"NEW SECTION.  Sec. 1   The legislature has previously enacted pilot project legislation to address domestic use of permit exempt wells in diverse water resource situations and areas of the state. The intent of this act is to establish an additional pilot project in the Carpenter/Fisher, upper Nookachamps, and east Nookachamps subbasins in the Skagit river basin to provide limited amounts of water for rural domestic water use while maintaining existing instream flow protections adopted by rule, by funding and implementing water budget action plans designed to offset impacts to subbasin streamflows caused by new domestic groundwater withdrawals within each subbasin, and where possible, to enhance instream flows in the subbasin.

Sec. 2   RCW 90.44.052 and 2003 c 307 s 2 are each amended to read as follows:
     This section includes water resource pilot projects to address domestic use of permit exempt wells in diverse situations and areas of the state.
     (1) Skagit river subbasins. The pilot project in this subsection applies to the Carpenter/Fisher, upper Nookachamps, and east Nookachamps subbasins in the Skagit river basin, as follows:
     (a) As of the effective date of this section, the owner of any legal lot of record that is located within one of these three subbasins may withdraw public groundwater in an amount of, and not exceeding, three hundred fifty gallons per day per dwelling unit if a new dwelling is proposed and the dwelling:
     (i) Will utilize an on-site septic system for wastewater management;
     (ii) Is unable to receive a water supply from a public water system pursuant to RCW 43.20.260 and as defined in RCW 70.116.030;
     (iii) Complies with all county ordinances and project approval conditions and requirements;
     (iv) Complies with any local jurisdiction provisions that require proof that water is physically available and that the water meets all applicable water quality standards; and
     (v) Is physically located in a subbasin that has a sufficient quantity of water available in its domestic water budget to offset the impact of the withdrawal before it occurs, in accordance with the criteria in section 4 of this act, or as otherwise provided in this subsection. After the effective date of this section, domestic groundwater withdrawals may occur before a sufficient quantity of water is available in a subbasin's domestic water budget only where:
     (A) A legal lot of record within the Carpenter/Fisher subbasin is eligible for domestic groundwater withdrawals under this section and a building permit application has been filed before the effective date of this section;
     (B) A domestic groundwater withdrawal is obtained under and debited against the quantity of water available in a subbasin reservation; or
     (C) Except as provided in (a)(v)(A) and (B) of this subsection (1), if the applicable subbasin reservation has been fully allocated and the applicable domestic water budget balance lacks a sufficient quantity to offset the consumptive use impact associated with the proposed dwelling and all prior impacts from permit exempt domestic groundwater withdrawals identified in section 4(2)(a) of this act, the building permit for such a dwelling is conditioned to only allow in-home domestic uses until the domestic water budget balance has a sufficient quantity of water available to fully offset such consumptive uses, consistent with the criteria provided in section 4(2) of this act.
     (b) To the extent groundwater withdrawn under the authority established in this section is regularly used beneficially, that dwelling is entitled to a right equal to that established by a permit issued under the provisions of this chapter.
     (c) Groundwater withdrawn under the authority established in this section must be limited to permit exempt domestic uses, as that term is defined in chapter 173-503 WAC, as it existed on the effective date of this section. The department shall prioritize enforcement efforts to ensure compliance with the provisions of this section.
     (d) Domestic groundwater withdrawals already obtained under and debited against such a subbasin reservation prior to the effective date of this section are not subject to the quantity limitations provided in this act. Domestic groundwater withdrawals obtained under and debited against such a subbasin reservation after the effective date of this section are subject to a maximum withdrawal of three hundred fifty gallons per day per dwelling unit.
     (e) An owner of a legal lot of record may at any time secure an alternate water source, mitigate, or make water available through another option recognized under chapter 173-503 WAC, as it existed on the effective date of this section.
     (2) Whitman county. The pilot project in this subsection applies to Whitman county, as follows:
     (a) On a pilot project basis, the use of water for domestic use in clustered residential developments is exempt as described in (b) of this subsection (((2) of this section)) from the permit requirements of RCW 90.44.050 in Whitman county. The department must review the use of water under this section and its impact on water resources in the county and report to the legislature by December 31st of each even-numbered year through 2016 regarding its review.
     (((2))) (b) For the pilot project, the domestic use of water for a clustered residential development is exempt from the permit requirements of RCW 90.44.050 for an amount of water that is not more than one thousand two hundred gallons a day per residence for a residential development that has an overall density equal to or less than one residence per ten acres and a minimum of six homes.
     (((3))) (c) No new right to use water may be established for a clustered development under this section where the first residential use of water for the development begins after December 31, 2015.
     (3) For the purposes of this section:
     (a) "Subbasin domestic water budget" has the same meaning as defined in section 4(3) of this act; and
     (b) "Subbasin reservation" has the same meaning as defined in section 4(4) of this act.

