[atlas:bill]

AN ACT Relating to water resources management; amending RCW 90.82.040, 90.82.130, 90.03.380, 90.80.005, 90.80.010, 90.80.050, 90.80.070, 90.80.080, 90.80.090, 90.80.100, 90.80.120, 90.80.130, 90.80.140, 90.03.330, 90.66.040, 90.66.060, 90.14.140, 90.38.020, 90.38.040, 90.42.040, and 90.42.080; adding new sections to chapter 90.80 RCW; adding a new section to chapter 90.03 RCW; adding new sections to chapter 90.66 RCW; adding a new section to chapter 82.16 RCW; creating new sections; prescribing penalties; and declaring an emergency.

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

NEW SECTION. Sec. 1. The legislature is committed to meeting the needs of a growing population and a healthy economy statewide; to meeting the needs of fish and healthy watersheds statewide; and to advancing these two principles together, in increments over time.

The legislature finds that improved management of the state's water resources, providing timely decisions on water transfers, and enhancing the flexibility of our water management system to meet both environmental and economic goals, are important steps to providing a better future for our state.

The need for these improvements is particularly urgent as we are faced with the imminent threat of drought conditions. The failure to act now will only increase the potential negative effects on both the economy and the environment, including fisheries resources.

Sec. 2. RCW 90.82.040 and 1998 c 247 s 1 are each amended to read as follows:

(1) Once a WRIA planning unit has been initiated under RCW 90.82.060 and a lead agency has been designated, it shall notify the department and may apply to the department for funding assistance for conducting the planning. Funds shall be provided from and to the extent of appropriations made by the legislature to the department expressly for this purpose.

(2)(a) Each planning unit that has complied with subsection (1) of this section is eligible to receive watershed planning grants in the following amounts for three phases of watershed planning:

((~~(a)~~)) (i) Initiating governments may apply for an initial organizing grant of up to fifty thousand dollars for a single WRIA or up to seventy-five thousand dollars for a multi-WRIA management area in accordance with RCW 90.82.060(4);

((~~(b)~~)) (ii) A planning unit may apply for up to two hundred thousand dollars for each WRIA in the management area for conducting watershed assessments in accordance with RCW 90.82.070, except that a planning unit whose initiating governments choose to include an instream flow, water quality, or habitat component in accordance with RCW 90.82.080 through 90.82.100 may apply for additional funds to conduct assessments of up to one hundred thousand dollars for each component included; and

((~~(c)~~)) (iii) A planning unit may apply for up to two hundred fifty thousand dollars for each WRIA in the management area for developing a watershed plan and making recommendations for actions by local, state, and federal agencies, tribes, private property owners, private organizations, and individual citizens, including a recommended list of strategies and projects that would further the purpose of the plan in accordance with RCW 90.82.060 through 90.82.100.

(b) A planning unit may request a different amount for phase two or phase three of watershed planning than is specified in (a) of this subsection, provided that the total amount of funds awarded do not exceed the maximum amount the planning unit is eligible for under (a) of this subsection. The department shall not approve an alternate allocation of funds unless the planning unit demonstrates that an alternate allocation will not impair the unit's ability to complete a plan in accordance with this chapter.

(3)(a) The department shall use the eligibility criteria in this subsection (3) instead of rules, policies, or guidelines when evaluating grant applications at each stage of the grants program.

(b) In reviewing grant applications under this subsection (3), the department shall evaluate whether:

(i) The planning unit meets all of the requirements of this chapter;

(ii) The application demonstrates a need for state planning funds to accomplish the objectives of the planning process; and

(iii) The application and supporting information evidences a readiness to proceed.

(c) In ranking grant applications submitted at each stage of the grants program, the department shall give preference to applications in the following order of priority:

(i) Applications from existing planning groups that have been in existence for at least one year;

(ii) Applications that address protection and enhancement of fish habitat in watersheds that have aquatic fish species listed or proposed to be listed as endangered or threatened under the federal endangered species act, 16 U.S.C. Sec. 1531 et seq. and for which there is evidence of an inability to supply adequate water for population and economic growth from:

(A) First, multi-WRIA planning; and

(B) Second, single WRIA planning;

(iii) Applications that address protection and enhancement of fish habitat in watersheds or for which there is evidence of an inability to supply adequate water for population and economic growth from:

(A) First, multi-WRIA planning; and

(B) Second, single WRIA planning.

(d) The department may not impose any local matching fund requirement as a condition for grant eligibility or as a preference for receiving a grant.

(4) The department may retain up to one percent of funds allocated under this section to defray administrative costs.

(5) Planning under this chapter should be completed as expeditiously as possible, with the focus being on local stakeholders cooperating to meet local needs.

(6) Funding provided under this section shall be considered a contractual obligation against the moneys appropriated for this purpose.

Sec. 3. RCW 90.82.130 and 1998 c 247 s 9 are each amended to read as follows:

(1)(a) Upon completing its proposed watershed plan, the planning unit may approve the proposal by consensus of all of the members of the planning unit or by consensus among the members of the planning unit appointed to represent units of government and a majority vote of the nongovernmental members of the planning unit.

(b) If the proposal is approved by the planning unit, the unit shall submit the proposal to the counties with territory within the management area. If the planning unit has received funding beyond the initial fifty thousand dollars under RCW 90.82.040, such a proposal approved by the planning unit shall be submitted to the counties within four years of the date ((~~the~~)) that funds beyond the initial funding ((~~was~~)) were first ((~~received~~)) expended by the planning unit.

