BILL REQ. #:  H-2246.2 

READ FIRST TIME 03/04/05.   

     AN ACT Relating to the trust water rights program; amending RCW 90.42.005, 90.42.010, 90.42.020, 90.42.030, 90.42.040, 90.42.050, 90.42.060, 90.42.070, 90.42.080, 90.42.110, 90.42.120, 90.42.130, 90.42.135, and 90.42.138; adding new sections to chapter 90.42 RCW; and repealing RCW 90.38.005, 90.38.010, 90.38.020, 90.38.030, 90.38.040, 90.38.050, 90.38.900, 90.38.901, and 90.38.902.

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

Sec. 1   RCW 90.42.005 and 2003 c 144 s 1 are each amended to read as follows:
     (1) It is the policy of the state of Washington to recognize and preserve water rights in accordance with RCW 90.03.010.
     (2) The legislature finds that:
     (a) The state of Washington is faced with a shortage of water with which to meet existing and future needs, particularly during the summer and fall months and in dry years when the demand is greatest;
     (b) Consistent with RCW 90.54.180, issuance of new water rights, voluntary water transfers, and conservation and water use efficiency programs, including storage, all are acceptable methods of addressing water uses because they can relieve current critical water situations, provide for presently unmet needs, and assist in meeting future water needs. Presently unmet needs or current needs includes the water required to increase the frequency of occurrence of base or minimum flow levels in streams of the state, the water necessary to satisfy existing water rights, or the water necessary to provide full supplies to existing water systems with current supply deficiencies;
     (c) The interests of the state and its citizens 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 resolve conflicts and to better satisfy both present and future needs for water; and
     (d) Water banking as a function of the trust water (([rights])) rights program and as authorized by this chapter can provide an effective means to facilitate the voluntary transfer of water rights established through conservation, purchase, lease, or donation, to preserve water rights and provide water for presently unmet and future needs; and to achieve a variety of water resource management objectives throughout the state, including drought response, improving streamflows on a voluntary basis, providing water mitigation, or reserving water supply for future uses.

Sec. 2   RCW 90.42.010 and 1998 c 245 s 173 are each amended to read as follows:
     (1) The legislature finds that a need exists to develop and test 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. Further, the legislature finds that water conservation activities have the potential of affecting the quantity of return flow waters to which existing water right holders have a right to and rely upon. It is the intent of the legislature that persons holding rights to water, including return flows, not be adversely affected in the implementation of the provisions of this chapter.
     (2) The legislature finds that:
     (a) Under present physical conditions in the Yakima river basin there is an insufficient supply of water to satisfy the needs of the basin;
     (b) Pursuant to P.L. 96-162, which was urged for enactment by this state, the United States is now conducting a study of ways to provide needed waters through improvements of the federal water project presently existing in the Yakima river basin;
     (c) The interests of the state will be served by developing programs, in cooperation with the United States and the various water users in the basin, that increase the overall ability to manage basin waters in order to better satisfy both present and future needs for water in the Yakima river basin.
     (3) It is the purpose of this chapter, consistent with the findings in subsection (2) of this section, to improve the ability of the state to work with the United States and various water users of the Yakima river basin in a program designed to satisfy both existing rights, and other presently unmet as well as future needs of the basin.

Sec. 3   RCW 90.42.020 and 1991 c 347 s 6 are each amended to read as follows:
     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 within a specified stream reach or reaches for other purposes without impairment or detriment to 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) "Pilot planning areas" means the geographic areas designated under RCW 90.54.045(2).
     (5) "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 existing water rights ((existing on July 28, 1991)).

Sec. 4   RCW 90.42.030 and 1993 c 98 s 2 are each amended to read as follows:
     (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 RCW 90.42.050.
     (2)(a) Except as provided in (b) of this subsection, 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 RCW 90.42.050, before the expenditure of state funds. Conveyance may consist of complete transfer, lease contracts, or other legally binding agreements. When negotiating for the acquisition of conserved water or net water savings, or a portion thereof, the state may require evidence of a valid water right.
     (b) For trust water rights created from the waters of the Yakima river basin, no contract shall be entered into by the department with a water user under this chapter unless it appears to the department that, upon the completion of a water conservation project financed with moneys as provided in this section, a valid water right exists for conveyance to the department.
     (3) As part of the contract, the water right holder and the state shall specify the process to determine the amount of water the water right holder would continue to be entitled to once the water conservation project is in place.
     (4) The ((state)) department 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.
     (5) If water is proposed to be acquired by or conveyed to the ((state)) department 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.
     (6)(a) Except as provided in (b) of this subsection, the ((state)) department 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.
     (b) For trust water rights created from waters of the Yakima river basin, the department shall not acquire an individual's water right under this chapter that is appurtenant to land lying within an irrigation district without the approval of the board of directors of the irrigation district.

