BP BHEAD INT H

AN ACT Relating to water rights transfers and market transactions; amending RCW 90.03.380, 90.03.383, and 90.03.390; adding new sections to chapter 90.54 RCW; and adding a new section to chapter 90.14 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 90.54 RCW to read as follows:

It is the intent of the legislature that existing administrative, legal, and economic barriers to the voluntary marketability and transferability of water rights be removed. Water rights transfers will be an important water management tool to meet existing and future water resource demands and will result in more efficient use of water resources, benefitting both the buyer and the seller. The legislature recognizes that water rights, like other property rights, are alienable, and that water rights should become freely marketable and transferable to other locations and uses. Water rights held in trust should also be marketable, subject to the provisions of RCW 90.03.380. The legislature also finds that conservation of water is a resource in itself, and that the transfer of conserved water to other locations and uses serves as a water allocation mechanism. Used effectively, the voluntary transfer of water rights could: (1) Allow the creation of additional multi-use water storage facilities; (2) alleviate water shortages; (3) save capital outlays; (4) reduce development costs; (5) provide an incentive for investment in water conservation efforts by water right holders; and (6) provide significant environmental benefits.

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

"Water right transfer" or "transfer" means any voluntary transaction for consideration, carried out in accordance with the provisions of this chapter, in which there is a temporary or permanent change in the place of diversion, place of use, source of supply, time of use, period of use, place of storage, or the purpose of use of all or part of the water to which any person is entitled by reason of owning or holding a water right. The term water right transfer or transfer includes, a sale, lease, or exchange of water rights, an agreement not to exercise a water right, the sale of water conserved by a present user, or any other transaction that permits water rights to be transferred from one use to another for consideration. The term water right transfer or transfer includes the transfer of rights or the exchange or delivery of water between public water systems through an "intertie."

Conserved water is that part of a ground or surface water right that is made surplus to the beneficial uses exercised under the right, through a change in the practices or activities under which the right was perfected.

NEW SECTION. Sec. 3. A new section is added to chapter 90.54 RCW to read as follows:

Conserved water may be transferred without limitation as provided in section 2 of this act. A water right proposed for transfer, that includes water other than conserved water, may not be permanently sold, and is subject to transfer for a specific term.

Sec. 4. RCW 90.03.380 and 1991 c 347 s 15 are each amended to read as follows:

(1)(a) 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.

(b) An existing right that is in the status of an undeveloped permit that is not being supplied at the time appropriation or subsequent beneficial use is not subject to injury or detriment by a transfer of water rights.

(c) Conserved water is subject to transfer and other existing water rights holders may not claim injury or detriment if the conserved water was obtained by efficiency measures, the water from which the conserved water was reclaimed was put to beneficial use, and the conserved water was not available to other water rights holders as return flow.

(d) 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.

(2)(a) If an application for change proposes to transfer water rights from one irrigation district to another, the department ((~~shall~~)) must, before publication of notice, receive ((~~concurrence~~)) approval from each of the irrigation districts that such transfer or change will not adversely affect the ability to deliver water to other landowners or impair the financial integrity of either of the districts.

(b) Irrigation districts may transfer conserved water within and outside of the district if the conserved water meets the criteria in subsection (1)(c) of this section.

(c) A change in place of use by an individual water user or users of water provided by an irrigation district need only receive approval for the change from the board of directors of the district if the use of water continues within the irrigation district.

(d) The department may not require that irrigation water rights transfers be conditioned on the transferor reducing his or her irrigated acreage.

(3) This section shall not apply to trust water rights acquired by the state through the funding of water conservation projects under chapter 90.38 RCW or RCW 90.42.010 through 90.42.070.

(4) The department may not initiate relinquishment proceedings under chapter 90.14 RCW as a result of information gained solely through a proposed water rights transfer under this section.

(5) The department of ecology may not initiate relinquishment proceedings under chapter 90.14 RCW on the grounds that an irrigation district holding a water right in trust for the benefit of land owners within the district has not put all of the water authorized in the permit to beneficial use.

(6) There shall be no relinquishment of all or any part of a water right when any water right holder fails to use all of the water that the holder is entitled to use under an appropriative water right because of water conservation efforts financed by such holder. Any reduction in the use of such appropriated water because of such conservation efforts shall be deemed equivalent to a reasonable beneficial use of water by the holder to the full extent of the reduction in use resulting from the conservation effort. A water right holder shall have the right to apply conserved water to any other beneficial use of the holder, or to sell, convey, exchange, or transfer any conserved water for beneficial use by another.