(c) If the watershed plan is not approved by the planning unit, the planning unit may submit the components of the plan for which agreement is achieved using the procedure under (a) of this subsection, or the planning unit may terminate the planning process.

(2)(a) The legislative authority of each of the counties with territory in the management area shall provide public notice of and conduct at least one public hearing on the proposed watershed plan submitted under this section. After the public hearings, the legislative authorities of these counties shall convene in joint session to consider the proposal. The counties may approve or reject the proposed watershed plan for the management area, but may not amend it. Approval of such a proposal shall be made by a majority vote of the members of each of the counties with territory in the management area.

(b) If a proposed watershed plan is not approved, it shall be returned to the planning unit with recommendations for revisions. Approval of such a revised proposal by the planning unit and the counties shall be made in the same manner provided for the original watershed plan. If approval of the revised plan is not achieved, the process shall terminate.

(3) The planning unit shall not add an element to its watershed plan that creates an obligation unless each of the governments to be obligated has at least one representative on the planning unit and the respective members appointed to represent those governments agree to adding the element that creates the obligation. A member's agreeing to add an element shall be evidenced by a recorded vote of all members of the planning unit in which the members record support for adding the element. If the watershed plan is approved under subsections (1) and (2) of this section and the plan creates obligations: (a) For agencies of state government, the agencies shall adopt by rule the obligations of both state and county governments and rules implementing the state obligations, the obligations on state agencies are binding upon adoption of the obligations into rule, and the agencies shall take other actions to fulfill their obligations as soon as possible; or (b) for counties, the obligations are binding on the counties and the counties shall adopt any necessary implementing ordinances and take other actions to fulfill their obligations as soon as possible.

(4) As used in this section, "obligation" means any action required as a result of this chapter that imposes upon a tribal government, county government, or state government, either: A fiscal impact; a redeployment of resources; or a change of existing policy.

NEW SECTION. Sec. 4. (1) The legislature finds that the number of applications relating to existing water rights must be reduced. The legislature also finds that existing case law requires that the evaluation of whether approval of such an application will impair any other existing water right must include evaluation of the effect of the application on any pending prior-filed applications for new water rights from the same source that are also awaiting action. The legislature finds that this case law requirement unnecessarily complicates the process of evaluating and rendering decisions on applications relating to existing water rights and creates inequity for persons awaiting action on such applications.

(2) The legislature intends to expedite the processing of applications relating to existing water rights. The legislature does not intend that this act divert the department of ecology's efforts or in any other way deter the processing of applications for new water rights.

Sec. 5. RCW 90.03.380 and 1997 c 442 s 801 are each amended to read as follows:

(1) 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 the 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. A change in the place of use, point of diversion, and/or purpose of use of a water right to enable irrigation of additional acreage or the addition of new uses may be permitted if such change results in no increase in the annual consumptive quantity of water used under the water right. For purposes of this section, "annual consumptive quantity" means the estimated or actual annual amount of water diverted pursuant to the water right, reduced by the estimated annual amount of return flows, averaged over the most recent five-year period of continuous beneficial use of the water right. 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 the application shall not be granted until notice of the application is 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) If an application for change proposes to transfer water rights from one irrigation district to another, the department shall, before publication of notice, receive concurrence 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.

(3) 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, and when water is provided by an irrigation entity that is a member of a board of joint control created under chapter 87.80 RCW, approval need only be received from the board of joint control if the use of water continues within the area of jurisdiction of the joint board and the change can be made without detriment or injury to existing rights.

(4) 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.

(5)(a) Pending applications for new water rights are not entitled to protection from impairment, injury, or detriment when an application relating to an existing surface or ground water right is considered.

(b) Applications relating to existing surface or ground water rights may be processed and decisions on them rendered independently of processing and rendering decisions on pending applications for new water rights within the same source of supply without regard to the date of filing of the pending applications for new water rights.

(c) An application relating to an existing surface or ground water right may be processed ahead of a previously filed application when sufficient information for a decision on the previously filed application is not available and the applicant for the previously filed application is sent written notice that explains what information is not available and informs the applicant that processing of the next application will begin. Such a previously filed application does not lose its priority date. This subsection (5)(c) does not affect any other existing authority to process applications.

(d) Beginning January 1, 2002, and ending on January 1, 2004, the department shall report to the legislature by January 1st of each year on the results of processing applications under this subsection (5). In the report due on January 1, 2004, the department shall provide an evaluation and make recommendations regarding whether the provisions in this subsection (5) should be modified.

Sec. 6. RCW 90.80.005 and 1997 c 441 s 1 are each amended to read as follows:

The legislature finds:

(1) Voluntary water transfers ((~~between water users~~)) can reallocate water use in a manner that will result in more efficient use of water resources;

(2) Voluntary water transfers can help alleviate water shortages, save capital outlays, reduce development costs, and provide an incentive for investment in water conservation efforts by water right holders; and

(3) The state should expedite the administrative process for ((~~noncontested~~)) water right transfers ((~~among water right holders, conveying greater operational control to water managers and water right holders~~)) by authorizing the establishment of water conservancy boards.

Sec. 7. RCW 90.80.010 and 1997 c 441 s 2 are each amended to read as follows:

The following definitions apply throughout this chapter, unless the context clearly requires otherwise.

(1) "Board" means a water conservancy board created under this chapter.