Sec. 5   RCW 90.42.040 and 2002 c 329 s 8 are each amended to read as follows:
     (1) All trust water rights acquired by the ((state)) department shall be placed in the state trust water rights program to be managed by the department. Trust water rights acquired by the ((state)) department 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. To the extent practicable and subject to legislative appropriation, trust water rights acquired in an area with an approved watershed plan developed under chapter 90.82 RCW shall be consistent with that plan if the plan calls for such acquisition.
     (2)(a) 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.
     (b) 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.
     (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)(a) Except as provided in (b) of this subsection, 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.
     (b) For trust water rights created from waters of the Yakima river basin, 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.
     (5)(a) Except as provided in (b) of this subsection, 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.
     (b) For trust water rights created from waters of the Yakima river basin, 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.
     (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)))(a) Except as provided in (b) of this subsection, subsections (4) and (5)(a) of this section do not apply to a trust water right resulting from a donation for instream flows described in RCW 90.42.080(1)(b) or to a trust water right leased under RCW 90.42.080(((8))) (7) if the period of the lease does not exceed five years. However, the department shall provide the notice described in subsection (5)(a) of this section the first time the trust water right resulting from the donation is exercised.
     (((9))) (b) For trust water rights created from waters of the Yakima river basin, section 16 of this act and subsections (4) and (5)(b) of this section do not apply to a trust water right resulting from a donation for instream flows described in RCW 90.42.080(1)(b) or from the lease of a water right under RCW 90.42.080(7) if the period of the lease does not exceed five years. However, the department shall provide the notice described in subsection (5)(b) of this section the first time the trust water right resulting from the donation is exercised.
     (7) Where a portion of an existing water right that is acquired or donated to the trust water rights program will assist in achieving established instream flows, the department shall process the change or amendment of the existing right without conducting a review of the extent and validity of the portion of the water right that will remain with the water right holder.

Sec. 6   RCW 90.42.050 and 1991 c 347 s 9 are each amended to read as follows:
     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 RCW 90.42.030;
     (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.
     ((These guidelines shall be submitted to the joint select committee on water resource policy before adoption.))

Sec. 7   RCW 90.42.060 and 1991 c 347 s 10 are each amended to read as follows:
     The policies and purposes of this chapter shall not be construed ((as replacing or amending)) to replace or amend the policies or the purposes for which funds available under chapter 43.83B or 43.99E RCW may be used.

Sec. 8   RCW 90.42.070 and 1991 c 347 s 11 are each amended to read as follows:
     Nothing in this chapter authorizes the ((involuntary)) impairment of or operates to impair any existing water rights.

Sec. 9   RCW 90.42.080 and 2002 c 329 s 9 are each amended to read as follows:
     (1)(a) The ((state)) department may acquire all or portions of existing water rights, including 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 the holder of a right to water from a 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 instream flows on a temporary or permanent basis, the department shall accept the donation on such terms as the person may prescribe as long as the donation satisfies the requirements of subsection (4) of this section and the other applicable requirements of this chapter and the terms prescribed are relevant and material to protecting any interest in the water right retained by the donor. Once accepted, such rights are trust water rights within the conditions prescribed by the donor.
     (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)) department 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 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 the five years before the donation. A water right holder who believes his or her water right has been impaired by a trust water right donated under subsection (1)(b) of this section may request that the department review the impairment claim. If the department determines that exercising the trust water right resulting from the donation or exercising a portion of that trust water right donated under subsection (1)(b) of this section is impairing existing water rights in violation of RCW 90.42.070, the trust water right shall be altered by the department to eliminate the impairment. Any decision of the department to alter or not to alter a trust water right donated under subsection (1)(b) of this section is appealable to the pollution control hearings board under RCW 43.21B.230. A donated water right's status as a trust water right under this subsection is not evidence of the validity or quantity of the water right.
     (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.
     (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))) (6) Any water right conveyed to the trust water right system as a gift 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.
     (((8))) (7) If the department acquires a trust water right by lease, the amount of the trust water right shall not exceed the extent to which the water right was exercised during the five years before the acquisition was made nor may the total of any portion of the water right remaining with the original water right holder plus the portion of the water right leased by the department exceed the extent to which the water right was exercised during the five years before the acquisition. A water right holder who believes his or her water right has been impaired by a trust water right leased under this subsection may request that the department review the impairment claim. If the department determines that exercising the trust water right resulting from the leasing or exercising of a portion of that trust water right leased under this subsection is impairing existing water rights in violation of RCW 90.42.070, the trust water right shall be altered by the department to eliminate the impairment. Any decision of the department to alter or not to alter a trust water right leased under this subsection is appealable to the pollution control hearings board under RCW 43.21B.230. The department's leasing of a trust water right under this subsection is not evidence of the validity or quantity of the water right.
     (((9))) (8) For a water right donated to or acquired by the trust water rights program on a temporary basis, the full quantity of water diverted or withdrawn to exercise the right before the donation or acquisition shall be placed in the trust water rights program and shall revert to the donor or person from whom it was acquired when the trust period ends.

