by paying all amounts that would have been due and owing under the terms of the applicable payment plan, absent default, on the date on which service is reconnected; and

(v) Advise the customer in writing at the time it disconnects service that it will restore service if the customer contacts the utility and fulfills the other requirements of this section.

(5) Every gas company and electrical company shall offer residential customers the option of a budget billing or equal payment plan. The budget billing or equal payment plan shall be offered low-income customers eligible under the state's plan for low-income energy assistance prepared in accordance with 42 U.S.C. 8624(C)(1) without limiting availability to certain months of the year, without regard to the length of time the customer has occupied the premises, and without regard to whether the customer is the tenant or owner of the premises occupied.

(6) Every gas company, electrical company and water company shall construct and maintain such facilities in connection with the manufacture and distribution of its product as will be efficient and safe to its employees and the public.

(7) An agreement between the customer and the utility, whether oral or written, shall not waive the protections afforded under this chapter.

(8) In establishing rates or charges for water service, water companies as defined in RCW 80.04.010 may consider the achievement of water conservation goals and the discouragement of wasteful water use practices.

Sec. 41. RCW 80.28.025 and 1980 c 149 s 2 are each amended to read as follows:

(1) In establishing rates for each gas and electric company regulated by this chapter, the commission shall adopt policies to encourage meeting or reducing energy demand through cogeneration as defined in RCW 82.35.020, measures which improve the efficiency of energy end use, and new projects which produce or generate energy from renewable resources, such as solar energy, wind energy, hydroelectric energy, geothermal energy, wood, wood waste, municipal wastes, agricultural products and wastes, and end-use waste heat. These policies shall include but are not limited to allowing a return on investment in measures to improve the efficiency of energy end use, cogeneration, or projects which produce or generate energy from renewable resources which return is established by adding an increment of two percent to the rate of return on common equity permitted on the company's other investment. Measures or projects encouraged under this section are those for which construction or installation is begun after June 12, 1980, and before January 1, 1990, and which, at the time they are placed in the rate base, are reasonably expected to save, produce, or generate energy at a total incremental system cost per unit of energy delivered to end use which is less than or equal to the incremental system cost per unit of energy delivered to end use from similarly available conventional energy resources which utilize nuclear energy or fossil fuels and which the gas or electric company could acquire to meet energy demand in the same time period. The rate of return increment shall be allowed for a period not to exceed thirty years after the measure or project is first placed in the rate base.

(2) In establishing rates for water companies regulated by this chapter, the commission may consider the achievement of water conservation goals and the discouragement of wasteful water use practices.

NEW SECTION. Sec. 42. A new section is added to chapter 90.03 RCW to read as follows:

The water restoration account is created in the state treasury. All receipts from the collection of penalties under RCW 90.03.600 and 18.104.155 shall be deposited into the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for the restoration of water and related resources damaged by violations of chapters 18.104, 43.83B, 90.03, 90.22, 90.44, and 90.54 RCW, and rules, permits, and other documents or orders issued by the department of ecology in enforcing those chapters.

NEW SECTION. Sec. 43. A new section is added to chapter 90.54 RCW to read as follows:

The water management account is created in the state treasury. All receipts from the taxes in section 25 of this act shall be deposited into the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for water resources planning and management.

NEW SECTION. Sec. 44. A new section is added to chapter 18.104 RCW to read as follows:

Civil penalties collected under RCW 18.104.155 shall be deposited in the water restoration account created in section 42 of this act.

NEW SECTION. Sec. 45. Section 22 of this act shall expire December 31, 2002.

NEW SECTION. Sec. 46. The sum of four million three hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the water management account to the department of ecology for the purposes of implementing a cooperative regional water resources planning and management process including (1) conservation pursuant to this act; (2) the water resources forum; (3) the critical area consultation process; (4) enhanced compliance efforts; and (5) a participatory grant program.

NEW SECTION. Sec. 47. The sum of eight hundred twenty-five thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the water management account to the department of health for the purposes of implementing a cooperative regional water resources planning and management process, specifically including (1) water reuse standards, model rates, and a metering program; (2) the water resources forum; and (3) the critical area consultation process.

NEW SECTION. Sec. 48. The sum of one hundred ten thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the water management account to the state building code council for the purposes of section 13 of this act.

NEW SECTION. Sec. 49. The sum of two hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the water management account to the department of general administration for the purposes of section 18 of this act.

NEW SECTION. Sec. 50. The sum of thirty-one thousand five hundred dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the water management account to the department of agriculture for the purpose of implementing a cooperative regional water resources planning and management process, specifically (1) the water resources forum and (2) the critical area consultation process.

NEW SECTION. Sec. 51. The sum of seventy-four thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the water management account to the parks and recreation commission for the purpose of implementing a cooperative regional water resources planning and management process, specifically (1) the water resources forum and (2) the critical area consultation process.

NEW SECTION. Sec. 52. The sum of five thousand five hundred dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the water management account to the conservation commission for the purpose of implementing a cooperative regional water resources planning and management process, specifically (1) the water resources forum and (2) the critical area consultation process.

NEW SECTION. Sec. 53. The sum of eighty-eight thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the water management account to the department of wildlife for the purpose of implementing a cooperative regional water resources planning and management process, specifically (1) the water resources forum and (2) the critical area consultation process.

NEW SECTION. Sec. 54. The sum of seventy-five thousand six hundred dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the water management account to the department of fisheries for the purpose of implementing a cooperative regional water resources planning and management process, specifically (1) the water resources forum and (2) the critical area consultation process.

NEW SECTION. Sec. 55. Sections 3 through 10 of this act shall constitute a new chapter in Title 90 RCW.

NEW SECTION. Sec. 56. Sections 14 through 21 of this act shall constitute a new chapter in Title 82 RCW.

NEW SECTION. Sec. 57. Sections 24 through 32 of this act shall constitute a new chapter in Title 82 RCW.

NEW SECTION. Sec. 58. This act shall be null and void in the event that the legislature fails to appropriate funds for this act by July 1, 1991, and if such appropriation does not derive from new revenues developed pursuant to this act.

NEW SECTION. Sec. 59. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.