(2) "Commissioner" means a member of a water conservancy board.

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

(4) "Director" means the director of the department of ecology.

(5) "Transfer" means a transfer, change, amendment, or other alteration of a water right authorized under RCW 90.03.380, 90.03.390, or 90.44.100.

NEW SECTION. Sec. 8. A new section is added to chapter 90.80 RCW to read as follows:

A board shall operate on a countywide basis, and have the following powers, in addition to any other powers granted in this chapter:

(1) A board may act upon applications for the same kinds of transfers that the department itself is authorized to act upon except that a board may not act upon any application to establish a trust water right under chapter 90.38 or 90.42 RCW. However, a board may recommend to the department that it establish a trust water right in connection with a transfer application filed with the board. A board may also not act upon an application for the type of transfer described in RCW 90.03.380(3). If a board receives an application for a transfer described in RCW 90.03.380(2), the board must, before publication of notice of the application, receive the concurrence specified in that section.

(2) A board may act upon an application to transfer a water right claim filed under chapter 90.14 RCW. In acting upon such an application, the board must make a tentative determination as to the validity and extent of the right, if any, embodied in the claim and may only approve a transfer of such a claim to the extent it is tentatively determined to be valid. Neither the board's tentative determination, nor the director's acceptance of such a tentative determination, constitutes an adjudication of the right under RCW 90.03.110 through 90.03.240 or 90.44.220, and such a determination does not preclude or prejudice a subsequent challenge to the validity, priority, or quantity of the right in a general adjudication under those sections.

(3) A board may establish a water right transfer information exchange through which all or part of a water right may be listed for sale or lease. The board may also accept and post notices in the exchange from persons interested in acquiring or leasing water rights from willing sellers.

(4) A board may request and accept technical assistance from the department. The department must provide assistance as is reasonably possible in consideration of the resources made available to the department by the legislature. A board may request and accept assistance and support from the county government of the county in which it operates.

Sec. 9. RCW 90.80.050 and 1997 c 441 s 6 are each amended to read as follows:

(1) A water conservancy board constitutes a public body corporate and politic and a separate unit of local government in the state. Each board shall consist of three commissioners appointed by the county legislative authority for six-year terms. The county legislative authority shall stagger the initial appointment of commissioners so that the first commissioners who are appointed shall serve terms of two, three, four, five, and six years, respectively, from the date of their appointment. The county legislative authority may appoint two additional commissioners, for a total of five. If the county elects to appoint five commissioners, the initial terms of the additional commissioners shall be for three and five-year terms respectively. All vacancies shall be filled for the unexpired term.

(2) The county legislative authority shall consider, but is not limited in appointing, nominations to the board by people or entities petitioning or requesting the creation of the board. However, the county legislative authority shall ensure that individual water right holders who divert or withdraw water for use within the county are represented on the board. The county legislative authority must appoint one position from the public at large and the commissioner so appointed must not have an affiliation with any water user group or other water interest group, but must be appointed to represent the overall public interest. The remaining board members must be selected to represent all of the major water interests in the county. If the county legislative authority chooses not to appoint five commissioners, and as of the effective date of this section there is no commissioner on an existing board from the public at large, the commission is not required to appoint a person from the public at large until the first vacancy occurs. In making appointments to the board, the county legislative authority shall choose from among persons who are residents of the county or a county that is contiguous to the county that the water conservancy board is to serve.

(3) No commissioner may participate in board decisions until he or she has successfully completed the necessary training required under RCW 90.80.040. Commissioners shall serve without compensation, but are entitled to reimbursement for necessary travel expenses in accordance with RCW 43.03.050 and 43.03.060 and costs incident to receiving training.

Sec. 10. RCW 90.80.070 and 1997 c 441 s 9 are each amended to read as follows:

(1) Applications to the board for transfers shall be made on a form provided by the department((~~, and shall contain such~~)). A board may require an applicant to submit within a reasonable time additional information as may be required by the board in order to review and act upon the application. At a minimum, the application shall include information sufficient to establish to the board's satisfaction ((~~of the transferor's~~)) that a water right to the quantity of water being transferred exists, and a description of any applicable limitations on the right to use water, including the point of diversion or withdrawal, place of use, source of supply, purpose of use, quantity of use permitted, time of use, period of use, and the place of storage.

(2) The ((~~transferor and the transferee of~~)) applicant for any proposed water right transfer may apply to a board for approval of the transfer if the water proposed to be transferred is currently diverted, withdrawn, or used within the geographic boundaries of the county, or would be diverted, withdrawn, or used within the geographic boundaries of the county if the transfer is approved. In the case of a proposed water right transfer in which the water is currently diverted or withdrawn or would be diverted or withdrawn outside the geographic boundaries of the county, the board shall hold a public hearing in the county of the diversion or withdrawal or proposed diversion or withdrawal. The board shall provide for prominent publication of notice of ((~~such~~)) the hearing in a newspaper of general circulation published in the county in which the hearing is to be held for the purpose of affording an opportunity for interested persons to comment upon the application.