Sec. 10   RCW 90.42.110 and 2003 c 144 s 3 are each amended to read as follows:
     (1) The department, with the consent of the water right holder, may identify trust water rights for administration for water banking purposes, including trust water rights established before May 7, 2003.
     (2) An application to transfer a water right to the trust water (([rights])) rights program shall be reviewed under RCW 90.03.380 at the time the water right is transferred to the trust water (([rights])) rights program for administration for water banking purposes, and notice of the application shall be published by the applicant as provided under RCW 90.03.280. The application must indicate the reach or reaches of the stream where the trust water right will be established before the transfer of the water right or portion thereof from the trust water (([rights])) rights program, and identify reasonably foreseeable future temporary or permanent beneficial uses for which the water right or portion thereof may be used by a third party upon transfer from the trust water ((right[s])) rights program. In the event the future place of use, period of use, or other elements of the water right are not specifically identified at the time of the transfer into the trust water (([rights])) rights program, another review under RCW 90.03.380 will be necessary at the time of a proposed transfer from the trust water (([rights])) rights program.

Sec. 11   RCW 90.42.120 and 2003 c 144 s 4 are each amended to read as follows:
     (1) The department shall transfer a water right or portion thereof being administered for water banking purposes from the trust water (([rights])) rights program to a third party upon occurrence of all of the following:
     (a) The department receives a request for transfer of a water right or portion thereof currently administered by the department for water banking purposes;
     (b) The request is consistent with any previous review under RCW 90.03.380 of the water right and future temporary or permanent beneficial uses;
     (c) The request is consistent with any condition, limitation, or agreement affecting the water right, including but not limited to any trust water right transfer agreement executed at the time the water right was transferred to the trust water rights program; and
     (d) The request is accompanied by and is consistent with an assignment of interest or portion thereof from a person or entity retaining an interest in the trust water right or portion thereof to the party requesting transfer of the water right or portion thereof.
     (2) The priority date of the water right or portion thereof transferred by the department from the trust water (([rights])) rights program for water banking purposes shall be the priority date of the underlying water right.
     (3) The department shall issue documentation for that water right or portion thereof to the new water right holder based on the requirements applicable to the transfer of other water rights from the trust water rights program. Such documentation shall include a description of the property to which the water right will be appurtenant after the water right or portion thereof is transferred from the trust water (([rights])) rights program to a third party.
     (4) The department's decision on the transfer of a water right or portion thereof from the trust water (([rights])) rights program for water banking purposes may be appealed to the pollution control hearings board under RCW 43.21B.230, or to a superior court conducting a general adjudication under RCW 90.03.210.

Sec. 12   RCW 90.42.130 and 2003 c 144 s 5 are each amended to read as follows:
     (1) The department shall seek input from agricultural organizations, federal agencies, tribal governments, local governments, watershed groups, conservation groups, and developers on water banking, including water banking procedures and identification of areas in Washington state where water banking could assist in providing water supplies for instream and out-of-stream uses. The department shall summarize any comments received on water banking and submit a report, including any recommendations, to the appropriate committees of the legislature for their consideration in the subsequent legislative session.
     (2) By December 31st of every even-numbered year, the department shall submit a report to the appropriate committees of the legislature on water banking activities authorized under RCW 90.42.100. The report shall:
     (a) Evaluate the effectiveness of water banking in meeting the policies and objectives of this chapter;
     (b) Describe any statutory, regulatory, or other impediments to water banking in other areas of the state; and
     (c) Identify other basins or regions that may benefit from authorization for the department to use the trust water (([rights])) rights program for water banking purposes.

