BILL REQ. #:  H-4089.1 

Read first time 01/16/2006.   Referred to Committee on Economic Development, Agriculture & Trade.

     AN ACT Relating to water resource management in the Columbia river basin; reenacting and amending RCW 43.84.092; adding a new chapter to Title 90 RCW; and providing an effective date.

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

NEW SECTION.  Sec. 1   FINDINGS. The legislature finds that:
     (1) Water resources are needed to meet present and foreseeable future needs for uninterruptible irrigation and municipal water requirements in the counties adjacent to the mainstem, to be allocated under this chapter;
     (2) Through the implementation of best management practices, hydropower mitigation fees, and the purchase of additional conservation measures within mainstem tributaries, waters in the mainstem should be used to meet present and foreseeable future irrigation and municipal water requirements, while protecting instream resources;
     (3) A program that provides incentives to water right holders to adopt best management practices and irrigation best management practices for the purpose of achieving water savings and water use efficiency on the mainstem is sound public policy that will provide significant environmental and economic benefits, including the availability for instream purposes of waters not appropriated from the mainstem for consumptive use purposes; and
     (4) The adoption and implementation of a hydropower mitigation fee program will establish a reliable long-term revenue source to fund needed new water conservation projects in the Yakima river basin or other tributary basins.

NEW SECTION.  Sec. 2   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Appropriation" means the process of legally acquiring the right to specific amounts of water resources for application to irrigation use or municipal use under this chapter and RCW 90.03.250 through 90.03.340 and 90.44.060.
     (2) "Best management practices" means any practice or combination of practices involving the diversion, distribution, and application or use of water resources that is both cost-effective and practicable, including technological, economical, and higher value crop rotation considerations, adopted for the purpose of achieving greater water use efficiency.
     (3) "Department" means the department of ecology.
     (4) "Hydropower mitigation fee" means the per acre foot hydropower mitigation fee established in section 7 of this act.
     (5) "Irrigation best management practices" means any irrigation management practice or combination of practices including, without limitation, irrigation scheduling, equipment replacement or modification, crop-related water management, screening of diversions, proper tillage, residue management, water management research, development, and demonstration projects, and any other irrigation practice that is both cost-effective and practicable, including technological, economical, and higher value crop rotation considerations, adopted at any time after the applicable water right was issued for the purpose of achieving greater irrigation water use efficiency.
     (6) "Irrigation use" means the use of water resources withdrawn from the mainstem for the purpose of irrigating crops, agricultural commercial applications, and other horticultural and agricultural purposes. Irrigation use includes, without limitation, the use waters from the reservation source of supply to modify the terms of an irrigation water right that was conditioned to be interruptible for the purpose of eliminating and removing the interruptible condition.
     (7) "Mainstem" means the main stem of the Columbia river from the Bonneville dam to the upper limits of the wells dam pool, the main stem of the Snake river from the confluence of the Snake and Columbia rivers to the upper limits of the ice harbor dam pool, and any ground water determined by the department to be in direct hydraulic continuity with the mainstem for management purposes.
     (8) "Municipal use" means a beneficial use of water: (a) For residential purposes through fifteen or more residential service connections or for providing residential use of water for a nonresidential population that is on average, at least twenty-five people for at least sixty days a year; (b) for governmental or governmental proprietary purposes by a city, town, public utility district, county, or water-sewer district; or (c) indirectly for the purposes in (a) or (b) of this subsection through the delivery of treated or raw water to a public water system for such use. If water is beneficially used under a water right for the purposes listed in (a), (b), or (c) of this subsection, any other beneficial use of water under the right generally associated with the use of water within a municipality is also for municipal water supply purposes, including, but not limited to, beneficial use for commercial, industrial, irrigation of parks and open spaces, institutional, landscaping, fire flow, water system maintenance and repair, or related purposes. If a governmental entity holds a water right that is for the purposes listed in (a), (b), or (c) of this subsection, its use of water or its delivery of water for any other beneficial use generally associated with the use of water within a municipality is also for municipal water supply purposes, including, but not limited to, beneficial use for commercial, industrial, irrigation of parks and open spaces, institutional, landscaping, fire flow, water system maintenance and repair, or related purposes.
     (9) "Nameplate" means the face of a water right.
     (10) "Person" means any firm, association, water users' association, corporation, limited liability company, irrigation district, municipal corporation, or other legal entity as well as an individual.
     (11) "Public body" means the state of Washington or any irrigation district, agency, county, city or town, other political subdivision, municipal corporation or quasi-municipal corporation, and those Indian tribes now or hereafter recognized as such by the federal government.
     (12) "Saved water" means the difference between the quantity and/or instantaneous amount of water shown on the nameplate of the water right and the quantity and instantaneous amount of water actually withdrawn after the water right holder becomes certified under the best management practices certification program established by this chapter.
     (13) "Water right" means the quantity and instantaneous amount of water that a water right holder is entitled to withdraw from the mainstem for any out-of-stream beneficial use as shown on the nameplate of the water right.
     (14) "Water conservation project" means any project or program located in the Yakima river basin, including water storage, that will contribute to relieving water shortages, provide for presently unmet needs, and assist in meeting future water needs, or that achieves physical or operational improvements that provide for increased water use efficiency in any systems of diversion, conveyance, application, or use of water under water rights.
     (15) "Water conservation project revolving fund" or "revolving fund" means the revolving fund established in section 8 of this act.