(3) After an application for a transfer is filed with the board, the board shall publish notice of the application ((~~in accordance with the publication requirements~~)) and send notice to state agencies ((~~as provided in~~)) in accordance with the requirements of RCW 90.03.280. Any person may submit comments to the board regarding the application and the comments must be considered by the board in making its determination. Any ((~~water right holder~~)) person claiming ((~~detriment or injury to an existing water right~~)) that he or she will be aggrieved or adversely affected if the transfer is approved may intervene in the application before the board ((pursuant to subsection (4) of this section. If a majority of the board determines that the application is complete, in accordance with the law and the transfer can be made without injury or detriment to existing water rights in accordance with RCW 90.03.380, the board shall issue the applicant a certificate conditionally approving the transfer, subject to review by the director)). A request to intervene must be in writing and must be received by the board within thirty days of the last date that the notice was published. The intervenor must clearly state the reason or reasons for the intervenor's concerns or objections to the application and may recommend means by which the concerns or objections could be relieved.

(4) If ((~~a water right holder~~)) an intervenor claims a proposed transfer will cause ((an)) impairment to ((~~that~~)) the intervenor's water right((~~, the water right holder~~)) or to an instream flow established by the department, or would be detrimental to the public interest or in violation of other requirements of law, the intervenor is entitled to a hearing before the board. The board shall receive such evidence as it deems material and necessary to determine the validity of the claim of ((~~impairment~~)) the intervenor. If the ((~~party claiming the impairment~~)) intervenor establishes by a preponderance of the evidence that ((~~his or her water right will be impaired by the proposed transfer~~)) the intervenor's claim is true, the board may not approve the transfer unless the applicant and ((~~the~~)) any person claiming an impaired ((~~party~~)) water right agree upon appropriate compensation for the impairment, or for other claims the board prescribes mitigation for the claim that may be cured by the compensation or mitigation.

(5) If a majority of the board determines that the application is complete, and that the transfer can be made without injury or detriment to existing water rights or the public interest and is in accordance with RCW 90.03.380, 90.03.390, or 90.44.100, the board must issue a proposed decision approving the transfer, subject to review by the director. The board must include in its proposed decision any conditions that are deemed necessary for the transfer to qualify for approval under the laws of the state. The proposed decision of the board must be documented in a report of examination. The board's proposed approval must clearly state that the applicant is not permitted to proceed to effect the proposed transfer until a final decision is made by the director.

(6) If a majority of the board determines that the application cannot be approved under the laws of the state of Washington, the board must issue a proposed denial of the application together with its report of examination documenting its determination. The board's determination is subject to review by the director under RCW 90.80.080.

Sec. 11. RCW 90.80.080 and 1997 c 441 s 11 are each amended to read as follows:

(1) ((~~If a transfer is approved by the board,~~)) The board must provide a copy of its determination to the applicant. The board shall submit ((~~a copy of the~~)) its proposed ((~~certificate conditionally approving~~)) decision on the transfer application to the department for review. The board shall also submit ((a)) its report of examination to the department summarizing ((~~any~~)) factual findings on which the board relied in ((~~deciding to approve the proposed transfer~~)) reaching its determination. The board shall also promptly transmit notice by mail to any person who objected to the transfer or who requested notice of the board's determination.

(2) The director shall review each proposed ((~~transfer conditionally approved~~)) decision made by a board for compliance with state water right transfer laws including RCW 90.03.380, 90.03.390, and 90.44.100, rules and guidelines adopted by the department, and other applicable law.

(3) Any ((~~party to a transfer or a third party who alleges his or her water right will be impaired by the proposed transfer~~)) person may file ((~~objections~~)) a written objection to the board's determination with the department. Objections must be received by the department within thirty days of the board's determination. If one or more objections to the transfer are filed with the department, the board shall forward the files and records upon which it based its decision to the department.

(4) The director shall review the action of the board and if no objection has been filed, the director must affirm, reverse, or modify the action of the board within forty-five days of receipt. If one or more objections are filed within the time frame prescribed in subsection (3) of this section, the director has seventy-five days from the date the department received the board's determination to affirm, reverse, or modify the action of the board. The ((~~forty-five day~~)) time period may be extended for an additional thirty days by the director, upon the consent of the ((~~parties to the transfer~~)) applicant. If the director fails to act within ((~~this~~)) the prescribed time period, the board's action is final((~~. Upon approval of a water transfer by the action or nonaction of the director, the conditional certificate issued by the board is final and valid~~)) and becomes the action of the department. If the director acts within the prescribed time period, the director's action is final.

Sec. 12. RCW 90.80.090 and 1997 c 441 s 12 are each amended to read as follows:

The decision of the director to approve or deny an action to create a board, or to approve, deny, or modify a water transfer either by action or ((~~nonaction~~)) inaction shall be appealable to the pollution control hearings board in the same manner as other water right decisions made pursuant to chapter 90.03 RCW.

Sec. 13. RCW 90.80.100 and 1997 c 441 s 13 are each amended to read as follows:

Neither the county ((~~nor~~)), the department, a conservancy board, or its employees, nor individual conservancy board commissioners shall be subject to any cause of action or claim for damages arising out of proposed decisions on transfers ((~~approved~~)) made by a board under this chapter.

Sec. 14. RCW 90.80.120 and 1997 c 441 s 16 are each amended to read as follows:

(1) A commissioner of a water conservancy board ((~~who has an ownership interest in a water right subject to an application for approval of a transfer or change by the board, shall not participate in the board's review or decision upon the application~~)) may not participate in the board's review or proposed decision upon an application if the commissioner has an interest, financial or otherwise, direct or indirect, in the outcome of the decision. This includes, but is not limited to, serving as an officer, director, trustee, member, or employee of the applicant, any potential purchaser of the water right, or an intervenor in the application.