Sec. 13   RCW 90.42.135 and 2003 c 144 s 6 are each amended to read as follows:
     Nothing in ((chapter 144, Laws of 2003)) RCW 90.42.100 through 90.42.130 shall:
     (1) Cause detriment or injury to existing rights or to the operation of the federal Yakima project to provide water for irrigation purposes, existing water supply contracts, or existing water rights;
     (2) Diminish in any way existing rights or the total water supply available for irrigation and other purposes in the Yakima basin;
     (3) Affect or modify the authority of a court conducting a general adjudication pursuant to RCW 90.03.210; or
     (4) Affect or modify the rights of any person or entity under a water rights adjudication or under any order of the court conducting a water rights adjudication.

Sec. 14   RCW 90.42.138 and 2003 c 144 s 7 are each amended to read as follows:
     Nothing in ((chapter 144, Laws of 2003)) RCW 90.42.100 through 90.42.130 may be construed to:
     (1) Affect or modify any treaty or other federal rights of an Indian tribe, or the rights of any federal agency or other person or entity arising under state or federal law;
     (2) Affect or modify the rights or jurisdictions of the United States, the state of Washington, the Yakama Nation, or other person or entity over waters of any river or stream or over any ground water resource;
     (3) Alter, amend, repeal, interpret, modify, or be in conflict with any interstate compact made by the states;
     (4) Alter, establish, or impair the respective rights of states, the United States, the Yakama Nation, or any other person or entity with respect to any water or water-related right;
     (5) Alter, diminish, or abridge the rights and obligations of any federal, state, or local agency, the Yakama Nation, or other person or entity;
     (6) Affect or modify the rights of the Yakama Indian Nation or its successors in interest to, and management and regulation of, those water resources arising or used, within the external boundaries of the Yakama Indian Reservation;
     (7) Affect or modify the settlement agreement between the United States and the state of Washington filed in Yakima county superior court with regard to federal reserved water rights other than those rights reserved by the United States for the benefit of the Yakama Indian Nation and its members; or
     (8) Affect or modify the rights of any federal, state, or local agency, the Yakama Nation, or any other person or entity, public or private, with respect to any unresolved and unsettled claims in any water right adjudications, or court decisions, including State v. Acquavella, or constitute evidence in any such proceeding in which any water or water-related right is adjudicated.

NEW SECTION.  Sec. 15   The department may adopt rules as appropriate to ensure full implementation of this chapter.

NEW SECTION.  Sec. 16   For trust water rights created from the waters of the Yakima river basin, 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.

NEW SECTION.  Sec. 17   (1) Except as provided in subsection (2) of this section:
     (a) 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;
     (b) RCW 90.03.380 has no applicability to trust water rights acquired by the state through the funding of water conservation projects; and
     (c) The provisions of RCW 90.03.380 and 90.03.390 do not apply to donations for instream flows described in (b) of this subsection, but do apply to other transfers of water rights under this section.
     (2) For trust water rights created from waters of the Yakima river basin, 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.

NEW SECTION.  Sec. 18   It is not the intent of this chapter to facilitate the transfer of water rights from one irrigation district to another.

NEW SECTION.  Sec. 19   Sections 15 through 18 of this act are each added to chapter 90.42 RCW.

NEW SECTION.  Sec. 20   The following acts or parts of acts are each repealed:
     (1) RCW 90.38.005 (Findings -- Purpose) and 1989 c 429 s 1;
     (2) RCW 90.38.010 (Definitions) and 1989 c 429 s 2;
     (3) RCW 90.38.020 (Acquisition or donation of trust water rights) and 2002 c 329 s 7, 2001 c 237 s 28, & 1989 c 429 s 3;
     (4) RCW 90.38.030 (Water conservation projects -- Contracts for financial assistance) and 1989 c 429 s 4;
     (5) RCW 90.38.040 (Trust water rights program) and 2001 c 237 s 29, 1994 c 264 s 90, & 1989 c 429 s 5;
     (6) RCW 90.38.050 (Rules) and 1989 c 429 s 6;
     (7) RCW 90.38.900 (Existing policies not replaced) and 1989 c 429 s 7;
     (8) RCW 90.38.901 (Transfer of rights between irrigation districts not intended) and 1989 c 429 s 8; and
     (9) RCW 90.38.902 (Existing rights not impaired) and 1989 c 429 s 9.

NEW SECTION.  Sec. 21   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.