NEW SECTION.  Sec. 3   WATER FOR FUTURE BENEFICIAL USE. (1) Water for future beneficial use consists of waters contained within the mainstem Columbia-Snake river system. Such waters are allocated for:
     (a) Appropriation for irrigation use, which means that any person may apply to appropriate such waters for irrigation use at any location along the mainstem system;
     (b) Appropriation for municipal use, which means that any person may apply to appropriate such waters for municipal use at any location along the mainstem system.
     (2) This chapter is intended to supersede and replace chapter 173-531A WAC. Beginning on the effective date of this section, chapter 173-531A WAC is void and the terms of this chapter shall govern future allocations.
     (3) Except as expressly provided in this chapter, this chapter may not be construed to lessen, enlarge, or modify rights acquired before the effective date of this section by appropriation or by other means.
     (4) Waters not appropriated and removed from the mainstem for consumptive use purposes remain available for instream flows.

NEW SECTION.  Sec. 4   APPROPRIATION OF MAINSTEM WATERS. Any person may apply for an appropriation of water from the mainstem. Applications may be for a new water right or for an appropriation that will be used to modify, amend, or supplement an existing water right. The terms and conditions in this section are applicable to applications for an appropriation of waters from the mainstem:
     (1) Future mainstem water allocations shall not exceed an additional three hundred thousand acre-feet of water, through 2015, with legislative authorization required to extend further water allocations after 2015.
     (2) It shall be a condition of any new permit or certificate or any amendment to an existing permit or certificate issued after the effective date of this section for the use of waters from the mainstem that the applicant must be certified under the best management practices program established under section 5 of this act.
     (3) It shall be a condition of any new permit or certificate or any amendment to an existing permit or certificate issued after the effective date of this section involving a new appropriation of waters from the mainstem that the water right holder shall pay the hydropower mitigation fee established in section 7 of this act for the right to beneficially use waters newly appropriated from the mainstem. However, the hydropower mitigation fee does not apply to waters that a water right holder is entitled to withdraw under an existing permit or certificate except saved water to the extent the saved water is actually withdrawn.
     (4) Any permit issued after the effective date of this section involving a new appropriation of waters from the mainstem that the water right holder is subject to a fifteen-year development schedule for putting the waters to beneficial use. Saved water is subject to a fifteen-year development schedule for putting waters to beneficial use from the date the water right holder becomes certified under the best management practices program.
     (5) It shall be a condition of any amendment or modification to a permit or certificate that supplements a water right existing on the effective date of this section with an appropriation of waters from the mainstem that the hydropower mitigation fee established in section 7 of this act applies to the portion of the water right, as amended, modified, or supplemented that represents a right to use waters newly appropriated from the mainstem. In the case of an amendment that supplements a water right existing on the effective date of this section to eliminate a condition of interruptibility, the hydropower mitigation fee shall apply to the extent waters are actually withdrawn that could not have been withdrawn under the applicable condition.
     (6) Applications for appropriations from the mainstem shall be made in the same form and manner provided in RCW 90.03.250 through 90.03.340, the provisions of which govern applications to appropriate waters from the mainstem: PROVIDED, That this chapter prevails in the event that any provision is determined to be inconsistent with or to conflict with RCW 90.03.250 through 90.03.340 and 90.44.060 or to be inconsistent with or to conflict with any other applicable provision of law.
     (7) No application, permit, or certificate to appropriate and use waters under this chapter may be denied or conditioned to be interruptible on the grounds that the denial or condition is necessary to satisfy the instream flow requirements in chapter 173-563 WAC or any other state law or rule.
     (8) Waters represented by canceled or relinquished applications, permits, and certificates will be considered as returned to the mainstem and available either for appropriation by a subsequent applicant or the waters shall be available for instream flow.