(2) ((A commissioner of a water conservancy board who also serves as an employee or upon the governing body of a municipally owned water system, shall not participate in the board's review or decision upon an application for the transfer or change of a water right in which that water system has or is proposed to have an ownership interest)) A violation of this section is grounds for removal from office and imposition of a civil fine. This section is enforceable in an action brought before the superior court of the county in which the board operates.

NEW SECTION. Sec. 15. A new section is added to chapter 90.80 RCW to read as follows:

A water conservancy board may be formally dissolved by the county in which it operates by adoption of a resolution of the county legislative authority. Notice of the dissolution must be provided to the director.

Sec. 16. RCW 90.80.130 and 1997 c 441 s 17 are each amended to read as follows:

Water conservancy board activities are subject to the open public meetings act, chapter 42.30 RCW and to chapter 42.32 RCW.

NEW SECTION. Sec. 17. A new section is added to chapter 90.80 RCW to read as follows:

(1) A board is subject to the requirements of chapter 42.17 RCW. Each board must establish and maintain records of its proceedings and determinations. While in the possession of the board, all such records must be made available for inspection and copies must be provided to the public on request under the provisions of chapter 42.17 RCW.

(2) Upon the conclusion of its business involving a water right transfer application, a board must promptly send the original copies of all records relating to that application to the department for recordkeeping. A board may keep a copy of the original documents. After the records are transferred to the department, the responsibility for making the records available under chapter 42.17 RCW is transferred to the department.

NEW SECTION. Sec. 18. A new section is added to chapter 90.80 RCW to read as follows:

For purposes of carrying out the official business of a board, a quorum consists of the physical presence of two of the three members of a three-member board or three of the five members of a five-member board. A board may operate with one or two vacant positions as long as it meets the quorum requirement.

Sec. 19. RCW 90.80.140 and 1997 c 441 s 18 are each amended to read as follows:

Nothing in this chapter affects transfers that may be otherwise approved under chapter 90.03 or 90.44 RCW.

NEW SECTION. Sec. 20. A new section is added to chapter 90.03 RCW to read as follows:

(1) By June 30, 2002, the department must adopt rules to establish certification procedures, qualifications, fees, and other requirements for certified water rights examiners.

(2) Certified water rights examiners must be certified by the department to perform the following functions:

(a) To carry out the proof examination of a permitted water right development as a prerequisite to the issuance of a final water right certificate. The examiner must provide a report and detailed map to the department as to that examination;

(b) To carry out the proof examination for a change or transfer of an existing water right or water right claim and to provide a report and detailed map to the department as to that examination as a prerequisite to the issuance of a superseding certificate or certificate of change;

(c) To provide advice and assistance or to act as an agent for a person applying or considering whether to apply for a new water right or for a water right change or transfer; and

(d) To evaluate water rights and provide an opinion to a person seeking such an opinion as to the validity and quantification of an existing water right. The opinion is not subject to disclosure under chapter 42.17 RCW, nor may the department request a copy of the opinion.

(3) The department must develop and administer a written examination for purposes of certifying water rights examiners. An examination fee in an amount established by the department's rule required by subsection (1) of this section must be paid in advance of testing. The certification is valid for one year, renewable upon payment of a renewal fee prior to the expiration of the one-year period. Examiners in good standing are not required to retest to receive a certification renewal. Former examiners whose certifications have lapsed for more than one year are required to retake the examination to be recertified. The department's denial of certification or a renewal may be appealed to the pollution control hearings board under RCW 43.21B.230.

(4) The department shall establish and from time to time update by rule the amount of fees charged for the examination, certification, certificate renewal, and training of water right examiners. The department shall set the fees at a sufficient level to defray all costs of administering the program to license and regulate water right examiners. Fees collected under this section shall be credited by the state treasurer to the state reclamation revolving account established in RCW 89.16.020. The fees must be allocated and expended by the director for the administration of the licensed water rights examiner program.

(5) The department may issue an order suspending or revoking the certificate of any certified water right examiner for good cause, including illegal acts, misrepresentation of the facts associated with a proof examination and report, or gross incompetence. The department's order may be appealed to the pollution control hearings board under RCW 43.21B.230.

(6) The department must keep a record of any complaints it receives or irregularities it observes regarding individual certified water rights examiners. The department must inform the examiner if a complaint is received or an irregularity is observed and permit the examiner to provide a written explanation to the department. The records must be made available to any person who requests them. The department must investigate complaints that allege or irregularities that indicate a breach of law.

(7) Each examiner may set his or her own fees for services offered.

(8) The department must retain a list of all active certified water rights examiners and the geographic areas of the state in which each has indicated a willingness to work. The list must be provided to any person who requests it and must be posted electronically by the department.

(9) The department must provide at least one day of continuing education training per year for water rights examiners. Examiners are required to attend the department's training session or attend an alternative training opportunity of at least one day's duration provided by a third party and approved by the department. The department must provide timely information to licensed examiners regarding changes in water resource laws, rules, policies, court decisions, and procedures.

(10) Proof examinations, opinions, or other actions taken by certified water rights examiners are not binding on the department, nor are they prima facie evidence in any legal proceeding.

(11) The department and officers or employees of the department may not be found liable for damages alleged to have arisen from the actions or inactions of the department, its officers, or employees under this section.

Sec. 21. RCW 90.03.330 and 1987 c 109 s 89 are each amended to read as follows:

(1) After a permit holder has completed the project as provided in the permit and has put water to beneficial use, the permit holder must submit to the department a statement to that effect. The statement must be made on a form provided by the department and signed before a notary public.