(7) The provisions of RCW 90.03.290 do not apply to transfers or changes made under this section.

NEW SECTION. Sec. 5. A new section is added to chapter 90.14 RCW to read as follows:

The department may not initiate relinquishment proceedings under this chapter as a result of information gained solely through a proposed water rights transfer under RCW 90.03.380.

Sec. 6. RCW 90.03.383 and 1991 c 350 s 1 are each amended to read as follows:

(1) The legislature recognizes the value of interties for improving the reliability of public water systems, enhancing their management, and more efficiently utilizing the increasingly limited resource. Given the continued growth in the most populous areas of the state, the increased complexity of public water supply management, and the trend toward regional planning and regional solutions to resource issues, interconnections of public water systems through interties provide a valuable tool to ensure reliable public water supplies for the citizens of the state. Public water systems have been encouraged in the past to utilize interties to achieve public health and resource management objectives. The legislature finds that it is in the public interest to recognize interties existing and in use as of January 1, 1991, and to have associated water rights modified by the department of ecology to reflect current use of water through those interties, pursuant to subsection (3) of this section. The legislature further finds it in the public interest to develop a coordinated process to review proposals for interties commencing use after January 1, 1991.

(2) For the purposes of this section, the following definitions shall apply:

(a) "Interties" are interconnections between public water systems permitting exchange, acquisition, or delivery of wholesale and/or retail water between those systems for other than emergency supply purposes, where such exchange, acquisition, or delivery is within established instantaneous and annual withdrawal rates specified in the systems' existing water right permits or certificates, or contained in claims filed pursuant to chapter 90.14 RCW, and which results in better management of public water supply consistent with existing rights and obligations. Interties include interconnections between public water systems permitting exchange, acquisition, or delivery of water to serve as primary or secondary sources of supply((~~, but do not include development of new sources of supply to meet future demand~~)).

(b) "Service area" is the area designated as the wholesale and/or retail area in a water system plan or a coordinated water system plan pursuant to chapter 43.20 or 70.116 RCW respectively. When a public water system does not have a designated service area subject to the approval process of those chapters, the service area shall be the designated place of use contained in the water right permit or certificate, or contained in the claim filed pursuant to chapter 90.14 RCW.

(3) Public water systems with interties existing and in use as of January 1, 1991, or that have received written approval from the department of health prior to that date, shall file written notice of those interties with the department of health and the department of ecology. The notice may be incorporated into the public water system's five-year update of its water system plan, but shall be filed no later than June 30, 1996. The notice shall identify the location of the intertie; the dates of its first use; the purpose, capacity, and current use; the intertie agreement of the parties and the service areas assigned; and other information reasonably necessary to modify the public water system's water right ((~~permit~~)). Notwithstanding the provisions of RCW 90.03.380 and 90.44.100, for public water systems with interties existing and in use or with written approval as of January 1, 1991, the department of ecology, upon receipt of notice meeting the requirements of this subsection, shall, as soon as practicable, modify the place of use descriptions in the water right permits, certificates, or claims to reflect the actual use through such interties, provided that the place of use is within service area designations established in a water system plan approved pursuant to chapter 43.20 RCW, or a coordinated water system plan approved pursuant to chapter 70.116 RCW, and further provided that the water used is within the instantaneous and annual withdrawal rates specified in the water rights ((~~permit~~)) and that no outstanding complaints of impairment to existing water rights have been filed with the department of ecology prior to September 1, 1991. Where such complaints of impairment have been received, the department of ecology shall make all reasonable efforts to resolve them in a timely manner through agreement of the parties or through available administrative remedies.

(4) Notwithstanding the provisions of RCW 90.03.380 and 90.44.100, exchange, acquisition, or delivery of water through interties approved by the department of health commencing use after January 1, 1991, shall be permitted when the intertie improves overall system reliability, enhances the manageability of the systems, provides opportunities for conjunctive use, or delays or avoids the need to develop new water sources, and otherwise meets the requirements of this section, provided that each public water system's water use shall not exceed the instantaneous or annual withdrawal rate specified in its water right authorization, shall not adversely affect existing water rights, and shall not be inconsistent with state-approved plans such as water system plans or other plans which include specific proposals for construction of interties. Interties approved and commencing use after January 1, 1991, shall not be inconsistent with regional water resource plans developed pursuant to chapter 90.54 RCW.

