(1) Substantial development undertaken on the shorelines of the state prior to the effective date of the act, including changes in shoreline jurisdiction as described in subsection (2) of this section, shall not require a permit except under the following circumstances:

(a) When the activity was unlawful prior to the effective date of the act.

(b) When there has been an unreasonable period of dormancy in the project between its inception and the effective date of the act.

(c) When the development is not completed within two years after the effective date of the act.

(d) When substantial development occurred prior to the effective date of the act on a shoreline and continued on to a different lake, river or tributary after the effective date, a permit shall be required for the development undertaken after the effective date.

(e) Substantial development undertaken prior to the effective date of the act shall not continue without a permit into other phases that were not part of the plan being followed at the time construction commenced.

(2) The effective date of the act is determined by one of the following procedures:

(a) When a change in the area subject to the jurisdiction of the act occurs as a result of a determination of jurisdiction by the department based on the provisions of RCW 90.58.030 (2)(d) or (e), the effective date of the act shall be the date the department provides written notice of the change to the local government(s) in which the affected area is located.

(b) When a change in the area subject to the jurisdiction of the act occurs as a result of an updated shoreline master program that supersedes the jurisdiction lists in chapter 173-18, 173-20 and 173-22 WAC, the effective date of the act shall be the date the department approves the updated master program.