(2) The department must review the following information before it issues a water right certificate under this section:

(a) A description and the location of any constructed works and other equipment or methods used for acquiring, storing, conveying, and making beneficial use of water, including the sizes and capacities of the facilities;

(b) An accurate and legible site map suitable for permanent recordkeeping that illustrates the location of facilities and the lands upon which water has been beneficially used;

(d) The source or sources from which water is withdrawn or diverted;

(e) The beneficial uses of water that are served by the works;

(f) The date water was first beneficially used under the permit;

(g) The maximum instantaneous and annual quantity of water that has been put to beneficial use based on measurements of flow through the system during operation;

(h) A legal description of the lands on which water has been beneficially used;

(i) For irrigation, the acreage that has been irrigated, the crops grown, and the type of irrigation system employed;

(j) For domestic or municipal water supply, the number and type of housing units, businesses, or other end uses that have received and beneficially used water from the system;

(k) For hydroelectric power, the head, the maximum flow used during generation, the capacity of turbines, and the maximum electrical output;

(l) Evidence that the conditions of the permit have been complied with including, but not limited to, the proper installation and operation of any required measuring devices, fish screens, well inspection ports, well identification tags, and well surface seals; and

(m) Any other information the department determines is necessary to confirm that the permit holder has completed the project and has put water to beneficial use.

(3) The permit holder may choose at his or her expense to use a water rights examiner, certified by the department under section 20 of this act, to conduct the proof examination in subsection (2) of this section. If the person elects to use a certified water rights examiner, the examiner must prepare a report of the proof examination and submit it to the department. The first page of the report and the first page of any attachments to the report, including any map or maps, must have the written certification and signature of the water rights examiner and the permit holder attesting to the truth and accuracy of the contents. The form of the written certification must be specified by the department.

(4) Upon a showing satisfactory to the department that any appropriation or change of water right has been perfected in accordance with the provisions of this chapter, it shall be the duty of the department to issue to the applicant a certificate stating such facts in a form to be prescribed by ((~~him~~)) the department, and such certificate shall thereupon be recorded with the department. Any original water right certificate issued, as provided by this chapter, shall be recorded with the department and thereafter, at the expense of the party receiving the same, be transmitted by the department ((~~transmitted~~)) to the county auditor of the county or counties where the distributing system or any part thereof is located, and be recorded in the office of such county auditor, and thereafter be transmitted to the owner thereof.

(5) The department shall make its decision whether to issue a certificate within one hundred twenty days of receiving the report of a certified water rights examiner provided to the department under this section.

NEW SECTION. Sec. 22. A new section is added to chapter 90.66 RCW to read as follows:

(1) Transfers of water rights established as family farm permits under this chapter may be approved as authorized under this section and under RCW 90.03.380, 90.03.390, or 90.44.100 or chapter 90.80 RCW as appropriate.

(2) A family farm permit may be transferred:

(a) For use for agricultural irrigation purposes as limited by RCW 90.66.060 (1) and (2) except as provided in RCW 90.66.060(3);

(b) To any purpose of use that is a beneficial use of water if the transfer is made exclusively under a lease agreement, except that transfers for the use of water for agricultural irrigation purposes shall be limited as provided by RCW 90.66.060 (1) and (2);

(c) To any purpose of use that is a beneficial use of water if the water right is for the use of water at a location that is, immediately before the transfer is approved, within the boundaries of a city or town or within the boundaries of an urban growth area designated under chapter 36.70A RCW, except that transfers for the use of water for agricultural irrigation purposes shall be limited as provided by RCW 90.66.060 (1) and (2).

(3) If a portion of the water governed by a water right established under the authority of a family farm permit is made surplus to the beneficial uses exercised under the right through the implementation of practices or technologies, including but not limited to conveyance practices or technologies, which are more efficient or more water-use efficient than those under which the right was perfected, the right to use the surplus water may be transferred to any purpose of use that is a beneficial use of water. Nothing in this subsection authorizes: A transfer of the portion of a water right that is necessary for the production of crops historically grown under the right; or a transfer of a water right or a portion of a water right that has not been perfected through beneficial use before the transfer. Water right transfers approved under this subsection must be consistent with the provisions of RCW 90.03.380(1).

(4) The authority granted by this section to transfer or alter the purpose of use of a water right established under the authority of a family farm permit shall not be construed as limiting in any manner the authority granted by RCW 90.03.380, 90.03.390, or 90.44.100 to alter other elements of such a water right.

Sec. 23. RCW 90.66.040 and 1979 c 3 s 4 are each amended to read as follows:

For the purposes of this chapter, the following definitions shall be applicable:

(1) "Family farm" means a geographic area including not more than two thousand acres of irrigated agricultural lands, whether contiguous or noncontiguous, the controlling interest in which is held by a person having a controlling interest in no more than two thousand acres of irrigated agricultural lands in the state of Washington which are irrigated under rights acquired after December 8, 1977.

(2) "Person" means any individual, corporation, partnership, limited partnership, organization, or other entity whatsoever, whether public or private. The term "person" shall include as one person all corporate or partnership entities with a common ownership of more than one-half of the assets of each of any number of such entities.

(3) "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 shall 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 rights of the family farm permit which is a part of the trust cannot be transferred to another by the beneficiary of the trust under terms of the trust. Each trust of a separate donor origin shall be treated as a separate entity and the administration of property under trust shall not represent a controlling interest on the part of the trust officer.