NEW SECTION.  Sec. 5   BEST MANAGEMENT PRACTICES PROGRAM. (1) The department shall by rule, after consultation with industry groups and other interested parties, develop and from time-to-time update a schedule of measures and practices that constitute best management practices and irrigation best management practices.
     (2) The department shall by rule, after consultation with industry groups and other interested parties, develop a certification program to certify any appropriator from the mainstem that applies for certification, whose water use methods and practices substantially comply with the measures and practices identified by rule as best management practices and/or irrigation best management practices.

NEW SECTION.  Sec. 6   SAVED WATER. Saved water shall be deemed to have been at all times beneficially used by the holder of the water right and the water right shall be deemed to include the quantity and amount of saved water up to the face amount and quantity shown on the permit or certificate: PROVIDED, That the holder of the permit or certificate must: (1) Become certified under the department's best management practices certification program, and (2) commencing the year after the effective date of this section, pay the annual hydropower mitigation fee established in section 7 of this act based on the quantity and amount of saved water actually withdrawn.

NEW SECTION.  Sec. 7   HYDROPOWER MITIGATION FEE. (1) There is hereby established a hydropower mitigation fee which shall initially be ten dollars per acre-foot. The amount of the hydropower mitigation fee shall be adjusted every five years beginning January 1, 2011, based on the increase or decrease in the implicit price deflator as published by the United States bureau of economic statistics. The hydropower mitigation fee shall apply as provided in this section.
     (2) The holder of any water right for the use of waters appropriated from the mainstem issued after the effective date of this section shall pay the hydropower mitigation fee annually based on the amount and quantity of water that the holder is entitled to withdraw from the mainstem up to the amount shown on the face of the water right based on actual measured water withdrawal.
     (3) The holder of any water right issued before the effective date of this section who applies for an additional or supplemental right to use waters from the mainstem to amend, modify, or supplement the existing water right shall pay the hydropower mitigation fee annually based on actual measured water withdrawal from the mainstem as authorized under the amendment or modification.
     (4) The holder of any water right may elect to pay the hydropower mitigation fee for the purpose of being deemed to have beneficially used saved water not actually withdrawn and the other treatment available under section 7 of this act.

NEW SECTION.  Sec. 8   WATER CONSERVATION PROJECT REVOLVING FUND. (1) The water conservation project revolving fund is hereby established in the state treasury for the purpose of making loans, grants, and other financial assistance as authorized in this chapter to finance or pay for water conservation projects. Moneys in the revolving fund may be spent only in a manner consistent with this chapter.
     (2) The water conservation project revolving fund shall be specifically used to offset the flow impacts of new waters appropriated from the mainstem, as provided for in section 4 of this act. Water conservation projects shall provide water savings and tributary instream flow contributions, equal to or greater than the amounts of water allocated under section 4 of this act.
     (3) Water conservation projects shall be approved for funding based on department review and approval.
     (4) The revolving fund shall consist of:
     (a) All of the hydropower mitigation fee payments received by the department under this chapter;
     (b) State matching funds appropriated or authorized by the legislature;
     (c) Any loans or grants provided by the federal government;
     (d) Any other revenues derived from gifts or bequests pledged to the revolving fund for the purpose of providing financial assistance to water conservation projects;
     (e) All repayments of moneys borrowed from the revolving fund;
     (f) All interest payments made by borrowers from the revolving fund; and
     (g) Any fee or charge levied in conjunction with the administration of the revolving fund.
     (5) The state treasurer may invest and reinvest moneys in the revolving fund in the manner provided by law. All earnings from such investment and reinvestment shall be credited to the revolving fund.