NEW SECTION.  Sec. 3   A new section is added to chapter 90.44 RCW to read as follows:
     (1) The department shall develop domestic water budget action plans for the Carpenter/Fisher, upper Nookachamps, and the east Nookachamps subbasins of the Skagit river basin in accordance with this act.
     (2) In developing plans under this section, the department must first confer with all parties to the 1996 Skagit river basin water resources memorandum of agreement, which included the Swinomish Indian tribal community, Skagit county, the upper Skagit Indian tribe, the Sauk-Suiattle Indian tribe, the city of Anacortes, public utility district number one of Skagit county, and the department of fish and wildlife. Before finalizing a subbasin's domestic water budget action plan under section 4 of this act, the department shall also consult with all affected federally recognized tribes within the Skagit river basin area.
     (3) A domestic water budget action plan developed and approved under this act may include any of the following implementing actions to protect and, where possible, enhance summer streamflows:
     (a) Acquiring water rights;
     (b) Incentivizing: Water conservation; collection, retention, and release of rainwater; or low-impact development practices;
     (c) Pursuing any alternate water sources or actions to make water available, as provided under the provisions of chapter 173-503 WAC; or
     (d) Promoting any other instream flow protection or enhancement projects, including but not limited to: Source exchanges; aquifer recharge; infiltration of storm water; or construction of ponds, wetlands, and other offstream water impoundments designed to capture and retime water from times of relative surplus to benefit streamflows in times of relative scarcity.
     (4) The department shall dedicate water rights acquired to protect or enhance summer streamflows to the state's trust water program. Such trust water rights, and any other water supplies developed by the department and credited to a subbasin's domestic water budget under this act, shall include reasonable assurance of success in benefiting instream flows on a permanent and ongoing basis.
     (5) The department must pursue funding required for successful implementation of subbasin domestic water budget action plans. If the department cannot secure sufficient funding, or a subbasin domestic water budget action plan is otherwise unable to meet the criteria for a successful plan as provided in section 4(2) of this act, by the time provided in section 4(1) of this act, the department must report that fact and the reasons behind it to appropriate committees of the legislature, consistent with RCW 43.01.036. Consistent with RCW 43.01.036, the department shall report to the appropriate committees of the legislature by January 1, 2014, regarding the status of the pilot project authorized under this act and make recommendations for sustainable funding needed for the ongoing implementation of this act.
     (6) For the purposes of this section, "subbasin domestic water budget" has the same meaning as defined in section 4(3) of this act.

NEW SECTION.  Sec. 4   A new section is added to chapter 90.44 RCW to read as follows:
     (1) The department must, consistent with this act, approve and implement domestic water budget action plans for specified Skagit river subbasins as follows:
     (a) For the Carpenter/Fisher subbasin: A domestic water budget action plan must be approved by the department and implemented by January 1, 2014.
     (b) For each of the upper Nookachamps and east Nookachamps subbasins, a domestic water budget action plan must be approved by the department and implemented by the time the applicable subbasin's reservation of groundwater is fully allocated.
     (c) Subbasin domestic water budget action plans approved and implemented consistent with the provisions of this act fulfill the mitigation plan requirements of chapter 173-503 WAC and may be implemented in phases relative to the number and impact of new domestic uses within the subbasin.
     (2) In approving and implementing a subbasin's domestic water budget action plan under this section, the department shall ensure that the plan meets the following criteria for plan success, and is designed to:
     (a) Augment summer subbasin streamflows with water quantities sufficient to offset total summer consumptive use impacts from permit exempt domestic groundwater withdrawals occurring within the subbasin and commenced after April 14, 2001;
     (b) Protect and, where possible, enhance summer streamflows by acquiring or developing water supplies as far up subbasin tributaries as practicable and feasible;
     (c) Quantify total consumptive water use from all domestic groundwater withdrawals identified in (a) of this subsection, cumulative summer impacts to streamflows within the subbasin resulting from such withdrawals, and the benefits derived from actions taken within the subbasin to offset impacts or benefit subbasin streamflows; and
     (d) Account for credits and debits within each subbasin domestic water budget. Offsetting water supplies acquired or developed and dedicated as trust water within a subbasin must be credited as deposits to the applicable domestic water budget. Debits against the water budget balance for new domestic groundwater withdrawals occurring within the subbasin must be based on a standard quantity calculated by the department to reflect the average summer daily consumptive use associated with the maximum withdrawal of three hundred fifty gallons per day per dwelling as authorized under this act. Unless otherwise provided in this act, permit exempt domestic withdrawals debited against a subbasin's domestic water budget must be made available, administered, enforced, and accounted for in a manner consistent with domestic water withdrawals obtained under a subbasin reservation.
     (3) For the purposes of this section, "subbasin domestic water budget" means a mechanism of tracking debits and credits for subbasin water supplies acquired or developed by the department to offset cumulative consumptive use impacts from permit exempt domestic groundwater withdrawals and to protect and, where possible, enhance subbasin summer streamflows as authorized and provided under this act.
     (4) For the purposes of this section, "subbasin reservation" means a reservation of groundwater that has been established under chapter 173-503 WAC as it existed on the effective date of this section.
     (5) The development, approval, and implementation of subbasin domestic water budget action plans under this act may be funded, in part or in whole, by state capital budget or omnibus appropriations funding. Nothing in this chapter prohibits a county, public utility district, or any other special purpose district recognized under RCW 39.34.190 from participating in or contributing public funds to support development, approval, and implementation of such plans.

NEW SECTION.  Sec. 5   The provisions of this act override any conflicting provisions contained in chapter 173-503 WAC as it existed on the effective date of this section, and the department of ecology shall commence expedited rule making as needed to ensure consistency with this act.

NEW SECTION.  Sec. 6   In enacting this act, the legislature does not intend to imply legislative approval or disapproval of any judicial interpretation or existing administrative rule or policy regarding the provisions of this act not expressly added or revised.

NEW SECTION.  Sec. 7   If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2012, in either the omnibus appropriations act or the capital budget, this act is null and void."