(4) "Department" means the department of ecology of the state of Washington.

(5) "Application", "permit" and "public waters" shall have the meanings attributed to these terms in chapters 90.03 and 90.44 RCW.

(6) "Public water entity" means any public or governmental entity with authority to administer and operate a system to supply water for irrigation of agricultural lands.

(7) "Transfer" means a transfer, change, or amendment to a water right authorized under RCW 90.03.380, 90.03.390, or 90.44.100 or chapter 90.80 RCW.

(8) "Withdraw" means to withdraw ground water or to divert surface water.

Sec. 24. RCW 90.66.060 and 1979 c 3 s 6 are each amended to read as follows:

(1) Except as provided in subsections (2) and (3) of this section, the right to withdraw water for use for the irrigation of agricultural lands under authority of a family farm permit shall have no time limit ((~~but~~)) and shall be conditioned upon the land being irrigated complying with the definition of a family farm as defined at the time the permit is issued((~~: PROVIDED, HOWEVER, That~~)).

(2) If the acquisition by any person of land and water rights by gift, devise, bequest, or by way of bona fide satisfaction of a debt, would otherwise cause land being irrigated pursuant to a family farm permit to lose its status as a family farm, such acquisition shall be deemed to have no effect upon the status of family farm water permits pertaining to land held or acquired by the person acquiring such land and water rights if all lands held or acquired are again in compliance with the definition of a family farm within five years from the date of such acquisition.

((~~(2)~~)) (3) For family farm permits under this chapter, if the department determines that water is being withdrawn ((~~under a family farm permit~~)) for use on land not in conformity with the definition of a family farm, the department shall notify the holder of such family farm permit by personal service of such fact and the permit shall be suspended two years from the date of receipt of notice unless the person having a controlling interest in said land satisfies the department that such land is again in conformity with the definition of a family farm. The department may, upon a showing of good cause and reasonable effort to attain compliance on the part of the person having the controlling interest in such land, extend the two year period prior to suspension. If conformity is not achieved prior to five years from the date of notice the rights of withdrawal shall be canceled.

(4) This section does not apply in any manner whatsoever to a transfer of surplus water authorized by section 22(3) of this act. However, this section does apply to other transfers of a water right established under the authority of a family farm permit to the extent that the transfer is to a use of water for agricultural irrigation purposes.

NEW SECTION. Sec. 25. A new section is added to chapter 90.66 RCW to read as follows:

A certificate of water right must be issued to the holder of a family farm permit, a publicly owned land permit, or a public water entity permit in accordance with RCW 90.03.330 after and to the extent that water has been put to beneficial use. However, a person holding a family farm permit must not be issued a water right certificate until the person has divested controlling interest in all irrigated acreage exceeding two thousand acres.

NEW SECTION. Sec. 26. A new section is added to chapter 82.16 RCW to read as follows:

(1) In computing tax under this chapter, there shall be deducted from the gross income those amounts expended to improve consumers' efficiency of water use or to otherwise reduce the use of water by the consumer when the expenditures are implementing elements of the conservation plan within a state approved water system plan.

(2) This chapter does not apply to amounts received for water services supplied by an entity that holds a permit under RCW 90.46.030 when the water supplied is reclaimed water as defined in RCW 90.46.010.

NEW SECTION. Sec. 27. The office of financial management, in consultation with the departments of revenue, health, and ecology, must evaluate the long-term revenue impacts of the deductions and exclusions authorized by section 26 of this act, and report its findings by October 1, 2001, to the legislature's standing committees with jurisdiction over water resources and the legislative fiscal committees.

Sec. 28. RCW 90.14.140 and 1998 c 258 s 1 are each amended to read as follows:

(1) For the purposes of RCW 90.14.130 through 90.14.180, "sufficient cause" shall be defined as the nonuse of all or a portion of the water by the owner of a water right for a period of five or more consecutive years where such nonuse occurs as a result of:

(a) Drought, or other unavailability of water;

(b) Active service in the armed forces of the United States during military crisis;

(d) The operation of legal proceedings;

(e) Federal or state agency leases of or options to purchase lands or water rights which preclude or reduce the use of the right by the owner of the water right;

(f) Federal laws imposing land or water use restrictions either directly or through the voluntary enrollment of a landowner in a federal program implementing those laws, or acreage limitations, or production quotas.

(2) Notwithstanding any other provisions of RCW 90.14.130 through 90.14.180, there shall be no relinquishment of any water right:

(a) If such right is claimed for power development purposes under chapter 90.16 RCW and annual license fees are paid in accordance with chapter 90.16 RCW;

(b) If such right is used for a standby or reserve water supply to be used in time of drought or other low flow period so long as withdrawal or diversion facilities are maintained in good operating condition for the use of such reserve or standby water supply;

(c) If such right is claimed for a determined future development to take place either within fifteen years of July 1, 1967, or the most recent beneficial use of the water right, whichever date is later;

(d) If such right is claimed for municipal water supply purposes under chapter 90.03 RCW;

(e) If such waters are not subject to appropriation under the applicable provisions of RCW 90.40.030; ((or))

(f) If such right or portion of the right is leased to another person for use on land other than the land to which the right is appurtenant as long as the lessee makes beneficial use of the right in accordance with this chapter and a transfer or change of the right has been approved by the department in accordance with RCW 90.03.380, 90.03.383, 90.03.390, or 90.44.100; or

(g) If such right is a trust water right under chapter 90.38 or 90.42 RCW.