NEW SECTION.  Sec. 9   ADMINISTRATION AND USE OF MONEYS IN THE REVOLVING FUND. (1) The department shall administer the revolving fund and shall use the moneys in the revolving fund to provide loans, grants, and other financial or technical assistance for the purpose of paying for construction or implementation of water conservation projects.
     (2) The department shall allocate funds for loans, grants, and other financial or technical assistance as provided in this section in accordance with an annual project priority list of feasible and cost-effective projects developed by the department in consultation with the Yakama Indian Nation and other resource agencies.
     (3) The department may make loans at or below market interest rates, including interest-free loans to public bodies to finance water conservation projects. The recipient of a loan must establish a dedicated source of revenue for repayment of loans. The revolving fund shall be credited with all payments of principal and interest on all loans.
     (4) The department may make grants and provide other financial or technical assistance to public bodies to finance, construct, or implement water conservation projects.

Sec. 10   RCW 43.84.092 and 2005 c 514 s 1106, 2005 c 353 s 4, 2005 c 339 s 23, 2005 c 314 s 110, 2005 c 312 s 8, and 2005 c 94 s 2 are each reenacted and amended to read as follows:
     (1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.
     (2) The treasury income account shall be utilized to pay or receive funds associated with federal programs as required by the federal cash management improvement act of 1990. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for refunds or allocations of interest earnings required by the cash management improvement act. Refunds of interest to the federal treasury required under the cash management improvement act fall under RCW 43.88.180 and shall not require appropriation. The office of financial management shall determine the amounts due to or from the federal government pursuant to the cash management improvement act. The office of financial management may direct transfers of funds between accounts as deemed necessary to implement the provisions of the cash management improvement act, and this subsection. Refunds or allocations shall occur prior to the distributions of earnings set forth in subsection (4) of this section.
     (3) Except for the provisions of RCW 43.84.160, the treasury income account may be utilized for the payment of purchased banking services on behalf of treasury funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasury and affected state agencies. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:
     (a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the developmental disabilities community trust account, the drinking water assistance account, the drinking water assistance administrative account, the drinking water assistance repayment account, the Eastern Washington University capital projects account, the education construction fund, the education legacy trust account, the election account, the emergency reserve fund, The Evergreen State College capital projects account, the federal forest revolving account, the freight mobility investment account, the health services account, the public health services account, the health system capacity account, the personal health services account, the state higher education construction account, the higher education construction account, the highway infrastructure account, the high-occupancy toll lanes operations account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the medical aid account, the mobile home park relocation fund, the multimodal transportation account, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the oyster reserve land account, the perpetual surveillance and maintenance account, the public employees' retirement system plan 1 account, the public employees' retirement system combined plan 2 and plan 3 account, the public facilities construction loan revolving account beginning July 1, 2004, the public health supplemental account, the public works assistance account, the Puyallup tribal settlement account, the real estate appraiser commission account, the regional transportation investment district account, the resource management cost account, the rural Washington loan fund, the site closure account, the small city pavement and sidewalk account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the Tacoma Narrows toll bridge account, the teachers' retirement system plan 1 account, the teachers' retirement system combined plan 2 and plan 3 account, the tobacco prevention and control account, the tobacco settlement account, the transportation infrastructure account, the transportation partnership account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' and reserve officers' relief and pension principal fund, the volunteer fire fighters' and reserve officers' administrative fund, the Washington fruit express account, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan 1 retirement account, the Washington law enforcement officers' and fire fighters' system plan 2 retirement account, the Washington public safety employees' plan 2 retirement account, the Washington school employees' retirement system combined plan 2 and 3 account, the Washington state health insurance pool account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the water conservation project revolving fund, the water pollution control revolving fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (4)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.
     (b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The aeronautics account, the aircraft search and rescue account, the county arterial preservation account, the department of licensing services account, the essential rail assistance account, the ferry bond retirement fund, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway safety account, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the safety and education account, the special category C account, the state patrol highway account, the transportation 2003 account (nickel account), the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation improvement board bond retirement account, and the urban arterial trust account.
     (5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION.  Sec. 11   Captions used in this act are not any part of the law.

NEW SECTION.  Sec. 12   Sections 1 through 9 and 11 of this act constitute a new chapter in Title 90 RCW.

NEW SECTION.  Sec. 13   Section 10 of this act takes effect July 1, 2006.