(5) For public water systems subject to the approval process of chapter 43.20 RCW or chapter 70.116 RCW, proposals for interties commencing use after January 1, 1991, shall be incorporated into water system plans pursuant to chapter 43.20 RCW or coordinated water system plans pursuant to chapter 70.116 RCW and submitted to the department of health and the department of ecology for review and approval as provided for in subsections (5) through (9) of this section. The plan shall state how the proposed intertie will improve overall system reliability, enhance the manageability of the systems, provide opportunities for conjunctive use, or delay or avoid the need to develop new water sources.

(6) The department of health shall be responsible for review and approval of proposals for new interties. In its review the department of health shall determine whether the intertie satisfies the criteria of subsection (4) of this section, with the exception of water rights considerations, which are the responsibility of the department of ecology, and shall determine whether the intertie is necessary to address emergent public health or safety concerns associated with public water supply.

(7) If the intertie is determined by the department of health to be necessary to address emergent public health or safety concerns associated with public water supply, the public water system shall amend its water system plan as required and shall file an application with the department of ecology to change its existing water right to reflect the proposed use of the water as described in the approved water system plan. The department of ecology shall process the application for change pursuant to RCW 90.03.380 or 90.44.100 as appropriate, except that, notwithstanding the requirements of those sections regarding notice and protest periods, applicants shall be required to publish notice one time, and the comment period shall be fifteen days from the date of publication of the notice. Within sixty days of receiving the application, the department of ecology shall issue findings and advise the department of health if existing water rights are determined to be adversely affected. If no determination is provided by the department of ecology within the sixty-day period, the department of health shall proceed as if existing rights are not adversely affected by the proposed intertie. The department of ecology may obtain an extension of the sixty-day period by submitting written notice to the department of health and to the applicant indicating a definite date by which its determination will be made. No additional extensions shall be granted, and in no event shall the total review period for the department of ecology exceed one hundred eighty days.

(8) If the department of health determines the proposed intertie appears to meet the requirements of subsection (4) of this section but is not necessary to address emergent public health or safety concerns associated with public water supply, the department of health shall instruct the applicant to submit to the department of ecology an application for change to the underlying water right or claim as necessary to reflect the new place of use. The department of ecology shall consider the applications pursuant to the provisions of RCW 90.03.380 and 90.44.100 as appropriate. The department of ecology shall not deny or limit a change of place of use for an intertie on the grounds that the holder of a permit has not yet put all of the water authorized in the permit to beneficial use. If in its review of proposed interties and associated water rights the department of ecology determines that additional information is required to act on the application, the department may request applicants to provide information necessary for its decision, consistent with agency rules and written guidelines. Parties disagreeing with the decision of the department of ecology on the application for change in place of use may appeal the decision to the pollution control hearings board.

(9) The department of health may approve plans containing intertie proposals prior to the department of ecology's decision on the water right application for change in place of use. However, notwithstanding such approval, construction work on the intertie shall not begin until the department of ecology issues the appropriate water right document to the applicant consistent with the approved plan.

Sec. 7. RCW 90.03.390 and 1991 c 350 s 3 are each amended to read as follows:

RCW 90.03.380 shall not be construed to prevent water users from making a seasonal or temporary change of point of diversion or place of use of water when such change can be made without detriment or injury to existing rights((~~, but in no case shall such change be made without the permission of the water master of the district in which such proposed change is located, or of the department~~)). Nor shall RCW 90.03.380 be construed to prevent construction of emergency interties between public water systems to permit exchange of water during short-term emergency situations, or rotation in the use of water for bringing about a more economical use of the available supply, provided however, that the department of health in consultation with the department of ecology shall adopt rules or develop written guidelines setting forth standards for determining when a short-term emergency exists and the circumstances in which emergency interties are permitted. The rules or guidelines shall be consistent with the procedures established in RCW 43.83B.400 through 43.83B.420.

The request for seasonal or temporary change must be made to the department in a manner that the department prescribes and approval must be granted prior to the change being made. The request need not comply with the full information and newspaper publication requirements of RCW 90.03.380 and no certificate of change is to issue.

A request that proposes to change use of water from one irrigation district to another must receive concurrence from each of the irrigation districts that such change will not adversely affect the ability to deliver water to other landowners or impair the financial integrity of the districts, before department action is taken.

A change in place of use by an individual water user or users of water provided by an irrigation district need only receive approval for the change from the board of directors of the district if the use of water continues within the irrigation district.

Water users owning lands to which water rights are attached may rotate in the use of water to which they are collectively entitled, or an individual water user having lands to which are attached water rights of a different priority, may in like manner rotate in use when such rotation can be made without detriment to other existing water rights, and has the approval of the ((~~water master or~~)) department.