Sec. 29. RCW 90.38.020 and 1989 c 429 s 3 are each amended to read as follows:

(1)(a) The department may acquire water rights, including but not limited to storage rights, by purchase, lease, 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. A water right acquired by the state that is expressly conditioned to limit its use to instream purposes shall be administered as a trust water right in compliance with that condition.

(b) If an aquatic species is listed as threatened or endangered under the federal endangered species act (16 U.S.C. Sec. 1531 et seq.) for a body of water, certain instream flows are needed for the species, and the holder of a right to water from the body of water chooses to donate all or a portion of the person's water right to the trust water system to assist in providing those instream flows on a temporary or permanent basis, the department may accept the donation on such terms as the person may prescribe as long as the donation satisfies the requirements of this chapter. Once accepted, such rights are trust water rights within the conditions prescribed by the donor.

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

(3) The trust water rights may be acquired on a temporary or permanent basis.

(4) A water right donated under subsection (1)(b) of this section shall not exceed the extent to which water was beneficially used during any of the five years before the donation nor may the total of any portion of the water right remaining with the donor plus the donated portion of the water right exceed the extent to which water was beneficially used during any of the five years before the donation. If, upon appeal from a determination by the department, it is found that exercising the trust water right resulting from the donation or exercising a portion of that trust water right impairs existing water rights in violation of RCW 90.38.902, the trust water right shall be altered to eliminate the impairment.

(5) Any water right conveyed to the trust water right system that is expressly conditioned to limit its use to instream purposes shall be managed by the department for public purposes to ensure that it qualifies as a gift that is deductible for federal income taxation purposes for the person or entity conveying the water right.

Sec. 30. RCW 90.38.040 and 1994 c 264 s 90 are each amended to read as follows:

(1) All trust water rights acquired by the department shall be placed in the Yakima river basin trust water rights program to be managed by the department. The department shall issue a water right certificate in the name of the state of Washington for each trust water right it acquires.

(2) Trust water rights shall retain the same priority date as the water right from which they originated. Trust water rights may be modified as to purpose or place of use or point of diversion, including modification from a diversionary use to a nondiversionary instream use.

(3) Trust water rights may be held by the department for instream flows and/or irrigation use.

(4) A schedule of the amount of net water saved as a result of water conservation projects carried out in accordance with this chapter, shall be developed annually to reflect the predicted hydrologic and water supply conditions, as well as anticipated water demands, for the upcoming irrigation season. This schedule shall serve as the basis for the distribution and management of trust water rights each year.

(5)(a) No exercise of a trust water right may be authorized unless the department first determines that no existing water rights, junior or senior in priority, will be impaired as to their exercise or injured in any manner whatever by such authorization.

(b) Before any trust water right is exercised, the department shall publish notice thereof 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 such other newspapers as the department determines are necessary, once a week for two consecutive weeks. At the same time the department may also send notice thereof containing pertinent information to the director of fish and wildlife.

(c) Subsection (5)(b) of this section does not apply to a trust water right resulting from a donation for instream flows described in RCW 90.38.020(1). However, the department shall provide the notice described in (b) of this subsection the first time the trust water right resulting from the donation is exercised.

(6) RCW 90.03.380 and 90.14.140 through 90.14.910 shall have no applicability to trust water rights held by the department under this chapter or exercised under this section.

Sec. 31. RCW 90.42.040 and 1993 c 98 s 3 are each amended to read as follows:

(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 for pilot planning areas, or to resolve critical water supply problems.

(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 indicating the reach or reaches of the stream, the quantity, and the use or uses to which it may be applied. A superseding certificate shall be issued that specifies the amount of water the water right holder would continue to be entitled to as a result of the water conservation project. 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.

(8) Subsection (5) of this section does not apply to a trust water right resulting from a donation for instream flows described in RCW 90.42.080(1)(b). However, the department shall provide the notice described in subsection (5) of this section the first time the trust water right resulting from the donation is exercised.

Sec. 32. RCW 90.42.080 and 1993 c 98 s 4 are each amended to read as follows:

(1)(a) 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. A water right acquired by the state that is expressly conditioned to limit its use to instream purposes shall be administered as a trust water right in compliance with that condition.

(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.

(4) A water right donated under subsection (1)(b) of this section shall not exceed the extent to which the water right was exercised during any of the five years before the donation nor may the total of any portion of the water right remaining with the donor plus the donated portion of the water right exceed the extent to which the water right was exercised during any of the five years before the donation. If, upon appeal from a determination by the department, it is found that exercising the trust water right resulting from the donation or exercising a portion of that trust water right impairs existing water rights in violation of RCW 90.42.070, the trust water right shall be altered to eliminate the impairment.

(5) The provisions of RCW 90.03.380 and 90.03.390 do not apply to donations for instream flows described in subsection (1)(b) of this section, but do apply to other transfers of water rights under this section.

((~~(5)~~)) (6) No funds may be expended for the purchase of water rights by the state pursuant to this section unless specifically appropriated for this purpose by the legislature.

(7) Any water right conveyed to the trust water right system that is expressly conditioned to limit its use to instream purposes shall be managed by the department for public purposes to ensure that it qualifies as a gift that is deductible for federal income taxation purposes for the person or entity conveying the water right.

NEW SECTION. Sec. 33. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.